Good article in the Wall Street Journal Wednesday on the “bullwhip effect” as it relates to Caterpillar. Caterpillar Inc. recently told its steel suppliers that it will more than double its purchases of the metal this year—even if the company’s own sales don’t rise at all. What does a company like Cat do when it is rebuilding inventories? It means big increases for suppliers. How does a supplier cope with a sudden surge in orders after a long dry spell in survival mode? How do you beef up ordering and production if you are a small firm whose credit lines are already overextended? Read the article.
Question: Have you seen the bullwhip effect yet in your business?