BUS5102 Supplier and Consumer Behaviour Report 1 Sample

BUS5102 Supplier and Consumer Behaviour

Assessment Detail

Assessment 1 is an exercise that demonstrates supply chain and consumer dynamics. This assessment in the form of a beer game developed by Massachusetts Institute of Technology (MIT) simulates the flow of material and information in the production and distribution of beer. This simulation focuses on the interconnectedness of a beer manufacturer, its distributors, its wholesaler, and its retailer. Students will form group of 4 students for the purpose of participating and completing this simulation. Each student in the group will be required to place orders and manage inventory for one firm in the supply chain. In this simulation, orders are the only information allowed to flow among the participants in the supply chain. The 20-minute simulation will be played from Week 1 to Week 9 by students in the group on a web-based computer simulation tool. https://beergame.transentis.com/

You need to describe and evaluate the problems in the supply chain as they unfold from Week 1 to Week 9; identify the causes and discuss possible solutions.
You will submit a well written academic assessment consisting of the following criteria.

• Introduction (5%)
• Description of the issues in the supply chain (25%).
• Evaluation of the issues in the supply chain (25%).
• Recommendation of solutions to all participants (firms) in the supply chain (25%).
• Conclusion (5%)
• References (15%)

You are required to use credible academic and industry literature that include at least 10 academic or industry references.

Solution

Introduction

This assessment has been developed that completely aligns with the aim of understanding the supply chain and consumer dynamics. In this assessment, a beer game developed by Massachusetts Institute of Technology (MIT) was played which is associated with beer manufacturing and distribution that could aid in describing and evaluating the issues in the supply chain that have been identified in the process of playing the simulation game. The focus of the game is associated with a brewery in which the manufacturer and its distribution channels such as distributors, wholesalers, and retailers are involved. A brewery has to face multiple issues associated with supply chain in the process of making beers such as availability of high-quality raw materials, anticipating the market demand, and availability of reliable labour forces which has been evaluated in detail according to the game results. Based on the results of the game, the issues in the supply chain procedures have been identified and analysed along with providing crucial recommendations to different participants from the perspectives of a brewery which can be beneficial in addressing the supply chain issues which have been identified in the company. The results of the game have been divided into six parts where each part contains the results of four weeks. Thus, the results of 24 weeks have been analysed in this report.

Description of the issues in the supply chain

Part 1

In the first week and second week, there were no back orders and 100 orders were received from the distributors which was equal to the current production. The beer manufacturing company also has an inventory of 400 units and has been able to deliver the orders to the distributors efficiently. In the third week of the simulation game, the beer manufacturer had higher orders from the distributors of 200 units and the inventory was reduced to 200 units with the same weekly production of 100 units. In the fourth week, the production was increased by 100 units and the orders from distributors were reduced to 200 units. However, the inventory was standing at 200 units. From the analysis of the game results, it is indicative that the manufacturer was able to maintain an effective supply chain as it was able to deliver its orders successfully to the distributors with enough inventory in hand. This indicates that there were no major issues which had been identified in the first week.

Part 2

In week 5, the orders received from distributors increased to 300 which was successfully delivered to them along with the production rate of 150 units. However, this week, a major issue was identified which was related to having lower inventory than required which can be a significant risk for the company. It was found in the sixth week that orders from distributors significantly increased to 400 units and the production was limited to only 200 units with a back order of 150 units. This is a significant concern as it reduced the revenue and profit of the company. In week 7, there were 150 backorders and zero inventory of beers as well as the orders from the distributors reduced to 100 units. It was also noticed that the cost of the previous week had increased from 200 € to 350 € for 200 units of beer. In week 8, in order to remove the backorders from the previous week the production was increased to 200 units which resulted in a reduction of backorder to 50 units with zero inventory. For the manufacturing industry, it is important to have an efficient supply chain management system to address any supply chain disruptions (Kanike 2023 p. 1). From the above findings, it can be said that there were multiple issues that have been identified such as low inventory, higher cost and rising backorders which can be related to the supply chain issues like disruptions in supply chain, labour shortages and unavailability of raw materials.

Part 3

In week 9, there were only 50 orders from distributors with no backorder or inventory and the production was as low as 100. The supply chain disruptions also resulted in higher weekly costs of production as the cost of 200 units were found to be 250 €. In the 10th week, the production was equal to the total inventory which was 150 units with zero orders from distributors. In the 11th week, there was a sudden rise in customer orders which created a backorder of 238 units and the production was only 87 units with zero remaining inventory. In the next week, the production again reduced to 50 units resulting in a backorder of 500 units. Supply chain disruptions result in reduced profitability and sales with an increase in costs (Baghersad and Zobel 2021 p. 7). From the analysis of the game results, it can be said that the reducing number of units of beer being manufactured in spite of high demand in the market along with rising costs indicates that there exist significant issues in the supply chain related to shortage of raw material and labour for MBA assignment expert

Part 4

In week 13, the demand from distributors was increasing however the production only stood at 100 units which created a huge backorder of 1000 units. Similarly in week 14, due to additional orders back orders significantly increased to 1400 units and there was a huge rise in cost which was 1200 € for producing only 100 units in the previous week. This backorder increased to 1500 units in the next two weeks with a rise in cost to 1700 € in week 16 pertaining to the production of 100 units in week 15. From the analysis of the game results related to week 12-16, it was found that there was a serious issue which needs to be addressed as this indicates that there are many supply chain issues being faced by the company. The main issues related to supply chain which have been identified from the business operations of the beer manufacturing company in this part were related to huge shortage of raw material and labour in addition to increase in cost of transportation and logistics. All these identified issues such as rising transportation cost and shortage of labour supply can be related to supply and process risks (Shekarian and Mellat Parast 2021 p. 4).

Part 5

The results from week 17 showed some positive signs with a rise in production to 500 units and reduction in backorder to 1200 units. In the next weeks, the company was able to increase the number of units produced each week for which the backorder was standing at 850 units at the end of week 20. The supply chain issues had resulted in reduction of beer orders from distributors which indicates that disruption in the supply chain has resulted in a negative impact on the entire market. However, it was noticed that there was an increase in demand in week 19 and 20 with 500 orders every week. The cost of production has also been found to be reduced significantly as compared to the units produced which can be a result of reduction in cost of logistics. The transportation cost should be minimised in such a way that can increase profit and provide better satisfaction to customers (Wisner et al. 2021 p. 303). From the analysis of the results, it can be said that the company was able to manage the supply chain issues to some extent which is evident from the increase in the number of units produced. But the issues along with the issue of manufacturing delay continues to persist as the company has not yet been able to fulfil its backorders.

Part 6

In week 21 and 22, the beer manufacturer was unable to deliver the backorder fully even with a production of 500 and 450 units respectively as there was a rise in demand from distributors. In week 23, the production again reduced indicating a rise in supply chain disruptions. However, in week 24, the company was able to increase its production that resulted in a decrease in backorder by 200 units. From the results of this part, it was found that the manufacturer was facing challenges with anticipation of demand which indicates that the company faces another supply chain issue related to demand forecasting and delay in supply of orders. Demand forecasting can be described as one of the core activities of supply chain management that helps in predicting the market demand and has a significant impact on other supply chain activities (Adhikari et al. 2019 p. 1105). It was found that the company was not being able to maintain any inventory to meet the certain demand which resulted in loss of revenue and profits.

Evaluation of the issues in the supply chain

Part 1

There were no major supply chain issues which were identified in the first four weeks of manufacturing operations related to beer production. However, it has been found that it was difficult for the brewery to anticipate the demand in the market due to huge fluctuation of demand among consumers. It is important to ascertain the market demand and maintain inventory at an appropriate level without over stocking to ensure highest profitability (Forbes, 2023). Therefore, one issue which was noticed was that the company was keeping a higher stock than required which was mainly due to lack of an efficient supply chain management system that could aid in estimating the market demand.

Part 2

There has been a significant rise in supply chain disruptions and global labour shortages in recent times that has had a significant negative impact on the manufacturing industry across the world (CNBC, 2021). From the perspectives of the brewery involved in the manufacturing of beer, in the second part associated with week 5 to 8, the main supply chain issue which was identified from the game results were labour shortages and unavailability of raw materials. Evaluating these findings on a critical ground, it would be appropriate to state that the brewery was facing issues related to finding high-quality raw materials and sufficient labour to support continuous production. Therefore, it can be said that due to these supply chain issues, the brewery has been facing a significant increase in the cost of production due to high demand of raw materials and labour and low amount of supply in the market. In addition to these issues, due to the issue of demand forecasting, the company was unable to maintain a sufficient level of inventory and meet the rising demand of the distributors which created backorders of beers. The sudden rise in demand for beer in the market which may be due to the festive season and low supply of raw materials has created a difficult situation for the brewer to continue production.

Part 3

In the manufacturing sector, supply chain issues related to labour shortage and unavailability of raw material shortage can result in shutdown of factories (Shukar et al., 2021 p. 96). With regards to week 9 to week 12, the brewery was facing the same issues which were unavailability of raw materials and labour were identified in this part from the game results. The long term success of a brewery is dependent on the quality of the raw materials and keeping consistency of such raw materials in the beer manufacturing. The taste of the beer is dependent on multiple aspects of raw material such as its freshness and quality. From the critical evaluation of the identified issue, it would be appropriate to state that due to shortage of workforce and delivery of high-quality raw materials on time, the company was unable to meet its growing market demand for beers by increasing their production. Therefore, it can be said that these issues are related to the supply chain of the brewery significantly affecting the profitability of the company.

Part 4

Outdated transportation and logistics infrastructure can result in inefficiency and rise in cost of production (Panfilova et al., 2020 p. 554). With respect to part 4, developed based on the game results of week 13 to week 16, it was found that the brewery was experiencing high cost of production which was mainly due to issues related to logistics and transportation. It was found that the cost of production of the brewery for the week suddenly increased indicating an increase in cost of logistics. Sourcing the high quality materials from the suppliers within a limited time to ensure continuity of production is a big challenge for breweries. This challenge was significantly noticed in the game as due to logistic related issues, the brewery was unable to provide sufficient raw materials that can support the production to meet the current market demand. From the evaluation of the above findings, it can be stated that the higher cost which is significantly affecting the profitability of the beer manufacturing company can be a result of rise in price of raw materials and labour wages along with increase in transportation costs.

Part 5

With respect to the game results associated with Week 16 to week 20, it was noticed that the production of the brewery was increasing which signifies that the brewery was able to source high quality raw materials and manage labour for continuing the production process to some extent. Manufacturing delay is a significant issue in the supply chain that leads to reduction in orders for the company resulting in low profitability and revenue in addition to increasing the advantage for the competitors (Forbes, 2022). Running a brewery is highly competitive in nature where the delay in production and delivery of order can result in loss of customers in addition to providing advantage to the competitors to capture a higher market share. The lack of raw materials and labour force availability reduced the capacity of the brewery to manufacture sufficient amounts of beer to support meet the demand from the distributors which created a huge backorder. All these issues had resulted in a low number of orders.

Part 6

With respect to week 21 to 24, it was found that the brewery continued to face supply chain challenges associated with demand forecasting and delay in order delivery. Demand volatility is a critical issue in the supply chain that exists due to continuous change in consumer behaviour and has a huge impact on the supply chain decisions (Abolghasemi et al., 2020 p. 1). It is common for a brewery to receive orders which vary to extreme levels due to factors such as festive seasons and changes in consumer preferences. Thus, from the perspectives of the brewery, it becomes difficult to accurately anticipate the demand for these specific reasons for which it was found that the brewery was unable to anticipate demand and maintain its inventory to support seasonal orders. Thus, from the evaluation of these supply chain issues that affect the beer manufacturing process of the company, it was found that due to lack of demand forecasting abilities and delay in delivery of goods the company was losing its orders and profitability.

Recommendation of solutions to all participants (firms) in the supply chain

Part 1

The digitalisation of supply chain procedures can be beneficial in the process of anticipating the demand and manufacturing accordingly which can ensure maintenance of the right level of inventory (Bigliardi et al. 2022 p. 1808). Therefore, it can be suggested to the brewery that digitalisation and automation technologies in the supply chain activities should be adopted which can aid in the cases of forecasting and estimating the demand of beers in the market with higher accuracy resulting in better customer satisfaction and higher profitability of the brewery. Thus, digitising the supply chain procedures can provide valuable insights about the market demand and make data given decisions related to production of beers.

Part 2

The manufacturer should focus on implementing technology that can ensure continuation of production in spite of low manpower (Harvard Business Review, 2023). Hence, it is recommended to the brewery that a suitable combination of manpower and technology should be developed that can ensure continuity of production in difficult situations when there is a shortage of labour in the market. In addition to this, the recruitment agencies on whom the brewery is dependent on labour, should also ensure that they have adequate labour supply and in case of any disruptions such information should be provided to the brewery in advance so that they can plan effective strategies to address such disruptions.

Part 3

It was found from the game results that the brewery was facing issues with availability of high quality raw materials and timely delivery of raw materials to continue production. Thus, it can be recommended to the brewery that they should not only rely on a single supplier for supply of raw materials used in the production of beer as it would increase supplier dependency. Therefore, it is recommended that the brewery should contact and establish strong relationships with multiple suppliers in the process of ensuring that there is continuous supply of raw materials to carry on the production process with minimised cost.

Part 4

In part 4, it was found that the manufacturer was facing issues of rising cost in transportation and logistics along with delay in delivery of raw materials for the purpose of producing beers on time and delivering them to the customers. Digitalisation of transportation systems can increase the value for the manufacturers (Chinoracky et al., 2021 p. 438). It is recommended to the brewery that they should focus on reducing the transportation cost by adopting digitised logistic systems which can provide real-time location of the raw materials and estimated delivery schedule to plan the production process more efficiently. The recommendation that can be offered to the raw material suppliers of the brewery is that they should focus on improving the delivery time by upgrading their logistic systems with implementation of digitalisation.

Part 5

It has been found from the results of the game related to week 16 to 20, that there exists an issue of manufacturing delay. Therefore, it can be recommended to the brewery that a focus should be given on improving their relation with the suppliers that could aid in the case of ensuring timely supply of raw materials for production of orders. In addition to this, the brewery should also tie up with transportation companies to reduce their inbound and outbound logistics cost along with ensuring timely delivery of raw materials and finished goods.

Part 6

Supply chain management can help in addressing the issues related to estimation of production and can provide the company with competitive advantage (Cahyono et al., 2023 p. 154). Therefore, it is recommended to the brewery that they should focus on developing an effective supply chain management system that can offer them crucial information about the current demand in the market by analysing the consumer behaviour and maintain their inventory according to such demands that can effectively increase their profitability and revenue in addition to increasing their chances of long-term business success. A similar suggestion can be provided to the dealers, wholesalers and retailers as they are also required to access the market demand.

Conclusion

On a concluding note, it can be said that the beer manufacturing company is not technologically advanced for which it faces multiple supply chain challenges such as lack of raw materials required for production of beer, shortage of labour, issue in demand forecasting and delay in manufacturing. It has been found that these issues have resulted in lower numbers of orders being received from dealers leading to reduced profitability and revenue. It has been recommended that the company should adopt an efficient supply chain management plan and focus on digitalisation to address these issues effectively.

References

Abolghasemi, M., Beh, E., Tarr, G. and Gerlach, R., 2020. Demand forecasting in supply chain: The impact of demand volatility in the presence of promotion. Computers & Industrial Engineering, 142, p.106380.

Adhikari, N.C.D., Domakonda, N., Chandan, C., Gupta, G., Garg, R., Teja, S., Das, L. and Misra, A., 2019. An intelligent approach to demand forecasting. In International Conference on Computer Networks and Communication Technologies: ICCNCT 2018 (pp. 167-183). Springer Singapore.

Baghersad, M. and Zobel, C.W., 2021. Assessing the extended impacts of supply chain disruptions on firms: An empirical study. International Journal of Production Economics, 231, p.107862.

Bigliardi, B., Filippelli, S., Petroni, A. and Tagliente, L., 2022. The digitalization of supply chain: a review. Procedia Computer Science, 200, pp.1806-1815.

Cahyono, Y., Purwoko, D., Koho, I., Setiani, A., Supendi, S., Setyoko, P., Sosiady, M. and Wijoyo, H., 2023. The role of supply chain management practices on competitive advantage and performance of halal agroindustry SMEs. Uncertain Supply Chain Management, 11(1), pp.153-160.

Chinoracky, R., Kurotova, J. and Janoskova, P., 2021. Measuring the impact of digital technologies on transport industry–macroeconomic perspective. Transportation Research Procedia, 55, pp.434-441.

CNBC (2021) There are millions of jobs, but a shortage of workers: Economists explain why that’s worrying. Available at: https://www.cnbc.com/2021/10/20/global-shortage-of-workers-whats-going-on-experts-explain.html (Accessed: 22 March 2024).

Forbes (2022). How bad are supply-chain delays? so bad that companies are already placing holiday orders. Available at: https://www.forbes.com/sites/laurendebter/2022/04/07/how-bad-are-supply-chain-delays-companies-are-already-placing-holiday-orders/?sh=7cb877ce139b (Accessed: 22 March 2024).

Forbes (2023). From Stockroom to sales: Unlocking profitability with strategic inventory management. Available at: https://www.forbes.com/sites/forbesbusinesscouncil/2023/06/21/from-stockroom-to-sales-unlocking-profitability-with-strategic-inventory-management/?sh=17fa39ec3493 (Accessed: 22 March 2024).

Harvard Business Review (2023). How to address the supply-chain staffing crisis. Available at: https://hbr.org/2023/09/how-to-address-the-supply-chain-staffing-crisis (Accessed: 22 March 2024).

Kanike, U.K., 2023. Factors disrupting supply chain management in manufacturing industries. Journal of Supply Chain Management Science, 4(1-2), pp.1-24.
Panfilova, E., Dzenzeliuk, N., Domnina, O., Morgunova, N. and Zatsarinnaya, E., 2020. The impact of cost allocation on key decisions of supply chain participants. International Journal of Supply Chain Management, 9(1), pp.552-558.

Shekarian, M. and Mellat Parast, M., 2021. An Integrative approach to supply chain disruption risk and resilience management: a literature review. International Journal of Logistics Research and Applications, 24(5), pp.427-455.

Shukar, S., Zahoor, F., Hayat, K., Saeed, A., Gillani, A.H., Omer, S., Hu, S., Babar, Z.U.D., Fang, Y. and Yang, C., 2021. Drug shortage: causes, impact, and mitigation strategies. Frontiers in pharmacology, 12, p.693426.

Wisner, J.D., Tan, K.C. and Leong, K., 2021. Principles of supply chain management: A balanced