STEVE INSKEEP, HOST:
A new online game lets you experience the supply chain crunch for yourself. The Beergame App simulates the steps of selling beer - from brewer to drinker.
Darian Woods and Stacey Vanek Smith of NPR's The Indicator found it reveals a real-world problem.
DARIAN WOODS, BYLINE: Mathias Le Scaon made the online beer game. And it's adapted from a game that he played when he was studying for his master's in production management and logistics.
MATHIAS LE SCAON: We played the beer game. It was on paper using just coins.
WOODS: This tabletop game with paper and poker chips was invented by an MIT systems scientist in the 1960s. And a typical game goes like this, whether it's in person or in Mathias' online version. Each player has a different role along the supply chain, whether it's retailer, wholesaler, distributor or brewer. In every round, you only do one thing - you choose how much beer you're going to order.
STACEY VANEK SMITH, BYLINE: So that sounds reasonable. But then...
LE SCAON: When you're in the middle of the supply chain, you are receiving bigger and bigger orders, so you do the same to your own supplier. But he doesn't respond usually quickly enough.
VANEK SMITH: The supplier usually does not respond quickly enough. And pretty soon you've got a backlog of beer orders. So, you know, human nature being human nature, you panic and order more beer.
WOODS: Exactly. And this is part of a pattern that happens almost every time that people sit down and play The Beergame. It's the further away from the big customer you are, the more volatile your orders would likely be. So this pattern is called the bullwhip effect.
VANEK SMITH: The bullwhip effect - so just like the shape of a whip, the part close to your hand goes up and down only a little bit. The whip's ends, though - the very tip of the whip goes up and down a lot. So a small change in customer demand might mean the factory on the other end gets, like, hundreds of orders one week and no orders the next. And, you know, that becomes really overwhelming.
WOODS: And after dealing with real-life bullwhip effects while working for a French cosmetics company, Mathias wanted to share those lessons with the world. That's where he came up with the online game vision.
VANEK SMITH: Yeah. So we at The Indicator, we signed on to train.
VIET LE, BYLINE: I'm Viet. I'm a producer on The Indicator. And I'm the retailer.
VANEK SMITH: And Viet bought his beer from our wholesaler.
KATE CONCANNON, BYLINE: I'm Kate. I'm the editor of The Indicator.
WOODS: Kate got her beer from me, a distributor. And I ordered my beer from you, Stacey. You were a proud brewer.
VANEK SMITH: There's no beer without me.
WOODS: So after an optimistic forecast for more beer customers, Viet ordered a few more cases of beer, which further down the chain, Stacey, you were not particularly happy about.
VANEK SMITH: I felt like I was...
WOODS: (Laughter).
VANEK SMITH: ...Under a lot of pressure because I was at the extreme end of the bullwhip as the brewer. And then I didn't want to respond too extremely 'cause then I was afraid I'd have a beer on my hands that I couldn't sell.
WOODS: Look, I mean that's probably what you should have done.
VANEK SMITH: (Laughter).
WOODS: Matthias says that the key to, like, avoiding the bullwhip effect is to keep calm and being steady. But I got to say, Stacey, eventually you did cave.
VANEK SMITH: OK. You know what I'm going to do? I'm going to make 600 cases of beer.
WOODS: What?
VANEK SMITH: I don't care.
(LAUGHTER)
VANEK SMITH: I'm just - I'm done.
WOODS: And look, I tried to comfort you, was trying to say that, look, this is a teaching tool...
VANEK SMITH: (Laughter).
WOODS: (Laughter) And it was not comforting.
VANEK SMITH: That is not comforting.
WOODS: (Laughter).
VANEK SMITH: The sting of the bullwhip - still feeling it.
WOODS: The sting - yeah. Well, that's right.
Darian Woods.
VANEK SMITH: Stacey Vanek Smith, NPR News.
(SOUNDBITE OF DINOSAUR JR SONG, "ALMOST FARE") Transcript provided by NPR, Copyright NPR.
