How does the Houlihan effect impact logistics operations?

The Houlihan effect, also known as the bullwhip effect, refers to the phenomenon of demand fluctuations amplifying as they move up the supply chain. This effect can have significant implications for logistics operations. Firstly, inaccurate demand forecasting at the retail level can lead to overordering or underordering of products by wholesalers and manufacturers, causing inefficiencies and increased costs in transportation and inventory management. Secondly, the Houlihan effect leads to increased volatility and uncertainty in supply chain planning, making it challenging to optimize production schedules, allocate resources, and secure reliable transportation services. As a result, logistics operations must become more agile and flexible to quickly adapt to changing demand patterns and mitigate the negative impact of the Houlihan effect on their efficiency and overall performance.

This mind map was published on 15 November 2023 and has been viewed 147 times.