The Forrester effect map is a
business technique used to analyse the disturbance on the
supply chain
In commerce, a supply chain is a network of facilities that procure raw materials, transform them into intermediate goods and then final products to customers through a distribution system. It refers to the network of organizations, people, activ ...
of reorder activity.
The tool is one of the seven
Value Stream Mapping
Value-stream mapping, also known as "material- and information-flow mapping", is a lean-management method for analyzing the current state and designing a future state for the series of events that take a product or service from the beginning of ...
tools as defined by Hines and Rich.
Forrester's research, (''Industrial Dynamics'', MIT Press 1961) showed that
demand
In economics, demand is the quantity of a good that consumers are willing and able to purchase at various prices during a given time. The relationship between price and quantity demand is also called the demand curve. Demand for a specific item ...
could be erratic with peaks and troughs commonplace within most organizations. These variations in requirements and
supply are amplified within the supply chain when re-orders are made.
Demand Amplification within the supply chain
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Process
The map is portrayed as a graph with a line showing elements such as customer forecasts, shipments to customers, orders for raw materials over a period of time shown on the x axis
A Cartesian coordinate system (, ) in a plane is a coordinate system that specifies each point uniquely by a pair of numerical coordinates, which are the signed distances to the point from two fixed perpendicular oriented lines, measured i ...
.
Results
Distortion between inventory
Inventory (American English) or stock (British English) refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilisation.
Inventory management is a discipline primarily about specifying the sh ...
levels is shown as a result of poor communication and an inability to schedule
A schedule or a timetable, as a basic time-management tool, consists of a list of times at which possible tasks, events, or actions are intended to take place, or of a sequence of events in the chronological order in which such things are ...
accurately. The flatter the lines displayed the leaner the system and more accurate the forecast.
See also
* Bullwhip effect
*Jay Forrester
Jay Wright Forrester (July 14, 1918 – November 16, 2016) was a pioneering American computer engineer and systems scientist. He is credited with being one of the inventors of magnetic core memory, the predominant form of random-access compu ...
References
External links
* http://www.qdc.fi/article/PP_1999.pdf - "Demand Amplification in Supply Chain in Mills ...."
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Business terms