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Quick Tips to Debrief the Simulation Report

Thank you for calling Capsim, this is Austin.

Hey Austin, it's Professor Tips here. I have an afternoon session today with one of my Capstone courses and I need some help with the report. They just finished the second round, and I want to talk through the results live with them in class today. But when I did it for round one, I mostly kept to the top page, I read off the sales, the profits, who was in the lead, but I didn't feel like I was able to explain why. So, I'm hoping there's some information that you can pull me in, some points that I could pull out that I can be sharing with my students.

Yeah, absolutely, I'd be happy to help. Did you say this class was today?

Yeah, in an hour.

Alright, well, I got it. Let me go ahead and pull up your account. We'll dive into it.

Alright, I've got it pulled up here. The nice thing is, I know we're going to be covering some main talking points today, and those talking points are actually going to be usable in any one of your industries. So, I think it's totally fine that you focus on the first page. There's actually some good info to talk about here.

Really when I'm going through a debrief, I think there's a couple of main things that I focus on. The first and biggest elephant in the room, I would say, is: Did a team receive an emergency loan or not? That's the first thing that I'm looking for. And, what sadly enough looks like, Team Ferris did catch an emergency loan. So, we'll definitely talk about kind of why that emergency loan happened as we get down the report. But in general, emergency loans will happen for one of two reasons. Maybe there could just be a simple lack of financing that happened, or more often than not, it's actually due to overproduction or having too much excess inventory by the end of the year. So, we'll be able to find out where that came from as we've a little bit further down the report. But that's the first thing that I'm looking for. If teams are getting Emergency Loans, this is something that we want to avoid going forward. So, really important that we cover that with the class. I think this would be a good use case for everybody to learn from, frankly.

First place that we would go when we see that there's an emergency loan that happened, first place that I'm looking at is assuming that it might be an inventory issue. I'm scrolling down to page four to look at where all of our products sold and how much inventory we have left over. When we look at Team Ferris here that had the emergency loan, we have a lot of excess inventory here. Essentially, it looks like they expected to sell more than they otherwise should have and they basically produced more than they needed. Not only did they not sell those units but ultimately, we're having to pay excessive inventory carrying costs, essentially just to house that inventory in our warehouse.

Now, we're talking about how obviously inventory or having high levels of inventory is the issue for our Team Ferris here, and that was really where their Emergency Loan came from. We also see on this page that I think another point that I would definitely touch on or I think that would be really helpful for other teams is to talk about these stockouts. It looks like every other team had at least one product, and even Team Eerie had all of their products stock out. So, these are definitely points that I would bring up with the class. When we're debriefing, because a lot of these issues, whether we under-produced or stocked out or over-produced, most of those things have to deal with forecasting. Right, forecasting is really the first step into how we produce, so usually that breakdown happens with our forecasts.

I think a good area after we've evaluated this page, we can look at inventory levels. I think a really good area to reference after this page would be to look at our market share report. That market share report, which is on page 10, is ultimately going to break down our actual Market sharing units or the amount of sales that we actually realized versus our potential. Here's our page here. We've got our actual market share on the left versus our potential on the right. Let's take a look at Team Ferris here. We're going to go on down that same line. This is the team with our Emergency Loan. It's kind of interesting actually with Team Ferris. Team Ferris actually sold more than they should have based on their potential. They only should have capitalized on roughly 11.9 percent of the market, and they actually capitalized on 14.5. Even though this happened, they sold more than they should have, they still overproduced. So, this was clearly a breakdown in terms of forecasting.

On the reverse side of things, we also have Team Eerie here, which is an interesting team as well. It looks like they're kind of on the opposite end of that Spectrum to where they actually sold less than what they should have sold. This is a situation we want to avoid too. Essentially, there were situations where we could look at one of their products, Product E here. They sold less than what they should have. They actually sold 17.3 percent of the traditional Market where they should have sold 18.2 percent.

One thing that I would bring up, and I think that one way to kind of get the class engaged as well is to explain that hey, Product E missed out on their market share. And you know when we look at the next team up, looks like team or Product Days which was a traditional product, actually sold more than they should have. It's probable that Days, some of their extra demand that they were able to gather came from the stock out from Product E. So, we could maybe engage with the class a little bit more and tell them, "Hey, you know Days just ate some of your market share, Eerie. We want to make sure that we increase that production to make sure that we avoid that happening again. We don't want to give those sales away to Team Digby Echo too, they look like they lost a lot there." Right? Same situation right where we've got our product Echo. We were supposed to capitalize it, we missed out on almost seven percent of the market here. So, ultimately that market share was split up across all these other products where we see Days had more sales than they should have, Cake had a little bit more than they should have, right? They handed the money over to their competitors. These are situations that we want to make sure that we avoid.

Ultimately, I think that arguably overproduction is a bigger evil. This is a situation that might lead to an emergency loan but we also don't want to be under-producing or just stocking out and missing out on our organic demand that we should be gathering. It's a really important section and I think a lot of these points can be extrapolated for all of the teams because frankly, all the teams had breakdowns in actual versus potential which again could be driven back to their forecasting.

We've talked about this market share section. I think this is a really important section to cover. This is definitely one that is going to be looked at 

upon every time I'm debriefing. So, I think there's a lot that we can talk about just in this section alone.

Now the other thing that I think we talked about in pretty good detail about, you know, emergency loans, forecasting, right? These are going to be problem areas. The other area that I like to focus debriefing around is team's contribution margins. When we come back up to the top page here, we're going to get a breakdown of our team's collective margins. This is basically the average margin that they have across all of their product offerings. The threshold that we want to see teams achieving is a margin of at least 30 percent or more.

So, some standouts on this page, the one that I think we should probably focus on with our debrief, or what I would focus on in the debrief is Team Eerie here. Team Eerie is below that 30 percent threshold. I would focus on what's going on here. Let's try to engage with the class and find out what we could do to increase this margin. Since this is a more of a collective margin, I think it's important as if we get the breakdown of each of our individual products. So again, we're going to scroll back down to page four, as you're already probably imagining. Page four is also a really, really important section when we're trying to debrief the class. There's a lot of information going on in here.

When we're looking at Team Eerie, they were the ones that were struggling in terms of margins. I want to pick out the products that are really hurting, and one that comes off the page here is Echo. Echo is sitting at a 14 percent margin, which is pretty abysmal. We want to make sure that we're growing that. So, the nice thing is here, we get a breakdown of Echo's stats from left to right. Their margin is made up of what they're pricing one unit at versus what it's costing them to make it.

In terms of debriefing, what I would ultimately want to do with this team is go and try to compare Echo to its competitors because that's what students should be doing anyway. We should be looking at, well, what are our competitors doing that we're not, right? So, one way we could do that since we know that Echo is a traditional product, let's take a look at the traditional segment and see what we might not be doing or what our competitors are doing better than us. So, we come down to this traditional segment here. It's the next page down. And we can find our product Echo here. Now the first thing that we could evaluate when we're looking at margins is the price point that we have Echo at. As of right now, we're at a pretty competitive price point. There's a couple products, we're right in kind of a mix here. So, I think all, arguably our price is okay. But the one thing that does kind of stand out right next to it is our MTBF level. It's way higher than our competitors which ultimately MTBF or our reliability is what drives our material cost, and this is really increasing our cost significantly. Ultimately, we could evaluate, or maybe this would be a good talking point to bring up at the class to engage them. Does anybody have an idea of what might be the breakdown of their low margin here with Product Echo? Right? We might not just give them this flat out. Hopefully, if anybody's paying attention to the report here, we'll notice this outlier. I think that's a really good way to engage with the class, have them kind of steer the conversation. From there, we can bring this up and go well, what could Echo do better? Like, where would you guys start? I think that's a really good way to get them engaged.

Looks like the customers like it. It's stocked out, but it's sustainable for the company, huh?

Right, exactly. So, I think that would be a very simple way to kind of not only touch on the contribution margin aspect but ultimately, we're also looking at how can you be a little bit more competitive, right? So, yeah, definitely a good place to bring that up.

So, again just kind of summarizing everything, I think those are the main points I'm going to be talking about. I'm looking at, does the team have an emergency loan or not? I want to talk about the inventory breakdowns on page four, right? We can see a lot of teams that either might have over-produced or had stockouts. We want to make sure that we're covering those. A lot of that information is going to be covered in our market share report all the way at the bottom where we get a breakdown of our actual versus potential. Again, a place where we had a lot of talking points for any team, whether we had an emergency loan or not. This is kind of where I center the debrief for any industry. This could be copy and pasted in any scenario.

So, hopefully that helps. Yeah, just to be sure, even if I don't have an emergency loan, I should still talk about inventory, actual versus potential, contribution margin?

Absolutely. I center the conversation around these topics because these are pitfalls that almost every team falls into at some point. I think whether we have that emergency loan or not, we can still keep the conversation centered around, "Hey, how do we monitor inventory levels? How are we comparing our product to our competitors or what are we doing that they're not or vice versa?" I think regardless if we have an emergency loan or not, these are still really great areas to kind of focus the conversation around to engage the class.

Awesome, well thanks so much, Austin. I think I've got some stuff to bring to class today and appreciate your time.

Absolutely, Professor Tips. Anything else comes up, don't hesitate to reach out, okay? Take care.

Alright, take care.