develop strategic solutions for complex challenges

Production Distribution & Systems Thinking

In person

Facilitator to participant ratio 1:16

The world is getting more complex with technological, social and environmental changes.

Understanding the dynamics of a supply chain is essential for businesses, but learning first hand through trial and error can be costly. Developed at MIT Sloan School of Management, the Production Distribution Simulation lets you experience some of the dynamics in a supply chain.

Under pressure, we focus on managing our own piece of the system, trying to keep our own costs low. When long-term effects of our short-sight actions hit home, we blame our customer for ordering erratically, and our supplier for delivering late.

The simulation illustrates the key principle that structure influences behaviour. Participants experience the pressures of playing a role in a complex system and can see long-range effects during the course of the simulation. Each participant contributes as a member of a team that must meet its customers’ demands. The objective of the simulation is to minimize the total cost for your organization.

Class size

4 hours

Format

Best for

Duration

Leaders with responsibility within a supply chain
Team members

The power of systems thinking and how structure influences behaviour.

Participants in the Production Distribution and Systems Thinking program learn:

The simulation is particularly useful in classes on operations management, production scheduling, and related issues.

The simulation highlights the importance of coordination among levels in an organization, the role of information systems in controlling complex systems, and the implications of different production paradigms such as just-in-time inventory management.

The simulation provides a vivd experience with a complex system, where participants can see how the collective results of individually sensible decisions can be disastrous and where they can see the connection between structure of a system and the dynamics it generates.

The simulation provides an opportunity for participants to play the role of managers in a complex dynamic system, specifically, managers in a supply chain representing the production and distribution of a product. Each team consists of four sectors: Retailer, Wholesaler, Distributor, and Factory. The goal is to meet customer demand and order enough from your supplier, while keep inventory low and avoiding costly backlogs.

This simulation provides an introduction to systems thinking and mental models relevant in any domain. Participants learn about the structure and dynamics of supply chains, but the stimulation is widely used in organizations of all types, including finance, services, government, and many others in which there are no supply chains or physical products. Participants experience interpersonal interactions and emotions that arise as unintended consequences of their decisions, including the often erroneous but self-reinforcing negative attributions we make about others. The impact of these negative attributions can erode trust in any organization, and the program explores what can be done to overcome them.

The Production Distribution Simulation creates an experimental learning environment that provides cognitive lessons. Within the compressed time and space of the model, participants experience the long-term consequences of their actions.
Research reported by John D. Sterman shows that most participants do not account for the impact of their own decisions on their team or on the system as a whole.
Participants have great difficulty appreciating the multiple feedback loops, time delays, and non-linearities in the system, using instead a very simple heuristic to place orders.