Upstream versus downstream information and its impact on the bullwhip effect

Abstract This paper reports the results of an experiment to examine whether giving supply chain partners access to downstream inventory information is more effective at reducing bullwhip behavior, and its associated costs, than similar access to upstream inventory information. Bullwhip behavior refers to the tendency of orders to increase in variation as they are passed upstream in a supply chain (i.e., away from the final consumer). We use a controlled version of the Beer Distribution Game as the setting for our experiment, and vary the amount and location of inventory information shared across treatments. We first independently test whether sharing upstream or downstream inventory information helps reduce bullwhip behavior, and find that only downstream information sharing leads to significantly lower order oscillations throughout the supply chain. We then compare the reduction in order oscillations experienced by supply chain level and find that upstream supply chain members benefit the most from downstream information sharing. Copyright © 2005 John Wiley & Sons, Ltd.