Supply Chain
Management
Beer Game
Design : Anne-Sylvie Borter
Origins of simulation
BeerGame classique XBeerGame
• Table game developed during the 60's • Different online solutions
at MIT (Massachusetts Institute of • Goal: to understand and master the
Technology) dynamics of business networks
• Improved version of the classic table
game
• Goal: familiarize players • Synchronized interface
with the dynamics of flow (Web)
control in a simple supply • Accelerated continuous time
chain • More complex demand
• • More than one product
• Collaboration and visibility
(advanced levels)
•
4
•
The Beer Game
• Understanding of concepts (alone)
• [Link]
431b-b48d-1b875b2720e7?mode=SETTINGS
• Game (class)
• [Link]
• [Link]
The supply chain
Information Flow (Orders)
Demand
Retailer Wholesaler Distributor Manufacturer
Raw
Material
Product flow (Beer cases)
Source : Adapted from Angel DIAZ et System Dynamics Society – MIT
Ronde 1
To the game!
Design : Anne-Sylvie Borter
3 notions of the course
MOSI
to save the day
• Safety stock
– Stock de sécurité
• The command point
– Point de commande
• The target level
– Niveau cible
Manufacturer The Bullwhip effect
Distributor
Wholesaler
Retailer
Demands are Consumers
magnified
throughout the
supply chain
9
Stylized facts
1. Oscillation: Orders and inventories are dominated
by large fluctuations
1.
• Amplification: The amplitude and variance of orders
increase steadily from the customer to the retailer
and the factory. The peak order at the factory is on
average more than double the peak of retail orders
• Phase shift: The order rate tends to peak later, as
one moves from the retailer to the factory
Bullwhip (Forrester) effect
• Difficulties in estimating demand by each actor in the supply chain
– The further away the perception of demand is from the final consumer,
the less accurate it is
– Each actor in the supply chain increases the gap between actual
demand and presumed demand
• Decision on the demand indicator submitted by the predecessor
and not on the request of the end customer
• =>Additional supplies and imbalances in inventories
• Consequences:
Lessons
• It is not the external forces, but the internal forces that
cause the system to collapse.
• Questions:
– Who is to blame?
– How to avoid the problem?
• Your orders represent signals for the upstream
actors
Causes of the Bullwhip effect
• Lack of strategic vision when planning the supply
chain
• Lack of tools and processes to strengthen
collaboration between actors
• Communication difficulties inside and outside the
company
The consequences of the Bullwhip effect
• Over-storage
• Out of stock
• Delays
• General disorganization and inefficient allocation of
resources
• Creating bottlenecks
• Storage costs, transport costs, rising shortage costs
•
Solutions to the Bullwhip effect
• Better sales forecasts
– Do not compartmentalize and protect your data
• Coordination between supply chain actors
– Information sharing
– Legal agreements
• Logistics planning (IS, enterprise resource planning)
• Awareness of the internal team:
Anti Bullwhip effect strategies
• Have stable prices
•
– A common strategy and we stick to it
• Make good forecasts
• Have a real collaboration strategy:
– Aim for a CPFR-type integration
– Use management policies such as the VMI or DPR
– Establish an EDI data exchange system
– Share demand information and stock information throughout the
chain
– And above all...
–
•
– Reasonable and realistic lot sizes based on demand
– Regular orders
• Sound management of batch sizes:
Videos
• Manufacturing & Supply Chain Disaster: The Beer
Game 10:08
• [Link]
• The Bullwhip Effect 1:28
• [Link]
