Bullwhip effect is a term that used in inventory. This term define how the fluctuation of demand in a supply chain. Supply chain is a network that used by organizations or business for procuring raw materials, transforming those materials into intermediate and the last into finished products and distributing the finished products to costumer. Back to bullwhip effect, concept of bullwhip effect is a situation that occurs in supply chain which the demands of costumer are change, either increase or decrease, this change causes distorted demand from each stage of supply chain. This distortion generates effects for all stage of supply chain that is the inaccuracy in demand.
The company effort to avoid bullwhip effect, as what done by PT PERTAMINA this company has good example in avoiding bullwhip effect, they effort to have a good connection from upstream to downstream, so that they can manage availability and fulfill the need of fuel at all district in Indonesia. If the company cannot manage good connection, this can make asymmetry information among company, upstream and downstream. Then the needs to fuel from all kinds of activities cannot be fulfilled and the scarcity of fuel will be occurred. The fuel is a crucial thing in economic activities, if PT PERTAMINA cannot manage well, the economic activities will be died.
This is an urgency to develop a good connection among upstream and downstream to avoid bullwhip effect.
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