Tuesday, March 04, 2008

Beer distribution game - learnings .



Learnings from the Beer Distribution game (A MANAGEMENT SIMULATION GAME OF THE DISTRIBUTION SIDE OF A BEER DISTRIBUTION CHAIN) 
  1. The need to collaborate between the different players in the supply chain to reduce the total supply chain costs.
  2. The presence of leadtimes for supplies between entities adds to the complexity of the supply chain. Not to mention of longer leadtimes !!
  3. The backordering phenomenon, whereby unmet sales are not lost, but met in a subsequent period also adds to the complexity of the ordering and distribution in the distribution chain.
  4. The presence of many players adds to the confusion as they add their own leadtimes, shortages to the supply chain and make it unwieldy.
  5. Non-availability of customer demand at the retailer for the upstream entities of the distributor and manufacturere adds to the complexity of forecasting.
  6. The wholesaler having to meet the demands from the two retailers has to decide on his rationing process in events of stock shortage during distibution. Also he has to keep track of the downstream demand and supply processes, with the resultant shortages, adding to th complexity of th process.
  7. The wholesaler was observed to be playing the key role in the chain as they were shared the customer demand by the retailers and were in turn directing the distributors how much to procure and the manufacturers how much to manufacture, in order to keep the supply chain costs of holding and shortage low.
  8. Even though the teams were aware of the finite horizon of the game, they were unmindful of the fact that unsold stocks at end of horizon are a burden. These excess stocks incurred heavy obsolescence costs and caused the supply chain costs to shoot up.
  9. For very short changes in demand at the customer end, the manufacturer had to deal with vey high variability of production, incurring heavy costs of outsourced/borrowed machine time, revised raw material procurement plans, holding, transportation costs etc. This is also another contributor to the costs of the supply chain. This effect is popularly called the Bullwhip effect ( variance amplification in orders placed as one proceeds upstream in a supply chain).
(feel free to add anymore learning from the game on a new page)
Given these facts of the game and the learning gained, if the game is played yet again, how would you respond. The aim is to keep the total supply chain costs low.
Write your points seperately on a sheet of paper and submit when the game will be played yet again.

Instructor : George Easaw

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