The Beer Game: Taming the Bul$h!t effect.
In the Beer Game, players take on roles in a four-stage supply chain: retailer, wholesaler, distributor, and factory. The goal is to satisfy customer demand while reducing inventory and backorder costs.
Despite good intentions, players often create demand swings that grow larger as they move up the chain. Delays in information and shipments, along with local decision-making and limited system-wide visibility, cause big fluctuations in orders, inventory, and service levels.
Modern Supply Planning Systems: Overcompensating for Variability
Modern supply planning systems have become hyper-vigilant in managing demand fluctuations, especially when it comes to safety stocks.
These systems aim to prevent stockouts by setting and adjusting safety stock levels at every point in the supply chain.
When demand rises or variability is observed, they respond by increasing safety stocks throughout the network.
The Safety Stock Trap: While safety stocks are crucial for buffering variability, their rigid enforcement can create new problems:
When safety stocks are adjusted upward, supply planning systems react by triggering replenishment orders. These can be large. These surges can overwhelm constrained production lines and warehouse space. But even small changes in safety stock can have an impact as, in the consumer products world, they trigger full loads to be built so the few “much-needed” safety-stock replenishment cases can travel.
Most planning systems are not aware of the physical realities of the network, such as dock capacity, warehouse labor availability, ware-house space or yard congestion. The result: trucks are dispatched into already stressed systems.
A minor dip below a safety stock threshold—even by a single case—can trigger a shipment, often without regard for shipping or receiving constraints.
The Hidden Costs of Hyper-Vigilance
Supply planning systems that react aggressively to inventory changes create ripple effects that add cost and complexity:
Introducing LevelLoad: A Smoother Path Forward
LevelLoad is a supply chain execution solution designed to proactively smooth out these spikes by connecting the dots between planning and real-world constraints. Instead of reacting to every inventory signal with urgent dispatches, LevelLoad considers the broader operational context—not just for today but for the next 30+ days.
LevelLoad functions by transforming the long-term supply plan into a consistent, actionable transportation schedule. It smooths the flow of goods over time, capacity, and modes, balancing inventory needs with the constraints of the physical network. Most importantly, its goal is to provide the best service to the customer.
What happens when 3 cases break the system?
Imagine a distribution center (DC) that typically receives 10 truckloads daily. When one of its SKUs drops three cases below safety stock, it triggers a request for shipment from the plant. The supply planning system, unaware of dock constraints, causes the generation of a stock transfer—even though the DC is already full and the staff are already taxed.
Meanwhile, the plant is pressured to dispatch the expedited order, forcing the loaders to work overtime. So the item that wasn’t truly needed that day has disrupted the sites. The lane’s core carrier may not be able to accommodate the additional load, so the transportation group may have to tender the load to a less desirable, lower-service, higher-cost trucker.
All this for 3 cases.
The dip below safety stock is noted, but the priority of each truck to be dispatched mainly determines how scarce labor, trucking, and warehouse capacity are allocated.
- LevelLoad schedules a replenishment a few days in advance, when dock time and labor are available.
- To assist carriers, capacity is reserved through a firm tender one week ahead.
- Just before shipment, the load’s composition is finalized to improve customer service while maximizing trailer utilization and transportation efficiency. The final shipment considers the most current supply needs and combines the most needed SKUs (based on days of supply) into the trailer that was tendered many days earlier.
Strategic benefits
Strategic Benefits of Load Smoothing
Reduce total freigh costs
Prioritize core carriers more, while using less of the more expensive, lower-service carriers.
lower labor costs
Less overtime and fewer idle staff on slow days.
improved service levels
Replenishment shipments no longer wait to be loaded or unloaded and travel on reliable carriers.
improved warehouse utilization
No longer trying to “over-stuff”.
increased organization trust
The silos separating planning from operations are merged.
Lessons from the beer game, revisited.
The Beer Game demonstrates how disconnects in decision-making and delayed feedback loops can cause major inefficiencies. Even though today’s supply planning systems are more automated and data-driven, they still face similar blind spots:
They operate in silos
They overreact to minor signals
They lack operational constraints
(They assume it is a wonderful world where everything is possible)
LevelLoad corrects these flaws by integrating the planning and execution layers of the supply chain.
A new way forward
While modern supply planning systems have improved significantly since the days of the Beer Game, they still show behaviors that increase demand variability and cause inefficiencies. Their strict enforcement of safety stock levels and their ignoring of capacity constraints reflect the same problems that the Beer Game reveals.
LevelLoad provides a new approach. By smoothing the flow of goods and incorporating real-world execution realities into planning, it reduces waste, enhances service, and builds a more agile and resilient supply chain. In a world where demand will always be unpredictable, LevelLoad makes sure your response doesn’t have to be.