Answer the Beer Game question
- What are the benefits of communication
Communication in logistics equips suppliers of raw materials, producers and suppliers of consumable goods and services with relevant market information. In various instances, we observe market inefficiencies, which result from information asymmetry. Thus, communication enhances market knowledge and aids in proper channeling of raw materials and finished goods to targeted market actors. Between the levels, that is, between retailer, OEM, warehouse and factory, communication facilitates material and information flow. The gap between retailers, EOM, warehouse and factory can only be reduced if the delivery process embraces the need to have a clear and proper means of communication. Extending from acquisition of raw materials to delivery of goods and services to final consumers, communication links the vendors and service providers in the supply chain. Other than between levels, communication plays an important role within the logistic process since it enhances logistical planning and identification of the various challenges proponent to the distribution process. Proper planning is essential for market acquisition and meeting customers’ demands through efficient and sufficient deliveries. Similarly, communication links the various processes within the factory. Product managers must link with inventory managers and other employees in order to produce the most needed item. This begins from acquisition of unprocessed raw materials to production of final goods and services which are finally distributed to customers.
- If you could change the structure of the network, assuming the rules on ordering, communication, and lead times are the same, how would you do it? Justify your answers.
The structure of the network in logistical planning otherwise known as the supply chain flow entails material flow, information flow and financial flow. From the information given in the Beer Game Model, the network system begins from material flow through information flow to financial flow. Assuming no changes on the rules of ordering, communication and lead time, this network structure could be altered, and information flow be given the first priority. The exchange of information between suppliers of raw materials and manufacturers is a vital step in inventory management. This is because information flow gives factories the opportunity to compare quality and quantity of the materials in light of the prices charged and also to make adequate preparation for order transmission and other consignment updates. The second stage in the supply chain could be financial flow which entails payment of orders, consignment and title ownership. This is because, unless the purchases are made on credit, payment on delivery is very necessary. Once the materials are paid for and the deal sealed, the next stage would be to make actual delivery of the materials to respective firms and consumers. The stated structure of supply network would help in reducing the risk of material loss and damage, and instances of unmet company’s supply goals.
- Suppose you were faced with a competitor who offered lower prices and your customers began defecting. How would you change the network rules, communications, etc., to respond given the continuing need to balance inventory and customer service?
Every supply chain aims at improving product and service consumption level. Where there are inefficiencies in the supply process, consumers tend to be uncomfortable and may at times loose trust on the company’s supply chain. In a perfect competitive market, a producing firm should consider the pricing strategy of its competitor, and respond by changing the network rules with an intention of retaining and attracting more customers. The only way a firm can reduce the price of a consumable product or service is by ensuring that the cost of production is significantly reduced. This entails seeking information on better price offers: raw materials and intermediate goods, and ensuring that the production and distribution process proceeds at relatively lower costs.
- What do you think the learning objectives of this exercise were and how were they accomplished? What would you to do improve the exercise?
From the questions provided, a person would argue that the learning objectives of this exercise were to make a learner understand the importance of communication in a company’s supply chain, to impact inventory managers with relevant information on material and product management, to enhance efficiencies within the supply chain, to improve consumption levels and to reduce backlogs in a company’s supply chain. The question-answer format has been used to propel the study and to create room for more investigations and discussions. By answering the questions fully, a person is capable of deriving the basic inventory management concepts, thus developing a supply chain that is more efficient and cost effective. The exercise could be made more practical by engaging the learner in company operations, designing of supply and pricing strategies.