One of the best practical sessions I took part in during my bachelor’s degree was a course called Logística de Distribución Directa e Inversa (Direct and Inverse Logistics). We had to download a software called Implexa (software developed by a professor at the UPV), with little knowledge of what was going on, the professor explained that it was a simulation programme and that each of us was a different company with different set ups and that during the 10 minute simulation we had to adapt production (number of units per batch produced, frequency, etc.) to demand, while trying to balance lead time, and total costs: storage costs, production costs and transport costs. In addition, there were other small constraints because you had to order your raw material to be able to produce, but sometimes the raw material would not arrive or would not cover your needs to be able to produce enough product to send to your customer.

In the first round we all tried our best and made decisions based on trial and error and the almost non-existent historical data. The simulation was fast and decisions had to be made as quickly as possible.

After the first simulation we did a second one and he gave us some additional information, we were all different companies but we were somehow connected, meaning we were connected as a network of customers and suppliers. Although this was a very powerful piece of information, the fact that the supply problems you were having were due to one of your colleagues, the fact that we didn’t know who our suppliers were and who our customers were, didn’t make things any easier. But it is true that the results of this second simulation were much better than the first, we already had 10 minutes of experience!

The third simulation revealed another key piece of information. It showed us the network, how we were all connected, so we basically knew who our customer was and who our suppliers were. This third time we were able to communicate with each other and ask our suppliers for more material or tell our customers that we would be able to serve them in a few moments. As expected, the results improved significantly in this third round.

Finally, in the last round, he even told us what the end customer’s initial demand was, “X units/second”. Knowing the demand and who the customers and suppliers were improved the overall efficiency of the network, resulting in the best results for each company so far.

However, the last scenario is far from reality because we do not know what our demand will be. The aim of the lesson was to show us, in an interactive way, the importance of the Weibull effect.

What’s the Weibull effect?

Also known as the Bullwhip effect or the Whiplash effect, is a phenomenon observed in supply chain management that describes the amplification of demand fluctuations as they move upstream in the supply chain. It is named after the Weibull probability distribution, which represents the pattern of demand variability. The Weibull effect typically occurs due to a lack of coordination and information sharing among supply chain partners, resulting in distorted and exaggerated demand signals. Here’s how the Weibull effect manifests in the supply chain.

Some of the reasons why this phenome occurs: demand variability, order batching, forecast inaccuracies, inventory buffering or poor communication and information delays.

The basic idea of the Weibull effect is that a problem has a tendency to propagate upstream in the supply chain. The exaggeration of demand fluctuations at each stage can accumulate and amplify as they move toward the upstream suppliers. This can result in an increasing magnitude of demand distortion and variability as one moves further up the supply chain. And leads companies to have inaccurate forecast, supplier relationships strains, inefficiencies in both production and planning, increase costs or level inventories.

Addressing the Weibull effect through improved coordination, information sharing, and supply chain practices can help mitigate these effects. Collaborative planning, demand smoothing, real-time data sharing, and the implementation of lean principles can contribute to reducing the negative impacts of the Weibull effect and enhancing overall supply chain performance.

Here below a video explaining Implexa can be found: