In today’s operations class, we learnt about a phenomenon called the “Bullwhip effect”which is observed in forecast-driven distribution channels. It refers to a trend of larger and larger swings in inventory in response to changes in customer demand, as one looks at firms further back in the supply chain for a product. I couldn’t help but correlate this to the situation we MBA grads are in with respect to internship/ job hunt. Imagine this is the structure of the supply chain in the job hunt scenario – You’ve companies that are end customers, career services that acts as the whole sale distributor and MBA grads are like the suppliers (of their skills, etc.)
Before you start the MBA program, you are are convinced that you enter the business with a certain value proposition committing to supply to a certain customer. After months of contemplation, soul searching and what not, you decide to convince yourself that you will have a dream, a back-up dream and then a back up for the back up of the dream. When there is a demand from the end customer in the first season (usually investment banking or consulting), there is little variability in the individual career services personnel’s stock since the various recruiting seasons (different industries) are disjoint. Once one season is over, another season starts and the respective career services person convinces you that the demand for this second season skill is lucrative and you as an MBA grad now has to be flexible (not focussed, mind you). After a few seasons, you realise, you have accumulated a huge inventory of applications trying to keep up with the variability in demand (combined with your inability to perform/ impress/ stand below the mistletoe while George Clooney is around or whatever!)
If you can eliminate the middle men (career services and the employers), let’s call it forward integrate by becoming an entrepreneur (Yeah, yeah, this also needs an idea, ability, mistletoe, etc), then you can get around the bullwhip effect. You can control the effect of variability better since you are your own distributor and end customer. When do you decide if you should get around the bullwhip effect? Probably when you realise that the variability is biting into your margins i.e when you have no more incentive (read motivation) to sell anymore or when you’ve a brilliant idea, operations person and a trusted investor, which ever happens earlier!!