Company X is implementing a new SCM system to improve visibility and real-time information sharing across its supply chain. What is one of the primary benefits they can expect from increased supply chain visibility?

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BlackTom AI · Accepted Answer

The question centers on the benefits of increased supply chain visibility from a new SCM system.
Option 1: Mitigation of the bullwhip effect. With greater visibility across the supply chain, partners can better align forecasts and demand signals, reducing order amplification and shortages or surpluses downstream. This is a core benefit of real-time information sharing and visibility. 
Option 2: Reduced inventory turnover. In reality, improved visibility often helps optimize inventory levels and turnover rates, but it is not typically described as a direct benefit; the statement suggests a negative or unintended effect rather than a primary gain from visibility. Moreover, visibility tends to balance inventory and avoid overstock or understock, which can improve turnover indirectly rather than guarantee a reduction in turnover rates. 
Option 3: Increased customer order cycle time. Enhanced visibility usually aims to shorten, not lengthen, the order cycle by providing faster, more accurate information to fulfill orders; thus this option describes the opposite of the expected effect. 
Option 4: Increased buyer power. While visibility can affect negotiation dynamics, the primary and most direct benefit of end-to-end visibility is improved coordination and reduced variability, not a direct increase in buyer power. This framing is more of a strategic consequence than a direct operational benefit of visibility. 
In summary, the option that aligns with the central advantage of enhanced visibility—reducing variability in orders and improving coordination across the supply chain—is the mitigation of bullwhip effects. The other options describe outcomes that are either less direct, unlikely, or contrary to the intended impact of greater visibility.

Company X is implementing a new SCM system to improve visibility and real-time information sharing across its supply chain. What is one of the primary benefits they can expect from increased supply chain visibility?

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Similar Questions

The bullwhip effect increases upstream order variability.

The bullwhip effect refers to:

A retailer notices a small increase in customer purchases and orders double the amount from the distributor. The distributor then orders triple from the manufacturer. This scenario is an example of:

A retailer notices a small increase in customer purchases and orders double the amount from the distributor. The distributor then orders triple from the manufacturer. This scenario is an example of:

The bullwhip effect occurs when order variance decreases upstream.

The Blank ______ effect occurs when distorted product-demand information ripples from one partner to the next throughout the supply chain.

What occurs when distorted product-demand information ripples from one partner to the next throughout the supply chain?

What is the Overall Bullwhip Effect?

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