Winning the Beer Game with The Internet of Things (IoT)

Published in Cisco Blog on Dec 10, 2013

Supply Chain Management (SCM) has always been critical to business operations and success. Executives in large corporations remember lessons from their SCM courses back in business school. For those who have forgotten, consulting companies and universities teach SCM using well-known games such as the Beer Distribution Game. The problem the Beer Distribution Game highlights is the lack of insight people along the distribution chain have beyond a few steps.  However, I’d posit that the Internet of Things (IoT) provides us the opportunity to holistically visualize and play with our entire supply chain.  In effect, IoT may make the Beer Distribution Game a relic of the past.

Beer Distribution Game!

The Beer Distribution Game is a role-player table game created by Jay Forrester at MIT Sloan School of Management in the early 1960s to teach principles of management science. The game is played by teams who simulate the supply chain of the beer industry during 40 weeks. Each team represents a brand and the goal is to meet customer demand. Each player represents a specific area of the supply chain: retail, wholesale, distributor and factory. Within each team players cannot communicate each other and information is only passed through orders and shipments notes every week. The winner of the game is the team with lower total cost of capital employed in stock for everyone in the supply chain while avoiding out-of-stock situations.

The most frequent problem during the game is accumulating excessive inventory due to the bullwhip effect – small changes in customer demand can result in large variation in orders placed upstream. Anyone can play this game from business school students to top supply chain executives. However the results are similar: once the game concludes, factory players who often accumulate 600+ stock units cannot believe that during the last 35 cycles the end customer demand remained completely constant with 4 units per week.

The purpose of the game is to illustrate the key principle that structure produces behavior, a concept from System Dynamics. Structural and communicative dysfunctions in many organizations that deal with material flows, stocks and time delays are responsible for high operational costs and market failure.

If downstream agents of the chain don’t receive the data about consumer behavior in real time, they cannot adjust production.

The good news is that today advanced information technologies; such as wireless sensor networks, mobile embedded systems, telemetry and ubiquitous computing can be connected to ‘things’ across the entire supply chain (beer taps, distribution trucks, warehouses, factory control rooms, offices, etc…) creating an automated system able to seamlessly adjust offer to demand.

Cisco Systems and its partner ecosystems provide the technologies that help organizations to migrate from forecast-driven supply chains to real-time information-driven supply chains.

According to a Forrester Consulting survey, 53% of enterprises from industries where SCM is critical are planning to implement IoT solutions within the next 24 months.

The majority of IT decision makers are turning to IoT solutions to provide more visibility in the supply chain, reduce carbon emissions, improve customer interactions, and ultimately minimize operational expenses to be more competitive.

——— And now, interviews with two companies making IoT a reality for businesses! ——

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Product Manager: Role from Startups to Enterprises

rafael maranon product management talk mit Product Management role definition has been extensively discussed in both academia and industry. The tasks to bring products to the market as well as bridging engineering and sales teams can diverge among corporations.

This morning I had the opportunity to give a talk to MIT students about Product Management where I provided my own view based on more than 7 years of experience in the role in startups in Europe and a large corporation in Silicon Valley. Thanks to the MITPMC and MIT System Design and Management Program for the invite.

Below you can find the slides, a video recording of the presentation, and key takeaways:

In this presentation I reviewed 5 of my products following the framework described below:

– H: Oil painting
– K: Web portal to advertise local business CartayaWeb.com
– M: Voipfutura Open source-based communication platform
– B: Catalyst 6800 Instant Access Solution
– T: The Internet of Things (IoT)

Product:
– Value (Customers)
– Effort (Technology, Skills, Innovation)

Management:
– Market (Listening + Analysis)
– Team (Execution = Static [Org structure] + Dynamic [Behavior/Int. Comm] + Funding )
– Go To Market (Branding, Pricing, Packaging, Support, Adoption)

What is consistent in the role of Product Manager across products?
– Right problem to solve
– Funding process
– Team orchestration
– Technology expertise
– Innovation process
– Execution determination
– Go To Market strategy
– Adoption metrics
… and a lot of passion

Product Management Cisco

 

 

 

 

 

 

 

 

 

 

Rafael Maranon-Abreu
@rafaelmaranon

The opinions expressed here are entirely the author’s opinions and not those of his employer and/or its affiliates.

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The Growth of The Internet of Things (IoT) in Spain

Spain has been a test case in Europe for whether austerity and structural overhauls can save its fiscally weak economies.  A direct consequence of austerity programs is the use of smart technologies to simplify process and drastically reduce operational expenses.

This motivated many Information and Communication Technology (ICT) integrators, universities, large corporations and public administrators to innovate.

With The Internet of Things (IoT) and Machine-to-Machine(M2M) as umbrellas, startups in Spain created hundreds of solutions to help cities, manufacturing plants, retail shops, farms, and utilities to succeed with their austerity plans.

EPSON MFP image
Last week I attended GigaOM MOBILIZE, and I had the opportunity to meet a couple of these Spanish IoT startups: Libelium, a technology leader in open source sensor platforms with 50+ applications for Smart City. And Carriots, a M2M application platform that allows you to build intelligent apps in 5 steps, including a very cool beer tap monitoring solution to detect bars serving another beer under the tap brand.

However, the leadership of Spain in IoT in many cases is driven by City Hall administrators who are looking to reduce costs while improving services for their citizens and tourists. Spain ranks in the top three for world leadership in the tourism industry with 58 Million visitors and $80.2 billion direct income in 2012.

One example is the city of Malaga that implemented a 31 million euro Smartcity Málaga pilot project headed by Endesa to reduce energy by 20% and CO2 emissions by 6.000 tonnes per year. This project earned Malaga the title of the smartest city of Spain, followed by Barcelona and Santander.

Barcelona is ahead of the curve for ICT and mobile solutions. Cisco Systems, the company I work for in California, has invested $7M to make Barcelona a global reference model for sustainable urban development with the Smart+Connected Communities platform. Cisco also selected Barcelona to host the IoT World Forum next week bringing together top executives from leading global companies, the public sector and academia to accelerate the advancement of IoT.

The third top smart city in Spain is Santander which increased  responsiveness of emergency services by 25% using IoT management systems. With more than 12000 sensors for traffic, temperature, luminosity, CO and noise the Smart Santander Project provides a unique opportunity in the world for a city-scale experimental research facility to validate social acceptance of IoT technologies and services.

Besides startups and public administration, a key stakeholder in Spain helping with the adoption of IoT is Telefonica M2M which provides process automation and business expansion to their customers. A few weeks ago in San Francisco I met Telefonica Labs CEO at his new book presentation about innovation and I was delighted to hear about all the efforts Telefonica is putting into the IoT space including a $2.4 billion contract to provide smart meter technology in UK homes.

Another company in Spain that is providing an end-to-end IoT solution for their corporate customers is Mildmac. I had the opportunity to work for Mildmac before I moved to the US and I’m not surprised that they have already embraced IoT. With 20+ years innovating and integrating systems, Mildmac has the right team and expertise to lead this technology transition with their new product BDFutura, With the acquisition, storage, and analysis of data flowing from sensors/actuators, BDFutura not only provides a multiservice application environment for IoT use cases, but also integrates with VoIPFutura, the open source based IP telephony/radio platform I was leading a few years back.

The growth of IoT in Spain is being incubated by academia in the area of information and computer science such as at the NICS Lab at the University of Malaga, and the University of Cantabria. Also, vast experience in supply chain management and logistics is demonstrated by the world’s largest clothing retailer Zara, and leadership in high speed rail, infrastructures and solar energies by companies such as Abengoa have created a culture of excellence in operations management in Spain.

I’m sure there are many entrepreneurs in Spain today creating IoT startups to continue leading this technology transition and help Spain improve their services while maintaining minimum operation expenses. Ultimately, IoT will not only lead Spain’s economy to a faster recovery, but also use the technology expertise to help other countries improve their processes and logistics.

I look forward to seeing more Spanish IoT startups leading the market!

Rafael Maranon-Abreu
@rafaelmaranon

The opinions expressed here are entirely the author’s opinions and not those of his employer and/or its affiliates.

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