Project #154673 - Strategic Information Technology Systems

Computer Tutors

Subject Computer
Due By (Pacific Time) 11/20/2016 12:00 am

Why Supply Chain Management Is So Difficult…Reducing the Bullwhip Effect

Write a 2 page, double-spaced paper.

In this module, you will be personally experiencing the importance of supply chain management (SCM) through a simulation exercise. Your job is to fully understand the components of SCM and how they are broken down into parts. SCM includes the customer as the input and output in the chain through planning, purchasing, inventory, production, and transportation. SCM ensures that products and services are delivered efficiently using IT and related applications such as enterprise resource planning (ERP), Oracle, and SAP. More specific applications include customer relation analysis (CRA), material resource planning (MRP), and inbound and outbound logistic tracking systems, among others. These applications integrate to the full value chain and interface with customers and suppliers via the Internet and mobile technology.

The challenge of SCM is coordination. Suppliers, manufacturers, sales people, and customers have their own, often incomplete, understanding of what real demand is. Each group has control over only a part of the supply chain, but each group can influence the entire chain by ordering too much or too little. Furthermore, each group is influenced by decisions that others are making. This lack of coordination coupled with the ability to influence while being influenced by others leads to what Stanford's Hau Lee refers to as the Bullwhip Effect. Decisions made by groups along the supply chain may actually worsen shortages or overstocks. The bullwhip effect is illustrated by a story Lee tells about how Volvo found itself with extra inventories of green cars. To get them off the dealers' lots, Volvo's sales department offered special deals, so demand for green cars increased. Production, unaware of the promotion, saw the increase in sales and ramped up production of green cars.

Coordination is not just about communication. Even in supply chains where communication is perfect, manufacturing and procurement delays can wreak havoc. While customers are ordering, backlogs can build, and it is easy to confuse backlogged orders with increases in demand.

Session Long Project

To begin to get a personal feel for how these processes work, there's nothing like a good simulation exercise. Thousands have felt the frustration of supply chain management in MIT's Sloan School of Management's "beer game." The simulation involves retailers, wholesalers, distributors, and brewers of beer. As the backlog of orders increases, players tend to order too much inventory, forcing their teammates into severe backlogs further down the supply chain. The game can be emotionally intense. John Sterman, Director of MIT's System Dynamics Group writes, "During the game emotions run high. Many players report feelings of frustration and helplessness. Many blame their teammates for their problems; occasionally heated arguments break out." We hope that your work with this similar simulation will involve less drama.

The Root Beer Game Simulation

Instructions for running The Root Beer Game simulation:

Forio Group. (2011). Root beer game demo. HBR. Retrieved from http://forio.com/simulation/harvard-root-beer-game-demo/login.htm

Running the simulation involves the following steps:

  • Review the Simulation Summary, Your Role, and How to Play sections under the Prepare tab.
  • Go to the Analyze tab to run the simulation.
  • Submit your weekly order in the Enter Order field; at least 20 rounds are necessary to get a good feel for the problems involved.
  • When finished, review your performance under the Dashboard Overview, Inventory and Shipments, Orders and Backlog, and Cost Detail tabs.

It sounds easy, right? Try it and see how good you are at getting root beer to your customers while keeping your inventory and costs low. See if you can control the bullwhip oscillations of stock-outs followed by over-supply.

To run the simulation several times, you will need log out and start again. The log out command is on the bottom left side of the page.

Spend a maximum of 30 minutes working with the game. Then think about it in conjunction with this module's readings for perhaps another 15-20 minutes.

Then, in 2-3 pages, address the following questions:

  1. What did you do in the simulation? What activities did you engage in? What did you learn about what's going on?
  2. What have you learned about supply chain management from your participation in this simulation?

If you cannot access the Root Beer Game link, use the alternate “Near Beer” link below and play the game, or just explain as much as you can. Obviously, the more you accomplish, the more you will learn; but the major factor in grading the SLP will be the work that you invest and the energy that you apply to learning from the experience. Your grade is not dependent on your "winning" the simulation, or even doing particularly well.

Forio Group. (2011). Near beer game demo. Forio. Retrieved from http://forio.com/resources/article/bullwhips-and-beer/

SLP papers require that you integrate, discuss, use in-text citations and fully reference at least three academically relevant sources. Use enough concurrent discussion so that the purpose of each citation is apparent. (Note that the paper is incomplete without at least three academically relevant references. Articles from sources such as CIO and HBR are acceptable. You may also use corporate/military references, but they do not count as part of the three required references.)

Use information from the modular background readings as well as any quality resource you can find. Cite all sources and provide a reference list at the end of your paper.

The following items will be assessed in particular:

  1. Demonstrate your understanding of the coordination needed in supply chain management.
  2. Provide some in-text references to modular background readings.

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