over time. However, when they examined the orders
from the reseller, they observed much bigger swings.
Also, to their surprise, they discovered that the orders
fTom the printer division to the company's integrated
circuit division had even greater flucttiations.
What happens when a supply chain is plagued with
a bullwhip effect that distorts its demand information
as it is transmitted up the chain? In the past, without
being able to see the sales of its products at the distribution channel stage, HP had to rely on the sales orders from the resellers to make product forecasts, plan
capacity, control inventory, and schedtile produaion.
Big variations in demand were a major problem for
HP's man^ement. The common symptoms of such
variations could be excessive inventory, poor product
forecasts, insufficient or excessive capacities, poor customer service due to unavailable products or long backlogs, uncertain producdon planning (i.e., excessive revisions), and high costs for corrections, such as for expedited shipments and overtime. HP's product division
was a victim of order swings that were exaggerated by
the resellers relative to their sales; it, in turn, created
additional exagerations of order swings to suppliers.
In the past few years, the Efficient Consumer Response (ECR) initiative has tried to redefine how the
grocery supply chain should work.' One motivation
for the initiative was the excessive amount of inventory in the supply chain. Various industry studies found
that the total supply chain, from when products leave
the manufacturers' production lines to when they arrive on the retailers' shelves, has more than 100 days of