7. Simulation Debrief

Question 1

What side is the upstream and downstream

Answer 1

Purchase order flow(left side) upstream
Product flow (right side) downstream

Question 2

Patterns / commonalities in the graph

Answer 2

Fluctuation (rarely level), amplification, & time lag (retailer- factory)

Question 3

Why did people act like that

Answer 3

-Lack of communication: made them guess customer demand- led to random ordering decisions which resulted in bullwhip effect
-Long lead time (3 wks) before getting your order caused panic causing you to order more.

Question 4

Bullwhip effect

Answer 4

information (orders) going back through the supply chain is distorted and then amplified
customer demand ordering decisions

Question 5

Business implications of the supply chain structure

Answer 5

• Stockout at times- lost profit
  -Excess inventory at times - holding cost ^
  -Overtime costs- ^ labour cost
  -Layoffs/re hiring costs- send people home due to fluctuating demand
  -Expediting - rush trans costs

Question 6

overall lesson of the supply chain structure

Answer 6

The supply chain structure leads to high costs throughout the supply chain, leading to a higher end price for the consumer.

Question 7

An example of bullwhip

Answer 7

Tyson chicken wrongfully predicted demand thereby closing down.

Question 8

Bullwhip Effect Measure

Answer 8

Variance amplification(increase) (i.e., the bullwhip effect) is present
if the bullwhip measure is greater than 1
Bullwhip = var. of orders/ var. of demand

Question 9

How to improve the supply chain

Answer 9

Comm. & cooperation
Shorten lead times

Question 10

How does comm. & cooperation help?

Answer 10

Actual con. demand with info. technology and avoid converting fairly constant cust. demand into lumpy demand by lot sizes.

How to encourage
-Offer incentive to get information
-Vendor Managed Inventory(VMI) - low admin cost to retailers, vendor sees actual demand.
Forecasting through collaborative planning forecasting and replenishment(CPFR) share forecast, prod. schedules and share decision making too.

Question 11

How do we shorten lead times

Answer 11

Admin(ordering) LT: info tech
Physical mfg LT: just in time prod. system(low set up time) - small batches
Transp. LT : have suppliers close by

Question 12

On shoring (not necessarily moving) / reshoring (u are moving back)

Answer 12

relocating back to your home country

Question 13

Next shoring

Answer 13

local production near demand
benefits
-Reduces logistics costs
 Improves environmental performance
 Reduces length of lead times
 Reduces variability of lead times
 Easier to identify local needs
 Consumer perception: “jobs in home country”
 A growing focus on countering traditional offshoring by locating facilities closer to a company’s home base

Question 14

What if you can’t change supply chain

Answer 14

If you understand the structure you can adapt and manage, even if you cannot change it
 ‘the aspirin rule’ - 10 minutes after taking two aspirin, you likely still have a headache – why don’t you take 2 more right then? You are inherently aware of the “lead time”, and don’t panic
 Some teams perform quite well in the beer game after they adapt to the given supply chain structure
 don’t panic - recognize the delays
 systems thinking - before you do anything, analyze how it will impact your supply chain