Supply Chain Management

You have been hired as a supply chain management consultancyfirm to present an evaluation of the commercial challenges of managing a beer supply chain.

You are required to make a presentation based on your understanding of the Beer Supply chain simulation, “The Beer Game”.

  1. Highlight the key management and commercial problems associated with the beer supply chain.


Because of the bullwhip effect, there has been a range of inefficiencies that occur throughout the supply chain. One of the challenges experienced in the Beer Game is lack of information. In the beer game, most of the information about customer demand is lost in the supply chain due to scanty or no information. Thus, the beer game end up simulating supply chains with minimum levels of trust where only little information is shared among the parties involved. Another cause of the bullwhip effect is over reliance on the traditional forecasting methods and stock keeping strategies leading to loss of actual customer demand. Therefore, this means that all forecasting should be made in relation to the incoming orders at each stage of the supply chain (Riemer, 2014).

Another challenge is the poor structure of the supply chain, which contributes to the bullwhip effect. The longer the lead-time, the more aggravated the bullwhip is likely to be. Lead-time deals with the amount of time an order takes to travel upstream and the subsequent delivery to travel downstream (Riemer, 2014). The order should be placed earlier in advance to ensure service level during the time until the delivery is made. Thus, the longer the lead-time is, the more pronounced an order would be as a reaction to an increase in forecasted demand.

Lack of collaboration is another challenge experienced in the beer game. This regards to the local optimization, whereby local forecasting and individual cost optimization lack cooperation in the bullwhip. In case of the batch order phenomenon, ordering in full tracks is quite cheaper than making orders in small amounts. In addition, many suppliers offer volume discounts when massive orders are placed (Riemer, 2014). Therefore, there is a certain motivation for individual players to hold back orders and only place aggregate orders.

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