Contractual control of bullwhip effect in the luxury industry

Nowadays, the competition between brands is becoming increasingly more difficult. Therefore, brands always search new ways to reduce costs and gain competitive advantage over their competitors. One way to reduce costs is by reducing the bullwhip effect, which is the focal point of this Master Thesis. Moreover, the scope of this thesis is to investigate how this phenomenon affects the supply chain of various companies of the luxury industry and to propose solutions, in order to reduce bullwhip effect. The starting point of the research is the analysis of the literature and the deep understanding of the bullwhip effect. Since the purpose of the thesis is to investigate the practical perspectives of this phenomenon and then propose solutions, it is essential to comprehend the theoretical perspective as well. Furthermore, in order to connect bullwhip effect to a luxury supply chain, literature review expands to supply chain theory and then moves to theory for luxury supply chain, in order to give a more clear perspective. Moreover, in order to investigate the practical version of the bullwhip effect, two main simulations were conducted. One simulation of the theory in order to illustrate the bullwhip effect in a supply chain and a simulation of three large companies of the luxury industry, which have been chosen as case studies, in order to illustrate the results of the bullwhip effect in luxury industry. Finally, based on the data and literature, this thesis proposes three main solutions, in order to reduce the phenomenon of bullwhip. These solutions are based on contractual control and illustrate how a coordination contract can solve this problem.