7 min read
No Small Beer: Big Data in Tackling Global Supply Chains
You may have heard of the Beergame and the lessons it tries to teach. Developed in the 1960s at the MIT Sloan School of Management, for decades it has provided “a laboratory for exploring how structure influences behavior”. As businesses grapple with supply chain risk management, the Beergame remains a crucial tool for understanding how small inefficiencies can cascade into major disruptions.
Behind the game lay a recurring problem at a General Electric (GE) appliance factory in Kentucky which was experiencing huge swings in production. Solving them led to the development of system dynamics and later transformed that notebook exercise into the Beer Game—now widely used to illustrate supply chain risk management challenges.
Nowadays, the game exists as a traditional board game, as well as table and software versions. You can find the rules of the game here. There are multiple language versions, the software version can be downloaded here. The game is played by teams of at least four players, often in heated competition, and takes from one to one and a half hours to complete. Afterward, a debriefing session of roughly the same length usually follows in order to review the results of each team and discuss the lessons learned. As a result, participants gain deeper insights into supply chain dynamics and decision-making challenges.
Over the years, this type of exercise that allows for direct hands-on interactions with decision situations (where the learner has little experience and context familiarity) brought variations on the original Beer game simulation (focused on supply chain communication). For instance, Deming’s bead activity is focused on quality control. The Goldratt’s matchstick experiment focus on system variability and bottlenecks. Additionally, the Juice Supply Game is dealing with inventory accumulation concepts and the effect of variability on order.
There have been numerous modifications and other academic elaborations of the original game, as is documented in numerous academic papers.
The main concepts that the Beer game could be summed up as:
- Teaching concepts like the bullwhip effect and the importance of communication across supply chain tiers
- Understanding market dynamics and decision-making under constraints
- Interplay between production systems and logistical networks
- Experiencing the differences between uncoordinated supply chains and those with information sharing and coordination
- The concepts of stocks and flows, and the importance of delays that lead to system instability
Some figures on Czech Beer Brewing and Consumption
The Czech Republic remains the number one country in Europe when it comes to beer consumption per capita, superb quality of hops and a long history of brewing beer, the first brewing recorded in the 10th century.
Its beer market is shared between several multinational players, local breweries and smaller artisan producers.The trends of recent years have evidenced the preference for in-home consumption and a significant shift towards craft beer and microbreweries.
In the context of beer production and distribution in the Czech Republic, supply chain networks and the complexities of coordinating raw materials, production, and distribution require precision and efficiency. Breweries in Czechia optimize their operations to ensure orderly production, timely delivery and maintain the high standards and quality expected by customers. By leveraging big data, breweries can plan their production and supplies, improve collaboration with suppliers and distributors, minimize financial loss and reduce waste.
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“Even seemingly simple systems can produce complex dynamics.”
The Beer Game is a classic simulation that effectively demonstrates the complexities of supply chain management. Specifically, the game highlights common issues such as the bullwhip effect, where even small demand changes at the consumer level can quickly amplify as they travel upstream in the supply chain. Consequently, this often results in excessive inventory, stockouts, or inefficiencies. Therefore, the simulation strongly emphasizes the importance of accurate data and seamless communication across all supply chain tiers to mitigate these risks effectively.
A key takeaway from playing the Beer game is that understanding system dynamics can lead to strategies that transform performance. Over the past decade, insights into financial trading systems have significantly reshaped market incentives. Meanwhile, sports teams have applied similar principles to strengthen their rosters and achieve greater success.
Furthermore, considering what one could or should do with perfect information often proves more valuable in fostering a deeper understanding of the system. This approach ultimately leads to better decision-making and improved performance, rather than merely receiving information without context.
Accurate information, reliable data, and effective sharing are crucial to achieving successful outcomes in the Beer Game. As a result, they serve as the foundation for well-informed decisions, helping to prevent backlogs, minimize delays, reduce financial losses, and protect customer relationships. Furthermore, global supply chains are subject to many influences and are increasingly characterized by their complexity. Thus, ensuring transparency and data-driven decision-making is essential for maintaining efficiency and resilience.
Navigating the Complexities of Supply Chain Risk Management
| Complex supply chains are characterized by multitier supplier networks that span regions or countries, introducing layers of dependency and complicating oversight and coordination. Their global operations demand navigation of diverse regulations, cultural differences, and geopolitical risks. The dynamic interdependencies within these networks mean that disruptions in one area can cascade throughout the entire system, amplifying the impact on operations. Additionally, these supply chains generate and depend on vast amounts of data, including inventory levels, supplier performance, demand forecasts, and logistics updates, to ensure seamless functioning.Operating across many countries means complying with multiple jurisdictions and a strict adherence to varying compliance requirements, such as labor laws, environmental standards, and trade regulations. Effective technological integration is essential for managing, monitoring, and optimizing supply chain operations, often involving multiple platforms and tools. Companies must adopt flexible and adaptive strategies to meet fluctuating customer demands. However, the inherent complexity of these supply chains increases their exposure to risks, such as natural disasters, supplier failures, cyberattacks, and market volatility. Proactive supply chain risk management helps organizations anticipate these risks, strengthen operational resilience, and maintain business continuity. |
Semantic Visions is a leader in data analytics. The company closely monitors supply chain dynamics using its advanced ability to gather and analyze publicly available data (OSINT).
Semantic Visions Monitoring tools
By identifying each element in the supply chain—from raw material suppliers to end-product distributors—companies gain deeper insight. This approach helps them understand dependencies and recognize vulnerabilities. It also improves risk assessment and decision-making. By anticipating disruptions like delays or shortages, companies can prevent downtime, reduce financial losses, and maintain smooth operations. This ensures the customer receives their products on time and without interruptions, fostering reliability and trust.
Effective supply chain and distribution monitoring also drives efficiency, cost savings, and transparency. Companies can optimize inventory, enhance collaboration with suppliers, and streamline logistics while aligning with ESG goals. For customers, this means more consistent service, better product availability, and assurance that businesses are operating responsibly. Ultimately, robust monitoring capacities help businesses stay agile and competitive, delivering value and reliability in a dynamic global market.
Semantic Visions Multi-tier Supply Chain Mapping
Multi-Tier Supply Chain Mapping provides businesses with unmatched visibility into the complex networks that drive production, inventory management, and distribution. By identifying each element in the supply chain— from raw material suppliers to end-product distributors—companies gain deeper insight. This helps them understand dependencies and spot vulnerabilities. This structured approach helps uncover hidden risks, such as reliance on single-source suppliers or exposure to geopolitical uncertainties. At the same time, it ensures compliance with regulatory standards and ESG objectives across all supply chain levels.
Beyond risk identification, supply chain risk management through multi-tier mapping enables businesses to implement effective contingency plans. This strengthens their resilience against surplus production, shortages, and disruptions. Mapping supply chain interdependencies also helps streamline processes, optimize costs, and build stronger partnerships with suppliers and distributors.
Advanced tools, including AI and machine learning, take this further. They analyze past patterns to predict future disruptions, such as delays, logistical bottlenecks, and distribution challenges. With these insights, businesses can proactively manage risks, maintain efficient stock control, and ensure smooth product distribution. This strategic approach secures a competitive edge in dynamic markets. Additionally, multi-tier mapping enhances a company’s ability to meet regulatory standards and sustainability goals across all supply chain levels.
Literature:
https://onlinelibrary.wiley.com/doi/full/10.1002/sdr.1767
https://www.sciencedirect.com/science/article/abs/pii/S014362282030326X
