Abstract

Drawing on results from supply chain modelling and dynamic simulation, presents four material flow principles which can be employed to reduce the bullwhip effect. A case study from the precision mechanical engineering sector is employed to illustrate the effect of rapid response manufacturing and supply chain integration. Analysis of six years of time‐series data indicates bullwhip reduction of up to 58 per cent. These results serve to validate the four material flow principles of selecting appropriate control systems, time‐compression, information transparency, and echelon elimination. They also raise interesting questions concerning the relationship between manufacturing agility and lean supply. For, by attenuating bullwhip the studied company was able to reduce their global inventory by 45 per cent. Thus, by viewing manufacturing in the context of the supply chain as a whole, it is possible to see how agile manufacturing can eliminate sources of variability induced waste; particularly inventory. In this way it is argued that agile manufacturing can subsume the paradigm of lean production.