The Beer Game for Services!

As I stood in a very long queue to go through airport security yesterday, I started to think about Operations Management. Despite me knowing that my long-suffering girlfriend would be once again forced to smile supportively whilst I bought the subject up, our discussion turned to why the queues existed.?

The simple answer was that most of the machines were inoperable due to staff shortages.

The longer, and more complete answer can be found by considering the bullwhip effect. Many MBA students (including alumni of my classes) have played the ‘beer game’ which beautifully demonstrates how the bullwhip effect occurs. In the game, a 4-stage supply chain is set up in which delays exist between ordering and receiving items. Small demand fluctuations triggered by a consumer are amplified though the system so that a small increase of (say) 4 beers at one end of the chain can lead to demand for hundreds of beers at the other end.?

Despite it being a fun, popular game, I stopped using it around 10 years ago since the conditions that create the bullwhip effect have been designed out of supply chains. EDI and just-in-time systems allow agile responses to demand fluctuations. It means that whilst 30 or 40 years ago weeks of inventory were held at distribution centres, nowadays inventory is measured in hours. And inventions such as point-of-sales systems and cross-docking mean that inventory holding is heading ever closer to zero.

However, this is still not the case in services – in fact what we’re experiencing now is a pull in the other direction. Staffing at airports nose-dived during the pandemic as air travel fell off a cliff. Suddenly demand jumped when most travel restrictions were lifted. This means that airports cannot staff up fast enough – there is a huge time lag between needing more staff and their arrival.

Think about the supply chain that delivers additional staff; recruitment, training, security vetting and issuing of passes are just some of the stages or steps that must be completed before personnel can start work. Each of these stages are experiencing significant bottlenecks causing delays:

·???????Finding staff is slow and difficult since it is low skill and low pay work done and employment rates are at an all-time high

·???????Staff must be security vetted – this is currently taking months since government security services can’t ramp up their capacity quickly enough to respond to demand

·???????Training staff is taking longer since training budgets, and thus personnel were cut to the bone during the pandemic

·???????Easyjet recently said that even issuing passes for people to work airside was taking 3 weeks even once the staff were recruited, trained and ready to go.?

My eyes lit up as the queue in front of me snaked forward and I realised that me and several hundred other people waiting to be processed were filtering though 2 out of the possible 10 lanes.??My girlfriend was the first to find out, but now it is time to announce that I’m going to invent a ‘new beer game’ that looks at how the service industry responds to fluctuations in demand.