The bullwhip is a phenomenon that occurs in the supply chain management. When consumer demand change their tastes and preferences, it forces the supply chain management to change .this change forces the supply company to order for more goods from the producing or manufacturing company, with an aim of meeting the demand change. The bullwhip effect flows from down to the bottom in the chain of supply. It begins with raw materials supplier, to the manufacturer of the products, distributors of the product, wholesalers of the product and finally to the retailers. Causes of a bullwhip effect are behavioral and operational causes (Christopher, 2010).
2. Eliminating intermediaries
Eliminating intermediaries affects the bullwhip because a company needs intermediaries to avail the products to the customers at the right time and at the right place. This means that intermediaries link consumers to producers, without intermediaries, suppliers will not be able to link directly with the customers and therefore a disadvantage which will affect the bullwhip effect. Also intermediaries help the company to provide information about the customers’ tastes and preferences, eliminating them will mean that the supply company will not be able to predict the customer demand which is the main cause of a bullwhip effect (Chu, Dyer, & Cho, 2012).
3. Initiatives for ameliorate bullwhip
The initiatives to ameliorate bullwhip effect include understanding the drivers of customer demand and their plan of consumption this is aided by the use of intermediaries. Since suppliers rely on consumers, it is therefore important for them to understand the needs of consumers so that they can predict the customer demand. Another initiative is the policies and pricing methodology of products, eliminating processes that delay customer orders and also charging other processes free, in other word providing the after sales services can ameliorate bullwhip effects.
Electronic data interchange (EDI) is the data transfer from one company to another by use of electronic networks. There is an increase on the use of EDI when companies connect to the internet. It is therefore evident that more companies are able to manage businesses using internet. This is only applicable for a business to business type of marketing. On the contrary, web-based transaction system is a means of conducting businesses by the use of websites.
4. Advantages of using web-based transaction system over EDI
- Management of customer information by the company is made easier since their information and transactions can be put into databases by employee from any department in the company.
- At the point of being able to manage the customer’s information, they can also use the same information to improve on their sales and marketing strategies.
- The use of web-based transaction system is cheaper compared to the use of EDI.
- The web-based program enables employees in organization to share database which can be updated anywhere in the world thus an advantage to businesses with many branches.
- Web-based system enables varieties of electronic devices to access the web example PDAs
Disadvantages of using web-based transaction system over EDI
- It requires that employees be well skilled on how to perform tasks using web system and therefore forcing the company to invest in training the staff.
- Web-based system is not applicable to any organization that has no internet access.
Electronic retailing is a business process that encompasses all the activities done in moving the product from producer to the consumer through the use of internet. Traditional retailing refers to all the activities done to physically move a product from the producer to retailer.
5. Advantages of E-retailing over traditional retailing
- A company that conducts its business via online has an advantage of being present worldwide. This is due to the fact that business conducted online has several viewers worldwide, unlike traditional retailing which is not present worldwide.
- It minimizes the costs of marketing and promotion. This is explained by the fact that conducting business through internet enables multiple viewers which promotes marketing and increase sales and therefore minimizing cost of marketing and promotions.
- It enables the company to develop a competitive strategy which they will be able to maintain and earn profits, unlike traditional retailing where the company cannot effectively develop a competitive strategy.
- E-retailing has enhanced customer services; example is when a customer visits a website and finds solutions to their problems. E-retailing provides a ready and a reliable customer service compared to traditional where customer service is inadequate and unreliable.
- E-retailing reduces the transaction costs because there is no involvement of middlemen, unlike traditional where middlemen are involved therefore increasing transaction costs.
Disadvantages of E-retailing
- E-retailing results minimal growth in some sectors for example food sector. Consumers cannot purchase food from the internet.
- The fear of safety on the products affects the development of E-retailing since many customers would want a safe product.
- E-retailing requires that customers to have e-mail address and passwords, this is a turn off to many customers.
7. Concept applicable to my company
The best concept applicable to my company is the ways to eliminate bullwhip effect which can be of an advantage in the supply chain management. The use of electronic retailing is also better because the advantages enable the company to make profits.
6a. Contributions to the case study
One of the contributions to the case study was to understand the supply process. Saturn Company worked hard to understand the parts that were needed. There was a need to understand the supply chain of the company in order to supply spare parts on time. Saturn embarked on the process of managing the entire process of the supply chain. This was in the quest to make sure that the spare parts would be supplied on time. With the need to satisfy the clients and reduce the cost, the main issue that was considered important was the need to manage the supply process. Clients wanted cheap automobiles but with quality. Japanese cars were considered cheap and of good quality. This prompted Saturn to undertake a strategy where the supply chain would be managed. This is what contributed to the case study (Barney, 2012).
Saturn points out the importance of after sale services across the supply chain. This results to shortage of risks on the side of a retailer, this helps to fulfill the customer’s needs and improves their loyalty, he sets an example to many companies on the after sales services.
Saturn also contributes to the supply chain management by pointing out the ease of acquiring information from customers by providing after sales services.
6b. Car dealers in Kuwait
The concept in the case study cannot be applied to the car dealers in Kuwait because of the fact that part suppliers are far. It will be hard to have suppliers of spare parts around Kuwait. Kuwait is not known to be handling automotive parts. The concept applied to Saturn because they dealt with spare parts. It was not hard to find spare parts companies in America. Car dealers in Kuwait will have to have efficient systems of supplying spare parts from different parts of the world. The only cost-effective way is to have the spare parts bulk so that there will be economies of scale. This will be costly because some spare parts do not sell that fast. This means that the concept at Saturn will be very expensive. The concept is working in America because there are many auto spare dealers.
The car dealers in Kuwait should apply the concept of Saturn on the importance of after sales services to the customers and the impact it has on customer’s loyalty. When it comes to purchasing a car, a customer needs more information regarding the car; it is therefore the role of the car dealer to provide appropriate and adequate information to the customer. Providing after sales services such as warranty and free delivery and guidelines to use a product make a customer satisfied. A well informed and satisfied customer will always remain loyal to the company
Barney, J. B. (2012). Purchasing, Supply Chain Management and Sustained Competitive Advantage: The Relevance of Resource‐based Theory. Journal of Supply Chain Management, 48(2), 3-6.
Christopher, M. (2010). Logistics and supply chain management. Financial Times/Prentice Hall.
Chu, W., Dyer, J., & Cho, D. S. (2012). Strategic supplier segmentation: The next" best practice" in supply chain management.