What is the bullwhip effect in Procter and Gamble supply chain?
The bullwhip effect refers to the phenomenon where small fluctuations in consumer demand create progressively larger fluctuations in demand up the supply chain. In Procter and Gamble\“s case, this was famously observed in their Pampers diaper supply chain where minor changes in retail demand caused significant inventory fluctuations at the manufacturer level.
How did Procter and Gamble address the bullwhip effect?
Procter and Gamble implemented several strategies including better information sharing with retailers, implementing collaborative planning forecasting and replenishment systems, reducing order batching through more frequent deliveries, and improving demand forecasting accuracy through data analytics. 
What were the main causes of bullwhip effect in P&G operations?
The primary causes included demand forecast updating, order batching, price fluctuations, rationing and gaming, and lack of supply chain visibility. Retailers would over-order during promotions and under-order during normal periods, creating artificial demand patterns.
What benefits did P&G achieve by reducing bullwhip effect?
Procter and Gamble achieved significant benefits including reduced inventory costs by 20-30%, improved service levels from 96% to over 99%, better capacity utilization in manufacturing plants, reduced transportation costs, and enhanced relationships with retail partners. |
