Troy, COO of an overhead crane services company, hung up the phone and shot a worried look at the backlog of orders on his desk. An important customer had just confirmed requirements for two large industrial overhead cranes. In normal times he would be delighted, but with a 12-month backlog totaling nearly $100 million, the company was facing a dilemma. Given the disruptions and delays in his own supply chain, the strong temptation was to increase orders to be sure at least some of the parts he was waiting for might be delivered on time. But he recalled the Beer Game, a business simulation exercise developed at MIT: students in a beer keg supply chain simulation ordered more and more from their distributors (at higher and higher prices) until the famous bullwhip effect set in, bankrupting the student teams. Troy was determined to resist the urge to over-order from his suppliers, but he knew something must change. Was there a way to create better partnerships and streamline his supply chain, creating win-win outcomes?
Small Businesses Play a Big Role in Supply-Chain Resilience
But lagging technology can make them a weak link.
December 06, 2022
Summary.
Small and midsize companies are essential to American supply chains, but they lag in productivity and technology adoption. If government and industry can help these smaller supply chain firms upgrade their technology, it would make supply chains significantly more resilient by enabling data-sharing and collaboration.