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Electronic data Interchange (EDI) is a technology which can be used to facilitate efficient information exchange among supply chain members.Improving operational efficiency to reduce lead times between each member of the supply chain can also help to control the bullwhip effect.The bullwhip effect is a major concern for different members of the supply chain because it often leads to poor customer service, inefficient use of resources and high inventory costs.Researchers have identified the five major causes of the bullwhip effect as: demand forecast updating, order batching, price fluctuation, non-zero lead times and supply shortages.Eventually, the network can oscillate in very large swings as each organization in the supply chain seeks to solve the problem from its own perspective.This phenomenon is known as the bullwhip effect and has been observed across most industries, resulting in increased cost and poorer service.Fourth, the establishment of the strategic partnership can build up mutual trust, share information to match the supply and demand of each stage of the supply chain well, thus reduce transaction costs. How to reduce the bullwhip effect in the supply chain of this new business is a critical question. sa=t&rct=j&q=&esrc=s&source=web&cd=10&cad=rja&ved=0CKg BEBYw CQ&url= Bullwhip effect is a big topic in inventory management.
Third, developing appropriate pricing strategies can encourage retailers to order small quantities and reduce the advanced purchasing behavior to reduce the bullwhip effect.
Breaking order batches to quickly replenish stock can also help to control the bullwhip effect however the major concern with frequent orders is the high transportation cost associated with it.
To manage this, composite orders can be made to maximize truckload deliveries through the economies of scale.
Finally, synchronizing inventory management across the supply chain will help to reduce costs and increase profits.
This requires coordination of all ordering decisions made by supply chain members and can be achieved through vendor managed inventory (VMI) where an upstream supplier manages the inventory of its downstream customer.
An unmanaged supply chain is not inherently stable.