THE APPLICATION OF CENTRALIZED DEMAND INFORMATION SYSTEM TO REDUCE BULLWHIP EFFECT IN SUPPLY CHAIN

Abstract

The main idea of supply chain management is a good synchronization and coordination among supply chain stages. Weak coordination causes amplification of order variability from downstream to upstream supply chain which is called bullwhip effect. This thesis studies about bullwhip effect that happens in PT. Y as wholesaler who distributes mineral and isotonic water to its distributors and often happens monthly overstocking and lacking of stock. It also analyzes how to reduce four types of bullwhip effect by using Centralized Demand Information (CDI). The method is used as it allows the wholesaler to know the real situation of order from their distributors and create the right forecasting to reduce the bullwhip effect. In this thesis, forecast order in 2011 is made by using sales data from all PT. Y’s distributors in 2010. After getting the result, it is then compared to the condition in 2011 and bullwhip effect occurred in PT.Y is reduced. The changes in the four types of Bullwhip effect are the following: Bullwhip effect 1) average of aggregation for each product in each distributor reduces 4.61%; Bullwhip effect 2) aggregation from all distributors for each product reduces 23.77%; Bullwhip effect 3) aggregation of products in each distributor reduces 0.42%; Bullwhip effect 4) aggregation of all products in all distributors 7.31%; and finally, the average of bullwhip effect is reduced to 9.27%.