"forecasting methods (see Module 3) and stock keeping strategies contribute to creating thebullwhip effect.2) Supply chain structureThe supply chain structure itself can contribute to the bullwhip effect. The longer the leadtime, i.e. the longer it takes for an order to travel upstream and the subsequent delivery totravel downstream, the more aggravated the bullwhip effect is likely to be. With traditionalordering, the point in time where an order is typically placed (the order point) is usuallycalculated by multiplying the forecasted demand with the lead time plus the safety stockamount, so that an order is placed so far in advance as to ensure service level during the timeuntil the delivery is expected to arrive. Hence, the longer the lead time is, the morepronounced an order will be as a reaction to an increase in forecasted demand (especially inconjunction with updating the safety stock levels), which again contributes to the bullwhipeffect.3) Local optimisationLocal optimisation, in terms of local forecasting and individual cost optimisation, and a lackof cooperation are at the heart of the bullwhip problem. A good example for localoptimisation is the batch order phenomenon. In practice, ordering entails fix cost, e.g.ordering in full truck loads is cheaper than ordering smaller amounts. Furthermore, manysuppliers offer volume discounts when ordering larger amounts (see Module 3). Hence, thereis a certain incentive for individual players to hold back orders and only place aggregateorders. This behaviour however aggravates the problem of demand forecasting, because verylittle information about actual demand is transported in such batch orders. Batch orderingcontributes directly to the bullwhip effect by unnecessarily inflating the orders.4 Information Technology and Supply Chain Management [This page should take about 35 minutes to complete]The value and importance of supply chain information technology is not lost on supply chainleaders. Information technology has a direct positive impact on organisational performance,internal and external collaboration. WatchThe following video contains some great explanations on the intersection of informationtechnology and supply chain management. (4 minutes)(Module 12: Supply Chains and Information Technology, W.P. Carey School of Business,2010) ReadingA good case company example that significantly relies on technology in its supply chainoperations is Walmart. The following article provide interesting insights on how IT has beenused and contributed to the supply chain capabilities of Walmart. (15 minutes)? Lundberg, A 2002. IT Inside the World's Biggest Company, CIO.-- Interview with B.Kevin Turner (Walmart’s Chief Information Office 2000-2005 and Microsoft’s ChiefOperating Officer 2005-2016) While information technology holds great promise for enhancing supply chain performanceand organisational competitiveness, the implementation of new technologies and softwaredoes not guarantee success. This could be associated with a number of issues including thefollowing:? Technology is only an enabler and cannot make ill-conceived supply chainsproductive, prompt adversarial organisations to collaborate, or make use of poorquality data.? People are a major barrier to the effective use of information technology.? Organisations often do not change their supply chain processes concurrent with theadoption of new information technology tools.? There are wide variety of software solutions that are promoted as being ‘supply chain’tools. Supply chain technology may be implemented in piecemeal fashion, leading toa ‘patchwork quilt’ of technologies.? Poor planning and preparation for technology implementation is also problematic.4 Information Technology and Supply Chain Management "