1. The benefits of communication in a Supply Chain are variable and depend on many factors other than enhanced clarity and efficiency. Benefits not only come from effective communication but from coordination and the decisions derived from useful information. Every node in a supply chain network has a significant influence over the decisions made by others pertaining to real demand. These decisions, in turn, affect the entire supply chain and distort the information as it travels vertically through the supply chain resulting in what is known as the “bull whip effect”.
a. Immediate benefits that were felt by the use of communication between levels were clarity and the reduction of inflated orders through the supply chain. Orders were planned based on end-user demand information derived from the retailer’s point-of-sale data. As a result, at every level of the supply chain, inflated orders were eliminated by creating smaller orders based on actual end-user demand. With the added benefit of communication in the second round of the beer game, the speed at which information was being shared allowed for collaborative planning. This ultimately led to supply chain integration and reduction of the bull whip effect. Each level focused on the information available from actual demand and planned according to running levels of inventory supplied from the vendor (factory). Through effective communication and real-time information sharing, supply chain visibility was achieved; not available in the first round of the beer game.
b. Within each level, communication presented an obstacle. In the first round of the beer game, communication wasn’t necessarily the issue, at least between levels. The real problems were coordination and the implementation of decisions -the quantity of beer being ordered by each level- derived from grossly distorted information. When reducing the responsibilities of each member, i.e. counters, planners, and reducing the amount of