November 9, 2023

Alleviating the Bullwhip Effect: The Promise of Autonomous Logistics

Tom Baroch

Senior Director of Global Partnerships

The year is 2020. The COVID pandemic is in full swing, and there is suddenly an increased global demand for cleaning products like disinfectant spray. Walmart stores across the country are deluged with hordes of masked customers, fighting to get their hands on a bottle of Lysol. 

Behind the scenes, supply chain leaders are frantically sending updated forecasts to their Lysol supplier to handle this sharp uptick in demand. Suddenly, everyone involved in the production of the disinfectant spray – suppliers of plastic bottles, labels, and cleaning chemicals to name a few – sees a domino effect of increasingly massive fluctuations in orders, inventory levels, production schedules, and shipping deadlines. 

COVID exposed us all to the “Bullwhip Effect,” a supply chain phenomenon that occurs at various degrees of severity. In essence, the Bullwhip Effect happens when the end customer demand suddenly fluctuates and it causes progressively larger fluctuations up the supply chain, leading to a combination of shortages, stockouts, inefficiencies, or excess inventory. The Bullwhip Effect can take weeks, months, and even years to stabilize and ultimately increases costs for suppliers and customers. 

Combating the Bullwhip Effect

Years later, we’re still seeing the Bullwhip Effect play out across a variety of industries. Post-COVID, amid current high inflation, climate disruptions, geopolitical situations, and uncertain and finicky customer demand, supply chain leaders are looking to identify ways to address this age-old problem.

Supply chain managers have three ways to optimize their supply chain’s responsiveness and prevent the Bullwhip Effect: 1) reduce variation in demand, 2) reduce lead times, and/or 3) hold more inventory. Since reducing demand variation is often difficult to impossible and holding more inventory can incur untenable costs, reducing lead times is often the best place to start. 

To reduce lead times, many companies are turning to re-shoring their operations to reduce shipping times and avoid disruptions in international trade. Others are expanding their distribution network with additional smaller warehouses to speed up store replenishment or using physical stores for fulfillment. And, underpinning all these strategies is an increasingly automated logistics network that keeps inventory moving efficiently at the optimal volume and throughput. To accomplish this, supply chain leaders are investing in automation across the supply chain. 

Automating the distribution yard 

Distribution yards are the critical link for over 10 billion tons of freight per year moving between US warehouses and over-the-road trucking. Today, these yards are filled with manual, repetitive tasks that create bottlenecks up and down the supply chain. Outrider is automating these yards to help minimize the Bullwhip Effect.

The Outrider System autonomously moves trailers to and from docks and parking spots for loading, unloading, cleaning, parking, and storage. With the ability to operate around the clock, the solution can reduce lead time and over-the-road truck wait times. In fact, yard automation can keep inventory moving down the highway one million more days per year in the US than manual operations alone. 

While trailers autonomously move around the yard, the system collects and shares data that are integral to minimizing the Bullwhip Effect. Real-time continuous trailer inventory collection includes the trailer ID number, spot number, type of trailer, and more. With enhanced visibility into the trailers that are sitting and moving through the yard, logistics managers can more accurately predict supply and demand, therefore increasing the yard’s efficiency and ultimately decreasing safety stock levels and inventory carrying costs. 

What’s more, when this data is shared via APIs with yard or warehouse management systems, logistics managers can schedule all trailers for loading and unloading at the correct time and place to provide a real boost to operational efficiency.

When logistics managers can schedule all trailers for loading and unloading at the correct time and place, this provides a real boost to operational efficiency – both inside and outside the warehouse.

Robots Love Talking to Robots 

Automated solutions are cropping up in nearly every corner of supply chain logistics – from robots inside the warehouse to autonomous yard operations to over-the-road autonomous trucking. These systems can operate for longer hours, reduce errors, speed up processes, and provide real-time data for better decision-making.

Today, these systems operate in isolation. In the future, they’ll become interconnected and will be able to share data and coordinate operations in real-time, leading to even greater efficiency and accuracy. Inter-robot communication can lead to a more responsive, resilient, and flexible supply chain.

Tom Baroch, Senior Director of Global Partnerships

Tom is responsible for designing, building, and leading Outrider's supply chain and partnership ecosystem. Prior to Outrider, Tom spent over a decade developing and scaling supply chains that make mobility safer and cleaner at Bosch, Tesla and Waymo.

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