We have selected bullwhip as a measure of performance because it is a
transparent and readily identifiable metric that can be used to establish if a
course of action has been beneficial to the system. In that sense it is analogous
to the use of elapsed time as an independent and unambiguous metric used for
assessing process re-engineering programmes (Thomas, 1990; Stalk and Hout,
1990). Recent advances in costing the bullwhip effect include predictions from
an OR model developed by Metters (1997). He concludes that avoidable on-costs
range from 10 per cent to 30 per cent (depending on bullwhip source) calculated
at the manufacturing stage alone. As Fisher et al. (1997) point out, the on-costs
throughout the chain can be very substantial, especially where an artificially
high load is placed on system capacity. So in that sense the Metters’ (1997)
figures can be regarded as underestimates. However, in our search herein for
generic solutions we concentrate on bullwhip reduction alone. We believe it is a
valid metric for VMI insight and exploitation in customer/vendor negotiations
and in subsequent system re-design. It is simple enough to satisfy the Buxey
(2001) need for basing production strategy around rules-of-thumb. At the same
time it is a meaningful driver towards cost reduction (Metters, 1997).