The objective beer game was minimizing cost of all the stakeholders in the
supply chain by keeping low inventory as well as managing to fulfill all orders.
The beer game gives a complete view of the supply chain by making us one of the
people who plans the supply chain. All the different kind of hurdles and KPIs were
understood. The actions of bullwhip effect were understood in the swings in order
demand. Other skills like communication also helps in designing and improving
the entire supply chain. Additionally, concepts like lean principles and continuous
improvement, software like ERP, inventory control techniques with better
forecasting are understood.
The difference in the two games was lack of communication in the first one which
proves to be an extremely important factor in the supply chain. With the lack of
communication every person in the supply chain would naturally think of
completing his goals without thinking of the consequence on the others. Thus, the
communication proves effective while planning a supply chain because one good
action for a person can be bad for several others.
When communication was done in the game 2 unlike game 1 between all the stake
holders , all the orders where carefully discussed and placed which in turn helped
individual and overall costs for the supply chain . Thus, the communication proved
effective and also helped to maintain the order costs.
The bullwhip effect is defined as the demand distortion that travels upstream in the
supply chain from the retailer through to the wholesaler and manufacturer due to
the variance of orders which may be larger than that of sales .It refers to the
increasing swings in inventory as a result of shifts in consumer demand. The beer
game lists out two important factors which could be responsible for these swings
and ultimately order costs, which are limited information travel and lack of
effective communication. Also factors affecting the demand are steps in supply
chain, order fulfillment time, and panic ordering.