build an analysis on the example below by offering another implication that they may have not thought of, or by discussing some of the complications that technology can cause throughout the supply chain.

Primary causes of the bullwhip effect are a lack of information, supply chain structure, and local optimization (Beergame.org, N.D.). Essentially, as demand is projected by each company within the supply chain, the supply is continuously expected to be much higher than needed, which ultimately produces much more product than needed. This product must then be either stored in a warehouse facility until demand catches up to it, or the product is sold at a discount to avoid obsolescence and eliminate waste along the supply chain, such as storage costs.

Other causes include demand forecast inaccuracies, free return policies, and shortage gaming, which occurs when customers order more than they need, knowing that they may only receive a fixed percentage of their order. The more they order, the higher the final count of their received goods, which they hope is enough to meet their customer demands (QuickMBA, 2010.)

The most important element within a supply chain is communication between all parties within it. Transparency of customer demand throughout the entire supply chain seems to be the best way to curb the bullwhip effect. As fluctuating pricing is another cause of the bullwhip effect, setting fixed prices can prevent misunderstandings stemming from seemingly erratic customer demand (QuickMBA, 2010).

Technology plays a large role in creating transparency throughout the supply chain. Many companies have now transitioned to using part numbers that originate early in the supply chain. This prevents a previously occurring practice of converting part numbers from one companys inventory management system to another companys management system. With the addition of transparency and consistent part numbers, companies throughout the supply chain can observe and anticipate the supplies as they travel through the supply chain. This allows companies farther up the supply chain to understand demand and can prevent them from creating their own (possibly inaccurate) demand forecasts and instead participate in channel alignment, which is the coordination of pricing, transportation, inventory planning, and ownership between upstream and downstream sites in a supply chain (Lee, 1997).