The Real Beer Game (with Jes Bengtsson) - Ep 135


00:00 Introduction and Jes Bengtsson’s background
01:36 How does the bullwhip effect - the central point of ‘The Beer Game’ - apply to real-life beer companies/breweries?
03:57 What are the characteristics of a well-organised beer supply chain?
06:16 How does one balance multiple sources of demand fluctuation with beer (such as surprise promotions)?
09:59 What changes have you noticed in the production of beer?
13:52 How do you account for the cannibalization effect when introducing new products into your assortment?
17:41 How does your extensive background in the supply chain industry translate to a consulting position at McKinsey?
22:25 Do you think supply chain optimization will become more of a primary concern for companies (instead of a logistical afterthought)?

Description

A mainstay of supply chain tutorials since the 1960s, The Beer Game has taught students how to visualise the oftentimes tricky coordination of upstream and downstream supply chain processes. The central thesis is that uncoordinated supply chains inevitably beget a bullwhip effect - a single action producing an outsized consequence - such as when retailers make decisions on customer demand (based on faulty or entirely incorrect reasoning), and order more than they need (including a safety stock buffer). This behaviour is repeated by the wholesaler, who orders a little more from the distributor (who, in turn, orders a little more from the factory). In the end, there is often a significant asymmetry between supply and actual demand.

In this discussion, Joannes picks Jes’ brain on how The Beer Game mirrors real-life supply chain complications for players in the beer space, as well as Jes’ thoughts on related topics, such as the challenges of coordinating a brewery’s supply chain, and how to cope with multiple sources of demand variance.