Welcome to the Financial Times Lexicon

Browse thousands of words and phrases selected by Financial Times editors and suggest new terms for the glossary.

 

Term of the day

the bullwhip effect

The bullwhip effect refers to a frustrating phenomenon that frequently starts with falling customer demand (lthough it could start with the reverse...a previously unanticipated rapid rise in customer demand). This fall in customer demand prompts retailers to under-order so as to reduce their inventories. In turn, wholeasers under-order even further to reduce theirs and the effect amplifies up the supply chain until suppliers experience stock-outs and then over-order in response. The effect can...