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Kick Off
• The Fresh Connection • is a producer of fruit juices• In NW Europe• suffering severe losses in the last year• because of poor performance
• A new management team has been appointed
• The assignment is to make the company profitable again• By making strategic and tactical choices
The Challenge
The roles
Finished productComponents
SRM Production CRM
Supply Chain
Purchasing Operations Sales
highestROI
RevenuePrice:
Customer satisfaction *Volume:Portfolio
* Customer satisfaction is calculated from flexibility, reliability, moq’s, leadtimes, offered shelf life, payment terms etc
CostsOperational costs
Improvement projects
InvestmentsInventory
Payment termsMachines
The performance
Individual targets
Role Based onPurchasing Lowest Purchasing priceOperations Lowest Operational
costsSupply chain Lowest Inventory valueSales Highest Revenue
• Three warehouses and overflow warehouses when needed• Two stage production: mixing and bottling•One bottling line and one mixer for all products (at the start)•MtS, leadtime customers of 1 day (delivery next day)
pallets
pallets
Finished product
Components
SRM Mixing CRM
The Fresh Connection’s supply chain
tankyard
Bottling
Assortment
• Two packaging types– Carton– PET bottle
• Three flavours– Orange– Orange C-Power– Orange/Mango
• Shelflife of finished products of 20 weeks
Shelf life
• If the shelf life agreement is 70%, the internal shelf life is 30%.
• Finished products are NOT distributed to that customer if the shelf life agreement is violated.
Shelflife is 20 weeks
Shelf life agreement= 70% Internal shelflife
Market
• Three customers
– Retailer Food & Groceries• 500 stores• Supply chain leader
– Retailer Land market• 300 stores• Discounter
– Chain of gas stations Dominick’s• 50 stores• Only PET bottles
Contract index
Price setting
• You cannot negotiate on sales/purchasing prices• Negotiate on supply chain performance (SLA’s)• This leads to a ‘contract index’• Contract index determines the sales/purchasing
price
• Example (sales)Promise Contract
indexBasic price Sales price
Much 1.1 € 1.5 € 1.65Little 0.9 € 1.5 € 1.35
Important elements
Delivery reliability
Availability components
Production reliability Service level
Leadtime Intake time Frozen period Order deadline
Delivery window
Finished productComponents
SRM Production CRM
Important elements (cont)
Contractindex
Trade unit Lot size Production frequency Trade unit
Contractindex
Bonus and penalty
Shelf life %
Finished productComponents
SRM Production CRM
Additional remarks
• Every round pictures half a year of TFC in a steady state. You don’t have to worry about fade in or fade out effects from one round to the next.
• Out of stock is not missed sales. The Fresh Connection works with backorders to their customers. So they are delivered at a later day.
• Graphs of inventory or demand in time are a snapshot of half a year out of a longer simulation period (to ensure predictable results).
The challenge
• Make this company profitable again• You can take 3,5 years (7 rounds) to do so• The sooner the better
Getting started
• Form a team and distribute roles
• Go to http://game.thefreshconnection.eu/2013 and log in with username/password
• Usernames and passwords are case-sensitive !
• During game SAVE new settings (‘deal’ in Purchasing and Sales)
Good luck