Why is the beer game so popular? Since it’s conception at MIT in the 1960s, the classic supply chain simulation has been a staple in university classrooms around the globe. Now, with the digital, 100%-remote Beer game App, prestigious consulting firms and large corporations are leveraging its customizable features to accomplish much more than the game’s original objectives.
Here are five key lessons, both instructors and players can take away from a session using The Beergame App.
1. Understand the role and the challenges of a supply chain manager
For those newer to supply chain concepts, such as students or junior employees, or even employees from other company departments (Sales, Marketing, Finance, etc.), participating in a beer game session provides an excellent opportunity to view a supply chain through the eyes of one who plans it. In doing so, all players can begin to understand the obstacles and important KPIs for measuring performance at each stage of the chain.
More experienced and even veteran supply chain professionals can also greatly benefit from participating in the session. They can better understand certain behaviors and tendencies of employees at each stage in order to more effectively identify and address planning problems. Because The Beergame App creates a fun and safe environment in which to reflect on the overall organization’s strategy, all teams can stay focused on continuous improvement without the real-life stress.
Among those notions, of course, the bullwhip effect, is crucial to understand. This term refers to demand swings increasing when going upstream from the consumer to the manufacturers and suppliers.
The Bullwhip Effect, a crucial notion in supply chains
2. Collaboration, teamwork and trust make THE difference
One effective way to illustrate the importance of increased visibility throughout the supply chain is to play two different sessions — one with less transparent settings that reveal issues stemming from blind spots between stages and another game with information-sharing settings turned on — and then compare the end results of both.
In the latter game, players can more easily communicate and share their points of view, which allows teams to better collaborate and formulate a plan in advance or more effectively react to sudden changes or events affecting certain stages of the chain. This experience allows participants to improve their understanding of the S&OP (Sales and Operations Planning) process, facilitating periodic exchanges between all departments.
Exchanging information and constraints is critical
3. Why “bad systems beat good people” and making the case for a systematic approach to supply chain management
In nearly every Beer Game session, due to various settings (lead times, visibility, etc.), players are so focused on their individual performance that the overall chain suffers, most notably from the dreaded Bullwhip Effect.
These types of behavior have been historically examined in the field of System Dynamics, popularized by the beer distribution game inventor Jay Forrester, and organizations are constantly trying to figure out solutions. The Beer Game aims to help managers improve the way the system is set up in the first place through supply chain design and processes.
The supply chain system
4. Agile supply chains achieve better results
Playing the beer game is a great way to help all participants understand the importance of continuous improvement and how modern approaches leveraging “Lean” methodologies are creating more flexible and resilient supply chains.
The goal of which, of course, is to reduce lead times, number of stages, order batching and price fluctuations that might occur during promotional campaigns. Overall, a shorter production/distribution cycle helps to more easily absorb variations in demand.
In addition, the Beer Game can be integrated into Agile IT training courses due to how effective it is in demonstrating why it’s so important for various departments to have better access to information in order to work more closely together.
Supply chain project based on the Agile methodology
5. The importance of ERPs and stock-management software
Better understanding the supply chain, reducing errors caused by human behavior and instinct, such as the tendency to secure stock, and truly executing on a path of continuous improvement require using innovative technology fed by a lot of data.
Supply chain management and planning are increasingly reliant on ERP (Enterprise Resource Planning) and complex inventory management systems, such as demand-driven MRP (Material Requirements Planning) software. Programs that create “digital twins” are also used to help simulate various scenarios in order to build the capabilities required in the new and improved supply chain (production capacity, transportation time, etc.). Even AI is being integrated to allow more precise forecasting and quicker reaction through “demand sensing”.
These 5 lessons are just a quick snapshot into how beer game sessions can really give supply chain planners and participants a real boost in different ways. The app is highly customizable so instructors are free to use it to focus on the lessons they believe are most important to learn depending on their industry and organization.