Question

How does the COVID-19 pandemic create the bullwhip effect in the food and hygienic products supply chain. (5 points)

Answer 1

COVID-19 has already created many crises across the world. The main and foremost crises we encountering are scarcity of food and hygienic products.

This has already created a bullwhip effect in our economy. This effect is usually of two types.

1.Bullwhip Excess, where the supply exceeds the demand.

2. Bullwhip Shortage, where the demand exceeds the supply.

Currently, we are facing a shortage effect. If the buying activity was the result of a fluke and demand picks up, the company's stores may end up running out. This is typically a more concerning issue because upset customers are bad for long-term business success. Food and beverages are fast-moving goods and they are non-durables. They cannot be preserved for more than a particular time. so the manufacturers cannot produce a bulk production when a crisis emerges. Likewise, many companies forecast the future and then produce the goods and services for the future. when this kind of pandemic situation comes, all the calculation goes wrong and the supply falls in regards to the demand.

Most companies in the supply order more than they can sell, attempting to prevent shortages and lost sales of goods. But in this case, the demand went so far and the companies couldn't meet up efficiently due to the unavailability of raw materials, labours and funds.

This has not only affected the food and beverages, but also safety product manufacturing. The safety products are being manufactured according to the order they get. Still, they produce more by forecasting the future.

With a worldwide effect, the demand increased 1000 times and where we have only 100 units to supply(example).