The Product Distribution or "Beer Game"

Overview

The Product Distribution or "Beer Game" is an experiential exercise designed to help decision makers recognize the usefulness of adopting a holistic and dynamic approach to problem solving. The game was invented in the early 1960s at MIT and has been played by thousands of public and private sector managers, professors, and business school/high school students throughout the world.

The mechanics of the beer game involve dividing the players into teams of four (or up to eight) who will run a beer industry. The players assume the roles of beer retailer, beer wholesaler, beer distributor, and brewery. During each round of the game, each player must make one and only one decision: how many cases of beer to order from their supplier upstream. The retailer orders beer from the wholesaler, the wholesaler from the distributor, and the distributor from the brewery. The brewery decides how much to produce, rather than how much to order from a supplier. The retailer receives its orders from the game facilitator (the "customers").

The beer game is played over a period of (roughly) three and a half hours. A half hour is required for game briefing, an hour and a half are devoted to the actual play of the game, a half hour is allocated for a break and for the facilitator to score the game and prepare the debrief, and an hour is required for game debriefing. During the debriefing session, the game facilitator leads a discussion centering on the results of the game and the insights the players can glean from the results.

Insights

Players typically come to see that:

1. a system's structure causes its behavior.

2. decision makers must look internally, rather than externally, for the causes of a system's problems.

3. decision makers must adopt a systems (holistic) point of view.

4. decision makers must adopt a dynamic point of view.

5. decision makers must alter the structures of their systems to make them behave better.

6. to understand how to alter the structure of a system, decision makers must first understand the relationship between its structure and dynamic behavior -- this requires the use of dynamic systems tools.

7. (2)-(6) require decision makers to think differently; leadership is necessary to alter the structure of the actual system.

One of the things that can be done during the game debrief is a presentation of a system dynamics computer simulation model of the beer game. This model imitates the behavior of the decision makers who played the game very well and illustrates how computer modeling can be used to generate strategic insights for organizations. Game debriefs can also:

1. include a discussion of the use of system dynamics modeling by a Fortune 100 company that resulted in a significant reduction in their supply chain costs.

2. tie the play of the game to the concept of customer satisfaction and look at the measurement of customer satisfaction and its effect on the bottom line from a systems perspective.

3. include a discussion of the role of forecasting in the supply chain, as many managers feel that accurate forecasts will solve all/most of their supply chain problems.

In short, the debrief of the beer game can be tailored to fit many situations commonly encountered by managers.

Beer game Add-On

Some organizations would like their members to be able put the insights from the beer game into "action" and are thus interested in having them introduced to systems thinking tools. A session can thus be run after the beer game in which decision makers are taught to apply reference modes, causal loop diagrams, and other systems thinking tools to problems with which they are confronted. This is typically a three hour add-on, but it can be adjusted to fit the organization's needs.

Beer Game Check List

The items listed below are needed to play the beer game with "n" people. Fours players is the minimum number required to play the game. Radzicki will bring along a lap top and "player packets" for each participant:

• INT(n/8) + 1 long tables

  • 1 head table in the front of the room

  • INT(n/8) tables set-up near one another with eight chairs per table (four to a side)

• 1 overhead projector

• 1 projection screen

• 1 LCD projector (Radzicki can bring if necessary)

• 1 large flip chart with white paper and a large black magic marker

• INT(n/8) rolls of masking tape

• INT(n/8) rolls of scotch tape

• INT(n/8) beer game boards***

• INT(n/8) customer decks***

• INT(n/8) "large piles" of plastic bingo chips***

• INT(n/8) sets of blank (colored) order slips***

• [INT(n/8)]/2 large racks of poker chips

  • Half a rack per table

• INT(n/8) "cheap" (e.g., $3.00) calculators

• n black pens

• INT(n/8) black Flair markers (medium point)

• INT(n/8) blue Flair markers (medium point)

• INT(n/8) green Flair markers (medium point)

• INT(n/8) red Flair markers (medium point)

Note 1: INT() means to round-up to the nearest integer. Example: 17 players. INT(17/8) = INT(2.125) = 3

Note 2: *** means these materials are available from the System Dynamics Society.

Interested in Playing?

Contact Mike Radzicki if you're interested in having me facilitate the beer game for your organization.

Note: If you are considering playing the beer game in a professional setting, I STRONGLY recommend that you have a "helper" for each table who will "hover" around the board and help the decision makers play the game. These people can step in immediately if there is a problem and fix things so that, when the game is over, the players attribute what happened to their decisions, and not to SNAFUs on the game board. I can provide these helpers if you wish or, alternatively, you can provide them. If you are going to supply the helpers, I'd like to meet with them prior to the game so that I can give them some training (watching over a table and fixing problems is trickier than it looks).