a result of an unmanaged supply chain

A pervasive supply chain problem whereby order variability grows as demand signals propagate upstream. Essentially, demand spikes as orders flow back from retailer to distributor to original equipment manufacturers to tier one suppliers, and so on.

An extreme change in the supply position upstream in a supply chain generated by a small change in demand downstream in the supply chain. Inventory can quickly move from being backordered to being excess. This is caused by the serial nature of communicating orders up the chain with the inherent transportation delays of moving product down the chain. The bullwhip effect can be eliminated by synchronizing the supply chain.