Adoption of Supply Chain Management Strategies as a Response to Bull Whip Effect : From the Perspective of Indian Retailers

The concept of bull whip effect remains a critical issue in the supply chain of products in global market. A small variance in the demands of the downstream end-customers may cause dramatic variance in the procurement volumes of upstream suppliers via the bull whip effect under the condition that the distortions of demand-related information exist among the members of a supply chain (Lee et al., 1997; and Metters, 1997). There are various causes for the bull whip effect. The prominent ones include lack of forecast updating, poor level of order batching, frequent price fluctuations and shortage gaming. As a result, there is a chance of excess inventory, poor level of customer service and improper sales management, imprudent capacity panning, high cost of transportation and longer production lead times (Lee et al., 1997; Metters, 1997; Fransoo and Wouters,2000; and Towill, 2005). There are a large number of retailers in India, as Indian retailing is mainly unorganized and small shops are around every corner of the country. This research is the end result of a survey conducted among Indian retailers on their SCM practices in counter-handling the bull whip effect. Application of SCM practices in these small, unorganized retail stores will increase profitability by lowering inventory carrying cost and increase their efficiency. The researchers compare the differences in perception of Small Retail Outlets (SRO) and Medium Retail Outlets (MRO). It is observed that motivation to participate in a supply chain network is comparatively lower among small retailers. As the size of their business grows over a period of time and they attain the status of an MRO, their trust and commitment to share information increases. The findings of this research will help the companies to effectively counteract the negative perceptions among retailers about SCM practices by identifying the underlying causes