THOMAS M. CORSI
SANDORBOYSON
ALEXANDER VERBRAECK
STIJN-PIETER VAN HOUTEN
CHAODONG HAN
JOHN R. MACDONALD
The Real-TimeGlobal Supply Chain
Game: New EducationalTool for
DevelopingSupply Chain
ManagementProfessionals
Abstract
Researchers at Delft Universiry and the Roben H. Smith School of Business at the University
of MaryIand have developed the "Global Supply Chain Game" (GSCG). A specific instance of
the game is called the "Distributor Game," centeredon globalization and the real-time supply
chain. The GSCG dffirs from many existing business learning games in that, as opposed to
being turn-based and locked in on demonstrating a single phenomenon (i.e., the bullwhip effect),
it simulates a real-world experience by operating on a continuous clock with ongoing events and
responsesto individual decisions. The decision-making processes of the distributors in the game
are controlled by human players. To confront the human players with a complex and dynamic
environment, suppliers, markets, and competing distribution centers are representedby computercontrolled actors. The Distributor Game has been testedat the Robert H. Smith School of Business
in seven courses since January 2005. The beta-tests include four MBA classes, two Executive
MBA classes,and a single undergraduate class. Each class has been consistent in its approval
of the game as a tool in simulating the complexities of a global supply chain and facilitating
learning about how to successfully manage this environment.
In today's global environment, cornpanies
recognize the strategic importance of wellmanaged supply chains. Clearly, companies
Mr. Corsi, EM-AST&I. is Mbhelle Smith professor of
Iogktics and co-director, Supply Chain Management
Center, Robert H. Smilh School of Business, Universily
of Maryland, College Parl6 Maryland. Mr. Boyson is
research professor of logistics and co-director, Supply
Chain Management Center, Robert H. Smith School of
Business, Univenily of Maryland, College Parlg
Mr. Verbraeck is associate professor of
Marlbnd
systems engineering, Faculty of Technology, Policy, and
Management, Delft Univercity of Technolagy, Deft, the
Netherlands. Mn van Houten h a doctoral student,
Faculty of Technologr, Policy, and Management, DeUt
IJniveniE of Technology, Mn Han is a docloral student
in logistits, business, and public policy, Robert H. Smith
School of Business, UniversiQl of Maryland" Collzge
Parlc, Maryland. Mr. Macdonald is a doctoral sdtdent in
logistics, business, and public policy, Robert H. Smith
School of Business, Univenity of Marylan4 Co&ege
Parl<, Maryland
suchas Dell, Wal-Mart,Zara,andLi & Fung
have built their overall corporate strategy
aroundachievingsupplychainsuperiorityover
their competitors(Copacinoand Anderson).
Thesefirms have gaineddistinct advantages
by efficiently managingthe complex web of
interactionsthat extendacrosscontinentsand
acrossenterprisesjnthe processof procuring,
assembling,and distributinggoodsin a global
context.
However,achievingsupply chain expertise
in today's global economy is a complex
challengefor corporations.Indeed,excellence
in supply chains requires executives who
possess
a wide rangeof skills in thefollowing
areas:information technology;advancedentelprise softwaresystems;f,rnancialplanning;
relationshipbuilding with supply chain partand customers;
ners. wholesalers/distributors
62
TRANSPORTATIONJOURNALTM
systemsdesign engineering;real-time event
monitoring;and businessintelligence.
This articleexaminestheuseof management
simulationgamesin higher educationto preparesupplychainleadersto meetthechallenge
of a global economy.The article introducesa
new tool, i.e., an Intemet-mediated,
real-time
GlobalSupplyChaingame,designedto bridge
thegapbetweenexistingtoolsfor trainingsupply chain leadersand those tools neededto
handlethewebof globalrelationships
intrinsic
to today'ssupplychains.
The next sectionof the articlepresentsmore
detail on the attributesthat supplychain managerswill need to achieveexcellencein performance.
Thisis followedby a generaldiscussionof somesimulationgamescurrentlyused
in businesseducationto developthe needed
supplychain skills and the limitationsof these
games.The real-timeGlobal Supply Chain
gameis presented
as an alternative
to existing
approaches
for the educationof supplychain
professionals.
The articleconcludeswith a discussionof how theGlobalSupplyChaingame
can be incorporatedinto a broadercurriculum
for the management
educationof supplychain
professionals.
Arrnnurrs
or Supply CH.clNLrnornsurp
As complexitieshaveincreasedin theglobal
economy,so too have the skills requiredto
managesupplychains.While a lesscomplex
world required supply chain/logisticsexecutives to focus on manufacturing,procurement,
anddistributionissues,theglobalsupplychain
requiresexecutivesto additionallyhavestrong
financial and accountingskills, highly developed informationtechnologyskills, excellent
customerrelationshipmanagement
skills, strategicplanningexpertise,and overallexecutive
skills. Specifically, the Harvard Business
School Executive program in Supply Chain
Management(HarvardBusinessSchool2006)
believesthat supply chain leadersshould be
able to do the following:
I Leverage supply chain innovations for
sustainablecompetitiveadvantage;
r Respond to competitive challenges
thoughout the value chain;
r Build supplychainpartnershipsthatmanageall theelementsfor thebenefitof every
partner;
Summer
r Motivate othersby addressingindividual
and organizationalbehavior issues that
posebarriersto supplychainperformance;
r Aftend to processdetailsand operational
execution,while creatingstrategicplans;
and
r Understandthe role of information technologyin the supplychain.
The challengeto the supplychainexecutive
is enormousand coversall the critical aspects
of overallcorporateperfornance.Whena company'ssupplychainis highly efficient,it can
give the company a sustainablecompetitive
Whenthesupplychainbreaks
advantage.
down
at a critical moment,the very essenceof corporatesurvivalcan be put at risk.
havestrategic,
tactiSupplychainexecutives
cal, and operationalperformanceresponsibility. The challengeis to manageand monitor
both the physicalflow of goodsand services
andto ensurecoordinationwith associated
information and financial flows. Furthermore,
mustprovidestrategic
supplychainexecutives
andtacticalplanningfor theoveralldesignand
structureof the supplychain.
All aspects of the supply chain are in
real time and require constant, 24/7 event
capabilityto
management
and quick response
identify problemsand relievebottlenecks.In
fact. there has been a growing movement
towardanticipatorysupplychain management
involving the collection of critical data in
real time and processingthosedata against
key performancemonitoringmeasuresto alert
managers about potential problems/bottlenecks,as opposedto waiting until they occur
before action is taken.
The supply chain executivecan best be
viewed as the "orchestra conductor" (Harvard BusinessSchool2006)who is responsible for bringing together everything at the
right place and the right time. The "conductor" must have a global perspectiveand the
abiliry to work acrossbusinessenvironments
and cultural differences.Indeed,the web of
interactionsinvolved in a global supply chain
is manifestlycomplex.The "conductor" must
have acuteanalyticalskills in order to judge
the "ripple" effects of each individual decision on the entire supply chain. Hence, a
simple decisionto sourcefrom an additional
2006
GLOBAL SUPPLYCHAIN GAME
supplier located on another continent will
impact distribution and manufacturingplanning as well as the financial flows that will
accompanythe transactions.Additionally, the
information technologychallengesof linking
transactionlevel systemswith the new supplier have to be addressed.Thus, each decision by the "conductor" requires sophisticated analyticsthat must be plannedfor and
addressed.Failure to accountfor theseintricate connectedactivities will result in additional costs,disruptedproduction schedules,
missedsales,and lost market share.Clearly,
the conductorsneed analytic tools to guide
their decisionprocessesand strategies.This
need comes at a time when the amount of
data being presentedto the supply chain
manageris increasingexponentially.Developments in radio frequency identification
(RFID) haveresultedin massiveincreases
in
real time data being incorporatedinto the
supply chain. Managers need sophisticated
tools, like businessintelligence,to manage
this influx of information.
for supply chain execuThe expectations
tives are enorrnous.Supply chain mangers
needa wide rangeof technicalskills covering
globalsupmultipledisciplines.Furthermore,
ply chain managersneed strong analytical
skills as well. Thereis a real challengeto the
educationcommunity to develop an overall
program/setof tools that will prepare"bestchain
in-class" orchestraconductors/supply
managers.
sruuurroN G,uuesANDTHEEOUClrron or
Suppr.vCnlrx LBonns
Thereis agreatchallengein designingeducationalcontentto build supply chain leadershipskills in executivesandmanagersof global
corporations.Traditional methodsof lectures
from textbookscoupledwith a pointed or directedset of casesnrdiesdo not replicatethe
dynamic 2417 envirormrentin which global
supplychain leadersmust function.
Digital Game-BasedLearning (DGBL) has
beenviewedasa potentialnew tool to develop
skills.For example,theMarch/April 2006issue
of EducauseReviewis devotedentirelvto "se-
63
rious gaming" in education.But the surveyof
the field concludes:"We are not likely to see
widespreaddevelopmentof thesegamesuntil
we canpoint to persuasiveexamplesthat show
gamesare being usedeffectivelyin education
(Van Eck)."
The samecan be said of the current crop
of supply chain gamesattemptingto expose
participantsto the cognitive challengesand
capabilitiesrequiredto leadsupplychains.Unto fill this training/educatil now, approaches
tion gaphavefocusedon a seriesof staticturngamesdesigned
to simulatethe
basedbusiness
environmentof a logisticsexecutiveand provide participantswith a better understanding
aswell as
theymightencounter
of thesituations
waysto dealwith thesesituationseffectively.
However,none of thesegamesreplicatethe
traits of the modern supply chain, which requires multi-taskingin a dynamic, real time
and event-drivenleadershipenvironment.The
next severalparagraphsdiscusssome of the
more popularof thesesimulationapproaches
with
and identify someof the gapsassociated
them (BillhardO.
The BeerGameis a role-playingsimulation
of anindustrialproductionanddistributionsysInstitute
tem developedat the Massachusetts
parof Technologyto introducemanagement
ticipantsto the conceptof economicdynamics
(Sterman).
In particular,thisconceptillustrates
the bullwhip effect that causeshigh variability
in ordersand inventorylevelsdueto non-linearitiesand time delaysbetweenthe actorsin
a supplychain.The gamecanbe playedusing
a board or as an Internet-mediatedversion
(Ravid and Rafaeli).
The main limitation with the Beer Gameis
its limited functionality.Its sole designis to
of the bullwhip efreinforcean understanding
fect and its central causalfactor, i.e., inadequate information sharing acrossthe supply
it is a turn-basedgamethat
chain.Furtherrnore,
involvesone set of decisionsbeingmadeand
a fixed responseto thosedecisions.It fails to
replicatethe continuoustime aspectof the real
world. Its message,while significantand important,doesnot changefrom one playing of
the gameto the next. The messageis singular
and constant.As such,it doesnot provide for
a rich continuousplay environmentin which
64
TRANSPORTATIONJOURNALTM
Summer
events are constantly changing and the remakenew decisions.Instead,the gamerunsat
sponsesfrom the managersmust filter the
a slow enoughpaceover the courseof a week
eventsand determinean optimal strategy/ap- or two that participantscan log in to a Web
proachbasedon an analysisof the impactsof
site,ascertainthe statusof theirteam,andmake
currentevents.
necessaryadjustments.
There is no need to
Morerecently,theHarvardBusiness
School view the game even hourly. The instructor
has developedan interactiveGlobal Supply
stopsthe game after the time period allowed
ChainManagementSimulationto provideparand ranks the teams.The types of decisions
ticipantswith a learningenvironmentthatreplithat participantscanmakearelimited to a few
catesthe complexitiesof the real world (Harpresetchoices,and the goal of the gameis to
vard Business School 2004). The game see which team can make the
best use of its
involvesparticipantsmakingdecisionsregard- resources.
There is competitionin the sense
ing therolloutof two modelsof mobilephones. that teamsare rankedin the
end, but thereis
The participantsmakedecisionsaboutproduct not competition
for resources
or demand.
featuresets,supplierselection,demandplanWhile there are other managementsimulaning, and management,
as well as pricing and
tion gamesdesignedto illustratesupplychain
marketing.Specifically,the gameis designed
managementprinciples (see Appendix A),
to illustratethe following key supply chain
there are a few important limitations. Most
concepts,accordingto the HarvardBusiness
gamesare furn-based,meaningthat particiSchool Web site (HarvardBusinessSchool
pantsmake a decision,submit that decision.
2004): "creating a balanced supply chain
and then, at a point later in time, they are
across supplierswith different lead times,
handed
a setof metricsdetailingtheirperformbuilding flexibility inro the supply chain to
ance
and
the consequences
of their decisions.
avoid stock-outsand excessinventory and
With
this
information
and
feedback,
theparticievaluatingand usingdemandforecasts."
pants
adjust
their
strategy/decisions
for a secParticipantsrun thesimulationfor four simuond
round
play.
of
The
second
important
limilatedyears.The simulationis turn-based,
with
tation is the competitionfor resources.All
eachturn representingan entirecalendaryear.
gameshavean "unlimited" pool of input reAfter eachtum, participantsarepresentedwith
sourcesavailable to the participant to draw
a seriesof reportsdocumentingtheirsales,their
from and most gamesallow all demandto be
supply chain performance,and their overall
fulfilled by all participants.Third and finally,
profitability results.Thesereportsprovide the
thereareno exogenous
eventsthatmay occur
participantswith information to adjust their
strategyanddecisionsfor thesecond(andsub- duringthegame.Forexample,halfwaythrough
doesnot ansequent)
turn.TheGlobalSupplyChainSimu- the BeerGame,the administrator
lationfrom theHarvardBusinessSchooldoes nouncethat there has been an improvement
not involve any continuousplay features. in the communicationorder relay technology,
Clearly, while it has very important learning therebyreducingthe delay from two periods
to oneperiod.Suchan eventwould requirethe
objectives,the gamedoesnot providea realworld, continuous
play environment.
As such, rethinkingof strategies,which is not rhe goal
of the games.The goal of suchgamesis either
theexperiencegivento thefutureglobalsupply
chainmanagersis limited andfails to replicate to demonstrate
a specificprinciple (i.e., the
thepressuresof operatingin a 24/7global sup- bullwhip effect) or to help players learn to
ply chain environment.
think aboutwhat they would do given certain
Therehasbeenan attemptto bridgethe gap
choices.
betweenturn-basedand real time games.ReThe fundamentalobservation,however, is
sponsiveTechnologies(www.responsive.net) that the real world is continuousand dynamic
hostsa gameon its Web-servercalledthe Sup(not turn-based),highly competitive,and exply Chain Game.It is completelyWeb-based tremelydisruptiveto eventhe best-laidplans.
andreal time in the sensethat thereis nevera
As a consequence,
the existingset of supply
point where the game completelystops and
chain management
simulationgamesdoesnot
participantsreceive a report from which to
replicatetherealworld of a globalsupplychain
2006
GLOBAL SUPPLYCHAIN GAME
OJ
manager.Clearly,this gaprepresentsa significant issue in the training and educationof
global supplychainmanagers,whoseenvironment is highly dynamic.
and services,andthe management
of f,rnancial
resources,all in real time.
ln order to createthis type of environment,
researchers
at Delft Universityandthe Robert
H. SmithSchoolof Businessat the University
of MarylandhavedevelopedtheGlobalSupply
rnn IxrpnNer-MrnHren Gr,onll, Supply
Cnln Gm,re Chain Game (GSCG).A specific instanceof
the gameis called the DistributorGame,centeredon globalizationandthe real-timesupply
Thereviewofcurrent approaches
in theeducationof supplychain managersdemonstrates chain.The GSCG differs from many existing
businesslearninggamesin that, asopposedto
that thereis a needto provide a learningenvibeing turned-basedand locked in on demonronment that closely approximatesthe chal(i.e.,thebullwhip
stratinga singlephenomenon
lengesof managinga real-timeglobal supply
effect),it simulatesa real-worldexperience
by
chain.Suchan environmentdemandsthat paroperatingon a continuousclock with ongoing
ticipants experiencebeing besiegedwith a
eventsand responses
to individualdecisions.
flood of information,needingto analyzethat
processes
Thedecision-making
informationor processit in a systematicway,
of thedistribuand being awareof the complex interdepen- tors in the game-thethird tier in Figure l-are
denciesof eachdecisionthat they make.The
controlledby humanplayers.To confrontthe
environmentmustprovideparticipantswith the
human playerswith a complex and dynamic
oppornrnityto makestrategicdecisionsinvolvenvironment,
suppliers,markets,andcompeting procurementof supplies,the matchingof
ing distributioncenterscan be represented
by
supply and demand,the distributionof goods computer-controlled
actors.
Figure 1. Structure of a Supply Chain
Supplier
Manufacturer
Distribution
Center
Flowof goods
Customer
or Market
66
TRANSPORTATIONJOUR}JALTM
Thus,in theGSCG,playersassumethechallengeof playing the role of a distributor.The
main tasks of a distributor are to compete
througha biddingprocessto buy productsfiom
suppliers,control the inventory levels of the
various productsin the warehousebasedon
projectionsabout sales,and sell the products
to marketsthroughanotherbiddingprocess.In
the initial insranceof the game,which is based
on a report on globalizationof the personal
computer industry (Dedrick and Kraemer
2002), the products are four different types
of computersystems:laptops,servers,multi-
thestateofplayersby takinginto accountcash
balances,the valueof inventory,outstanding
orders,incoming orders,bills to be paid, and
paymentsto be received.Thesesheetsarepresentedto playerteamson a regularbasis,enablingthemto seehow their strategiesperform
in comparisonto other teams' strategies.
To supportthe conceptof globalization,the
world is divided into threeregionsin the DistributorGame:theU.S.,Europe,andAsia, alth,oughit is possibleto work with any number
of regions and any geographicdemarcation.
An overview of the Europeanregion is illustratedin Figure 2. Eachregion has a number
of player=controlled
distributors.Furthermore.
threeregionsandhasto developandteststrategies for global versuslocal sourcing,global
versuslocal sales,inventorylevelsto be maintained,andproductspecializationor differenti-
ation. Due to rapid depreciation,unsolditems
arealmostworthless.In thegamesefting,profit
marginsare underpressuredue to heavyiom_
petition,andmakinga profit for thedistributors
is difficult. Customersexpectfastservicefrorn
the distributor,but they cannottell in advance
when they want to purchaseitems and what
they require. Due to the heavy competition,
distributorscannotafford to haveno inventorv
on hand.One of the main assignments
of thb
playersis managingthe trade-offbetweenhaving as little inventoryas possibleto decrease
the inventorycostsand havingenoughinventory at hand to satisfytheir customers'erratic
and suddenbuyingpatterns.
TheDistributorGamehasbeenimplemented
in a layeredsoftwarearchitecfure,
which allows
the reuseof partsof the applicationin other
gamesinsideor outsidethe supplychaindomain.The softwarearchitecture
hasbeendescribedin moredetailin vanHoutenandJacobs
(2004), van Houren et at. (2005), and Verbraeckand van Houten(2005).
In order to participate in the Distributor
Game,theplayersdownloada Javaapplication
flom the game'sWeb site.Installationof special softwareby the playersis not needed.The
playerapplication(Figure3) providestheplayerswith anoverviewof thestateof theirdistributor companyand allows them to entertheir
decisions.
Throughtheapplication,
theplayers
getupdates
aboutpurchases,
sales,finance,and
inventory. They can also communicateelectronicallywith otherplayersvia a built-inchat
functionality,which is especiallyusefulwhen
the playersare not all in the sameroom.
The DistributorGamesupportsthe learning
of a numberof skills that arecritical to manasing global supply chains in real time. Theie
skills include strategicleadership,operations
management,
financialmanagement,
andinformation technology.The following paragraphs
discussthe link betweenthe DistributorGame
andeachofthesecritical skills for supplychain
managers.The discussionis summarizedin
Table l.
In thegame,thedistributor,usinga sophisticatedelectronicstradingnetwork,is constantly
struggling to align supply with demand.Internet-basedcustomer inquiries/orders are
floodinginto thedistributorin realtime.Simultaneously,orders to suppliers are streaming
GLOBAL SUPPLYCHAIN GAME
Figure 2. Example of the Players in one of the Regions in the Distributor Game
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69
GLOBAL SUPPLY CHAIN GAME
Table 1. Link between Supply Chain Leadership Skills and Learning Points in the
Distributor Game
SC Leadership Attribute
SC Game Attribute
SC leadershave understandingof a SC as a business Distributorcorporationis a SC-basedenterprise
ecosystemspanningthe enterprise,its customers,and whereits global operatingperformancein supply
its suppliers,with best of breedSC performersoften chain hasenterprise-wideeffectsand determines
financialperformance.
out-performingIaggardsin ROVProhtability,
InventoryTurns, and CustomerSatisfactionmatrices.
The Distributor Gameis global in scope,with teams
SC leadersunderstandthat rapid globalization
choosingto focus salesand supply sourcing
increasesthe strategiccomplexityof the operating
or fully
strategieson regional,trans-regional,
environment.
globalizedmarketsand spreadof suppliers'
by volatflity of supply
The gameis characterized
SC leadersmust deal with increasingvolatility due
and demandand is subjectto massiveexternal
to heightenedexposureto internationalmarketanc
eventsthat dramaticallyshift customerand supplier
supplyrisk conditions.
conditions.
Gameparticipantsare constantlybombardedwith
The Internetand CorporateIT Systemscreatedata
real-timedata.They must instantlyevaluate
overloadon SC leaders:leadersmust access/filter
potentialcustomerrequestsfor quotes;match
data,apply critical judgement,and make timely
marketdemandpatternsagainston hand and/or
decisionsbasedon most relevantdata.
availablesupply; preparebids basedon internalor
externalpricing imperativesor anticipatedrevenue
to comply
targets;and organizetransport/shipping
with customerlead time requirements.
The gameis played by small teamswhere
CorporateSC decisionstructuresinvolve the
skills and analyticcapabilitiesare
management
blendingof CFO, CIO, and Chief SC Officer
as well as other horizontally- blendedin the minute-by-minuteoperationsof the
executiveperspectives,
distributorcompanyto which they belong.
orientedenterprisemanagementteams.
Distributorcompaniesvie for longer-term
supply
engage
in
long-term
Companies
external
and bigger salesvolumesthan originally
agreements
chain partnershipbuilding with customersand
solicitedin customerRFQs.
suppliers.
Individual SC leadersgo througha complexleaming Gameparticipantsare constantlybalancingand
rebalancingfactorsof decisionmaking and are
curve to incorporateexpertiseandjudgmentover
testingcapabilitiesagainstcompetitiverealities.
time and to demonstrateintuitive supply chain
decision-makingmasteryin a processof developing Participantsoften exhibit enhancedconltdencein
their own masteryand a desireto play the game
"CognitiveAgility" (Dibello2005).
again and test out new and imProved
non many times during the play sessionand
cometo betterunderstandthe competitivepricing dynamicsat work in the industry. On the
buy side,a major learningpoint relatesto order
sizequantities.Whatwill be the optimal grouping oforders into a specificbuy from a supplier
to meet ag$egate customerdemands?Order
sizeis animportantdeterminantof othersupply
chain costs,suchastransportation.Finally, the
participantsexperiencethe powerful imperative to compressthe cash-to-cashcycle and
to effectively manageaccountsreceivableand
accountspayable.
Virtual collaboration with customers and
suppliersover the Internet can often lead to
confusionand dissatisfaction,yet it remainsa
highly significant managerialinnovation' The
Distributor Game demonstratesto participants
the web of relationshipsthat technology can
help bring together quickly to solve supply
chain dilemmas. Customer requirementscan
spark a dramatic "raying out" of messaging
and processactions acrossa web of inter-related enterprisesto meet those requirements.
Suppliers from other regions and the whole
world can be mobilized on an ad-hoc basis
using Internettechnologyto servethe distributor's customers.The participantsappreciatethe
technology infrastructure that supports this
supplychain "ecosystem."
Theselearning points help align game skill
developmentattributeswith core supply chain