Labor Costs, The Beer Game, Apple, and Supply Chains

Recently, via Zite,  I came across a posting, “The Beer Game -or- Why Apple Can’t Build iPads in the US” by David Wu (@marksweep) that used the famous supply chain simulation game, The Beer Game, to allegedly explain why Apple has it manufacturing operations in China.

The lessons of the Beer Game are pretty evident. Delay in the supply chain causes amplified downstream problems. The problem wasn’t that we were kids running beer supply, the problem was the structure of the chain itself. Small changes at the front end lead to massive mistakes down the line.


Because of the bullwhip effect illustrated by the game, Apple needs to have factories in China because the supply chain is there. We learned in the Beer Game that minute changes have massive ripple effects along the supply chain.

The U.S. has lost that industrial base and it’s extremely difficult to get it back. It’s not about unions, jobs Americans don’t want – it’s about delay.

These are not the lessons of the Beer Game. Continue reading