BEER GAME REPORT
Atoyebi Tolulope, Obiorah Azuatalam, Azhar Mahmood, Inder Raj Singh
16TH March, 2015
Were you surprised at the behavior of the supply chain?
Honestly, we were totally surprised with the behavior of supply chain especially with order irregularities. Firstly the orders factory was getting from her distributor was extremely low that it can be taken from the inventory without producing and after a while no orders for couple of weeks. Furthermore, all of a sudden the orders gotten from the distributor was getting high and high and after a while there was no order coming for weeks. Due to this sudden high order the factory has placed high order from her supplier which later lead to high backorder and this goes on for distributor to wholesaler as well as wholesaler to retailer. But it was observed that the orders placed by customers from the retailer gets to manufacturers at a later time due to the information and order delivering time from one stream or channel to the other. Also the order get increased from one channel to the other which later led to high back order at all the channels. Making decisions with partial information? Considering the Bullwhip article:
As a group, the feeling was not so good at the end of the game. Having to make decisions without adequate information provided brought about results that made us feel like bad supply chain managers. However it was educating. When the game started the orders that came to the retailer for the first 2-3 weeks were consistent and made the retailer not to order more from the wholesaler and this passed across upstream the supply chain. This changed suddenly and the orders started bombarding, causing tension on the retailer to order as much as possible from the wholesaler to supply demand to customers. This brought about a variability in demand across the supply chain because the wholesaler had to order same from the distributor and upstream to the Factory. The partial information provided in the game made it impossible to forecast and just rely upon intuition. This resulted in backorders at first, then because we needed to fulfill the backorders it resulted in excess inventory at the end of the game and the holding cost of inventory made us all incur more cost upon ourselves in the supply chain. The long lead time (2 weeks) and order processing time (2 weeks) also made it difficult to achieve a seamless supply chain operation because the orders were not predictable and we had to keep our inventory to the barest minimum to avoid high holding costs of inventory and also satisfy customer orders.
Four causes of the Bullwhip Effect are described in the article, solution to eliminate the problem.
Demand Forecasting: As all we have partial information and don’t know the exact demand placed from the consumers which show the variances at every node of supply chain from manufacturer to retailer. Moreover, because of long lead time of 2 weeks of in transit and information delay also causes the problem.
Solution: This problem can be eliminating with the help of using appropriate techniques of forecasting. Moreover, if electronic data interchange is used to share data with each other and reduce the chance of errors too.
Order Batching: each organization and stream like distributor, wholesaler down to retailers has the different techniques method they use to make orders whether in batches, pallets, or full truck load. However the order is not the true reflection of the actual demand. For example in our beer simulation game, factory always add to order gotten from her distributor and the goes to the orders distributors got from wholesalers and this lead to irregular ordering. First solution is there should be a mandate standard date for submitting orders, in doing this each stream or customers will have the chance to order weekly, biweekly or monthly with a set deadline dates. Secondly Orders can only be make based on what was sold