Contents

Introduction.................................................1

Successes within the Simulation Game for Team 3..............1

Failures within the Simulation Game for Team 3...............2

Supply Chain Strategies......................................3

Lean Approach...............................................4

Agile Approach..............................................5

Leagility Approach..........................................5

Supply Chain Management Issues...............................6

Relationships...............................................6

Integration and Risk........................................7

Recommendations..............................................9

Conclusion..................................................10

Appendices..................................................11

References..................................................14

1

Introduction

The Supply Chain Simulation Game involved teams referred to as

‘small companies’ making simple paper-based greeting cards

based on orders from the market-place, represented by the

‘order board’. Orders were placed on the white boards and each

team had to select orders that they felt were manageable. The

cards had specific requirements in terms of quality, speed and

dependability and only cards that met the standard

requirements were purchased by the market.

Team 3 began with a ‘Plan of Action’, allocating each team

member with a specific role in 4 different functions:

sales/marketing, stock control, production control and

accounting. The group soon realised the work flow was so fast

and due to the pressure of time constraints, the team had to

re-consider their strategy to enable them to achieve success.

This report aims to analyse Team 3’s performance in relation

to Supply Chain Management issues and recommendations will

derive from the analysis.

Successes within the Simulation Game for Team 3

“Long term relationships between customers and suppliers are being built based on

cost, trust, innovation, quality, and flexibility, and teams are an excellent vehicle to

build these relationships.”

(Rooney, J, The Journal For Quality and Participation, 2002)

2

One of the main successes team three had achieved was

discovering if a process of production was slowly derailing,

team three quick action was taken to establish the executive

decision to cancel an order and incur a penalty. An important

method within organisation is communication and team three

were able to establish when they needed help. (Naylor, J,

1996)

Re-evaluating the stock situation, was left in the hands of

the stock control team, however team three was extremely vocal

and quick to help a team member out. Thus they alerted the

stock control team to place orders of new tools and equipment

and this allowed production success to increase and flourish.

At the beginning of the game the team ensured they had at

least 12 of each paper and continued to replenish stock, this

strategy changed towards the end.

Team three’s relationship with the supplier improved

throughout the day. At the start of the game the group were

required to wait at least ten minutes for supplies to be

ready. However, by three o’clock in the afternoon team three

was first to have their supplies ready and prompt. The group

was then able to react quickly to customer demand by quickly

ordering and receiving the paper required to make the chosen

order. Relationship marketing’s strongest driver is retaining

the loyal customer and supplier bond. (Blythe, J, 2009)

Having struggled within the first half of the game, team three

really began on a strong stride within the second half of the

game having a full order of cards accepted and incurring the

3

first sale. This was down to spreading the production of the

cards over four people instead of two. Thus the main successes

derived from having a break to re-strategize and work out how

team three could improve upon the original mistakes.

Failures within the Simulation Game for Team 3

Unfortunately, although team three came into their own in the

second half of the game there were costly errors and mistakes

made throughout the game that incurred penalties against them.

Team threes first mistake was reading the instructions of the

game incorrectly. The instructions stated that any order that

was late would not be accepted at all and would incur a 20%

penalty against the team’s profits. However, the team was

under the impression that they would only sustain the penalty

but still have their order accepted.

The second failure team three became aware was under thinking

the pressure within the lead times. A twenty minute lead time

with twelve cards to create, having only two people on

production, with limited tools was impossible. The verse on

the inside of the card was to be measured and placed within in

particular specifications, and team three skipped this step

completely. Thus many of the first attempts were rejected by

the control team as they did not meet requirements.

At this point team three seemed to all become rather stressed

having had no orders accepted, and the two members on

production began delegating out jobs to the rest of the team

to involve them in the card making process. At the start of

4

the simulation game, the decision was made that team three

would all take leadership of their own posts and not have one

particular project manager. Thus, important management

decisions took longer. Having many leaders rather than one

person in charge was a major downfall in the team’s

simulation. Common features of organisation include common

goals and shared skills; this was evident through team threes

approach but one of the main focal points, i.e. Hierarchy, was

forgotten about consequently causing problems along the line.

(Naylor, J, 1996)

The quality of the cards fell quite dramatically towards the

end of the game. This is reflected in the timeline below:

15:16 - 6 out of 8 accepted

15:45 – 5 out of 8 accepted

15:56 – 7 out of 12 accepted

16:13 – 12 out of 12 accepted

16:36 – 3 out of 12 accepted

16:55 – 3 out of 12 accepted

The last failure team three incurred was essentially ruining

their leftover inventory. All the leftover paper the team had

not used was folded in preparation and the rubber was tore in

half so more than one person could be using it and any given

time. Therefore, attempting to help the team further along the

line, team three shot themselves in the foot as they received

no money back for the surplus of inventory. Inventory

management is vital to any organisation as it affects the

5

customer and the business at the end of the day. (Greasley, A,

2009)

Supply Chain Strategies

Managing supply chains effectively is a challenging task due

to the current business trends of expanding productivity and

short product life cycles. A company’s strategy is therefore

of critical importance as it involves planning and configuring

the organisation for the future. (Mangan, 2012) Although the

field of business strategy is very broad, this section will

focus on Lean and Agile supply chain strategies and evaluate

which approach Team 3 adopted.

Lean Approach

The lean approach focuses on eliminating waste and improving

the flow of information and material. ‘Waste’ can take many

forms, (Womack and Jones, 1996) identified the seven deadliest

waste as: overproduction, waiting, transportation, processing,

inventory, motion and defects. The idea in creating a flow in

lean is to deliver products and services in the right amounts,

at the right quality levels at the right time. (Cudney &

Elrod, 2011) Companies that operate in Lean have many

advantages over traditional supply chain management,

including:

Supply more tightly linked with demand

Lower inventory risk

6

Processes that focus specifically on activities that add

value for the customer

A greater focus on mistake-proof processes (Hatton,

2013)

Applying this to Team 3’s performance, as stated in the

previous section, resources were not used to their full

potential in the first half of the game. However, in

recognising this error, the 2nd half of the game proved to be

more productive. All team members realised that if they wanted

to achieve results then ‘Lean Thinking’ had to be adopted by

the entire group by doing only the things that add customer

value and eliminated the activities that don’t. In practise,

at the beginning of the simulation game, each team member

specifically focused on their individual role which left only

two members producing the cards. This resulted in ‘waiting’,

‘processing’ and ‘motion’, problems as previously described.

The team soon adopted a ‘Lean’ mind-set by purchasing only the

materials they needed to allow all team members productive so

there was a continuous flow to the customer, which refers to

(Cudney & Elrod, 2011) idea’s. The team planned and executed

there strategy throughout the day, sometimes not always

succeeding as previously mentioned. However, adopting the

‘lean way of thinking’ proved to be successful as the team

managed to get their first order delivered on time and

accepted by the market and they continued to work this way as

it was clear it had positive results.

Agile Approach

7

“The aim of an Agile Strategy is to give a high customer service by responding

quickly to different or changing circumstances” (Waters, 2003)

Companies that adopt an agile supply chain pursue the

flexibility to meet customer demands, focus on customer

satisfaction with a quick reaction time (Waters, 2003). The

fundamental principle of an agile supply chain is primarily

concerned with responsiveness and the ability to match supply

and demand (Mangan, 2012).

Relating this to Team 3’s performance, throughout the entire

game the team were heavily focused on providing a fast

response rate and meeting the market demands. At times the

team tried to be too flexible by taking on more than one order

at a time, but soon realised that this was not manageable with

the materials and resources they had, if they wanted to meet

the standard requirements successfully.

Leagility Approach

According to (Mangan, 2012), there is no one generic supply

chain typology that works in all situations. A combined

approach of lean and agile strategies is known as the

‘Leagile’ approach (sometimes referred to as the ‘hybrid

strategy’), where both agility and leanness demand high levels

of productivity. (Mason-Jones, Naylor &Towill, 2000)

“The leagile supply chain enables the upstream part of the chain to be cost effective

and the downstream part to achieve high levels of service in a volatile marketplace”

(Mason-Jones, Naylor &Towill, 2000)

8

The diagram below describes the concept of the ‘decoupling

point’ where, in a leagile supply chain lean principles apply

upstream to the decoupling point and agile principles apply

downstream beyond the decoupling point.

After analysing both lean and agile supply chain strategies,

it is can be said that overall, Team 3 adopted a ‘leagilty

approach’. In practise: the group were lean in their upstream

activities by adding value to their operations with the use

all of their resources and material to eliminate waste as well

as making sure there was a continuous flow to the customer,

meeting market demands with the right quality, right time and

right place. In Team 3’s downstream activities, in the demand

side, stock control made sure they collaboratively planned

with all functions of the company and co-managed inventory to

meet with the market demands. Team 3 also emphasised the

importance of getting the cards in on time (responsiveness)

again, reflects the characteristics of having an agile supply

chain at the demand side. Applying such Supply Chain

management practises provides companies with a competitive

advantage (Thatte, 2007), thus the leagile approach had a

positive impact on the company as the team scored 2nd out of

Adopted from (Mangan, 2012)

9

the 4 teams. A good result - improvements could have been made

which are referred to in ‘Recommendations’. However, a

combination of a ‘lean’ and ‘agile’ approach is definitely a

winning combination in Supply Chain Management, evident in

Team 3’s performance, especially in the 2nd half of their

operations.

Supply Chain Management Issues

Relationships

It is clear that strong internal and external relationships

were a key factor in team 3’s success. Good relationships

within the group allowed us to avoid conflict and work

together as a team to make the correct decisions such as

identifying when more materials were required to allow the

group to accept orders.

As the game progressed, the group was also able to build

strong relationships with our supplier which resulted in

increased flexibility as we were able to order more material

at short notice. According to Harland, management of buyer-

supplier relationships is central to the success of the supply

chain management in firms (Harold, 1996, in Ambrose et el.,

2010). Lead times for the material were also reduced as a

result of having a strong relationship with our supplier.

These strong relationships meant that our team high levels of

integration across different functions in the group such as

accounts, production, sales and procurement.

10

Integration and Risk

Integration is an important part of Supply Chain Management as

stated by Chen (2009) and refers to “linking major business

functions and business processes within and across companies

into a cohesive and high performance business model” (Chen,

2009, p27). Wisner also states that in order to create value

for the services and products provided to customers, a company

needs to integrate their internal process activities (Wisner,

2012). Moreover, the higher the level of integration with

suppliers and customers in supply chain the greater the

benefit, as present in the Arcs of Integration (See the

appendix 1)

In the game, Team 3 could not move further upstream or

downstream so external integration was not possible. However,

as discussed, by improving the relationship between our group

and the supplier in the second half of the game, our team

benefited from increased flexibility when ordering material,

which gave us a competitive advantage. This helped to improve

efficiency by reducing the process time. “Along with benefits,

integration activities also involve costs” (SCHOENHERR, T., &

SWINK, M., 2012, p100). In the first half of the game, the

team lost potential sales when a contract was rejected due

topoor communication between team members which resulted in

errors.The team was also unable to complete orders on time due

to a lack of organisation, although this did improve as the

game progressed and integration improved.During the first part

of the game, Team 3 operation failed in the supply chain

11

integration dimension: “information integration” which is

shown in the 4 dimension in the appendix 2.

Supply chain risk comes from 5 sources: supply risk, demand

risk, process risk, control risk, and environmental risk. See

the appendix 3. During the game, Team 3 realised that

additional tools were required. Thus the team took a risk and

bought more material such as stencils, rulers, pens, and

pencil. However due to the lack of understanding of the

processes at first, our group were unable to identify the

bottlenecks. Also, the team did not make use of all resources

in the first half of the game. Overall, the lack of understand

and manage the risk profile is directly and indirectly

influenced the strategy and result of the team.

Our group worked as a team to identify that we needed to adapt

and change our strategy. As discussed, by focussing on our

production line and adding more human resource, the group was

able to increase output. We were able to recognise that some

roles within the team, such as accounting, were important

however did not require as much effort as planned. By

identifying this waste in terms of human resource and applying

it to these bottlenecks, the group was able to increase the

quality and speed of production line. In applying this lean

philosophy, there were less defects in production which

resulted in increased efficiency and profitability.

Quality and speed are key factors which contribute to the

overall success of supply chain management and therefore

12

competitive advantage. Mellat-Parast states that

“understanding quality issues at the supply chain is critical

to the success of the firm and supply chain performance,”

(Mellat-Parast, 2012). As previously discussed earlier in the

report, in adding more quality checks to our production line

such as employing team members to measure the card markings,

we were able to increase the quality of our products which

resulted in a higher percentage of orders being accepted.

In applying key Supply Chain Management theories such as

recognising the importance of relationships, quality control

and integration & risk, team 3 created a competitive advantage

by improving efficiencies which resulted in the team coming

2ndin the game with a total profit of £3,839.

Recommendations

A typical downfall in business is to presume that we know

exactly what the customer wants. Whereas, in truth attention

is easily diverted from the reality of the marketplace when

the management is busy with the daily running of a business.

(Christopher, 2005).

It is crucial to establish an understanding of what the

customer wants through detailed research (Christopher, 2005).

Relating to Team 3, they should have made sure instructions

were studied in detail and ensured every team member knew of

specific requirements such as card measurements, no late

orders accepted. For next time, this would ensure a much

stronger position as less time would be wasted.

13

In organisations, many crucial decisions are made in product-

planning activities. Production planners discuss and decide

what resources organisations will need to produce their

outputs (Kanet and Sridharan, 1998). Poor methods of

production that are too loose and result in too tight or

unnecessarily large lead times which have consequences of

failure to meet the delivery time (Tenhiälä, 2011). This time

limit affects all operations (Waters, 2003).

The capacity of an operation is its maximum output in a

specified time. The team struggled to meet demand and incurred

penalties for the unfulfilled orders. Not all parts of the

supply chain have the same capacity (Waters, 2003). The bottle

neck in the teams supply chain was production. Production to

start with was limited as there were only 2 people

manufacturing. In order to get more people on production the

team decided to purchase more stock such as pens, pencils,

stencils and rulers, thus substantially increasing output as

it enabled more of team to manufacturer. Capacity planning is

a major area for improvement for Team 3 as it determines how

many cards they can deliver to the customer in a given time

(Water, 2003).

However, even if the team had the resources and capacity to

make the cards there would still be an issue of quality to

deal with. The customer’s quality standards were very high

therefore a lot of the team’s orders were partially or

completely rejected. Only 39.1% of Team 3’s orders were

accepted. With short lead times this is to be expected.

However, upon completion of the simulation Team 3 came to know

14

that the winning team – Team 1- had adopted a clever strategy.

They’re strategy was to look up an order from the board which

they liked but not officially take on the order, they would

then start producing and a while into production would take

the order from the board and get it approved. This innovative

strategy allowed the team extra time to make the cards and

check them over. Therefore, reducing the amount of rejected

orders.

Lastly, appointing an official Project Manager would be a

beneficial decision if the game were to re-run. This person

would be able to oversee the whole operation and would be able

to identify which areas needed to be addressed, therefore

eliminating weaknesses in the team.

Conclusion

In Conclusion, the growing complexity of products and the

globalisation of business has made the Supply Chain Management

process in organisations more complex than ever before.

Informations overload, rising quality levels and complexity

being at the fore front in driving change. Good relationships

both Internal and External need be established as well as

applying a strategy to reduce risks and increase the overall

company performance.Analysis of these Supply Chain Management

Issues in relation to Team 3’s performance has demonstrated

the need to manage supply chains carefully in order to respond

to today’s dynamic markets and increasing customer

requirements.

15

Appendices

Appendix 1:

Arcs of integration (FROHLICH, M. T., & WESTBROOK, R., 2001, p187)

16

Appendix 2:

17

Figure 2 – (Lee and Whang, 2011, p3)

18

Appendix 3:

Sources of risk in the supply chain (CHRISTOPHER, M., 2011, p195)

19

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