Last Friday, Dr. Drake and Dr. Naga hosted “The Beer Game” simulation. Dr. Drake teaches our Value Chain and Operations class, while Dr. Naga teaches Systems Thinking for Sustainability class. Now, I’m sure you are wondering: Why are MBA students playing a beer game in class?
The simulation assigns a role along the supply chain of beer to each student. Roles include factory, wholesaler, distributor, and retailer. The major constraint of the game is that teammates are not allowed to communicate with those assigned to different parts of the supply chain.
What was the outcome? Since communication and collaboration are not allowed among the four supply stages, the simulation illustrates the “bull-whip effect”. Now the concept of the “bull-whip” effect was new to our cohort; however, but it is rather easy to understand. Basically the variation in demand at the customer end of the process causes larger and larger swings to respond to the product demand. Kind of looks like a whip doesn’t it?
So what’s the take-a-way? Communication and collaboration are vital to successful supply chain management. Also, I personally found it encouraging as a MBA student that supply chain managers will also run into the “bull-whip effect” when you take out the communication and collaboration of the various roles!