The "Real World" Supply Chain Beer Game

Anyone who has taken any supply chain related academic course -- or any MBA who went to a program worth its weight in hops -- has probably at least heard of or actually played the beer game. The game teaches the challenges of managing and communicating supply and demand signals across multiple tiers of a supply chain -- and its impact on availability and inventory as a result. Besides its educational value, the beer game can be fun, especially on a Friday afternoon, when you can drink the game pieces once the demonstration is over.

But it turns out that in the real world, the beer game is even more complex. And that's because of the asinine system of distribution in different states and regions of the United States (rules and regulations in other countries range from entirely lax to near "friends of the government" monopolies). Consider that, according to the Wall Street Journal, pubs on the West Coast are having a hard time getting their shipments of popular European imports. "At Rosie McCann's Irish Pub & Restaurant, an upscale tavern in San Jose, Calif., patrons frequently request Stella Artois ... But for nearly all of last month the Stella tap was dry," their recent story on the topic notes.

The article (registration required) continues: "at the start of prime beer-selling season, bars and retailers are facing low inventories of Stella, one of the nation's fastest-growing imports, as well as Bass, Beck's and other European beers made by InBev SA, the world's largest brewer, based in Leuven, Belgium." What's the cause of this shortage? You can't blame ethanol -- real beer (e.g., not Budweiser, Coors, etc.) stays as far away from corn or corn-related byproducts as possible. But you can blame a stodgy old distributor-model that grew out of government meddling on the state level.

To this end, the rest of the story notes that Anheuser-Busch -- which became the exclusive importer of 19 InBev Brands earlier this year -- has not completely nailed down how it will work with distributors. "Now, in many states, distributors who work for Anheuser have a legal right to take on distribution of InBev beers," the story notes. "But that typically means paying the previous distributor for the contract" which has not yet happened in many cases.

For those looking for a cold one to replace their Stella or Bass -- two beers which are mediocre at best in my book -- let me suggest some American microbrew replacements which top my list: Bells, New Glarus, Sierra Nevada (not just their ale), and Rogue. You won't be sorry! And you also won't be dependent on an unnecessarily long and complex supply chain. However, I will still admit that there is no replacement for a classic Trappist double or tripple -- that's worth waiting for.

Jason Busch

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