Electronic supply chain management systems in managing the bullwhip effect on selected fast moving consumer goods.

Abstract

The amplitude in order variability as orders surge upstream a supply chain epitomises a phenomenon commonly called the bullwhip effect. The real consumer demand orders are comparatively and tentatively evinced less variability while trading supply chain members on the midstream and upstream stages experience the amplified order vacillations. The oscillator effect reveals a number of pernicious problems throughout the supply chain networks, as downstream sites include harmful bloated inventory and shortages with poor customer service, and the midstream and upstream sites depict the disharmonic capacity on improper planning and inconsistent scheduling in production. This study investigates the selected fast moving consumer goods (FMCG) industry on the amplified consumer demand order variability as orders cascade from downstream (retailers) to the midstream as well as upstream sites of the supply chain network.The effect of electronically-enabled supply chain management (e-SCM) systems remains the central hypothesis for instant information sharing on inventory positioning, integrated supply chain management processes and improved profitability through positive performance targets and outcomes across supply chain trading partners. The main objective aims to understand the on extent of the relationship to which the phenomenon of bullwhip effect can be explained by e-SCM system diffusion, optimal inventory positioning, strategic information sharing and global optimisation strategies. These seamless linkages between supply chain partners seem to entrench velocity on quasi-real-time information flow in consumer demand and supply sides, inventory status and availability, and capacity availability. This study found empirical research evidence on e-SCM systems that retail supply chain businesses have fastidiously adapted to technology clockspeed for the last five years. The majority of the respondents (92%) for both upstream and downstream echelon categories agreed that e-SCM systems have a significant role to play in mitigating the consumer demand order variability in the supply chain network. This study further discovered that the migration from in-house IT systems to integrated e-SCM systems (65%) would entrench close integration of information exchange and processes across different parts of the organisation and inter-organisational linkages. The e-SCM systems diffusion also depicted a positive linear relationship to the extent to which the organisations efficiently and timeously communicate the future strategic needs and demand order replenishments throughout the entire supply chain network. However, the access to advance economic information negatively related to e-SCM systems with the virtue of legal constraints and template-based information attachments.