Executive Summary for HBS Global Supply Chain Management Simulation
Introduction – The game has supply chain managers of a mobile manufacturing company plan the rollout of two mobile phone models, i.e.: basic ad high end each year. Managers have to take a decision on the product designs consisting of 1-4 options, arrive at expected monthly demand and plan a sourcing policy. This performance is evaluated by board members on parameters of service levels, sourcing policy, production flexibility, forecasting accuracy, supplier order level changes & design selection affecting demand uncertainty. This also forms the basis of their votes. Analysis of board member requirements gives us the win game strategy as always keeping a safety stock on the basis of standard deviation, implementing a flexible sourcing policy using a supplier with large lead time and a supplier with small lead time, selecting a design that boosts product volumes & profitability while ensuring low demand variability.
Analysis – The game is divided into four playoffs. Each playoff is independent in terms of previous year’s performance and demand realization. Key issues to achieving objective are: 1. Unavailability of historical demand trends 2. Conflicting view of forecasters 3. Long lead times for cost effective oversea supplier and high costs for domestic suppliers 4. Effects of design options on demand uncertainty
Issues were mitigated through optimum selection of
Product design: Product design variables can be defined as: 1. Profit boosting option 2. Volume boosting option
Each option brought its own error variability in forecast data, thus selection of product design was based on the spread (risk) between highest & lowest possible volumes along with profitability, as per Exhibit 1. Option with average cumulative spread in years one and two were selected to