Let’s investigate a high-level conceptual design for applying game mechanics to coordinate the actions of a network of separate companies that all do business together. These companies are manufacturers, logistics providers, distributors, and retailers, and they are all members of a common supply chain.
We’ll start by imagining a company called Fantastic Corporation. They make a fantastic home entertainment system. It’s got wide-screen HDTV with surround sound, broadband Internet connection, and a built in high-performance PC with enhanced graphics capabilities. There are modular plug-ins for other devices such as DVD players, video cameras, even turntables to play vinyl records. It’s a great piece of gear for a great price and everybody wants one. Sales have been ramping up nicely.
[ A simplified version of this game is available for instructors and students to use in their courses, see more about this in our blog “A Multiplayer Supply Chain Game – Overview” ]
Their product and its success has also attracted the attention of competitors. If Fantastic can’t keep up with customer demand, then competitors will certainly step in with similar products to meet demand. So the game right now for Fantastic is to coordinate with its supply chain of suppliers and retailers to increase production to meet demand at existing stores and introduce the product into new stores to expand market share.
Coordination of Supply Chain Operations
The consumer electronics industry is one where product life cycles are measured in months (not years) and where prices and demand forecasts fluctuate from week to week. Nobody wants to get locked into long-term contracts because of the risks involved with this market uncertainty. Most products use similar combinations of electrical components so component manufacturers can sell their output to whichever product company shows the greatest demand and best prices. Nobody anywhere in the supply chain from manufacturers to distributors and retailers wants to get stuck with excess inventory because the short product life cycles cause excess inventory to rapidly lose its value. This means close cooperation between all parties in the supply chain to accurately forecast demand and make and move products effectively to meet demand.
Fantastic needs voluntary participation and enthusiastic cooperation from the players in its supply chain if it is going to increase its sales and expand market share. If Fantastic can bring these manufacturers, distributors, and retailers into a collaborative game, then it has a chance to move a lot of product and make a lot of money. And that chance is what the other players are looking for as well. So the challenge for Fantastic is to show its supply chain partners that they can all make good money if they all work together.
The folks at Fantastic organize an event to kick off their campaign. People attend online or in person at Fantastic’s corporate office. Participants at the Fantastic office gather in a conference room with those big comfy arm chairs that lean back; they all have their tablets or laptops. There is a large projection screen at the front of the room. As the meeting starts, everyone logs on to the Internet and accesses a collaboration platform called SCM Globe.[i] It provides a map of the world that is projected on the large screen in the conference room at Fantastic, and everyone can also see it on their own devices wherever they are in the world.
Conference participants follow along and talk to each other using voice, video, and chat links. The map starts out showing the global reach of the Fantastic supply chain. The facilities of all the companies and routes between them are shown. By clicking on facilities, people can see relevant information; by clicking on routes, it shows the vehicles that travel on those routes and other relevant information. The screenshot below shows a global view of Fantastic’s supply chain.
(click on screenshot for larger image) – Global view of the Fantastic Corporation supply chain
Changes people make on their displays at Fantastic or online elsewhere are seen by everyone. People use touch-screen controls to call up information and draw in new facilities or routes. By tapping on countries or cities, they can access specific market data. The map displays current sales by product category and sales trend lines over the last several months or years can also be shown with a further tap of the finger.
Online and Interactive Supply Chain Planning
As the session gets under way, all participants are able to communicate with each other via Internet audio or text messages. They can direct their communications to other individual participants, to the whole group, or to subgroups in the conference. There is a master of ceremonies from Fantastic who is acting as the leader, but that mostly means facilitating a free flow of ideas, and keeping people focused on tasks at hand.
People from three of the manufacturers draw in additional factories their companies are building that could deliver components for the Fantastic home entertainment product. Then a guy from the logistics company that supports stores on the East Coast adds in a new distribution center they are opening and shows on the map how they could support additional store deliveries of the Fantastic product (this is illustrated in the screenshot below).
Then some retailers say they are opening additional stores and if they started stocking the Fantastic product, their demand forecasts would go up so they enter higher demand numbers at a bunch of their stores. As the meeting progresses, the visibility and interaction makes it possible to get a good consensus on amounts of product that can be sold and the amounts of component parts and distribution services needed to support this sales growth.
[ We are glad to provide a FREE EVALUATION ACCOUNT to instructors and supply chain professionals interested in exploring SCM Globe simulations — click here to request an account — Get Your Free 30-Day Trial Demo ]
People run simulations on the supply chain configuration they have designed to see if it can handle the volumes required to meet sales forecasts. The system runs the simulation before everyone’s eyes and shows where problems will crop up. A screenshot below shows results from one of the simulation runs. It shows the inventory delivered to each of the stores and then shows a red circle over the Long Beach Factory and Warehouse indicating that this facility has run out of critical inventory by the end of the first week.
People respond as these problems crop up in the simulation and make changes to the design and rerun the simulation. After several iterations and some spirited discussions, a supply chain configuration is arrived at that delivers needed performance levels at an operating cost that is acceptable.
(click on screenshot for larger image) – Simulation results showing supply chain performance
This session harnessed a notion from gaming called “crowd sourcing” to arrive at the supply chain design. Fantastic Company invited its supply chain partners to an open exchange of ideas and simulations to test the goodness of forecasts and designs. The group arrived at a good solution and that solution also has the active support of the relevant parties. So it is likely to be successful.
Everyone participated in setting the goals that need to be met, and the roles and rules for each company are set forth in their contracts with Fantastic. People at each company feel good about what they accomplished and each party in this multiparty online game sees how they can make money and even have some fun doing so. As people go back to their offices, they are all committed to accomplishing the goals that were agreed on. This is business—all people want to make a profit, and they understand how much money their companies can make if they accomplish their goals.
Multiplayer Online Collaboration Platform
This conference would not be mistaken for that bane of corporate existence known as a “meeting”. Time went by quickly for all because all were intensely involved. It lasted for a day; two sessions of two hours each with a break in the middle of the day for lunch and individual conversations. Substantive work was done, and everyone was following along and contributing. During the conference, the feedback people got from the simulations and from interacting with each other drew them in and focused their attention on the challenge at hand. It brought out their collective creativity and they worked out good solutions for a range of complex issues.
Participants experienced that state of mind that gamers call “flow.” We all know what flow is; it’s what happens when you lose your self-consciousness and time gets distorted and you are engrossed in an experience that provides pleasure and satisfaction in its own right. Good work is done when flow happens.
Everything people need to continue working together is there online in this multiplayer collaboration platform, and information is updated in real time or near real time as people start carrying out the activities they agreed to. This collaboration platform is not just for planning; it will be used every day by all participants in the supply chain to monitor daily operations and meet online to resolve issues as they arise.
This event was what gamers would call a massively multiplayer online role-playing game (MMORPG or MMO). MMOs are a type of game that closely resembles business activities such as those described here. Games and gamers have pushed the technology to do things like what is described here as a regular matter of course. Players in MMOs do everything described here and a lot more. Because of games and gamers, the technology has arrived. It does what we need and it does it in real time and at a price point that is affordable. This kind of technology used to be the exclusive domain of big governments and large corporations, but not any more.
What will happen when we take game technology and its close cousin, social technology, and apply these technologies to the way we do business? What new things will it allow us to do and what things will we have to do differently to get the full benefits of using this technology?
[ A version of this game is available for instructors and students to use in their courses, see more about this in our blog “A Multiplayer Supply Chain Game – Overview” ]
This article is excerpted from my book Enterprise Games: Using Game Mechanics to Build a Better Business
[i] SCM Globe (http://scmglobe.com/) is a supply chain design and simulation application. At present, SCM Globe is used in university courses and supply chain training programs as a learning tool for people to design and simulate the operation of different supply chain configurations. As further functionality is added, it will be available for companies to use as a supply chain collaboration platform to work with supply chain partners and monitor and manage actual supply chain operations.
Copyright © 2014 by SCM Globe Corp.