COMPANY GAMES AND LOGISTICS OPERATIONS

Business games work as a kind of laboratory, in which it is possible to test strategies and decisions and evaluate their respective results. In the same way that physicists, chemists and biologists carry out experiments in laboratories, or a pilot uses a flight simulator, executives can use company games in training programs, dissemination of knowledge, or even for reflection on a certain topic.

Given the increasing use of these tools in Training Programs in Logistics and Events to raise awareness of the impacts arising from more efficient logistics management, this text will address Logistics games, clarifying the most relevant aspects related to their role, dynamics and your applications.

COMPANY GAMES

Just like flight simulators, business games also simulate something real, in this case business reality. Participants divided into teams are responsible for managing their respective companies, normally competitors of one another. Thus, the group is placed at the forefront of decision-making.

While in flight simulators the responses to commands are immediate, just as it happens in practice in an airplane, in business games reality and simulation do not walk at the same pace. When managing a company, many decisions have non-immediate repercussions, which is why, in the business game, time is “hurried”, making it possible to simulate working days in minutes. Thus, participants can quickly evaluate the successes and failures and correct the course of their fictitious companies. This means that training does not consume excessive time, in addition to providing a very dynamic activity.

To allow for a quick decision-making speed by the groups without jeopardizing the discussions – fundamental in this type of program – the game must simulate reality in a simplified way. The important thing is that it deals with the main factors of the topic addressed.

As it is a training and knowledge exchange tool, the game must represent the reality of a business environment in a similar way to the way a caricature portrays a person, that is, in a simple way, highlighting what is relevant . Simple from the point of view of the participants' decisions regarding the number of variables and the amount of information.

The model – game processor – can and should be quite sophisticated, and also calibrated in a way that adheres to reality to allow participants to provide feedback consistent with business practice. Because it is an exercise, it can often be interesting to amplify some real effects, such as, for example, certain costs or indicators, when these are related to the purpose of the game, analogously to the striking features of a caricature. Therefore, the game must have its real purpose clear so that these factors can be highlighted.

The parallel with reality has the purpose of convincing the participants that the effects verified in the simulation are the same ones present in real life. The counterpart of this relationship should not be pursued, as not all the parameters present in the day-to-day of companies must be present in the game, under the risk of it becoming complex and not very dynamic.

In a book on business games – handbook of management games (1988) -, Elgood suggests some defining characteristics of a business game:

• Have a clear structure, being able to be recognized whenever it is applied;
• Have successive stages, where learning takes place by checking mistakes and successes;
• Allow prior identification of performance evaluation criteria;
• Demand from the participants a certain level of ability to relate with colleagues in the group, to coordinate work teams, as well as to use available resources, such as presented documentation, support materials and computers;
• Engage competition and be clear at the end of the competition who are the winners.

GAMES IN THE LOGISTICS AREA

The first computer game was developed by the Rand Corporation – the Monopologs Game – for the US Air Force in 1955. Interestingly, the game was about logistics and simulated a supply and material management system. In the following year, 1956, the Top Management Game was developed, considered the first business game.

Although the term Supply Chain Management gained prominence and became popular in the 90s, in the 60s MIT (Massachusetts Institute of Technology) had already developed a non-computerized game to simulate inventory management in a supply chain called the Beer Game, which, to this day, continues to be one of the most widely used business games around the world.

THE BEER GAME

Its main objective is to highlight the importance of integrating and efficiently exchanging information in a supply chain. To this end, the game simulates the inventory management process of companies that make up the various stages of a beer production chain (retail, distributor, reseller and factory), as shown in figure 1.

Figure 1 – Beer Game Supply Chain

The big difference between this and other business games is that, at first, it is not a competitive game, but a collaborative one, since all companies in the same supply chain have a common objective, that of minimizing the total cost of chain. To maintain the competitive character, common in this type of activity, several supply chains competing with each other can be simulated simultaneously.

Currently, several software have already been developed by universities that apply the beer game all over the world. Some of these maintain a playful character and are used together with the physical parts and cards that represent the distribution centers, stocks, order form, vehicles, etc. (figure 2), while others are fully computerized, or even applied over the internet. (see the software that accompanies Simchi-Levi's book Designing and Managing the Supply Chain).

Figure 2 - Activities with Physical Parts and Computational Screen

risk pool game

It aims to show the impact of centralization or decentralization of inventories on cost and service indicators. For this, the groups manage two systems in parallel, one with centralized inventory and the other decentralized. Thus, participants can see that for the same level of product availability, the decentralized model does not require a larger safety stock (this game is also found in the aforementioned book by Simchi-Levi).

Integrated Logistics Games

To highlight the need for integration not only between the logistical functions, but also between them and the marketing strategy, some games, such as: LOG, LOG-Advanced, BR-LOG and LOGA (the first three developed at COPPEAD and the last one at Michigan State University) simulate a competitive environment in which each team is responsible for managing one of the competing companies that operate in common markets. These games involve decisions related to the supply and transport of raw materials, production support, distribution of finished products and marketing strategy.

A great attraction of these games is the high degree of motivation of the participants resulting from the competition between the teams. The fact that the markets are common and the teams compete for a portion of these markets means that the result of each period is not only the result of their decisions, but also of the decisions and strategies of the other groups. Thus, a given company can, for example, take advantage of the product availability problem of one of its competitors to gain market share. Consequently, each group has the opportunity to learn not only from its mistakes and successes, but also from those of the competition.

The levels of detail of the decisions of these games are quite varied, in LOG, for example, the logistics network is already given and the decisions are more macro, not dealing with issues related to price policies, capacity and location of installations. At the other extreme, BR-LOG and LOGA contemplate these and other decisions. The most suitable game depends directly on the participants' level of knowledge, the heterogeneity of the group, the objective of the training program and the time available for the activity.

Among the main trade-offs discussed in these games, the relationship between the cost of excess and the cost of lack of inventories can be highlighted, as well as the relationship between the costs of inventories and those of production and transport. Thus, the main objective is to provide participants with a systemic view of logistics with a focus on total cost, but also the opportunity to experience the simultaneous management of all these activities and also integrate them with marketing actions.

Most of the time, even though they already know the concept of Integrated Logistics, the participants start the game seeking to minimize the cost of each activity separately, but as the program progresses, the teams realize that when seeking a management policy limited to one function, such as transport, end up burdening other activities, such as inventory and storage.

Other Logistics games

Some other games, such as the Supply Chain Game and Forecast Game, were developed as part of a training program, that is, they are more directly linked to certain conceptual content.

Dynamics of business games

Depending on the complexity of the game and the purpose of the program, it can last from just over two hours to a total of over forty hours. Regardless of time, game applications are usually divided into 3 stages: the initial presentation, the decision rounds and the final presentation, which are described below.

Initial presentation

In addition to sensitizing participants to the importance of the game, both from a conceptual and practical point of view, this stage has two main objectives. The first is to make the rules clear and the second is to explain how your driving will be. Participants are recommended to read the game manual beforehand. In this case, the presentation has the function of reinforcing some rules and clarifying any doubts.

At this stage, participants must understand the mechanism of the rounds and the respective decision-making process. It is also important to understand what feedback will be provided throughout the rounds and whether there will be any kind of penalty in relation to possible delays in decisions and endgame policies.

decision rounds

This is the most dynamic phase of the game, in which groups gather around decision-making that represent real-world planning meetings.

In the first round, the discussion process between each team allows a good leveling of knowledge among its members.

From the second round, the groups begin to receive reports regarding the results of previous decisions. At this moment, the greatest practical learning takes place, as the group builds its knowledge from experimentation. At each round, the teams examine their respective results, question their strategies and, when reassessing their decisions, start a new discussion that will end with the decisions related to the new round.

For a better understanding of the game rules, it is common to carry out a test round, after the initial presentation. In this case, the groups receive feedback on what the first round would be like and the game starts over as if nothing had happened.

Final presentation

This last step is conducted in a plenary session, in which the discussion transcends the working groups and the role of the game administrator becomes vital. Ideally, this presentation should take place right after the last round, allowing the chaining of decision sequences and an exercise of concepts applied to business reality. At this stage, not only the best, but also the worst practices should be presented and discussed, so that everyone can learn from mistakes and successes.

Since logistics is a multifunctional activity and that by definition involves a series of trade-offs, each team usually guides its decisions more focused on a certain function, to the detriment of the others and this ends up making all competitors have both good and bad practices depending on the area and round being evaluated. Thus, the analysis of these gaps between the teams' practice and the best practice enriches and motivates the presentation.

As throughout the rounds the information regarding the other companies is quite limited, the participants show a great interest in following what the other companies did throughout the game. At this moment, each group manages to evaluate its result based not only on its decisions, but also on the actions of its competitors.

The instructor responsible for applying the game must be well prepared with regard to what happened throughout the application in order to tie the conceptual part well with the practice of the simulation, using the groups' decisions and their consequences as examples that transmit an even broader content. At this stage, the curiosity of the participants in relation to the results makes them very receptive, contributing even more to the consolidation of knowledge.
APPLICATIONS

The growing number of training programs in the area of ​​Logistics has been accompanied by the dissemination of business games focused on this activity. To have an idea of ​​this growth, only in the programs of the Center for Studies in Logistics at COPPEAD, more than 750 executives participated in games in this area in 2002, against approximately 150 in 1998. This increase was the result not only of the growth of programs training in the area, as well as a new demand for the use of games in business events. These two possibilities are presented below.

1. As part of the training program

Business games have great synergy with other teaching techniques such as lectures and the case method. Among the key factors that contribute to the success of these programs are:

• The great integration of the group during the application of the games, increasing participation in more traditional methods, such as expository sessions and case studies.
• The high degree of motivation with the course, allowing a great absorption of content, even in programs with a high workload per day.
• The rich exchange of experiences between team members who, when defending their arguments within the group, bring knowledge related to their professional experience.

The complementarity between the techniques is important because each one has its advantages. Expository plenary sessions, for example, allow working with a broader scope of knowledge than a business game. On the other hand, games are more effective as a teaching and development tool, as participants experience them and build their learning, allowing a better assimilation of content and the development of a practical sense of decision-making.

2. As an awareness tool at business events

The great interface of logistics with other areas of the company, such as information technology, production, finance, commercial and marketing, make it necessary to spread logistics concepts throughout the organization. In this sense, business games have become an important tool in the pursuit of this objective by promoting group integration, the exchange of knowledge and the establishment of conceptual content.

This type of application allows participants to take on functions that are different from their daily lives, so they can experience new experiences and understand in greater depth the relationship between logistics and other areas of the company.

In addition to internal company events, the concept of Supply Chain Management has also aroused interest in events that bring together customers and/or suppliers to raise awareness of the need for greater integration and exchange of information between companies. Figure 3 shows the application of a game for QAD, a software company that offers integration technologies, in an event with its customers to highlight the importance of coordination and integration in the supply chain.

Figure 3 – Application of the Beer Game at the QAD Event

CONCLUSION

Business games are conquering an important space within management teaching, more specifically in the area of ​​logistics, where they are being applied not only in the academic area, but mainly in executive development programs.

The games make it possible to train heterogeneous groups – both with regard to the diversity of skills and the level of knowledge – in the same application, being at the same time interesting and motivating from the perspective of the participants. Discussions within work teams allow for a rich exchange of experience and function as a mechanism for disseminating training. During the game, professionals are also much more receptive to new information and new knowledge. The playful style of the games involves participants actively reacting to the progressive need to evaluate results, plan strategies and make decisions.

Aware of the effectiveness and efficiency of using Logistics games in training programs, the Logistics Center at Coppead/UFRJ and the Marketing and Supply Chain Management department at Michigan State University last August signed a bilateral knowledge exchange program , allowing both to use games, simulators and teaching tools developed in these entities.

Figure 4 – Tips Board

BIBLIOGRAPHY

• BOUZADA MAC, A Genuinely Brazilian logistics game, master's thesis, COPPEAD/UFRJ, 1997.

• ELGOOD, C., Handbook of Management Games. 4th Ed Grower, 1988.
• JACOBS FR, Playing the beer Distribution Game over the internet, Production and Operations Management, Vol. 9, No. 1, Spring 2000.
• MARQUES F., P., PÊSSOA, MSP, Business Games: A Strategy for Teaching Management and Decision Making, 5th Congress of Scientific Production – Methodist University of São Paulo, 2000.
• MIYASHITA, R., Elaboration and Use of a Logistics Game, Ricardo's master's thesis, COPPEAD/UFRJ, 1997.
• SIMCHI-LEVY, D., Designing and Managing the Supply Chain, McGraw-Hill, 2000.