Supply Chain Game Assignment
In our first encounter with the “Beer Game” there was a deliberate lack of information flow throughout the supply chain. This inability to access and analyze previous data and forecasts left all participants in the supply chain in the dark as to the right amount of stock to keep on hand and the ability to predict future fluctuations in the demand. Without this data to rely on many decisions were made from a panic mentality rather than a logical one. Communication within the supply chain is imperative and must be shared among all participants to allow each member to better evaluate their customer demands at high and low periods. In the second session of the “Beer Game”, all participants were allowed access and share data needed to make rational decisions rather than emotional ones. By having this information, the prices and inventories were kept at closer intervals and all members were able to adjust accordingly without panic, saving undue production and costs. Having a demand forecast updating throughout the supply chain allows all participants the ability to fine-tune their inventories, reduce overheads and costs. Cisco in turn had the opportunity to secure all information and data needed to make good decisions but, in gathering information, it is only as good as a person that gathers it. After reading the article “What Happened to Cisco”, the information that was gathered was skewed toward the idea of cost growth. Cisco had begun to believe their own hype and believed that their systems were so efficient that they were infallible. The one thing Cisco did not model for was what would happen if the growth suddenly stopped. After four straight quarters of consistent growth, Cisco was never not growing. (3)
The next issue facing the members of supply chain had to do with the time limitations and delivery schedules between orders. This effect, according to the article “The Bullwhip Effect in Supply Chains” was referred to as ‘order...
References: 1. “The Bullwhip Effect in Supply Chains”, Lee, Hau L, Padmanabhan V, Whang, Seungjin, MIT Sloan Management Review; Spring 1997; 38, 3; ABI/INFORM Global Pg. 93
2. “What is the Bullwhip Effect? Understanding the concept & definition”, 02 April, 2012 Copyright, 2014, Adaptalift Hyster,
3. “What Went Wrong at Cisco” - CASE STUDY: CISCO – CIO; Magazine Aug 1, 2001; http://www.cio.com/article/30413/What_Went_Wrong_at_Cisco_in_2001
4.) Summers, Peter M., “What Caused The Great Moderation? Some Cross-Country Evidence”; ECONOMIC REVIEW; THIRD QUARTER, 2005 http://www.kc.frb.org/Publicat/ECONREV/PDF/3q05summ.pdf
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