The impact of the Bullwhip Effect on throughput in an electrical utility in Pietermaritzburg.

Abstract

In a rapidly-changing globalised economy, companies need to become more competitive to stay ahead of the competition and sustain the advantage of being on the top. Supply chain efficiency and lean production are familiar in supply chain management. However, there are impediments to the extent of success that companies wish to achieve. One such impediment is demand amplification (or the bullwhip effect) through the supply chain. This study investigated the impact of human behaviour on the bullwhip effect, the impact of variability in materials and information flow, and the relationship between the impact of human behaviour and that of materials and information flow on the bullwhip. The research included a case study to validate the findings of the former investigations. A questionnaire survey was conducted using a sample of supply chain role-players for the investigation of human behaviour of the bullwhip. A separate study was conducted on a sample of real-time projects for the investigation of materials and information flow on the bullwhip. A comparison was drawn between the two independent studies. A case study was presented, based on a power-lines refurbishment project, currently in the construction phase. The results on human behaviour revealed that the types of "disabling" behaviour, namely "panic" or "safe harbour" exist amongst supply chain role-players. The findings of the study on real-time projects showed chronic variability in materials and information flow. Similar results have been reported from the findings of the case study. The key conclusion is that there is a relationship between people and processes and both have an impact on the bullwhip. The recommendations made are applicable to a generic company as well as Eskom. An action plan for a way forward for Eskom is included in this study. The key elements of the action plan include revision of the current policy document with suppliers, prioritization of customer projects and optimal use of the warehousing function. Further research is proposed to extend the investigation to other regions and divisions within Eskom and to probe into the suppliers' supply chain to promote efficiency.