The potential impact of RFID technology on the Bullwhip Effect within the automotive industry

The automotive industry is very complex in nature and supply chains are getting more complex due to increasing globalisation, growing market and the fact that customer preferences are constantly changing. This increasing complexity can result in a lack of visibility of assets, inefficient handling of stock or logistic mismanagement. In the end, these complexities contribute to the existense of the well known phenomenon ‘The Bullwhip Effect’ in the automotive industry. Many researchers claim that RFID technolgy is able to mitigate this effect, for it is expected to increase the supply chain visibility and information sharing. This paper tries to investigate to which extent RFID technology has a potential impact on the Bullwhip Effect within the automotive industry. In order to research this, the hypothesis that RFID technology increases information sharing and chain visibility and thus mitigates the Bullwhip Effect, is tested. This is done with the aid of secondary data and semi-structured interviews with several parties active within the automotive supply chain. The paper starts by first explaining what the Bullwhip Effect and RFID technology exactly are. After data was gathered, an analysis on the automotive industry and its supply chains is made in order to give an overview on how such a complex industry looks like. After that it explaines what exactly causes the Bullwhip Effect and how RFID technology is currently applied within the automotive industry. Finally, the paper analyses and discusses these findings. From the discussion it can be concluded that the hypotheses has to be revised and that RFID technology is co-dependent on information sharing and when used together it can enhance the chain visibility and transparency. This in turn leads to a decrease of the Bullwhip Effect. Also, the outcome of the research therefore is that RFID technology has high potential to mitigate the Bullwhip Effect within the automotive industry because it enhances the chain visibility and transparency.