Production and Operation Managements Supply Chain Management and The Bullwhip Effect Prof.JIANG Zhibin Dr.GENG Na Department of Industrial Engineering Management Shanghai Jiao Tong University
Production and Operation Managements Prof. JIANG Zhibin Dr. GENG Na Department of Industrial Engineering & Management Shanghai Jiao Tong University Supply Chain Management and The Bullwhip Effect
® Contents Supply chain management ·Bullwhip effect ·Beer games
Contents • Supply chain management • Bullwhip effect • Beer games
熟 Supply Chain Management What is Supply Chain Management (SCM)? / SCM deals with the management of materials, information and financial flows in a network consisting of suppliers,manufacturers,distributors,and customer- Hau-Lee,the head of Stanford Supply Chain Forum (1999) 分销架道 皆月摩务 函售分公元 丽分冬 客户 供应商 隔两
Supply Chain Management What is Supply Chain Management (SCM)? SCM deals with the management of materials, information and financial flows in a network consisting of suppliers, manufacturers, distributors, and customerHau-Lee, the head of Stanford Supply Chain Forum (1999)
Supply Chain Management Manage what? management of materials,information and financial flows a network consisting of suppliers,manufacturers,distributors,and customers within the enterprise and outside the firm's allied business partners How? efficiently integrate suppliers,manufactures,warehouses,and stores synchronizing the flow of marketplace products,services,and information. Objective produce and distribute at the right quantities,to the right locations,and at right time minimize system wide costs while satisfying service level requirements highly competitive,customer-enriching supply system to create unique,individualized sources of customer value
Supply Chain Management Manage what? • management of materials, information and financial flows • a network consisting of suppliers, manufacturers, distributors, and customers • within the enterprise and outside the firm’s allied business partners How? • efficiently integrate suppliers, manufactures, warehouses, and stores • synchronizing the flow of marketplace products, services, and information. Objective • produce and distribute at the right quantities, to the right locations, and at right time • minimize system wide costs while satisfying service level requirements • highly competitive, customer-enriching supply system • to create unique, individualized sources of customer value
Bullwhip effect -Executive a at Procter Gamble (P&G) studied the replenishment patterns for one of their best selling products (diapers). Consumer sales Retailer orders to wholesalers 20 2 50 Kuuonb apO 10 5 5 0 ELLLLEELLLtt 0 Time Time Wholesaler orders to manufacturer Manufacturer orders to supplier 20 20 15 1 10 5 5 0 0 Time Time
Bullwhip effect Executive at Procter & Gamble (P&G) studied the replenishment patterns for one of their best selling products (diapers)
Beer games -In this game,the supply chain of beer is consisted of four roles: retailers,wholesales,distributor and manufacturer; -Each role is consisted of two or three students;The students sitting in the same row forms one supply chain; -Each role must make ordering decision based on downstream demand information;Discussion within the same role is allowed; End customer will directly buy the beer from the retailers;the lead time for other roles is 1 week;the manufacturer will order beer f from raw material supplier.No capacity limitation is considered: -Every week,each role place once order.Cost of inventory is 1 dollar/bottle,cost of stockout is 2 dollar/bottle.When stockout occurs,you need not fill it when you have the beers in the next weeks. -The supply chain with the minimal cost is the winner
Beer games In this game, the supply chain of beer is consisted of four roles: retailers, wholesales, distributor and manufacturer; Each role is consisted of two or three students; The students sitting in the same row forms one supply chain; Each role must make ordering decision based on downstream demand information; Discussion within the same role is allowed; End customer will directly buy the beer from the retailers; the lead time for other roles is 1 week; the manufacturer will order beer from raw material supplier. No capacity limitation is considered; Every week, each role place once order. Cost of inventory is 1 dollar/bottle, cost of stockout is 2 dollar/bottle. When stockout occurs, you need not fill it when you have the beers in the next weeks. The supply chain with the minimal cost is the winner
⑧ Beer games R1.Receive the delivery, One volunteer W1.Receive the delivery, record the number; record the number Buy beers R3 Place the order 一一一一一 一一一一 Customer Retailer Wholesaler R2.Sell the beers,record W2.Read order,delivery the inventory or stockout the beers,record the inventory or stockout M3.Place the order D3.Place the order Raw Material 4一一一一一一一一一 Manufacturer Distributor Supplier Delivery M1.Receive the delivery,M2.Read order,delivery the D1.Receive the delivery, One volunteer record the number beers,record the inventory record the number; or stockout
Beer games Customer Retailer Wholesaler Distributor Raw Material Supplier Manufacturer Buy beers R2. Sell the beers, record the inventory or stockout R3 Place the order D3. Place the order M2. Read order, delivery the beers, record the inventory or stockout M3. Place the order Delivery W3. Place the order D2. Read order, delivery the beers, record the inventory or stockout One volunteer One volunteer R1. Receive the delivery, record the number; M1. Receive the delivery, record the number D1. Receive the delivery, record the number; W1. Receive the delivery, record the number W2. Read order, delivery the beers, record the inventory or stockout
Beer games Initialization: At week 0,initial inventory is 6,each role has placed the order of 4 bottles,that means,you will receive 4 bottles of beer at the beginning of week 1.No demand at weeko Steps: Step 1:Receive beers and record the number/ 货，并记录收到货物的数量 Step 2:Read orders,make the delivery,and record inventory and stockout/看订单，发货，记 绿库存或缺货 Step3:Make forecast and place orders/.需求预 测，下订单
Beer games Initialization: At week 0, initial inventory is 6, each role has placed the order of 4 bottles, that means, you will receive 4 bottles of beer at the beginning of week 1. No demand at week0. Steps: Step 1：Receive beers and record the number/收 货，并记录收到货物的数量 Step 2：Read orders, make the delivery, and record inventory and stockout/看订单，发货,记 录库存或缺货 Step 3：Make forecast and place orders/需求预 测,下订单
Team homework After the beer game,please analyze the reason why your supply chain succeeds or fails. If you can play the game again,how can you make the improvement?
Team homework After the beer game, please analyze the reason why your supply chain succeeds or fails. If you can play the game again, how can you make the improvement?
⑧ The End!
The End!