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Class was split into 2 teams who were competing with each other, and in each round the customer asked for certain products as well as different qualities. And as the products were different, you had to predict how much the customer would ask and what kind of product, the both teams had to deliver, and each team consist of a guillotine, autoclave, assambly1, assmebly2, assembly 3, heat and threat or punch and trim.
The two teams were representing a so called supply chain; there was supplier, producer, warehouser, and customer. Each member of the company had to work well with each other to meet the asked demand by the customers. In total there were almost 24 round. Each round customers asked different product and both companies had to deliver the products in time.
After the 1st round, we changed our strategy from lean supply to agile tactics. We decided to improve our quantity of product since we were unable to produce the right amount of goods on certain times. The improvement included to produce more in order to keep with the demand and do not fall behind and run up cost.
In our 2nd round, although we order more products in order to cope with the demands, failure of communication with the other departments, mainly supply department, lead to the supplies order being delayed and this resulted in the lead time and order processing inefficiency. This led us to implement procedures to improve communication and speed up the rate of supply in order to reach the desired goal. These procedures included talking often and checking with each other more often and delegating a led person to handle the communication with the supply team.
After 3rd round we added an extra equipment which made it easier for us to compete against the other business and product more goods, the unwanted goods were stocked, this increased the storage costs but now we were able to deliver the product on time since we had it in our stock.
On the 4th round, the situation turn dire and we went from being over- stocked to running out of supplies as our previous achievements turn us to become more relaxed and resulting in yet another failure in communication. This failure cost us money as we had to invest in late delivery fees.
By choosing speed increase equipment would prevent over- production and running up cost. In order to achieve this we would have had to anticipate the supply demands and have adequate supply to cover this demand.
Choose whatever improvement you believe was made and helped the company act better.
3 Advantages of the improvement/disadvantages
The main advantages were our running strategies were we had to anticipate client demand and prepare for these demands by having adequate supplies and efficient procedures for the production. The main disadvantages included failure in communication and not having right volume of stock, by either over or under -stocking.
The conclusion from this excise is that communication and team work are the keys of any successful business and that they go hand in hand. Just as in any company, it takes hard working personnel with exceptional interpersonal skills to manage different departments to work as a cohesive unit. Initially, the different teams did not have a structure and the different 'companies' were working blind. As the game progressed the different teams started to use their business skills, tactics and their competitive nature to make their team and company proud. Another important lesson here was to learn from previous mistakes and to anticipate client demands. My main lesson for this task was the importance of communication and the power of team work, where the team can either work together by dividing the tasks and keeping an eye on the ball or failing miserably on the height of the game by relaxing and letting your guarded.
5 Bullwhip Effect
The supply chain management is used by organisation to manage high velocity flow of information and quality, as well as this it helps suppliers to maintain an uninterrupted and accurate flow of materials to customers. The Bullwhip Effect is most caused by the distortions. Distortions caused by stock outs in the supply chain, but there are many causes that can be tribute to this effect. Below are the drivers most common for demand distortions;
An unplanned demand can result in a disturbance also called a "lump of demand" this can have a huge effect on the supplier end of the chain. The Bullwhip Effect is accepted as norm as it is thought to be part of the order to delivery cycle. The negative impacts of Bullwhip Effect are excess inventories, higher material cost quality problems and expenses and shipping cost. It can also lead to bad customer service, lost of sales and extended lead times. To run a smooth supply chain it is important to eliminate the Bullwhip Effect.
6 Understand the Causes
It is important for managers to understand factors that cause supply chain oscillations. Here are some examples:
Sporadic sales promotions. This is perhaps due to companies responsible for sale promotions that effect current inventory and supply pipelines, do not comprehend the actual impact of sale promotions policies and practices on a quantitative and qualitative basis. Only after an accurate understanding of the impact on sales promotions on the company, can the company answer the question of sales promotion polices and practices that need to be changes. Severe demand distortions that can cause supply chain oscillations are due to common complaint and reason such un-forecasted and "unknown" sales promotions. These sales promotions can create ripples in the supply chain and excess costs which can be described as Incalculable.
Does sales incentive plan contribute to demand distortions? Applying sales target Quotas and commissions for a long period will often cause demand distortion. Company managers need to take this in to consideration and opt for a shorter based intervals rather than a long periods such as three moths or more, this in turn will ensure smoothing of demand resulting in decreased lumps in ordering and dampening the Bullwhip Effect
False orders and subsequent cancellations? Two common causes for false orders are:
Customer that do not have the confidence in the ability of a company to rapidly and reliably supply product. The result will be that the customer will place projected demand that is higher than required on the manufacturer, in the hope that they will receive what they have order and will receive it when they ordered it. Once the order product is received they will cancel the remaining orders due often to excess purchased material in inventory and in the pipeline.
Sales personnel, who believe they can not make their projected quota in time to increase their commissions and qualify for a bonus, will often add or change orders placed by a cooperative customer. The customer will then in turn either cancel or return part or all of the order. On top of this the customer might also expects some concessions from the salesperson or the company for the service provided.
Whether it is a single or a combination of causes, the distortion effect will work itself through to the supplier's network and the network that supplies them. This often leads to due to unexpected and often false increase in demands to extension of lead times. The delivery time lead time then is lengthened due to the reversal in the supply chain not being able to provide raw material in limited time. This is due to the manufacturer having to forward the information to their distributors who then tell their dealers that lead times have increased due to supply problems. These factors will lead the Bullwhip Effect to reverse down the supply chain and to worsen the situation another Bullwhip Effect travelling up the chain will lead to longer lead times, consequences being new and often false demand for future supply coverage for the customer's replenishment planning systems. This surge in demand has a negative impact on operating performance, which is caused by unnecessary increase capacity, which further complicates the supply chain planning and execution processes.
Schedule variability increases
Capacity is overloaded and/or under-loaded
Cycle times lengthen
Working and safety stock inventories increase
Overall costs increase
Customer service levels decrease
Sales and profits decrease
7 Reducing the "Bullwhip Effect"
In order to decrease the effect of the 'Bullwhip Effect' there is number of task that can be performed. Including, understanding the factors that triggers quantity orders such as customer demand drive, planning, inventory and consumption in the supply chain. Another way to smooth out the fuel is what drives demand and supply patterns, and once understood work towards improving information quality and compress cycle times. Below are examples of different ways to increase business performance by minimising the Bullwhip Effect:
The cycle time in receiving projected and actual demand information are minimised.
Close to real time basis for monitoring of actual demand for product.
Understand product demand patterns at each stage of the supply chain.
Increase the frequency and quality of collaboration through shared demand information.
Minimise or even eliminate information queues that create information flow delays.
Eliminate inventory replenishment methods that launch demand lumps into the supply chain.
Eliminate volume transportation discounts or promotions, by decreasing incentives for customers that directly cause demand accumulation.
Offer your products at consistently good prices to minimise buying surges brought on by temporary promotional discounts.
Identify, and preferably, eliminate the cause of customer order reductions or cancellations.
Monitor Vendor-Managed Inventory (VMI) levels by collaboratively planning inventory needs with the customer to projected end-user demand.
The Bullwhip Effect cannot even be stopped by the most modern of Supply Chain Management systems. It is unfortunately a management process demand problem with wide implications due the core of the values of the organisation. These values or belief system includes encompasses policies and measurement systems. However, the degree of negative effect it can have on sales, market share, cost and profits can be enormous. Although, very difficult it a very necessary problem to solve.