1. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Beer Game Facilitator Packet

2. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 1 The Value Stream Simulation Facilitator Packet Jim’s Home Brew Jim’s Wicked Ale

3. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 2 The Beer Value Stream Retailers Orders Placed Wholesaler’s Incoming Orders Wholesaler’s Orders Placed Distributor’s Incoming Orders Distributor’s Orders Placed Factory’s Incoming Orders Customer Demand Receiving Delay (Green) Receiving Delay (Green) Receiving Delay (Green) Consumed Beer (Green) Receiving Delay (Green) Shipping Delay (Red) Shipping Delay (Red) Shipping Delay (Red) Shipping Delay (Red) Shipping Delay (Red) Retailer’s Inventory Lite (Blue) Distributor’s Inventory Lite (Blue) Distributor’s Inventory Regular (Blue) Wholesaler’s Inventory Regular (Blue) Wholesaler’s Inventory Lite (Blue) Retailer’s Inventory Regular (Blue) Factory’s Inventory Lite (Blue) Factory’s Inventory Regular (Blue) 12 Wht 12 Red Setup for the game. 4 each Week A Lite 4Reg 4 Week A Lite 4Reg 4 Week A Lite 4Reg 4 Week B Lite 4Reg 4 Week B Lite 4Reg 4 Week B Lite 4Reg 4 Raw Mat. Incoming Orders Raw Materials Lite (Purple) Raw Materials Regular (Purple)

4. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 3 The Value Stream Simulation Beer Game This exercise is a simulation of the order and production flow of a beer distribution value stream. During this exercise, you will play the role of one of the value stream participants. The value stream starts with the beer factory and ends with the beer retailer(s). The value stream is illustrated below. The game is designed so that each participant represents one of the value stream participants. The players represent the factory, distributor, wholesaler or retailer(s). The play of simulation will be explained by your instructor using the more detailed layout on the next page. Each position in the value stream is identical. Each has an inventory of regular (red/blue chips) and light (white chips) beer. Beer is ordered from the next participant upstream in the process. Orders are received after a mailing delay. Beer Retailer Beer Wholesaler Beer Distributor Beer Factory Raw Materials Final Consume r Bee r DownstreamUpstream Orders

5. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 4 Chip Legend Cases of Reg BeerCase of Lite Beer

6. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 5 Cup Positions Shipping Delay Lite Beer Inventory Receiving Delay Reg. Beer Inventory

7. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 6 Customer Demand Do not look at your book or go to the next page until you are instructed to do so. Do not share this information with anyone. Please let your retailer know if you are not satisfied with their service.

8. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 7 Wholesaler’s Incoming Orders Retailer Orders Placed Please place your order prior to learning your Customer’s demand. You may NOT talk or share information with anyone else next to you.

9. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 8 Wholesaler’s Orders Placed Distributor’s Incoming Orders You may NOT talk or share information with anyone else next to you. Please order sheet here FACE DOWN

10. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 9 Distributor’s Orders Placed Factory’s Incoming Orders You may NOT talk or share information with anyone else next to you. Please order sheet here FACE DOWN

11. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 10 Factory’s Work Orders Placed You may NOT talk or share information with anyone else next to you. Please order sheet here FACE DOWN

12. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 11 WEEK ___ Lite = ______ Reg= ______ WEEK ___ Lite = ______ Reg= ______ WEEK ___ Lite = ______ Reg= ______ WEEK ___ Lite = ______ Reg= ______ WEEK ___ Lite = ______ Reg= ______ WEEK ___ Lite = ______ Reg= ______ WEEK ___ Lite = ______ Reg= ______ WEEK ___ Lite = ______ Reg= ______

13. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 12 Inventory/Backlog Record Sheet Quantities should be cumulative. You must fill backlog prior to filling current orders.

14. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 13 Orders Placed You must record orders placed during each cycle!

15. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 14 100 60 80 0 40 20 -40 -20 -80 -100 -60 INVENTORY/BACKLOGINVENTORY/BACKLOG 5101520253035404550 Plot your weekly inventory or backlog per week. Use RED pen for REG. Beer and Blue pen for LITE Beer. Team:____________ Position:________________ WEEKS

16. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 15 Team:____________ Position:________________ 100 80 90 50 70 60 30 40 10 0 20 ORDERS PLACEDORDERS PLACED 5101520253035404550 Plot your orders placed for each beer. Use RED for REG Beer and BLUE for LITE Beer. WEEKS

17. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 16 R1 R3 D2 R4 R2 W1W2FD1 Beer Game Layout R = Retailer W = Wholesaler D = Distributor F = Factory RM= Raw Material Legend RM Option 1

18. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 17 R = Retailer W = Wholesaler D = Distributor F = Factory RM= Raw Material Legend Option 2 RW R F W D R F W D R F W D R F W D Number of teams dependent on class size.

19. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 18 Process Steps For Each Week’s Play Step 1 -Receive Inventory Orders you have placed earlier are now arriving at your dock. Add the contents of Receiving delay to your lite and regular beer inventory ( Green to Blue) Step 2 -Advance Shipping Delays Goods upstream move further downstream. Move the beer from shipping delay to Receiving delay. Shipping delays are one week. (Red Cups to Green Cups) Step 3 -Fill Orders Retailers look at the next page, when instructed, in their order book. Everyone else fills the “incoming orders” for beer. Unfilled orders should be added to the backlog. Fill orders by moving beer into the shipping delay (Red Cups) and Retailers place in consumed beer cups. The factory can only fill one type of order (lite or regular) each week. (Blue Cups to Red Cups) Step 4 -Record Inventory/ Backlog on Record Sheet Count (if necessary) and record the inventory in your Blue cups. Step 5 -Advance Order Slips when instructed Step 6 -Place Your Orders Listen Carefully and Follow Instructions

20. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 19 Beer Game Steps Step 1 - Receive Inventory Step 2 - Advance Shipping Delay Step 3 - Fill Orders Step 4 - Record Data Step 5 - Advance Orders Step 6 - Place Orders Inventory Lite (Blue) Receiving Delay (Green) Shipping Delay (Red) Receiving Delay (Green) Inventory Regular (Blue) Shipping Delay (Red)

21. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 20 Beer Game Exercise Break out by positions You will have 20 minutes to answer three questions. What happened? Who is to blame? What can we do differently?

22. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 21 The Beer Value Stream Retailers Orders Placed Wholesaler’s Incoming Orders Wholesaler’s Orders Placed Distributor’s Incoming Orders Distributor’s Orders Placed Factory’s Incoming Orders Customer Demand Raw Materials Lite (Purple) Raw Materials Regular (Purple) Receiving Delay (Green) Receiving Delay (Green) Receiving Delay (Green) Consumed Beer (Green) Receiving Delay (Green) Shipping Delay (Red) Shipping Delay (Red) Shipping Delay (Red) Shipping Delay (Red) Shipping Delay (Red) Retailer’s Inventory Lite (Blue) Distributor’s Inventory Lite (Blue) Distributor’s Inventory Regular (Blue) Wholesaler’s Inventory Regular (Blue) Wholesaler’s Inventory Lite (Blue) Retailer’s Inventory Regular (Blue) Factory’s Inventory Lite (Blue) Factory’s Inventory Regular (Blue) Raw Mat. Incoming Orders

23. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 22 Lessons From The Game The System controls us more than we control it Small events trigger large reactions creating chaos System structure determines managerial behavior and organizational performance To change the system you must change the structure, not the symptoms Small changes in the structure can yield great change in behavior

24. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 23 Lessons From The Game The world works through systems, but we are not trained to understand or manage them The success of each element in the system relies on the success of the other elements The greater the transparency of the whole = the greater the effectiveness of the elements Today’s problems come from yesterday’s solutions Derived from “The Fifth Discipline”, Peter Senge

25. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 24 Trademarks And Service Marks Trademarks of Six Sigma Academy: Breakthrough Design Breakthrough Software Design Breakthrough Diagnosis Breakthrough Execution Breakthrough Lean ® Breakthrough Sigma Lean Breakthrough Six Sigma Breakthrough Strategy ® Breakthrough Value Services ® FASTART INTELLEQ METREQ WE WEAVE EXCELLENCE INTO THE FABRIC OF BUSINESS Six Sigma is a federally registered trademark of Motorola, Inc. SigmaFlow is a trademark of Compass Partners, Inc. MINITAB is a trademark of Minitab, Inc. VarTran is a trademark of Taylor Enterprises

26. Copyright © 2001-2004 Six Sigma Academy International LLC All Rights Reserved Instructor Guide Beer Game Pg 25 Six Sigma Academy www.6-sigma.com US Tel: (480) 515-9501 US Fax: (480) 515-9507 International Tel: +44-1403-783456 International Fax: +44-1403-218788 8876 E. Pinnacle Peak Road, Suite 100 Scottsdale, AZ 85255