RMIT International University Vietnam

Assignment Cover Page

Subject Code: OMGT2272

Subject Name: International Logistics

Title of Assignment: Reflection on the Harvard individual

simulation game
Student name: Thuc Anh Phan

Student Number: S3697355

Teachers Name: Eckart Dutz

Number of pages including this one: 9

Word Count: 1220

I declare that in submitting all work for this assessment I have read, understood, and agreed to the
content and expectations of the Assessment Declaration.
Introduction
Following the openness and the complexity of the global market, companies would be likely to diversify
their product ranges, which can be based on the following characteristics: quality, delivery speed,
reliability, product design, flexibility, and brand image, etc., to meet as many consumers’ demands as
possible. Samsung's smartphone product range is the perfect example of this phenomenon, in which
Samsung produces cheap products to compete with Chinese competitors and high-end products against
Apple, a US smartphone producer (Samsung 2022). However, one of the downsides of having a lot of
different product options is that it can be difficult to predict and meet customer needs.

To have a better understanding of the complicated situation faced by many entities, a game called
"Global Supply Chain Management Simulation Game Version 2" was created by Harvard University and
allows students like myself to understand the calculating and planning mechanisms to (a) create a cost-
effective and flexible supply chain by seemingly utilizing a mix of expensive, short-lead-time, and
affordable, long-lead-time suppliers, as well as (b) incorporate flexibility into the supply chain in order to
prevent stock-outs and excess inventory in an unpredictable demand environment, and how to assess
the optimum degree of flexibility for particular goods and contexts.

This paper reflects my process when playing this game.

About the game

The Global Supply Chain Management Simulation Game V2 is about how a company can manage its
international supply chain to keep up with the constant demand and changes in the market.

Specifically, I played as a newly hired supply chain manager in charge of two newly created mobile
phone model lines: A is the base model1, which can be easily studied and copied by the competitors, and
B is the high-end model2, which obtains better performance and appearance. The decisions in the
stimulation game made by the manager affect the following areas: product features, demand forecast
and production amounts, marketing advertising, production scheduling and planning with the available
suppliers, as well as communication with the board of directors. The decisions would be applied in the
sales season that occurs from May to December, which has consistent market demand.

From the business results (Appendix 1, 2 & 3), during a 4-year period, there is no loss, and the total gross
margin is 123,667,300 US dollars, with an average of 30,916,825 US dollars; approximately 35 million US
dollars is the gross margin of year 4. Furthermore, the percentage of the company’s gross margin is
greater than 5%; to be specific, here is the ranking in accordance with the yearly gross margin, from
highest to lowest: Year 1: 23.74%, Year 2: 19.54%, Year 4: 15.71%, and Year 3: 7.10%. Besides, the
average number of broad members’ votes of confidence for myself is 2 out of 4, with the highest of 03
votes in year 2 and the lowest of 01 vote in year 3.

1
Model A
2
Model B
In the following part, I would like to provide my thoughts on the process of participating in the game and
how the theories of international logistics and supply chain management support me in shaping the
decisions.

What does the game teach me?

In this part, the reflection of Harvard virtual stimulation game would be provided based on what was
happening in each year.

Before putting the yearly performance into discussion, I would like to address the challenges when
making the decisions over a period of 4 consecutive years.

To be specific, the insufficient amount of data indicating the decline stages of life cycle of products
(Rodrigue n.d., Appendix 4), caused the supply chain manager experienced a rougher decision-making
process on creating the production plan. Consequently, the final version of products usually witnessed a
higher chance of having the unwanted product features as well as frequency of under- or over-
produced, triggering unnecessary excessive inventory, stock-outs, and loss of confidence in the long
term.

Moreover, the relationship between the supply chain and marketing department can determine the
success of an operation; it is because one party fulfills the customer's demands while the other learns
and creates the demands in the market, which would likely cause tension if the marketers’ observation
and production unit estimation are not aligned (Dutz 2022). As I went through the stimulation game, the
role of marketing was novel since Jessica the marketing provided the observations that partially
confirmed whether my predictions were correct. However, the observations come late as the marketing
promotion happened in March, and sometimes the production is executed in January, and any change in
production order can bring the company into punishment with the suppliers. As a result, the marketing
observations had little impact on my final decisions as supply chain manager as the speed of collecting
and providing information of customer demand is slow along (Dutz 2022; Appendix 5) with amount of
time to adjust the production plan were too short.

Year 1
Generally, this was a successful year, with a margin profit of approximately 44 million US dollars.

Stepping into the first year of the game, the demand forecast team is the one working closely with the
supply chain manager to make a decision on what product features should be available in both models A
and B. From my perspective, in the design process, I chose to focus on the interior features such as
storage capacity and upgraded communication, as these features are more important to the customers
who first approach the products that have a basic demand to communicate through phone calls, SMS, or
other forms of virtual communication and store their communication processes and information in a
mobile device. Regarding the exterior features such as styling and exterior materials, these can be later
adjusted based on the market context and demand. What I learned from the design process is the
psychological characteristic when making a decision on a model that the high consensus among the
forecast team members on a specific option is not believable as the opinion among team members is
either personal or biased. This can be observed in the discussion among team members regarding the
option of external material (Appendix 6) and mentioned by one of the broad members.
In the production process, my forecast on the demand on a monthly basis is 65,000 for model A and
35,000 for model B. These amounts remain the same when placing orders with the suppliers as it is best
to firstly study the market as well as create and boost the demand for both products through marketing
promotion to make the market pay attention to the advancements of both models. As a result, the
stock-outs only happened in May for both models and in June for model B. Additionally, despite the
decrease in sales in November due to the change in market demand as people prefer to gift hand-made
crafts and mementos, the 20% increase in high-end model sales in December alone covers the
November loss and made approximately 30 million US dollars. This can only happen because of accurate
demand estimations.

Year 2
From my standpoint, it is also a successful year for the company as the gross margin is about 33 million
USD, with high confidence from the board of directors. However, the issues regarding the demand
forecast need to be paid attention to.

In the design decision process, my intention continues to concentrate on the interior features such as
durability and storage capacity to maintain the product performance in the customers’ mindset and on
the stylish exterior elements as this action can enhance the products’ appearance, which targets the
high-end users such as executives in the red-carpet club who love individualization. 60,000/month for
model A and 40,000/month for model B, which are based on the averages of monthly estimated
demand for each model, plus approximately 10% of the average monthly estimated demand for model A
and 30% of the average monthly estimated demand for model B. In the decision of model B, a mistake is
established due to the fact that the gross margin of model B is higher than that of model A, and it leads
to a higher prediction for model B, the ignorance of the marketing department’s observation confirming
the decrease in sales of model B and the continuation of a false calculation. Nevertheless, during the
process of working with the suppliers, there has been a 5000 increase in the model A’s production order
than the original estimation, should any negative, unexpected events happen, which turned out to be
the right decision.

As a result, model A experienced significant insufficiency in product volume by 20,000 in May, which
allowed competitors to seize the market share. Later, from August to October, the model A is sold out.
Whereas model B witnessed a huge inventory in July, particularly 39,000 compared to the product
receipt from suppliers of 40,000, thanks to the negative and unexpected event. This sales drop
phenomenon for model B continues until December. Also in December, for model A, thanks to its sold
out and accurate inventory calculation in the last two months, the company’s profit leapt from 9 million
US dollars in November to 33 million in December. In the end, despite the positive feedback from three
broad members, there was a lack of business alignment in the customer demand forecasting process,
which put attention on only the price instead of capacity allocation and production flexibility, leading to
the wrong model which was irrelevant for the future success. All this wasted time for the supplier and
risked credibility of company in stakeholders’ mindsets (Dutz 2022).

Year 3
This year I made many mistakes in my decision-making process and there were turbulent events in the
marketplace. Despite that, the company did not suffer a loss and recorded a profit of 11 million US
dollars.
Even though the decisions on product features and forecast demand experienced no significant issues
and some of the features, such as GPS anti-theft tracking, became unique value propositions (Dutz
2022), there has been a miscalculation in placing the orders with the far-far away supplier. Specifically,
the lead time of the far-far away supplier is four months, and yet this order is planned to start producing
in February and the order from a pretty-close supplier is planned to start manufacturing in July.
Consequently, there are no sales in May for both models, and due to the insufficient product quantity of
model A to meet the market demand, together with the sales drops in August and December due to
negative and unexpected events, the profitability has taken a heavy toll. Fortunately, thanks to the
accuracy of demand estimation of pretty-close and far-away suppliers, 11 million were made as profit in
December, compared to-23 million US dollars in November.

Year 4
Taking the lessons of all 03 years, the profit of Year 4 is recovered and higher than year 2.

In design decision-making process, besides the existing feature of GPS anti-theft tracking, camera quality
is added as this is the manageable risk option, which is likely to outrace the competitors, attract new
customers and continue to allure existing customers (Dutz 2022).

In the production decision-making process, the miscalculation of each suppliers’ lead-time has been
fixed with the even distribution of production time allocation (Appendix 7), the model A was
overproduced and costly in terms of inventory as the market suddenly shift its demands to Model B.
However, as the model B has a higher profit margin than model A and a better calculation, it has been
sold out in from July to September and December.

Conclusion
In conclusion, there are lots of lesson learnt in the stimulation, which can bestow upon my
understanding of how supply chain works, and the importance of coordinating with other departments
and parties in and out of the business.

Reference
https://www.samsung.com/us/mobile/phones/all-phones/

https://transportgeography.org/contents/chapter7/freight-transportation-value-chains/product-life-
cycle/

https://rmit.instructure.com/courses/101545/pages/topic-2-learning-materials?
module_item_id=3965247

https://rmit.instructure.com/courses/101545/pages/topic-3-learning-materials?
module_item_id=3965252
Appendix

Appendix 1. The business result of Year 4

Appendix 2. The business results in a 4-year period

 Appendix 3. The business results in a 4-year period
(continue)

Appendix 4. The product life

cycle (Reproduced from: Rodrigue n.d.)
 Appendix 5. The speed of the
lead-time process in supply chain (Reproduced from: Dutz 2022)

Appendix 6. The discussion among team members in Year

1 on exterior material feature.
 Appendix 7. Production
plan in Year 4