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The Fresh

Connection
Introductions

Hans Kremer, CPIM, CIRM, CSCP,


partner of Involvation Interactive

Involvation Interactive is a spin off of


Involvation, a consultancy firm
specialized in supply chain design and
control based in The Netherlands

In 2008 they developed The Fresh


Connection
Introduction round

Who are you?

Your background, company and role?

What is your experience with The Fresh


Connection?

What are your expectations?


The program

The Train-the-Trainer program


covers
How the simulation software works

Learning points of the simulation

Coaching tips for struggling teams

Available support material

Back office functionalities and support


Program day 1

09.00 - Introductions & Kick off


11.00 - Short break
11.10 - Round 1 of The Fresh Connection
12.30 - Evaluation Round 1 and introduction SC
Strategy
13.00 - Lunch
14.00 - Round 2 of The Fresh Connection
15.15 - Evaluation Round 2 and introduction S&OP
15.45 - Short break
16.00 - Round 3 of The Fresh Connection
17.00 - Evaluation of Round 3
17.15 - Wrap up of the day
17.30 - End
Program day 2

09.00 - Kick off


09.15 - Introduction SCRM and round 4 of TFC
10.30 - Evaluation Round 4
10.45 - Short break
11.00 - All role settings/decisions in TFC
11.30 - Introduction of Market Dynamics, CO2 and round 5
of TFC
12.45 - Lunch
13.45 - Evaluation of Round 5
14.00 - Back office: calculation, scores, users, reports
15.00 - Intro External collaboration and round 6 of TFC
16.00 - Evaluation of Round 6
16.15 - Evaluation and Certification
16.45 - Wrap up
17.00 - End
Voting
session
The Challenge

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

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The Roles

VP Supply Chain

Components Finished product

Supply Production Distribution

VP Purchasing VP Operations VP Sales

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Assortment

Two packaging types


1L carton
0.3L PET bottle

Three flavors
Orange
Orange C-Power
Orange/Mango

Shelf life of finished products is 20


weeks

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The Fresh
Connections Supply
Chain
Components

pallets
Finished product

Bottlin pallets
SRM Mixing CRM
g
tanky
ard

Three warehouses and overflow


warehouses when needed
Two stage production: mixing and bottling
Bottling line(s) and mixer(s) for all
products
MtS, leadtime customers of 1 day (delivery
next day)
Shelf life

Internal
Shelf life agreement= 75%
shelflife

Shelf life is 20 weeks

If the shelf life agreement is 75%, the internal


shelf life becomes 25%
In other words, if the customer is promised a
remainder of shelf life of 15 weeks at the
moment of delivery, inventory of finished
products may not rise higher than 5 weeks
Finished products are NOT distributed to a
customer if the shelf life agreement is violated

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Market

Three customers

Retailer Food & Groceries


500 stores
Supply chain leader

Retailer Land market


300 stores
Discounter

Chain of gas stations Dominicks


50 stores
Only PET bottles
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Contract index

Price setting

You cannot negotiate directly on


sales/purchasing prices
Negotiate on supply chain performance (SLAs)
This leads to a contract index
Contract index determines the sales/purchasing
price

Promise Contract
Example (sales) Basic price Sales price
index
Much 1.1 1.50 1.65
Little 0.9 1.50 1.35

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Performance
evaluation

Costs
Operational costs
Improvement projects

highest
ROI

Revenue Investments
Price: Working capital
Customer satisfaction Equipment
Volume: Buildings
Portfolio

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Quick
Tour

testgig3 16
The Challenge
The Start

Make this company profitable again


You have one round (half a year) to
prove you can do this job

How?
We make pairs of two people
Each pair has one vote
Hand out ABCD forms
Majority rules

All roles are played in a very limited


format 17
Where do we start?

A. Purchasing
B. Operations
C. Sales
D. Supply chain management

Results
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Purchasing - PET

A. Current supplier, no change


B. Current supplier, high quality
C. More reliable supplier, high quality and
FTL
D. Nearby top Trio
supplier, high quality
Trio (high Plant
and
Philyp
FTL (current) quality) in Jones
Leadtime in 10 10 15 5
days
Service level % 94% 94% 96% 98%
Certified No No Yes Yes
Price (contract 0.9620 0.9660 0.986 1.022
index) 0
Component 0.0289 0.0290 0.029 0.0307
price 6
Price (relative) 100 100.4 102.5 106.2
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Purchasing -
Oranges

A. Current supplier, payment term 4 weeks


B. Current supplier, payment term 6 weeks
(contract index + 0.21%)
C. Current supplier, payment term 8 weeks
(contract index + 0.51%)
D. Current supplier, payment term 2 weeks
(contract index 0.13%)

. Interest rate is 15% annually Back to roles


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Operations
Inbound
Warehouse
A. Warehouse size 750 pallet locations
B. Warehouse size 1,000 pallet locations
C. Warehouse size 1,250 pallet locations
D. Warehouse size 1,500 pallet locations

. Inhouse: 200 per location per year


. Overflow: 3 per location per day

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Operations
Bottling

A. Increase speed
B. Go to three shifts
C. Introduce SMED
D. Introduce preventive maintenance

. Increase speed, costs: 15 K, 10% more


speed
. Extra shift, costs: 200 K annually
. SMED, costs: 10 K, 30% less changeover
time
. Prev maintenance, takes 3 hours/week,
50% less downtime Back to roles
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Sales Shelf life

A. Shelf life for all customers to 70%


B. Shelf life for all customers to 75%
C. Shelf life for all customers to 80%
D. Shelf life for all customers to 85%

. Every 5% increase gives 75 K extra


revenue
. Every 5% increase means 1 week less
time internally
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Sales Service
level

A. Service level for all customers to 90%


(- 351k)
B. Service level for all customers to 92.5%
(- 180k)
C. Service level for all customers to 95%
(- 61k)
D. Service level for all customers to 97.5%
(+ 14k)
Back to roles
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SCM Frozen
period

A. Frozen period to 4 weeks


B. Frozen period to 3 weeks
C. Frozen period to 2 weeks
D. Frozen period to 1 week

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SCM
Production
frequency
A. All products every day
B. All products every two days
C. All products every week
D. All products every two weeks

Back to roles
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SCM Batch size
raw materials

Which raw material do you want to give a


batchsize of 1 week ?

A. Carton
B. PET bottle
C. Orange
D. Vitamin C

Back to roles
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Results

Predictable financial results are


important.
What do you expect for the next half
year?

A. Increase of the ROI


B. Decrease of the ROI

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? 29
Get Started
Strategy into
action
Levels in version 2013
Theme Sales SCM Operations Purchasing

Service level # Shifts


Delivery window
Level 1 Reliability Order deadline Safety stocks # Pallet locations
Delivery reliability
Shortage rule # FTE

Lotsizing in SMED
Batches and Shelf life
Level 2 frequencies Trade unit
production and Increase speed Trade unit
purchasing

Intake time
Preventive
Supplier selection
maintenance
Speed and Payment terms
Level 3 quality
Payment terms Frozen period Solve breakdowns
Quality
training
Transport mode
Raw materials
inspection
Extensions
in version 2013

Theme Sales SCM Operations Purchasing

Promotional
pressure
Extension Production interval Resource selection Dual sourcing
S&OP Category
a tool
management
Forecasting

Outsourcing VMI
Extension External Promotion horizon
warehouse (MCC) Supplier
b collaboration VMI
Inflate PET development

CO2 sla Decrease of water


usage
Decrease of
Extension CO2 footprint
energy usage
c Sustainabilty
Decrease of start
up productivity
loss

Extension KPIs and


KPI selection KPI selection KPI selection KPI selection
d targets

Tracking & tracing Contract duration


Supply chain Quarantine Supplier
Extension Risk events
risk Scenarioplanner Risk events development
e Relaunch (horizon)
management Pooling warehouse Dual sourcing
FTE Risk events
Getting started

Divide roles within your team


Go to
http://game.thefreshconnection.e
u/2013

and log in with


username/password, usernames
and passwords are case-sensitive
During game save new settings
(deal in Purchasing and Sales)
Calculating results is done
Good
luck!