GOVT.

ISLAMIA COLLAGE (W)

COOPER ROAD LAHORE
DEPARTMENT OF B.COM
“SUPPLY CHAIN MANAGEMENT”
Alishba Nasir
Roll No:06
Bakhtawar Mumtaz
Roll No:26
Bisma Iqra
ROLL No:28
Fatima Sharif
Roll No:34
Fiza Aslam
Roll No:35
Javaria Akram
Roll No:38
Kinza Rafique
Roll No:39
Submitted To: Miss SUMAYYAH
Contents
Introduction...................................................................................................................1

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

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

Supply Chain Strategies...............................................................................................4

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

BIBLIOGRAPHY.........................................................................................................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.

Main text

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)

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)
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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 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
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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 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 customer and the
business at the end of the day. (Greasley, A, 2009)
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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
 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
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(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

“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)

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.
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Adopted from (Mangan, 2012)

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 2 nd out of 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
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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.

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
 8

and integration improved.During the first part of the game, Team 3 operation failed in
the supply chain 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 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.
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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.

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 that
the winning team – Team 1- had adopted a clever strategy. They’re strategy was to
 10

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.
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Appendices

Appendix 1:

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

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Appendix 2:

Figure 2 – (Lee and Whang, 2011, p3)

 13

Appendix 3:

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

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 15

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