Beer Distribution SC game at Alliance School of Business, Bangalore

Late Prof. J. Forrester, of Massachusetts Institute of Technology, US, first described the order variance amplification phenomenon (later coined as bullwhip effect) in 1961 where he identified increasingly large demand distortions along the supply chain resulting in swings in inventory levels.

It was during the nineties at P&G that the impact became popularly known as Bullwhip effect. At MIT Boston the improved versions of the game is played for 24 time periods to get the students to experience the real feel of supply chain dynamics. 

 

Simulation of supply chains in the classroom can be used to: 

• Determine safety stock values in multi-echelon supply chains. 
• Evaluate inventory policies. and 
• Identify bottlenecks.

On the afternoon of 19 August 2022 at Alliance School of business Bangalore we played the Beer distribution supply chain game for MBA sem 1 sec C students. Totally there were 3 supply chains. The game was a great learning experience for the students as some of them were experiencing real life commercial situations for the first time in their lives. There was information sharing possible vertically between the stakeholders of a supply chain and laterally between the members at the same level during the game.

Supply chain A was the winner as their initial supply chain costs were the least.

The real benefit from the game happens after the playing during the analysis phase while discussing the dynamics in the post-game classroom sessions. Click here to go thru earlier versions of the game played by the author across educational institutions. 

Discussions will be centred in the introductory classes at the basic level around how the profitability of the supply chain gets eroded when supply chain costs escalate. This is at best the simplest level of understanding.

 

In higher classes we also bring in the concept of order variance amplification (aka Bullwhip effect) leading to profitability erosion due to escalation of hidden inventory holding and shortage costs. The amplification of the variance of orders placed on upstream entities leads to the high costs which adds to the erosion of profitability.

Even sixty years after introducing this concept at Massachusetts Institute of Technology classrooms in Boston by Prof. J. Forrester, the game when played at other top business schools of the world, has not lost its novelty and usefulness in giving the participants real life feel of understanding the impact of supply chain dynamics on supply chain profitability. 

 

The author's beer distribution game sessions with classmates under guidance of Prof. Narayan Rangaraj at Indian Institute of Technology,  Mumbai was a great eye opener. We wish to thank late Prof Jay Forrester and other faculty members at MIT Boston and Prof. Narayan Rangaraj at IIT Bombay India for making possible playing this game that has great intrinsic learning for the student community of the world.

In the Alliance School of Business Bangalore classroom, supply chain A played a very sensible game allowing coordination and communication among themselves (not across echelons) which helped them keep their unit sc costs low and emerge the winner. It offered good learning for everyone. 

 

These days supply chains are a vital aspect of any activity, be it manufacturing or service, even not-for-profit organisatons have vast supply chains. Understanding the impact of holding inventory (and also not having enough of it) across the supply chain is a great lever in hte hands of the CEO in controlling costs. 

 

We shall be playing this ROLE PLAY GAME with all first MBA sections to help them improve the understanding of how supply chain inventory management plays an important role in making or breaking companies.

Click here for a ppt on the game details

George