This form of commerce is referred toast Business-to-consumer (BBC) commerce. While BBC is probably the form of commerce that you are most aware of, arguably the more important form, in dollar value, is Business-to-Business (EBB) commerce. EBB commerce Involves businesses trading, via networks, with other businesses. To understand the Importance of EBB commerce, you should look first at what Is meant by a “SUPPLY CHAIN”. A Supply Chain refers to the flow of materials, information and services from raw material suppliers through factories and warehouses to the end customers.
A supply chain includes the organizations and processes that create and deliver these products, information and services to the end customers. Making Supply Chains work is very Tricky!!! In short, It requires informed cooperation between the businesses which together cause the flow of materials, Information and services, from raw product to the eventual customer. So why is this tricky? Well – if you are a business operating as part of a supply chain there will be delays between you placing orders with your suppliers and you receiving those deliveries.
While you are waiting for deliveries, you don’t want tussocks – customers demanding goods from you which you simply don’t have in stock. On the other hand, you do not want to overstock (holding large quantities of unsold stock Just In case there Is demand) because this will tie up your capital, and storing excess stock will cost you money” What is the trick to making a supply chain work? The following principles are crucial to making a supply chain work: 1 . Share real-time information up and down the supply chain. commerce Workshop The Beer Game – Version 1 Page 1 2.
Trust this Information and your partners along the supply chain to be operating In chain” approach. 3. Order and manufacture products as guided by this information. Don’t override/over-manufacture Just-in-case it might be needed! To give you a chance to experience the operation of a supply chain, you are going to play two different versions of the “Beer Game” The Beer Game- Version 1 In this version you will get the chance to be the producer of beer. The beer that you produce takes some time to reach the point of sale, however.
Specifically, after production it is first shipped by boat (taking 2 weeks), then by trucking company (taking 1 week), then it is held in stock from which it can be sold. Each week new sales re generated. Each week, as the producer, you must decide how much beer you will produce, to be shipped to replace the amount that has been sold. Your goal is to adjust your production levels to keep the optimum stock level at the point of sale (I. E. If the demand in a given week is 15 kegs of beer then you want exactly 15 kegs in stock! At the start of the game (Week 1) there are 10 kegs in stock, and you have demand for 10 kegs, so your stock levels are perfectly balanced. You are told, however, that it is expected that in the near future demand will go up from 10 to 15 kegs per week. So, how many should you produce? Type in your production order and press enter. In Week 2 the demand will go up to 15 kegs per week. How long will it take you to get your stock level back in balance? Go to: http://barriers. Invitation. Nil/en and play the game (see Figure 1).
Can you work out the strategy needed to get the inventory back in balance after Just 5 weeks? If so, share your strategy with the class, and explain how you worked it out! Page 2 Enter your production order here and press ENTER Figure 1: Beer Game Screen (Version 1): Start of the game The Beer Game – Version 2 In Version 1 of the Beer Game (above), you could see the progress of sales and orders ever the entire supply chain. Imagine, instead, how hard a supply chain would be to chain. In Version 2 of the Beer Game it will be much harder.
You will now have to act as the retailer at the end of a simulated supply chain, reacting to customers placing orders (for beer), and placing orders for beer from your supplier (the Wholesaler) to maintain appropriate stock levels at your retail outlet. But, you will not have detailed information of how the orders are progressing along the supply chain. Let’s see how you go! It is possible for four people to take part in this version of the game = four impasses (Producer; Distributor, Wholesaler, Retailer) that are each other’s customers or suppliers in a supply chain.
We will not be playing it this way, today. Instead, you will play as the Retailer and you will use ghost players to make up the game field (I. E. The computer will play as the Producer, Distributor and Wholesaler in your beer supply chain). The aim of this version of the Beer Game is to minimize the total cost for everyone in the supply chain by maintaining low stocks but nevertheless managing to deliver all orders. You also earn income when a keg of beer is delivered. Note: It is not the intention that o should try to reduce your costs at the expense of the rest of the supply chain.
Click the other three player positions (Producer, Distributor and Wholesaler), to select that they will be played by the computer (see Figure 5) commerce Workshop Page 5 Figure 5: Beer Game Screen: Set Automatic Players 5. Week 1 will start automatically. You start with 12 kegs in stock, 4 kegs arrive from the Wholesaler in Week 1 (costing you $4), an order arrives from your customers for 4 kegs which you are able to fill (earning you $16), leaving your stock as it started, at 12 eggs (for which you are charged $12 because storing excess stock costs you money).
Your net revenue for Week 1 is therefore $0 (I. E. -12 – 4+16). Now, decide how many kegs you will order to replenish your stock – will you Just continue with the stock you have (I. E. Order O), or will you replace the 4 that you Just sold, or will you order a little extra Just in case. Enter your outgoing order to your wholesaler, and press “Send Order” (see Figure 6). Page 6 Figure 6: Beer Game Screen: Placing and sending the Retailer’s outgoing order 6. Continue placing orders each week, as stock gets sold. Note that when you place an order with the Wholesaler it does not arrive the next week.
There will be delays in delivery, maybe your supplier doesn’t have sufficient stock. A problem that you will encounter is that you do not have real-time information flow between the partners in the supply chain, for example about delays in delivery, and when you can expect your orders to arrive, to inform your ordering decisions. 7. Continue the game for at least 20 weeks. Keep records of what is happening to you as a retailer. Try to develop a strategy to get the best overall supply chain score (shown at the top of the screen). Remember, you do not want your stock level to go negative – I. . You do not want to be in a position where you cannot satisfy a customer’s order, so you are waiting for a backlog of orders to arrive in order to clear the order from that customer. Note too that your balance as the “Retailer” may be positive, but if you start to place orders erratically you may be causing your other supply chain partners to fail to meet orders as they cannot predict what you are doing, or maybe they will end up overstocking as a result of your unpredictable ordering patterns, so causing an overall supply chain loss. Age 7 8.
After 20 weeks, note your “Retailer” balance, and the overall “Supply Chain” balance (see Figure 6). How did you go compared with the rest of the people in the workshop? Compare. Who achieved the best “Supply Chain” score in your class? Can they share their strategy? Click “Finish Game” to terminate the simulation of the supply chain (see Figure 7). Figure 7: Beer Game Screen: Finish Game after 20 weeks 9. Reflect on how you felt during the game. Share this with the class: Did you feel yourself controlled by forces in the system from time to time? Or did you always feel n control? Did you find yourself “blaming” the rest of the supply chain for your problems? Did you feel desperation at any time? If you did, don’t worry. That is exactly what the supply chain simulation is supposed to promote. This represents what can happen in the real world, if you find yourself as part of a supply chain that is starved of real-time shared information from your supply chain partners. You don’t understand what is happening. Will stock arrive this Page 8 delivery associated with? How much should I reorder each week to maintain stable stock levels, but not overstock?
That is why EBB commerce is so important. EBB commerce involves the use of cooperative networks, sharing information up and down the supply chain, so that shared strategies for operating the supply chain can be devised, and operated, to everyone’s benefit! The “Bullwhip Effect” – Role Play In small groups, consider the following questions: 1 . What is the “Bullwhip effect”? (An excellent introduction to this is available at: http://www. Youth. Com/watch? V=wolfhound’s) 2. Is it possible that what has been happening in your simulated supply chain might be a result of the “Bullwhip effect”? 3.
What factors can contribute to the “Bullwhip effect” happening? 4. Identify 2 strategies that you could use to counteract the “Bullwhip effect”? Drawing upon these small group discussions, imagine that you are members of a task force that has been established at Hammer Wines PILL to ensure that the Hammer Wines’ beverage importation and distribution operation will not be adversely affected by the “Bullwhip effect”. Prepare, and deliver to the workshop, a short presentation explaining two key strategies to counteract the Bullwhip effect, and the associated processes, that you would advise that Hammer Wines should adopt. Page 9