Lack of effective communication is what sets the bullwhip effect in motion. If each of the links in the chain receives the same information accurately, the effect is significantly reduced along with their respective costs.The causes of the bullwhip effect can be behavioral (due to the abuse of the base-stock policies, due to the lack of perception in the feedback and lead time , among others) or operational (due to forecasting errors, anticipation of shortages, promotions and advance purchases ) Solutions to Bullwhip EffectCoordination in a Supply Chain requires that each link share information and measure the impact that its actions have on other links. But the different links can have conflicting objectives if each one has a different owner, which can result in actions that often reduce the effectiveness of that chain. Lack of coordination, due to the distancing between the different process areas in the Supply Chain, has as a consequence Bullwhip Effect.Strategies to try to eliminate these effects, such as reduce uncertainty, reduce variability, reduce delivery time and strategic alliances could be implemented, Reduce Uncertainty to avoid Multiple Demand Forecast UpdatesEach link must receive the same information as the current demand. However, if each one uses different forecasting methods or buying practices different from each other, the whip effect will prevail. Even with the maximum possible uniformity in the communication process, this strategy will not eliminate the demand variability completely, unless uniformity in forecasting and buying practices can be apply. Reduce Variability to Stabilize Prices Another strategy is to stabilize the client’s current demand. For example, there are some retailers that have a policy of keeping prices low every day. This consistently ensures a low price. No promotions or offers that can create dramatic variations in demand are used. The elimination of promotions means that there are no advance purchases by retailers, that results in orders that match customer demand,then prices tend to stabilize. Reduce Delivery Time to avoid Order BatchesRelatively high cost of placing and replenish an order is one of the reasons for order batches,improving order efficiency reduce cost, therefore ordering batches is not longer need it. If orders are made with lower cost, there’s no reason for order batches, one alternative for reducing cost is reducing delivery times. Since delivery times have a direct impact on inventories, the longer those times to deliver products, the more difficult it is to coordinate inventory stocks, production and demand. To reduce the delivery time two steps are necessary, first, watch the time that is spent in manufacturing and shipping a product, as well as the time it takes to process an order. Strategic Alliances to eliminate Shortage Gaming Some alliances to share information can eliminate the bullwhip effect. For example, with the VMI (Vendor Management Inventory), the manufacturer or supplier manages the inventory of its products in the retailer, determining for itself, how much and when it should be shipped of each product, thus, base on demand information manufacturer can adjust production capacity or schedule it with better knowledge. Real-life example of solution Walmart is a great example of solution for some causes of bullwhip, since bullwhip effect happen in supply chains that are mostly based on forecasting, it is necessary to amplify the knowledge of the behavior of the client’s demand as much as possible. Walmart has been able to overcome this obstacle by establishing a demand-driven supply chain,that works in line with current customer orders. Walmart has implemented a model in its distribution system, by transmitting point of sale data from individual stores, to the headquarters every certain time during day, thus this demand information is used to have a better manage of customer demand and inventory movement along the supply chain. For Walmart this has been highly beneficial since better information leads to a better positioning of the inventory and lower costs throughout the supply chain, lower costs of operation are reflected in a reduction of the cost of the product, for which the company has been able to maintain its low price policy and be able to eliminate many of its competitors and become a global trading giant. Summary Bullwhip Effect increases all costs in the Supply Chain and reduces service levels to customers. Bullwhip Effect drives away all parts of the Supply Chain from efficiency and reduces both customer satisfaction and profitability within a Supply Chain. The evidence of the size of the Bullwhip Effect could be effective in making the different stages of the Supply Chain strive to achieve coordination and eliminate the variability created within them.