I’ve provided 3 discussion that need to be responded separately. This week’s discussion is about Supply Chain Management.
1-)Supply Chain Management
In this video the presenter Professor Navarre presents topics on supply chain with the help of a role-model stimulation game. During the presentation he used different visuals in form of graphs and images to explain different themes. He explained many concepts such as supply chain and its purpose, the Beer Game and the developer of the game, Bullwhip and strategies to mitigate this effect and principles of system dynamics. The concepts learned are supply chain, the Beer Game, the bullwhip effect, and the solutions to reduce Bullwhip effect.
Supply Chain is management of activities involved to fulfill a customer’s request in a timely manner. The activities involved are product development, production, sourcing, logistics, and finance. The supply chain can be compared to a network where the entities involved in the supply chain are linked together through flow of goods and information. Therefore to enhance the process of supply chain it is important for back and forth interaction between the entities to avoid disruptions and ensure on-time delivery of products or goods (Navarre, 2012, June, 5).
The Beer Game
This game was developed by Professor Forrester at MIT (Navarre, 2012, June, 5). It is a role play that allows participants to experience a supply chain environment and the potential problems associated with supply chain management The game involves four groups the factory, the wholesaler, the distributor and the retailer. The game is to be played for 50 rounds, for each round the activity is to produce and deliver the ordered units of beer. The factory is the brewer that produces the beer and the other three groups are responsible for reaching the product to the customer at the end of the supply chain. The goal of the game is to fulfill every order in the same round or later rounds as well as minimize cost (Navarre, 2012, June, 5).
The Bullwhip effect occurs in the supply chain due to the variations of order from being high in some weeks and almost none in the following weeks. These fluctuations are then amplified along the supply chain to meet the increased forecasted demand. This effect is created due to lack of communication and coordination between groups. As a result of bullwhip effect there can be a rise in cost, wastage of inventory, loss of business or dissatisfied customers (Navarre, 2012, June, 5).
Solutions to Reduce Bullwhip Effect
Bull whip effect can be reduced by improving means of communication and collaboration which can be achieved by the use of supply chain software and other capabilities (Navarre, 2012, June, 5). Using forecasting and visibility tools allow having a visual view of forecasted activity trends and demand. Building a demand-driven approach enables visibility and transparency allowing every organization involved in the supply chain to have access to demand and inventory levels as well as see changes in real time (Rouse, 2018, April, 4).
This video was very helpful to understand the upstream and downstream process involved in the supply chain. The use of the role play stimulation game gave a better understanding of how insufficient information and lack of communication can make it difficult to minimize cost. Also when fluctuations and inefficiencies occur, it can present problems in the decision making process.
In the shared video of Supply Chain Management, Prof. Larry Navarre explained Supply chain management in simple words with the help of Beer Game of Supply Chain. According to the professor, supply chains are dynamic network system that require effective communications between up and down steams of supply chain operations. To understand the supply chains, professor shared example of ketchup company. There are three main characteristics of supply chains which drive the SCM completely. Performance excellence, collaboration with supply chain partners and information technology. (Navarre, 2012).
The Beer Game:
In the video, professor played one game, called The Beer Game which is created by MIT. It is played by forming four teams of factory, distributor, wholesaler and retailer. In this game, every team has to provide required beer numbers without coordinating with other teams. Based on that, demand and supply gap between all these supply chains calculated to understand the how demand from each team affects the whole supply chain. The process followed in this game is traditional SCM method, where there is a lack of communications among the supply chain groups. Due to lack of communications, each group often has incomplete understanding of real demand of an order. This game demonstrates how the less coordination can impact the products demand and supply balance. One group decision has major impact on the other group’s decisions. It is pass on from one to another with growing effects. (Navarre, 2012).
In the beer game, each group demands beer units without having any communications or coordination with any other group which in result creates small variation in that demand, which amplifies as it passes onto next supply chain level in the upstream. A small variation generated by customer produces successive large variation at the next level in upstream stages of SC. This increasing effect called as bullwhip effect, which gets created due to lack of coordination among the different level or group of supply chains. This effect can be minimized by increasing coordination amongst all the groups which are participants in the supply chain. (Navarre, 2012).
This term first used in year 1990 by Procter and Gamble company when they observed amplifying demand patterns in the baby diapers. The known consequences of bullwhip effect are additional stock level, underutilization of capacity, poor customer service, wrong predication of demand forecast, product high cost etc. (Navarre, 2012).
3-)This was an interesting video mostly comprised of a game called the “Beer Game” which simulated Supply Change Management (SCM). However, there were three key takeaways I did divulge from this video:
One was just the concept of SCM in general. Prof. Navarre described it as “all activities involved, directly or indirectly, in fulfilling a customer request.” This process includes all entities that are participating actors in this chain including, but not limited to: manufacturers, warehouses, customers, and suppliers. The goal of this process is to fulfill a request by a customer for a product or service. These processes require the coordination of all parties involved as well to ensure maximum efficacy. Concepts such as collaboration between chain partners and IT play a key role in ensuring such takes place from business to consumer.
The second take away from this video was the purposes of Supply Chains in general. Professor Navarre gave four different justifications for this claim and those being: time, distance, quantity, and assortment. Time is the buffer between the production process and consumption by the consumer consuming the product or service. As stated above, included in ensuring the utmost efficacy overall with help reduce buffer time significantly. An example of a corporation whom has this art mastered is Amazon. Distance is the length from production and consumption. Multiple factories and suppliers would help in shortening such to ensure buffer time is low or fast enough to be considered acceptable by consumers. Building off of the Amazon example, the company partners with many different suppliers, even average consumers or small businesses to ensure the shortest distance. Quantity and assortment are ying and yang per se in that quantity is the practice by which producers have a limited assortment of products/services but in large quantities while assortment is exactly as one would deduce it as; consumers seeking a wider assortment but in small quantities.
The third and final concept I took away from this video was the Bullwhip Effect. Professor Navarre included a statement regarding this concept which was “acting in isolation, with limited information, supply chain managers make decisions that are magnified upstream resulting in stockout and overstocking throughout the supply chain.” In short, changes by consumers (whether in interest or quantity due to any number of circumstances) result to changes in the supply chain. Supply chain managers respond to these changes in trend by altering their supply orders or cutting down on certain processes, which is where overstocking and stockouts stem from. A few different factors contribute to the bullwhip effect as well including the impact of batch ordering, decision and information isolation, and inaccurate demand forecasting by supply chain managers.