Bullwhip severity in conditions of uncertainty: regional vs global supply chain strategies

Published on Feb 12, 2019in International Journal of Emerging Markets
· DOI :10.1108/IJOEM-02-2017-0050
Marcelo J. Alvarado-Vargas4
Estimated H-index: 4
,
Keith J. Kelley6
Estimated H-index: 6
Sources
Abstract
Purpose Using a phenomenon known as the bullwhip effect, the authors explore why additional uncertainty in the marketplace can create severe disruptions in global supply chains (GSCs). The purpose of this paper is to analyze related risks in regional vs GSCs during low and high levels of uncertainty. The authors propose and discuss a number of potential implications alongside some tactics that may help mitigate disruptions in some cases before they become terminal problems for the supply chain sustainability. Design/methodology/approach Monte Carlo simulation is used to generate the conditions of uncertainty and various scenarios that may emerge to challenge GSCs. Vensim software is utilized as a tool for simulation purposes. The authors considered scenarios applicable to manufacturing and retail sectors specifically because of storability property of goods. Findings Regional supply chains, as opposed to global ones, are more stable and reliable (less risk of disruption) during low and high levels of uncertainty. During uncertain times, upstream suppliers are at greater risk in GSCs. Firms must make strategic decisions that will secure its supply chain functionality and assess the likelihood of such events since many firms entered emerging markets. Originality/value Building on internalization theory, it shows that risk and survival are components of decision making that are further complicated by supply chains now operating globally in emerging markets. The paper demonstrates with simulation that GSCs are riskier than regional supply chains in low and high levels of uncertainty, particular as it relates to the bullwhip effect. It also provides recommendations about supply chain restructure and investments in communication improvements to reduce the bullwhip effect in the supply chain.
📖 Papers frequently viewed together
46 Citations
2013
5 Authors (Borja Ponte, ..., Isabel Fernández)
3 Citations
References55
Newest
#1Bharat Arora (IITR: Indian Institute of Technology Roorkee)H-Index: 3
#2Zillur Rahman (IITR: Indian Institute of Technology Roorkee)H-Index: 53
Purpose The purpose of this paper is to examine the impact of superior IT capability on financial performance of firms in the chemicals and chemical products industry in India. Design/methodology/approach Financial performance of 28 firms with superior IT capability has been compared with benchmark over a period of six years. Findings This research has five important findings for the chemicals and chemical products industry in India: there is positive association between superior IT capability a...
12 CitationsSource
Purpose The purpose of this paper is to contribute to the ongoing and unresolved debate in the international business (IB) literature with respect to what drives or impedes multinational company (MNC) success in emerging markets, focusing specifically on the impact of institutional conditions on subsidiary performance. Design/methodology/approach In the understanding that greater attention to different institutional settings and their diversity has much to offer theory-building in the IB area, t...
8 CitationsSource
Purpose The purpose of this paper is to examine the effect of institutional distances (IDs) on the choices of host country and the entry strategies, taking into account various firm resources. Design/methodology/approach Institutions are quantified in terms of regulatory, normative, and cognitive aspects. Firm resources include technological and marketing resources, organizational slack, and internally generated and externally raised financial resources. The research context is foreign direct in...
9 CitationsSource
Purpose The purpose of this paper is threefold: first, to study internationalization-performance relationship of Indian born global (IBG) firms from multi-theoretical lens and establish the nature of this relationship; second, to highlight the role of foreign equity in moderating this relationship; and third, to establish the relevance of export intensity (EI) in determining these firms’ financial performance. Design/methodology/approach In total, 411 IBG firms were identified based on born glob...
7 CitationsSource
#1Ravi Ramamurti (NU: Northeastern University)H-Index: 19
17 CitationsSource
#1Mustafa Hekimoğlu (Işık University)H-Index: 4
#2Yaman Barlas (Boğaziçi University)H-Index: 17
Last. Luis F. Luna-ReyesH-Index: 25
view all 2 authors...
Sensitivity analysis of system dynamics models is essentially about sensitivity of patterns of output behaviors to inputs, since system dynamics modeling is behavior pattern oriented. In this study, a regression-based procedure for pattern sensitivity analysis is developed, by defining behavior pattern measures such as equilibrium level, trend, inflection point, or oscillation amplitude. A unique feature of the procedure is that it takes into account the possibility of a model generating multipl...
17 CitationsSource
#1Xun Wang (Cardiff University)H-Index: 10
#2Stephen Michael Disney (Cardiff University)H-Index: 52
The bullwhip effect refers to the phenomenon where order variability increases as the orders move upstream in the supply chain. This paper provides a review of the bullwhip literature which adopts empirical, experimental and analytical methodologies. Early econometric evidence of bullwhip is highlighted. Findings from empirical and experimental research are compared with analytical and simulation results. Assumptions and approximations for modelling the bullwhip effect in terms of demand, foreca...
158 CitationsSource
#1Balram Avittathur (IIM-C: Indian Institute of Management Calcutta)H-Index: 12
#2Jayanth Jayaram (USC: University of South Carolina)H-Index: 35
Abstract This introductory article of the special issue on supply chain management in the emerging economies attempts to categorize the research that exists in the field and identify the areas of potential research opportunities in supply chain management within the context of emerging economies. Specifically, we note that (i) few studies have been conducted at the supply chain level; (ii) few studies have looked at supply chain practices in the context of emerging economies; and (iii) a signifi...
15 CitationsSource
#1Inge Bleijenbergh (Radboud University Nijmegen)H-Index: 11
#2Jac A. M. VennixH-Index: 20
Last. Marloes L. van Engen (Tilburg University)H-Index: 18
view all 4 authors...
This paper contributes to the understanding of dynamic decision making by exploring how people understand the dynamic system underlying a task with modest dynamic complexity. Using the faculty gender balancing task, we experimentally test the extent to which participants correctly estimate the inflow needed to balance two unbalanced stocks and how they substantiate their decision. The results, based on performance data for 133 participants, show that people have difficulty determining the correc...
5 CitationsSource
#1Gary Knight (SPbU: Saint Petersburg State University)H-Index: 37
#2Peter W. Liesch (UQ: University of Queensland)H-Index: 30
In this paper, we summarize how internationalization research has evolved over time, where it stands today, and how it might evolve going forward. Specifically, we examine internationalization research from earlier times to the present day. We contrast the incremental internationalization characteristic of older multinational enterprises with the early, rapid internationalization of born global firms. The paper summarizes the evolution of research on early internationalization and born global fi...
255 CitationsSource
Cited By8
Newest
Information distortion tends to inflate from downstream to upstream, and results in demand planning errors and this is followed by inaccurate forecasting. This situation is referred to as the bullwhip effect phenomenon. Demand management is also determined based on either a centralized or decentralized distribution strategy. Both strategies will influence the accuracy of demand planning and its effect on the bullwhip phenomenon. Unfortunately, research investigating the relationship between cent...
Source
1 CitationsSource
#1Tat-Dat Bui (NTOU: National Taiwan Ocean University)H-Index: 8
#2Feng Ming Tsai (NTOU: National Taiwan Ocean University)H-Index: 8
Last. Ming K. Lim (Coventry University)H-Index: 58
view all 6 authors...
Abstract Balancing sustainability and disruption of supply chains requires organizational ambidexterity. Sustainable supply chains prioritize efficiency and economies of scale and may not have sufficient redundancy to withstand disruptive events. There is a developing body of literature that attempts to reconcile these two aspects. This study gives a data-driven literature review of sustainable supply chain management trends toward ambidexterity and disruption. The critical review reveals tempor...
16 CitationsSource
#1Ahmed ShabanH-Index: 13
#2Mohamed A. ShalabyH-Index: 9
Last. Riccardo PatriarcaH-Index: 12
view all 4 authors...
The bullwhip effect reflects the variance amplification of demand as they are moving upstream in a supply chain, and leading to the distortion of demand information that hinders supply chain performance sustainability. Extensive research has been undertaken to model, measure, and analyze the bullwhip effect while assuming stationary independent and identically distributed (i.i.d) demand, employing the classical order-up-to (OUT) policy and allowing return orders. On the contrary, correlated dema...
3 CitationsSource
13 CitationsSource
#1Zhiyi Zhuo (Quanzhou Normal University)
#2Ka Yin Chau (City University of Macau)H-Index: 9
Last. Yun Kit Ip (City University of Macau)
view all 4 authors...
Customer demand is the core of the vendor’s implementation of product supply strategies. There are three different patterns of demand: real demand, false demand, and semi-real demand. For this arti...
2 CitationsSource
2 CitationsSource
#1Abba Adam (IBS: International Business School, Germany)H-Index: 1
#2Norhayati ZakuanH-Index: 1
Last. Rajeh Bati Almasradi (IBS: International Business School, Germany)H-Index: 1
view all 6 authors...
This study investigates the nature and context-based peculiarities of sustainability practices related to the supply chain of oil servicing firms operating in the downstream sector of Nigerian oil and gas industry. The supply chain management practices of oil servicing firms are crucial to the functioning of the downstream sector of the oil and gas industry. However, the literature on their supply chain sustainability is scant and scattered. To fully explore this field; therefore, survey data we...
2 CitationsSource