Uploaded byGuennoun Wajih
Supply chain simulation for Managers
The document discusses a supply chain simulation game, known as the Beer Game, which helps managers understand supply chain challenges and the importance of information sharing. It emphasizes the detrimental effects of the bullwhip effect caused by poor demand forecasting and highlights strategies to optimize supply chain performance. The document also notes Walmart's success in mitigating these issues through vendor-managed inventory practices.
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Supply chain simulation for Managers
- 1. Supply Chain Simulation A role-playsupply chain simulation making managers experience and understand typical supply chain problems and constraints Wajih Guennoun Casablanca 6th April 2016
- 2. “Win/Win is aframe of mind and heart that constantly seeks mutual benefit. With a Win/Win solution, all parties feel good about the decision and feel committed to the action plan. Win/Win sees life as a cooperative, not a competitive arena” - Stephen Covey
- 3. About the beerGame The origin of the supply chain game The supply chain simulation, known as the Beergame, was originally invented in the 1960s at MIT. While the original goal of the simulation game was to research the effect of systems structures on the behaviour of people, the game can be used to demonstrate the benefits of information sharing, supply chain management, and eCollaboration in the supply chain.
- 4. Congratulation You are thenew supply chain manager You have been chosen among hundreds to assure supply of goods and materials right he way to customers. And because you are the best, you have committed to the shareholders that the company financials will improve by meeting customer demand while reducing stocks
- 5. How it works Whatis the optimal strategy Each item in stock costs 0.5 $ per week and each item on backlog costs 1 $ per week. Thus the primary aim of each sub group is to keep their costs low. Hence the optimal strategy is to run their business with as little stock as possible without being forced to move into backorder. Players are not allowed to communicate. The only information allowed to communicate is the order amount.
- 6. Get ready forthe game Create your teams Create at least 2 supply chains . Each one will have to satisfy his custmer demand based on the below MOQ. Min order quantities are as below Factory : MOQ = 15 Wholesaler MOQ = 10 Distributor MOQ = 5 Retailer MOQ = 1
- 7. Let’s start thegame Get the teams ready 1- get the order from customer 2- Deliver and satisfy the demand 3-place an order to your supplier Track and fill on weekly basis your playsheet - inventory - backlog - order placed Delay Distributor Outgoing order Incoming order Incoming delivery Outgoing delivery Wholesaler Factory Delay
- 8.
- 9. 0 10 20 30 40 50 60 70 80 1 2 34 5 6 7 8 9 10111213141516171819202122232425262728293031323334353637383940 Qtyordered Orders Customer Retailer Wholesaler Distributor Factory
- 10. -200 -150 -100 -50 0 50 100 1 2 34 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Units Inventory Retailer Wholesaler Distributor Factory
- 11. 0 1000 2000 3000 4000 5000 6000 7000 8000 1 2 34 5 6 7 8 9 10111213141516171819202122232425262728293031323334353637383940 $ Cost Retailer Wholesaler Distributor Factory Supply Chain
- 12. A typical organizationresponse would be to find the guy in charge of the supply and blame him. But the game clearly demonstrates how inappropriate this response is. The result is the same for different supply chains. WE HAVE TO CHANGE THE STRUCTURAL SETUP
- 13. Demand forecasting Many companiesforecast demand by looking at the past demands from their own direct customers. Since each upstream chain member sees fluctuations in demand caused by the bullwhip effect from downstream, that member orders accordingly, creating further swings for the upstream suppliers. This can be addressed by providig access to point of sales, VMI, or single control replenishment
- 14. LeadTime The longer thelead time is, the more pronounced an order will be as an reaction to an increase in forecasted demand (especially in conjunction with updating the safety stock levels, see above), which again contributes to the bullwhip effect. 4 easy ways to reduce lead-time Consolidate supply chain sources Reduce complexity Late stage differentiation
- 15. Batch strategy Ordering fulltruck loads is cheaper then ordering smaller amounts. Furthermore, many suppliers offer volume discounts when ordering larger amounts. Hence, there is a certain incentive for individual players to hold back orders and only place aggregate orders. This behaviour however aggravates the problem of demand forecasting, because very little information about actual demand is transported in such batch orders .And batch ordering, of course, contributes directly to the bullwhip effect by unnecessarily inflating the orders.
- 16. Even if eachparty acts “optimally” individually the result is less than optimal for the whole supply chain” Competition is now supply chain against supply chain and Network against network
- 17. Wall mart!!! Walmart’s successis partly due to the effective implementation of the vendor-managed inventory model to stop the bullwhip effect trough the supply chain. In this model, suppliers access data from Walmart’s information system, such as data on current inventory levels, sales. Suppliers decide when to send additional goods to Walmart.
- 18. “It is literallytrue that you can succeed best by helping others to succeed” - Napoleon Hill
- 19.
Editor's Notes
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