What is the Houlihan effect in logistics?

The Houlihan effect in logistics refers to a phenomenon where an increase in inventory levels occurs due to uncertainties in demand and supply chain. This effect is named after Patrick Houlihan, who identified it as a major challenge in logistics management. The Houlihan effect occurs when companies try to safeguard against stockouts and disruptions by building up excess inventory, leading to higher costs and inefficiencies in the supply chain. This effect can be exacerbated by factors such as inaccurate demand forecasting, lengthy lead times, and a lack of coordination between different levels of the supply chain. Managing the Houlihan effect requires implementing effective demand planning, reducing lead times, improving communication and collaboration across the supply chain, and adopting agile inventory management strategies.

This mind map was published on 15 November 2023 and has been viewed 45 times.