THOMAS M. CORSISANDOR BOYSONALEXANDER VERBRAECKSTIJN-PIETER VAN HOUTENCHAODONG HANJOHN R. MACDONALD

The Real-Time Global Supply ChainGame: New Educational Tool for

Developing Supply ChainManagement Professionals

AbstractResearchers at Delft Universiry and the Roben H. Smith School of Business at the University

of MaryIand have developed the "Global Supply Chain Game" (GSCG). A specific instance of

the game is called the "Distributor Game," centered on globalization and the real-time supplychain. The GSCG dffirs from many existing business learning games in that, as opposed to

being turn-based and locked in on demonstrating a single phenomenon (i.e., the bullwhip effect),it simulates a real-world experience by operating on a continuous clock with ongoing events andresponses to individual decisions. The decision-making processes of the distributors in the game

are controlled by human players. To confront the human players with a complex and dynamic

environment, suppliers, markets, and competing distribution centers are represented by computer-controlled actors. The Distributor Game has been tested at the Robert H. Smith School of Businessin seven courses since January 2005. The beta-tests include four MBA classes, two ExecutiveMBA classes, and a single undergraduate class. Each class has been consistent in its approvalof the game as a tool in simulating the complexities of a global supply chain and facilitatinglearning about how to successfully manage this environment.

In today's global environment, cornpaniesrecognize the strategic importance of well-managed supply chains. Clearly, companies

Mr. Corsi, EM-AST&I. is Mbhelle Smith professor ofIogktics and co-director, Supply Chain ManagementCenter, Robert H. Smilh School of Business, Universilyof Maryland, College Parl6 Maryland. Mr. Boyson isresearch professor of logistics and co-director, SupplyChain Management Center, Robert H. Smith School ofBusiness, Univenily of Maryland, College ParlgMarlbnd Mr. Verbraeck is associate professor ofsystems engineering, Faculty of Technology, Policy, andManagement, Delft Univercity of Technolagy, Deft, theNetherlands. Mn van Houten h a doctoral student,Faculty of Technologr, Policy, and Management, DeUtIJniveniE of Technology, Mn Han is a docloral studentin logistits, business, and public policy, Robert H. SmithSchool of Business, UniversiQl of Maryland" CollzgeParlc, Maryland. Mr. Macdonald is a doctoral sdtdent inlogistics, business, and public policy, Robert H. SmithSchool of Business, Univenity of Marylan4 Co&egeParl<, Maryland

such as Dell, Wal-Mart,Zara, and Li & Funghave built their overall corporate strategyaround achieving supply chain superiority overtheir competitors (Copacino and Anderson).These firms have gained distinct advantagesby efficiently managing the complex web ofinteractions that extend across continents andacross enterprisesjn the process of procuring,assembling, and distributing goods in a globalcontext.

However, achieving supply chain expertisein today's global economy is a complexchallenge for corporations. Indeed, excellencein supply chains requires executives whopossess a wide range of skills in the followingareas: information technology; advanced en-telprise software systems; f,rnancial planning;relationship building with supply chain part-ners. wholesalers/distributors and customers;

62 TRANSPORTATION JOURNALTM Summer

r Motivate others by addressing individualand organizational behavior issues thatpose barriers to supply chain performance;

r Aftend to process details and operationalexecution, while creating strategic plans;and

r Understand the role of information tech-nology in the supply chain.

The challenge to the supply chain executiveis enormous and covers all the critical aspectsof overall corporate perfornance. When a com-pany's supply chain is highly efficient, it cangive the company a sustainable competitiveadvantage. When the supply chainbreaks downat a critical moment, the very essence of corpo-rate survival can be put at risk.

Supply chain executives have strategic, tacti-cal, and operational performance responsibil-ity. The challenge is to manage and monitorboth the physical flow of goods and servicesand to ensure coordination with associated in-formation and financial flows. Furthermore,supply chain executives must provide strategicand tactical planning for the overall design andstructure of the supply chain.

All aspects of the supply chain are inreal time and require constant, 24/7 eventmanagement and quick response capability toidentify problems and relieve bottlenecks. Infact. there has been a growing movementtoward anticipatory supply chain managementinvolving the collection of critical data inreal time and processing those data againstkey performance monitoring measures to alertmanagers about potential problems/bottle-necks, as opposed to waiting until they occurbefore action is taken.

The supply chain executive can best beviewed as the "orchestra conductor" (Har-vard Business School 2006) who is responsi-ble for bringing together everything at theright place and the right time. The "conduc-tor" must have a global perspective and theabiliry to work across business environmentsand cultural differences. Indeed, the web ofinteractions involved in a global supply chainis manifestly complex. The "conductor" musthave acute analytical skills in order to judgethe "ripple" effects of each individual deci-sion on the entire supply chain. Hence, asimple decision to source from an additional

systems design engineering; real-time eventmonitoring; and business intelligence.

This article examines the use of managementsimulation games in higher education to pre-pare supply chain leaders to meet the challengeof a global economy. The article introduces anew tool, i.e., an Intemet-mediated, real-timeGlobal Supply Chain game, designed to bridgethe gap between existing tools for training sup-ply chain leaders and those tools needed tohandle the web of global relationships intrinsicto today's supply chains.

The next section of the article presents moredetail on the attributes that supply chain man-agers will need to achieve excellence in per-formance. This is followed by a general discus-sion of some simulation games currently usedin business education to develop the neededsupply chain skills and the limitations of thesegames. The real-time Global Supply Chaingame is presented as an alternative to existingapproaches for the education of supply chainprofessionals. The article concludes with a dis-cussion of how the Global Supply Chain gamecan be incorporated into a broader curriculumfor the management education of supply chainprofessionals.

Arrnnurrs or Supply CH.clN Lrnornsurp

As complexities have increased in the globaleconomy, so too have the skills required tomanage supply chains. While a less complexworld required supply chain/logistics execu-tives to focus on manufacturing, procurement,and distribution issues, the global supply chainrequires executives to additionally have strongfinancial and accounting skills, highly devel-oped information technology skills, excellentcustomer relationship management skills, stra-tegic planning expertise, and overall executiveskills. Specifically, the Harvard BusinessSchool Executive program in Supply ChainManagement (Harvard Business School 2006)believes that supply chain leaders should beable to do the following:

I Leverage supply chain innovations forsustainable competitive advantage;

r Respond to competitive challengesthoughout the value chain;

r Build supply chain partnerships that man-age all the elements for the benefit of everypartner;

2006

supplier located on another continent willimpact distribution and manufacturing plan-ning as well as the financial flows that willaccompany the transactions. Additionally, theinformation technology challenges of linkingtransaction level systems with the new sup-plier have to be addressed. Thus, each deci-sion by the "conductor" requires sophisti-cated analytics that must be planned for andaddressed. Failure to account for these intri-cate connected activities will result in addi-tional costs, disrupted production schedules,missed sales, and lost market share. Clearly,the conductors need analytic tools to guidetheir decision processes and strategies. Thisneed comes at a time when the amount ofdata being presented to the supply chainmanager is increasing exponentially. Develop-ments in radio frequency identification(RFID) have resulted in massive increases inreal time data being incorporated into thesupply chain. Managers need sophisticatedtools, like business intelligence, to managethis influx of information.

The expectations for supply chain execu-tives are enorrnous. Supply chain mangersneed a wide range of technical skills coveringmultiple disciplines. Furthermore, global sup-ply chain managers need strong analyticalskills as well. There is a real challenge to theeducation community to develop an overallprogram/set of tools that will prepare "best-in-class" orchestra conductors/supply chainmanagers.

sruuurroN G,uues AND THE EOUClrron orSuppr.v Cnlrx LBonns

There is agreatchallenge in designing edu-cational content to build supply chain leader-ship skills in executives and managers of globalcorporations. Traditional methods of lecturesfrom textbooks coupled with a pointed or di-rected set of case snrdies do not replicate thedynamic 2417 envirormrent in which globalsupply chain leaders must function.

Digital Game-Based Learning (DGBL) hasbeen viewed as a potential new tool to developskills. For example, the March/April 2006 issueof Educause Review is devoted entirelv to "se-

GLOBAL SUPPLY CHAIN GAME 63

rious gaming" in education. But the survey ofthe field concludes: "We are not likely to seewidespread development of these games untilwe can point to persuasive examples that showgames are being used effectively in education(Van Eck)."

The same can be said of the current cropof supply chain games attempting to exposeparticipants to the cognitive challenges andcapabilities required to lead supply chains. Un-til now, approaches to fill this training/educa-tion gap have focused on a series of static turn-based business games designed to simulate theenvironment of a logistics executive and pro-vide participants with a better understandingof the situations they might encounter as well asways to deal with these situations effectively.However, none of these games replicate thetraits of the modern supply chain, which re-quires multi-tasking in a dynamic, real timeand event-driven leadership environment. Thenext several paragraphs discuss some of themore popular of these simulation approachesand identify some of the gaps associated withthem (BillhardO.

The Beer Game is a role-playing simulationof an industrial production and distribution sys-tem developed at the Massachusetts Instituteof Technology to introduce management par-ticipants to the concept of economic dynamics(Sterman). In particular, this concept illustratesthe bullwhip effect that causes high variabilityin orders and inventory levels due to non-lin-earities and time delays between the actors ina supply chain. The game can be played usinga board or as an Internet-mediated version(Ravid and Rafaeli).

The main limitation with the Beer Game isits limited functionality. Its sole design is toreinforce an understanding of the bullwhip ef-fect and its central causal factor, i.e., inade-quate information sharing across the supplychain. Furtherrnore, it is a turn-based game thatinvolves one set of decisions being made anda fixed response to those decisions. It fails toreplicate the continuous time aspect of the realworld. Its message, while significant and im-portant, does not change from one playing ofthe game to the next. The message is singularand constant. As such, it does not provide fora rich continuous play environment in which

64 TRANS PORTATION JOURNALTM Summer

make new decisions. Instead, the game runs ata slow enough pace over the course of a weekor two that participants can log in to a Website, ascertain the status of their team, and makenecessary adjustments. There is no need toview the game even hourly. The instructorstops the game after the time period allowedand ranks the teams. The types of decisionsthat participants can make are limited to a fewpreset choices, and the goal of the game is tosee which team can make the best use of itsresources. There is competition in the sensethat teams are ranked in the end, but there isnot competition for resources or demand.

While there are other management simula-tion games designed to illustrate supply chainmanagement principles (see Appendix A),there are a few important limitations. Mostgames are furn-based, meaning that partici-pants make a decision, submit that decision.and then, at a point later in time, they arehanded a set of metrics detailing their perform-ance and the consequences of their decisions.With this information and feedback, the partici-pants adjust their strategy/decisions for a sec-ond round of play. The second important limi-tation is the competition for resources. Allgames have an "unlimited" pool of input re-sources available to the participant to drawfrom and most games allow all demand to befulfilled by all participants. Third and finally,there are no exogenous events that may occurduring the game. Forexample, halfway throughthe Beer Game, the administrator does not an-nounce that there has been an improvementin the communication order relay technology,thereby reducing the delay from two periodsto one period. Such an event would require therethinking of strategies, which is not rhe goalof the games. The goal of such games is eitherto demonstrate a specific principle (i.e., thebullwhip effect) or to help players learn tothink about what they would do given certainchoices.

The fundamental observation, however, isthat the real world is continuous and dynamic(not turn-based), highly competitive, and ex-tremely disruptive to even the best-laid plans.As a consequence, the existing set of supplychain management simulation games does notreplicate the real world of a global supply chain

events are constantly changing and the re-sponses from the managers must filter theevents and determine an optimal strategy/ap-proach based on an analysis of the impacts ofcurrent events.

More recently, the Harvard Business Schoolhas developed an interactive Global SupplyChain Management Simulation to provide par-ticipants with a learning environment that repli-cates the complexities of the real world (Har-vard Business School 2004). The gameinvolves participants making decisions regard-ing the rollout of two models of mobile phones.The participants make decisions about productfeature sets, supplier selection, demand plan-ning, and management, as well as pricing andmarketing. Specifically, the game is designedto illustrate the following key supply chainconcepts, according to the Harvard BusinessSchool Web site (Harvard Business School2004): "creating a balanced supply chainacross suppliers with different lead times,building flexibility inro the supply chain toavoid stock-outs and excess inventory andevaluating and using demand forecasts."

Participants run the simulation for four simu-lated years. The simulation is turn-based, witheach turn representing an entire calendar year.After each tum, participants are presented witha series of reports documenting their sales, theirsupply chain performance, and their overallprofitability results. These reports provide theparticipants with information to adjust theirstrategy and decisions for the second (and sub-sequent) turn. The Global Supply Chain Simu-lation from the Harvard Business School doesnot involve any continuous play features.Clearly, while it has very important learningobjectives, the game does not provide a real-world, continuous play environment. As such,the experience given to the future global supplychain managers is limited and fails to replicatethe pressures of operating in a 24/7 global sup-ply chain environment.

There has been an attempt to bridge the gapbetween turn-based and real time games. Re-sponsive Technologies (www.responsive.net)hosts a game on its Web-server called the Sup-ply Chain Game. It is completely Web-basedand real time in the sense that there is never apoint where the game completely stops andparticipants receive a report from which to

OJ2006 GLOBAL SUPPLY CHAIN GAME

manager. Clearly, this gap represents a signifi-cant issue in the training and education ofglobal supply chain managers, whose environ-ment is highly dynamic.

rnn IxrpnNer-MrnHren Gr,onll, SupplyCnln Gm,re

The review ofcurrent approaches in the edu-cation of supply chain managers demonstratesthat there is a need to provide a learning envi-ronment that closely approximates the chal-lenges of managing a real-time global supplychain. Such an environment demands that par-ticipants experience being besieged with aflood of information, needing to analyze thatinformation or process it in a systematic way,and being aware of the complex interdepen-dencies of each decision that they make. Theenvironment must provide participants with theoppornrnity to make strategic decisions involv-ing procurement of supplies, the matching ofsupply and demand, the distribution of goods

Figure 1. Structure of a Supply ChainSupplier Manufacturer

and services, and the management of f,rnancialresources, all in real time.

ln order to create this type of environment,researchers at Delft University and the RobertH. Smith School of Business at the Universityof Maryland have developed the Global SupplyChain Game (GSCG). A specific instance ofthe game is called the Distributor Game, cen-tered on globalization and the real-time supplychain. The GSCG differs from many existingbusiness learning games in that, as opposed tobeing turned-based and locked in on demon-strating a single phenomenon (i.e., the bullwhipeffect), it simulates a real-world experience byoperating on a continuous clock with ongoingevents and responses to individual decisions.The decision-making processes of the distribu-tors in the game-the third tier in Figure l-arecontrolled by human players. To confront thehuman players with a complex and dynamicenvironment, suppliers, markets, and compet-ing distribution centers can be represented bycomputer-controlled actors.

DistributionCenter

Customeror Market

Flow of goods

66 TRANSPORTATION JOUR}JALTM

Thus, in the GSCG, players assume the chal-lenge of playing the role of a distributor. Themain tasks of a distributor are to competethrough a bidding process to buy products fiomsuppliers, control the inventory levels of thevarious products in the warehouse based onprojections about sales, and sell the productsto markets through another bidding process. Inthe initial insrance of the game, which is basedon a report on globalization of the personalcomputer industry (Dedrick and Kraemer2002), the products are four different typesof computer systems: laptops, servers, multi-

the state ofplayers by taking into account cashbalances, the value of inventory, outstandingorders, incoming orders, bills to be paid, andpayments to be received. These sheets are pre-sented to player teams on a regular basis, en-abling them to see how their strategies performin comparison to other teams' strategies.

To support the concept of globalization, theworld is divided into three regions in the Dis-tributor Game: the U.S., Europe, and Asia, al-th,ough it is possible to work with any numberof regions and any geographic demarcation.An overview of the European region is illus-trated in Figure 2. Each region has a numberof player=controlled distributors. Furthermore.

three regions and has to develop and test strate-gies for global versus local sourcing, globalversus local sales, inventory levels to be main-tained, and product specialization or differenti-

ation. Due to rapid depreciation, unsold itemsare almost worthless. In the game sefting, profitmargins are under pressure due to heavyiom_petition, and making a profit for the distributorsis difficult. Customers expect fast service frornthe distributor, but they cannot tell in advancewhen they want to purchase items and whatthey require. Due to the heavy competition,distributors cannot afford to have no inventorvon hand. One of the main assignments of thbplayers is managing the trade-off between hav-ing as little inventory as possible to decreasethe inventory costs and having enough inven-tory at hand to satisfy their customers' erraticand sudden buying patterns.

The Distributor Game has been implementedin a layered software architecfure, which allowsthe reuse of parts of the application in othergames inside or outside the supply chain do-main. The software architecture has been de-scribed in more detail in van Houten and Jacobs(2004), van Houren et at. (2005), and Ver-braeck and van Houten (2005).

In order to participate in the DistributorGame, the players download a Java applicationflom the game's Web site. Installation of spe-cial software by the players is not needed. Theplayer application (Figure 3) provides the play-ers with an overview of the state of their distrib-utor company and allows them to enter theirdecisions. Through the application, the playersget updates about purchases, sales, finance, andinventory. They can also communicate elec-tronically with other players via a built-in chatfunctionality, which is especially useful whenthe players are not all in the same room.

The Distributor Game supports the learningof a number of skills that are critical to manas-ing global supply chains in real time. Theieskills include strategic leadership, operationsmanagement, financial management, and infor-mation technology. The following paragraphsdiscuss the link between the Distributor Gameand each ofthese critical skills for supply chainmanagers. The discussion is summarized inTable l.

In the game, the distributor, using a sophisti-cated electronics trading network, is constantlystruggling to align supply with demand. In-ternet-based customer inquiries/orders areflooding into the distributor in real time. Simul-taneously, orders to suppliers are streaming

GLOBAL SUPPLY CHAIN GAME

Figure 2. Example of the Players in one of the Regions in the Distributor GameI u(|r|rrd

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2006 GLOBAL SUPPLY CHAIN GAME

Table 1. Link between Supply Chain Leadership Skills and Learning Points in theDistributor Game

SC Leadership Attribute SC Game Attribute

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SC leaders have understanding of a SC as a businessecosystem spanning the enterprise, its customers, andits suppliers, with best of breed SC performers oftenout-performing Iaggards in ROVProhtability,Inventory Turns, and Customer Satisfaction matrices.SC leaders understand that rapid globalizationincreases the strategic complexity of the operatingenvironment.

SC leaders must deal with increasing volatility dueto heightened exposure to international market ancsupply risk conditions.

The Internet and Corporate IT Systems create dataoverload on SC leaders: leaders must access/filterdata, apply critical judgement, and make timelydecisions based on most relevant data.

Corporate SC decision structures involve theblending of CFO, CIO, and Chief SC Officerexecutive perspectives, as well as other horizontally-oriented enterprise management teams.Companies engage in external long-term supplychain partnership building with customers andsuppliers.Individual SC leaders go through a complex leamingcurve to incorporate expertise and judgment overtime and to demonstrate intuitive supply chaindecision-making mastery in a process of developing"Cognitive Agility" (Dibello 2005).

Distributor corporation is a SC-based enterprisewhere its global operating performance in supplychain has enterprise-wide effects and determinesfinancial performance.

The Distributor Game is global in scope, with teamschoosing to focus sales and supply sourcingstrategies on regional, trans-regional, or fullyglobalized markets and spread of suppliers'The game is characterized by volatflity of supplyand demand and is subject to massive externalevents that dramatically shift customer and supplierconditions.Game participants are constantly bombarded withreal-time data. They must instantly evaluatepotential customer requests for quotes; matchmarket demand patterns against on hand and/oravailable supply; prepare bids based on internal orexternal pricing imperatives or anticipated revenuetargets; and organize transport/shipping to complywith customer lead time requirements.The game is played by small teams wheremanagement skills and analytic capabilities areblended in the minute-by-minute operations of thedistributor company to which they belong.Distributor companies vie for longer-termagreements and bigger sales volumes than originallysolicited in customer RFQs.Game participants are constantly balancing andrebalancing factors of decision making and aretesting capabilities against competitive realities.Participants often exhibit enhanced conltdence intheir own mastery and a desire to play the gameagain and test out new and imProved

non many times during the play session andcome to better understand the competitive pric-ing dynamics at work in the industry. On thebuy side, a major learning point relates to ordersize quantities. What will be the optimal group-ing oforders into a specific buy from a supplierto meet ag$egate customer demands? Ordersize is an important determinant of other supplychain costs, such as transportation. Finally, theparticipants experience the powerful impera-tive to compress the cash-to-cash cycle andto effectively manage accounts receivable andaccounts payable.

Virtual collaboration with customers andsuppliers over the Internet can often lead toconfusion and dissatisfaction, yet it remains a

highly significant managerial innovation' TheDistributor Game demonstrates to participantsthe web of relationships that technology canhelp bring together quickly to solve supplychain dilemmas. Customer requirements canspark a dramatic "raying out" of messagingand process actions across a web of inter-re-lated enterprises to meet those requirements.Suppliers from other regions and the wholeworld can be mobilized on an ad-hoc basisusing Internet technology to serve the distribu-tor's customers. The participants appreciate thetechnology infrastructure that supports thissupply chain "ecosystem."

These learning points help align game skilldevelopment attributes with core supply chain