3-6. The Necessity of SCM, Information Integration (Bullwhip Effect)
1. What is SCM (Supply Chain Management)?
It is a management method that centralizes and optimizes information across the integrated flow from production to sales—spanning raw material procurement, manufacturing (makers), distribution (wholesalers), and sales (retailers) down to the final consumer.
2. The Problem Shown in the Diagram: "Demand Amplification Phenomenon (Bullwhip Effect)"
This is a typical failure example that occurs when information is not shared at each stage of the supply chain.
| Stage | Situation / Forecast | Order / Production Quantity |
|---|---|---|
| Customer | Purchases 10 units (Actual demand: 12 units) | — |
| Retailer | Forecasts "15 units will sell" to prevent stockouts | Orders 15 units from the wholesaler |
| Wholesaler | Forecasts "18 units will sell" factoring in safety stock | Orders 18 units from the sales company |
| Sales Company | Creates a conservative "Sales plan of 20 units" | Orders 20 units from the manufacturer |
| Manufacturer | Creates a conservative "Production plan to produce 24 units" | Produces 24 units |
📌 Result (Bullwhip Effect)
In response to the consumer's actual demand (12 units), the manufacturer ultimately produces double the amount (24 units). The further upstream (manufacturing side) you go, the more the risk of excess inventory and waste swells. (The whip-cracking phenomenon)
3. The Role and Challenges of Wholesalers
This is an explanation of the changes in distribution structure due to the advancement of SCM.
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Traditional Structure
Previously, supply and demand balances were maintained by absorbing the fluctuations in demand and inventory risks at each stage through the "know-how and risk bearing of wholesalers."
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Impact of SCM Introduction and Logistics Rationalization
When sales data such as POS is directly shared with manufacturers, overproduction is curbed and logistics are optimized. On the other hand, the intermediate function (existential value) of wholesalers, who used to absorb risks, weakens, leading to the challenge of their role being eliminated (disintermediation).
4. The Role of Wholesaling and Survival Strategies in the SCM Era
These are 3 strategies for breaking away from the intermediary margin business of "simply procuring and distributing goods" and deciding which area to specialize in to create added value.
3 Survival Strategies
| Strategy Type | Content | Aim / Background |
|---|---|---|
| 1. Specializing in Small to Medium Retailers | Providing a full line of products for small to medium retailers | To lock in small and medium-sized retail stores (independent shops, regional supermarkets, etc.) that have difficulty with large-scale procurement on their own by providing the convenience of "getting all kinds of products by relying on this one company." |
| 2. Specializing in Logistics Agency | Acting as an agent for the logistics functions of major retailers | As a logistics professional (3PL), they take on the outsourcing of physical logistics infrastructure and operations such as storage, delivery, and distribution processing for major retailers. |
| 3. Specializing in Commercial Flow | Supporting retailers' product management, customer management, etc. | Beyond simply transporting goods, they provide consulting functions to increase retail store sales, such as sales data analysis, shelf allocation proposals, inventory management, and marketing support. |
💡 Conclusion / Message
"You cannot survive unless you possess at least 1 of the 3."
Wholesalers who merely sit in the middle will be weeded out. It is essential to establish one or more of "comprehensiveness in procurement (specializing in SMEs)," "logistics efficiency (logistics agency)," or "added value in information (specializing in commercial flow)" as a core strength.