Education about global logistics management contributes to business success

05/19/2014 11:21 PM

06/03/2014 10:17 AM

You may not think about supply chains much or how they affect almost every facet of life — from the food you eat to the clothes you wear to the computers you use. Yet, a recent workshop on supply chain management sponsored by Washington University’s Olin Business School and KC SmartPort Inc. demonstrated the importance for Midwestern business executives to successfully manage operational logistics in today’s fast-paced global marketplace.

According to KC SmartPort, Kansas City is the leading logistics hub in North America. In 2013, Missouri and Kansas combined exported more than $25 billion in goods and services. Both states’ strong performance helped the U.S. reach an all-time record for exports, $2.3 trillion in 2013, supporting nearly 10 million American jobs.

For businesses to be successful today, I can’t stress enough the importance of cultivating a global understanding through educational opportunities. What’s more, there is an increasing need to know about supply chain systems from a worldwide viewpoint and how they affect business operations of all sizes.

Knowing this created a heightened interest recently during a workshop called “Serving Up Strategy: Learn Supply Chain Through the Beer Game.” Some of Kansas City’s largest retailers and companies battled on teams for a hearty helping of fun, interactive role-play, a little stress and chaos, and, yes, even a beer at the end of the simulation. The goal was to demonstrate a fundamental concept in supply chains called the “bullwhip phenomenon.”

The “beer distribution game” is a physical experiential simulation of interactions within complex multi-stage supply chains. It is played by teams with four players per team, each player making decisions at one stage in the supply chain. The four supply chain stages in this case are brewer, distributor, wholesaler and retailer.

In the game, there is a lack of accurate information about market demand. Small changes in the market create a rather chaotic environment in the supply chain with erratic orders, frequent inventory shortages, and profit loss. When this phenomenon of small variations in the marketplace leads to amplified disruptions throughout the supply chain, the market appears unstable, and no one is immune to tension and uncertainty pulsing through the supply chain. This is the bullwhip phenomenon — a real-life situation that both manufacturing and services firms must effectively manage.

Mastering supply chain management is valuable for a wide range of professions, including engineering, IT, operations-logistics, procurement, and research and development. To meet global demands and remain competitive and opportunistic, local business people need higher education venues that provide access to the latest information as well as business fundamentals.

One such venue is Washington University’s executive MBA program. The university’s business school faculty travel to Kansas City to teach executive students applied learning techniques with a global perspective.

Washington University also partners with local groups, such as KC SmartPort, to share research-driven knowledge on topics such as entrepreneurship, design thinking and innovation, and leadership.

The program also offers an international residency in Shanghai, China, where Washington University has a joint venture with Fudan University.

The goal is to develop business leaders who are competent, comfortable in the global workforce, intuitive decision makers, and strong problem solvers.

The end game is for Kansas City to remain a major player in global business and logistics.

Panos Kouvelis is director of the Boeing Center for Technology, Information, and Manufacturing and Emerson Distinguished Professor of Operations and Manufacturing Management at Washington University’s Olin Business School.

In 2013, Missouri and Kansas combined exported more than $25 billion in goods and services. Both states’ strong performance helped the U.S. reach an all-time record for exports, $2.3 trillion in 2013, supporting nearly 10 million American jobs.

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