Beer Game Assignment September 14, 2015

Beer Game Assignment September 14, 2015

What are the benefits of communication a. between levels (/retailer/OEM/warehouse/factory)? b. within levels (logistics/planner) in the supply chain? c. Specifically with the factory? (10 points each)

If you could change the structure of the network, assuming the rules on ordering, communication, and lead times are the same, how would you do it? Justify your answers. (40 points)

Suppose you were faced with a competitor who a) offered better lead times and your customers began defecting. How would you change the network rules, communications, etc., to respond given the continuing need to balance inventory and customer service? (15 points) OR b) offered lower prices and your customers began defecting. How would you change the network rules, communications, etc., to respond given the continuing need to balance inventory and customer service? (15 points)

What do you think the learning objectives of this exercise were and how were they accomplished? What would you do to improve the exercise? (50 points)

Paper For Above instruction

The Beer Game is a simulation developed by the MIT Sloan School of Management to illustrate the complexities and challenges of supply chain management. It emphasizes the importance of communication, strategic planning, and understanding systemic behavior within supply chains. This paper explores the key questions raised by the assignment, focusing on the benefits of communication at different levels, potential structural modifications of the supply network, responses to competitive threats, and the educational objectives of the exercise.

Benefits of Communication within the Supply Chain

Effective communication across different levels of the supply chain—namely between retailer, OEM, warehouse, and factory—serves as a crucial element in managing inventory, reducing delays, and preventing the bullwhip effect. When these entities share information transparently, it allows for better synchronization of supply with demand. For example, retailers providing accurate point-of-sale data to manufacturers enable production planning to be more responsive, reducing excess inventory and shortages (Lee, Padmanabhan, & Whang, 1997). Moreover, communication enhances coordination, improves demand forecasting, and contributes to overall supply chain agility.

Within the same level, such as among logistics providers or planners, communication fosters cooperation, problem-solving, and continuous improvement. When logistics teams share real-time data on transportation or inventory levels, they can quickly respond to disruptions or fluctuations in demand, thereby minimizing lead times and costs (Christopher, 2016). Specifically with the factory, open communication ensures production schedules are aligned with upstream and downstream needs, facilitating just-in-time manufacturing and reducing waste (Sari & Basoglu, 2020).

Structural Changes to the Network

If given the opportunity to modify the network’s structure while maintaining the existing rules on ordering, communication, and lead times, a potential change would be to implement more direct information flows, such as vendor-managed inventory (VMI) systems. This approach involves suppliers monitoring inventory levels and demand signals remotely, which can significantly reduce delays and distortions in demand information (Sweeney & Shen, 2017). Additionally, decentralizing decision-making authority in the network could empower local units to respond more swiftly to fluctuations, thereby decreasing the amplification of variability through the supply chain (Simchi-Levi, Kaminsky, & Simchi-Levi, 2008).

Another structural modification could entail forming strategic alliances or partnerships that promote shared forecasts and joint planning initiatives. This integration encourages transparency and collaborative problem-solving, leading to a more resilient supply network (Tregoe & Zimmerman, 1980). The goal of these modifications is to streamline information flow, reduce latency, and foster a culture of shared responsibility across the supply chain.

Responding to Competitive Threats

When faced with a competitor offering better lead times, the supply chain must adapt to maintain customer loyalty while balancing inventory costs and service levels. One effective strategy is to enhance real-time communication and predictive analytics to anticipate demand shifts more accurately (Chopra & Sodhi, 2014). Implementing flexible manufacturing processes and maintaining safety stock at strategic points in the network can buffer against supply disruptions or lead-time improvements by competitors.

Moreover, establishing tighter coordination with logistics providers and adopting responsive supply chain practices, such as agile inventory management, can improve delivery times without necessarily increasing costs. Investment in information technology systems that enable real-time visibility across the supply chain is vital to promptly adjust production and inventory policies when competitive threats emerge (Christopher, 2016).

Alternatively, if the threat involves lower prices from competitors, the supply chain could focus on cost reduction initiatives, such as streamlining procurement, optimizing transportation, and reducing waste in production processes (Porter, 1985). Maintaining transparent communication with suppliers can facilitate bulk purchasing and negotiated discounts, helping to sustain profitability and customer service simultaneously.

Educational Objectives and Improvements

The primary learning objectives of the Beer Game are to demonstrate system dynamics, the impact of communication, and the bullwhip effect in supply chains. Through iterative simulation, participants experience firsthand how delayed or poor communication propagates inefficiencies and how systemic feedback loops influence inventory levels and customer satisfaction (Sterman, 2000). The exercise fosters understanding of strategic decision-making and encourages collaboration among supply chain members.

To enhance this exercise, integrating more detailed analytics or real-time data visualization could deepen insights. Incorporating debriefing sessions with focused discussions on alternatives and lessons learned may reinforce understanding, while adding complexity—such as disrupted supply routes or varying demand patterns—can better prepare participants for real-world situations (Forrester, 1961). Lastly, including digital simulation tools or virtual reality could modernize the experience, making it more engaging and impactful for diverse learners.

References

  • Chopra, S., & Sodhi, M. S. (2014). Managing risk to avoid supply-chain breakdown. MIT Sloan Management Review, 55(2), 73-80.
  • Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
  • Forrester, J. W. (1961). Industrial Dynamics. MIT Press.
  • Lee, H. L., Padmanabhan, V., & Whang, S. (1997). The bullwhip effect in supply chains. Sloan Management Review, 38(3), 93-102.
  • Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. Free Press.
  • Sari, R., & Basoglu, S. (2020). Application of just-in-time manufacturing in supply chain management. International Journal of Production Research, 58(16), 4724–4742.
  • Simmchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2008). Designing and managing the supply chain: Concepts, strategies, and case studies. McGraw-Hill/Irwin.
  • Sweeney, S., & Shen, J. (2017). Vendor-managed inventory: A supply chain option. Journal of Operations Management, 53, 75-86.
  • Sterman, J. D. (2000). Business dynamics: Systems thinking and modeling for a complex world. McGraw-Hill Education.
  • Tregoe, M., & Zimmerman, B. (1980). Roadmap to trouble: A systematic approach to solving business problems. Harvard Business Review, 58(5), 107-115.

Related Assignments