Thursday, December 8, 2011

Another Take on the Bullwhip Effect

A recent article published by the IrishTimes examines how the financial crises in the Euro Zone the could cause a bullwhip effect that would trigger a global recession.  The bullwhip affect in the article was described as the "negative shock that is amplified through the supply chain into large swings in demand the further one moves away from the final consumer."   On a broader scale the article demonstrated that a decrease in demand in the "developed world," i.e. the Euro Zone, could lead to a collapse in world trade and production declines in export based economies in developing countries.  The increased global networks within supply chains could have severe bullwhip effects  on the world economy if the the economic outlook within the Euro Zone does not improve.  The author extols that developing countries would not be able to withstand a long term global recession.  As it stands the global financial crisis seems inevitable.  Can business strategies on reducing bullwhip effects (demand forecasting, and improving information flow)  stave off a potential global recession?

Read the article here:

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