Information distortion in a supply chain: the bullwhip effect
Management Science - Special issue on frontier research in manufacturing and logistics
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To facilitate the parent company's push to gain market share, Heineken USA needed to be more responsive to market demand fluctuation. Because of the long lead-time between order and delivery, they found that responding to marketplace changes in a timely fashion was becoming increasingly difficult. In the meantime, major competitors such as Anheuser Busch were responding to consumer demands for fresher products by providing freshness label dating. Heineken USA launched its new Interact based system called Heineken Operational Planning System (HOPS) to allow the parent company to produce the beer closer to the time when they need to deliver it, so the customer receives a fresher product. The new system enables Heineken USA to achieve 50% reduction in the lead-time from order to delivery and 10% increase in sales.