The green bullwhip effect: Transferring environmental requirements along a supply chain

The bullwhip effect has long been recognized as a critical factor that amplifies demand variability as customer orders pass upstream through successive tiers of a supply chain. Like customer demand, environmental requirements also change significantly at times, and are passed along the supply chain to varying degrees, suggestive of what we term, the “green bullwhip effect”. Based on field cases exploring changes in three supply chains across three adjacent tiers, we find evidence that such a phenomenon exists. First, ratcheting demands for better environmental performance are passed upstream through successive tiers with significant variation. Second, a green bullwhip effect is created as time to comply with specifications is compressed. Four different managerial responses, namely replace, accommodate, negotiate and collaborate, were observed to amplify or attenuate a green bullwhip effect based on the nature of firm relationships and balance of environmental capabilities at each tier. Of particular interest, the green bullwhip effect can force positive change, triggering the development of new environmental capabilities at multiple tiers in a supply chain.