THE IMPACT OF ELECTRONIC DATA INTERCHANGE ON REDUCING BULLWHIP EFFECT AND SUPPLY CHAIN INVENTORY COSTS

A distortion in demand known as the bullwhip effect has been noted in investigations of supply chain behavior. This paper uses a web-based supply chain simulator to demonstrate the potential benefits of using electronic data interchange (EDI) in supply chain management. It is hypothesized that the use of EDI will substantially reduce the bullwhip effect as it reduces information delays. This should also reduce related costs. The simulation experiment measures the impact of EDI on mean inventory costs, orders placed, cumulative cost, amplification and net excess stock in the supply chain. In all cases, there are statistically significant reductions in the values of the variables studied for the simulations with EDI. The comprehensive use of EDI provides substantial savings in costs as well as notable improvements in supply chain management. The study also demonstrates that computer simulation is a feasible way to conduct statistically significant tests in supply chain management research.

• Record URL:
  • http://www.sciencedirect.com/science/article/B6VHF-49PRM43-2/1/d37b24f7a61fba32aaf50719e149f40b
• Availability:
  • Find a library where document is available. Order URL: http://worldcat.org/issn/13665545
• Corporate Authors:

  Elsevier

  The Boulevard, Langford Lane
  Kidlington, Oxford  United Kingdom  OX5 1GB
• Authors:
  • Machuca, JAD
  • Barajas, R P
• Publication Date: 2004-5

Language

• English

Media Info

• Features: Figures; References; Tables;
• Pagination: p. 209-228
• Serial:
  • Transportation Research Part E: Logistics and Transportation Review
  • Volume: 40
  • Issue Number: 3
  • Publisher: Elsevier
  • ISSN: 1366-5545
  • Serial URL: http://www.sciencedirect.com/science/journal/13665545

Subject/Index Terms

• TRT Terms: Costs; Demand; Electronic data interchange; Inventory control; Simulation; Supply chain management
• Subject Areas: Finance; Freight Transportation; Highways; Planning and Forecasting; Society; I72: Traffic and Transport Planning;

Filing Info

• Accession Number: 00972632
• Record Type: Publication
• Files: TRIS
• Created Date: Apr 23 2004 12:00AM