Wednesday, April 01, 2009

Root Beer Game

During our Logistics District Managers meeting this week, we incorporated the Root Beer Game into our lean training session. The root beer game is a supply chain management simulation game hosted online by Harvard Business School derived from the classic “Beer Game” originally created by MIT in the 1960’s.

With this computer simulation game, we broke into teams of four and assigned each member a role of retailer, wholesaler, distributor and factory. Each role had the mission of satisfy their customer demand while keeping cost at a minimum which was measured by inventory carrying costs. In our session we simulated 40 weeks of production to see the effect. The total time to run the simulation, report out and discuss key learning took almost 3 hours.

The main focus of the simulation is to demonstrate oscillation in the supply chain and how variability increases up the chain which is described as the “bull whip” effect. Discussion also includes the effects of forecasting, lead time, information flow, batching, impact of promotions and uncertainty.

It was pretty cool watching the reaction of the teams and individual responses as the game progressed. Some of the comments heard included:

“I don’t know why it is doing this.”

“Oh, what an idiot!” (Gently reminders to the group of respect for people and the no-blame culture aspect of lean were needed.)

“We didn’t buy that ERP module.”

“We used the roll-the-dice strategy.”

“That was fun, can we do it again.”

Overall, it was a great learning experience for all. It does require a license based on the number of participants which cost $37.50 per license. We also need a bit of help from our IT staff to link the computers together and connect to the Harvard server during our allotted time window, but it was not a major problem. If you are looking for a good supply chain game as a teaching aid, this one does an excellent job.
For another write up on their beer game experience, check out the great post by Pete Abilla at Shmula called The Bullwhip Effect.


Mark Graban said...

I'm curious why you chose the computer simulation model instead of doing a physical beer game simulation where you physically move poker chips or other pieces of inventory?

Mike Wroblewski said...

Good question Mark. We simply wanted to give the computer simulation a try for the experience.

Jamie Flinchbaugh said...

Congratulations Mike. I'm glad you and the team enjoyed it.

We use the beer game but not as much to teach the bullwhip effect but what we think is is much more universal message: bad systems beat good people. The message is that no matter how hard they try, how smart they are, or even if they know exactly what's going to happen, they can't be a bad system. The activities, connections, and flows inherent in the system will beat you. The only way to get real change is to move past firefighting (reacting to events) and get to the systems level (activities, connections, and flows). The Lean Learning Center will soon be releasing the Beer Game as a complete package, with board games, beer truck routes, instructor guides, participant guides, and so on. It should be out in about a month as our Instructional Design Team finalizes the content.

Mike Wroblewski said...

Thanks for your insight Jamie. The game can teach many aspects depending on your focus. To your point, a bad system wins over good people every time. I look forward to trying out your new version. Computers are great but physical pieces are a better visual learning tool.