Finance:Forrester effect mapping
The Forrester effect map is a business technique used to analyse the disturbance on the supply chain of reorder activity.[1]
The tool is one of the seven value stream mapping tools as defined by Hines and Rich.[2]
Forrester's research, (Industrial Dynamics, MIT Press 1961) showed that demand could be erratic with peaks and troughs commonplace within most organizations. These variations in requirements and supply are amplified within the supply chain when re-orders are made.[3]
Process
The map is portrayed as a graph with a line showing elements such as customer forecasts, shipments to customers, orders for raw materials on the y-axis, over a period of time shown on the x axis.
Results
Distortion between inventory levels is shown as a result of poor communication and an inability to schedule accurately. The flatter the lines displayed the leaner the system and more accurate the forecast.
See also
- Bullwhip effect
- Jay Forrester
References
- ↑ Best Practice Procurement: Public and Private Sector Perspectives By Andrew Erridge, Ruth Fee, John McIllroy
- ↑ Lean Evolution: Lessons from the Workplace By Nick Rich, Ann Esain, Nicola Bateman
- ↑ Demand Amplification within the supply chain
External links
- http://www.qdc.fi/article/PP_1999.pdf - "Demand Amplification in Supply Chain in Mills ...."
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