Taking part in the beer game, participants were asked to complete 30 week-cycle in ordering and giving orders to our customers. I played the role of a wholesaler, the link between distributor and retailer. The wholesaler’s primary job is to know and deliver on the real order of the retailers. Therefore, it solely depended on me if I would order the same quantity of goods, if not in excess, from my supplier which, in the simulation, is the distributor. Since I know my customers’ order, i planned to order exactly what my customers’ ordered from me. This process was done in the initial stages of the game despite the fact that I already lacked supplies. The main reason behind this was to stabilize the incoming orders.
When my backlog costs started escalating, I realized that though my supplier could provide me with the goods I ordered, I was limiting my orders same as my customers’ (retailers) orders. My next step was to wait until the retailers that I was taking orders from could give me their correct amount of orders and subsequently minimize my backlog costs. Despite my efforts, I came to realize that the competition is not in my supply chain, but between our supply chain and the other groups’ supply chain.
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Given another chance to play the game, I would consider the game as a competitive battle between supply chains from different teams and not among my team-mates. I was trying to avoid too much inventory and simultaneously the overload of supplies. Being aware of my customers’ orders means that our orders will be similar to avoid an overload of goods on my part. The step I’ll take is to add few more orders since I found out that most of the retailers that depended on my supplies were following my lead. Because I chose to order the same amount of supplies as my customers, the wholesalers next to me also ordered the same or even less than my order. Some decided to order zero quantity so as not to hold too much inventory. The result was that there were at least ten weeks of backlogs on my part and to other teams as well. Though we are well aware that having backlog costs is two times the cost per unit of inventory costs, we still decided to choose not to be overzealous in ordering.
The beer game proved to be a pretty exciting experience for me. I’ve always had the desire to have my own business as a wholesaler and to have the opportunity to deal with orders and supplies. However, my selfish and conservative decisions and actions led to me incurring a lot of costs. If this happens in real life, my business could probably face a shutdown. I failed to satisfy the business needs of some of my customers and at the same time lost the trust of the distributor and manufacturer. The beer game challenged me to think of ways and means the supply chain could be improved. For instance by redesigning the system, including making improvements in the ordering process and communication or information flow (Lee, Padmanabhan, & Wang, 1997). Incorporating implementation of various policies and guidelines would also prove useful for the operation since forecasting is not applicable in this situation. Decisions about the supply chain must be discussed as a group to reduce the variance significantly among different units to minimize costs like inventory and backlog.
The beer game is a management game that produces similar results and the same learning experience every time it is played (Shmulla LLC, 2007). The beer game stimulated me into thinking how difficult it would be to run a business. But by applying systems thinking, positive outcomes usually ensue. The main issue of concern should not be the competition among retailers, wholesalers, distributors, and factories; but instead, it should be among other supply chains. I had the experience of losing the game but learned the valuable lesson that behavior can subsequently affect a chain supply system and that it can be improved by the system’s way of thinking and eventually coming up with solutions.
References
Lee, H. L., Padmanabhan, V., & Wang, S. (1997). The Bullwhip Effect in Supply Chain. Sloan Management Review, 38 (3), 93.
Shmulla LLC. (2007, January 24). The Bullwhip Effect and the Beer Distribution Game . Retrieved November 24, 2017, from Shmula.com: http://www.shmula.com/the-bullwhip-effect/310/
