Beer and Forrester

Beer and Forrester – A tale of humans vs. data

The idea of a “beer game” is always tempting. Jay Forrester’s Beer Game, developed in the late 1950’s, was, until recently, a mainstay of the University of Buckingham’s Lean MSc Supply Chain module. It simulates the supply chain of the beer industry and in so doing, it illuminates aspects of system dynamics and psychological or human responses. Unfortunately, no actual beer in sight, booo! I say until recently because, ironically, we had to cut the beer game out of the module due to repeat cheating from the class. Who’d have thought it? You know who you are! One particular culprit was later seen walking around Cork one year dressed as an elf…….well, that’s another story.

One of the major dilemmas that is exposed by Jay Forrester’s Beer Game is between human behaviour and clear, transparent data. The well-known, rational thinking approach for a supply chain is that we can substitute inventory for data. That means where we have visibility of real demand we can more accurately agree our rational minimum stocking policy to achieve the desired customer service level. Logically this should be true but, human behaviour has a powerful impact when put under pressure. This is often termed as “gaming” and is all around us.

In Jerry Z. Muller’s 2018 book “The Tyranny of Metrics” he highlights various types of gaming. He describes four main types. These are gaming through;

Creaming. This is when we focus on easy cases and exclude tougher cases.

Lowering Standards. Making it easier to achieve the target or quota.

Omission and distortion. Leaving out figures that undermine the message.

Cheating. Sorry back to the guilty elf…..I won’t  let it go…..

Supply Chain gaming wouldn’t happen now, in the modern data-rich world, would it?

In this modern world of “big data”, the “cloud” and information transparency supply chains wouldn’t suffer from gaming, would they? Well they still do. Shortage gaming is what it’s called and it still happens. Recently in the UK in the build up to a possible “no deal” Brexit this has been the case for pharmaceuticals. The price of drugs has increased despite the Government setting up “official” stockpiling at the drug manufacturers and suppliers.

Simon Dukes, chief executive of the Pharmaceutical Services Negotiating Committee (PSNC), said there were supply shortages for a number of reasons and that “concerns around a no-deal Brexit are likely to exacerbate those ongoing issues”. Dukes also noted that the PSNC suspects that there is unofficial stockpiling of generic drugs somewhere in the medicines supply chain. He said that “a combination of that and distributors possibly raising prices in anticipation of there being no deal are factors in the recent market moves.”

This is happening despite, Matt Hancock, the UK’s Healthcare Minister saying “healthcare professionals should not build stockpiles of their own and any over-ordering will be investigated”. Who could have predicted people gaming in the public sector?

What we have found is that supply chains are invariably complex and often have emergent characteristics and reveal unintended consequences. Don’t even get me started on Trump’s trade tariffs on steel ………lie down needed.