Further Motivation for Continuous Improvement in Just-In-Time Logistics

In the supply chain literature, little work has been done on modeling the propagation pattern of quality defects in supply chains. We quantitatively model a defect bullwhip effect in supply chains that can be addressed logistically by reducing time intervals between product deliveries. We explicitly consider the cause and effect of this defect bullwhip effect and demonstrate analytically that there is a strong incentive for practitioners to continuously reduce shipment size. We also consider production characteristics such as the frequency of supplier failure and stringency of the buyer´s inspection process. Implications for managers are suggested.