Lasse Ziegler

Beergame at Agile Dinner in Helsinki

2011-07-06T11:27:07Z

At the last Agile Dinner in Helsinki on Tuesday 6th of July I ran The Beergame. The turnout was surprisingly good for being prime vacation time as we had a total of 16 people.

The game actually requires a lot of preparation and setup. There is quite a bit of papers that need to be prepared and printed. Good version can be found on the Beergame site but for this I created my own slightly improved ones. The group gave some good feedback and I have some good improvements for the next time such as using more of a pull process to run the supply chain and color coding the papers.

Bullwhip Effect

Here we see how the different team ordered from their suppliers. It clearly shows the panic reaction in some of them as they begin to order ever bigger amounts. Each of them ordering more than the previous one. The first spikes are a really big Bullwhip effect but the second is a bit smaller.

Causes of the Bullwhip Effect

1) Lack of information
In the beergame no information except for the order amount is perpetuated up the supply chain. Hence, most information about customer demand is quickly lost upstream in the supply chain.
With these characteristics the beergame simulates supply chains with low levels of trust, where only little information is being shared between the parties.
Without actual customer demand data, all forecasting has to rely solely on the incoming orders at each supply chain stage. In reality, in such a situation traditional forecasting methods and stock keeping strategies contribute to creating the bullwhip effect.

2) Supply chain structure
The supply chain structure itself contributes to the bullwhip effect. The longer the lead time, i.e. the longer it takes for an order to travel upstream and the subsequent delivery to travel downstream, the more aggravated the bullwhip effect is likely to be.
With traditional ordering, the point in time where an order is typically placed (the order point) is usually calculated by multiplying the forecasted demand with the lead time plus the safety stock amount, so that an order is placed so far in advance as to ensure service level during the time until the delivery is expected to arrive.
Hence, the longer the lead time is, the more pronounced an order will be as an reaction to an increase in forecasted demand (especially in conjunction with updating the safety stock levels, see above), which again contributes to the bullwhip effect.

3) Local optimisation
Local optimisation, in terms of local forecasting and individual cost optimisation, and a lack of cooperation are at the heart of the bullwhip problem.
A good example for local optimisation is the batch order phenomenon. In practice, ordering entails fix cost, e.g. ordering in full truck loads is cheaper then ordering smaller amounts. Furthermore, many suppliers offer volume discounts when ordering larger amounts.
Hence, there is a certain incentive for individual players to hold back orders and only place aggregate orders. This behaviour however aggravates the problem of demand forecasting, because very little information about actual demand is transported in such batch orders.
And batch ordering, of course, contributes directly to the bullwhip effect by unnecessarily inflating the orders.

Inventory

The inventory of each stage in the supply chain also shows a similar behavior. It comes after the Bullwhip effect and is reversed. This is first the factory inventory grows rapidly and then it propagates down the supply chain. This of course causes everyone to stop ordering from their supplier. Once the inventory levels drop they order again and most likely cause the next Bullwhip effect.

More pictures

Agile Finland Coaching Circle

2011-06-22T20:43:16Z

Today we had the first meeting for the Agile Finland Coaching Circle. We mostly talked about what the vision is for the circle and came up with a structure of how we would organize each circle as well as an initial backlog of topics. The idea is to have a circle once every month of the agile coaches in the Helsinki area. The circle would have three phases. In the first we do coaching dojos, in the second we have a topic to which we try to find some solution and the final phase is a retrospective and reflection of the circle itself.

A couple of pictures from the circle:

Wave 3 Leadership

2011-06-21T11:05:27Z

Agile Finland and Aalto Pro are planning a leadership training program for R&D managers. Today we had a workshop with both managers from different companies and agile coaches trying to gather information on what the program could offer.

Pictures from the workshop:

Coaching Agile Transitions @ Turku Agile Day 2011

2011-06-19T14:48:49Z

This is the presentation that I gave at the Turku Agile Day 2011 on Agile Transitions:

Coaching Agile Transitions @Turku Agile Day 2011

View more presentations from Lasse Ziegler

LESS2010

2011-06-19T16:05:01Z

This week I attended the first LESS 2010 International Conference on Lean Enterprise Software and Systems in Helsinki. Overall I think that the conference was a great success and that the organizers did a good job at providing interesting content as well as a nice social program. I hope that next years LESS 2011 in Stockholm will be as good.

Jurgen Appelo‘s presentation “Complexity versus Lean: The Big Showdown” was very interesting and it also won the best presentation award at the conference. I highly recommend at least reading through the slides. Better yet would be attending XP Days Benelux and see it for yourself.

Complexity versus Lean

View more presentations from Jurgen Appelo.

The Grand Duel on the topic “Do we need agile development to deliver business agility?” between Vasco Duarte and David Anderson was interesting. The duel was a short 15 minute debate where the audience showed their support for their chosen candidate by physically standing behind him. If changed your mind than you moved over to the other candidate.

Cross-functional teams

2010-03-01T07:45:50Z

From Lean Thinking by Womack and Jones:

In our experience, dedicated product teams do not need to be nearly as large as traditional managers would predict, and the smaller they can be kept the better all around. A host of narrowly skilled specialists are not needed because most marketing, engineering, purchasing, and production professionals actually have much broader skills than they have (1) ever realized, (2) ever admitted, or (3) ever been allowed to use. When a small team is given the mandate to “just do it”, we always find that the professionals suddenly discover that each can successfully cover a much broader scope of tasks than they have ever been allowed to previously. They do the job well and they enjoy it.

Doesn’t this sound like a cross-functional team used in Scrum? That shouldn’t be surprising as the root of Scrum a deep in Lean.

Muda of complexity

2010-02-28T20:29:03Z

A nice quote from Lean Thinking by Womack and Jones:

What traditional managers fail to grasp is the cost maintaining and coordinating a complicated network of high-speed machines making batches. This is the muda of complexity.

Replace the high-speed machines with the appropriate people who build software and you still have the same problem.

Dice Games

2010-02-28T11:46:33Z

In the book “The Goal” by Eliyahu M. Goldratt, the main character Alex plays a Dice Game with some boy scouts in order to demonstrates the principles of Theory of Constraints.

The Washington State University has instructions on how to run a Dice Game similar to the one found in the book and also instructions on variations.

The Beergame

2010-02-28T11:46:19Z

A couple of weeks ago I heard about the beergame:

The beergame is a role-play simulation game that lets students experience typical coordination problems of (traditional) supply chains, in which information sharing and collaboration does not exist. In more general terms, this supply chain represents any non-coordinated system in which problems arise due to lack of systemic thinking.

It sounds interesting and I need to try it out sometime. Maybe I should organize a Agile Finland dinner and run the game.

Certified ScrumMaster Course

2010-02-28T11:46:46Z

Yesterday I had my second public Certified ScrumMaster course as a co-trainer to Jim Coplien. We had a great time and great people in the class. Thanks all!

Here is a picture of the class: