The Fresh Connection
description
Transcript of The Fresh Connection
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The Fresh Connection
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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
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Introduction round
• Who are you?
• Your background, company and role?
• What is your experience with The Fresh Connection?
• What are your expectations?
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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
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09.00 - Introductions & Kick off11.00 - Short break11.10 - Round 1 of The Fresh Connection12.30 - Evaluation Round 1 and introduction SC Strategy 13.00 - Lunch14.00 - Round 2 of The Fresh Connection15.15 - Evaluation Round 2 and introduction S&OP15.45 - Short break16.00 - Round 3 of The Fresh Connection17.00 - Evaluation of Round 317.15 - Wrap up of the day17.30 - End
Program day 1
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09.00 - Kick off09.15 - Introduction SCRM and round 4 of TFC10.30 - Evaluation Round 410.45 - Short break11.00 - All role settings/decisions in TFC11.30 - Introduction of Market Dynamics, CO2 and round 5 of TFC12.45 - Lunch13.45 - Evaluation of Round 514.00 - Back office: calculation, scores, users, reports15.00 - Intro External collaboration and round 6 of TFC16.00 - Evaluation of Round 616.15 - Evaluation and Certification16.45 - Wrap up17.00 - End
Program day 2
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Votingsession
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• 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
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Finished productComponents
Supply Production Distribution
VP Supply Chain
VP Purchasing VP Operations VP Sales
The Roles
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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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• 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)
pallets
pallets
Finished product
Components
SRM Mixing CRM
The Fresh Connection’s Supply Chain
tankyard
Bottling
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Shelf life
• 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
Shelf life is 20 weeks
Shelf life agreement= 75% Internal shelflife
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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 Dominick’s• 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 (SLA’s)• This leads to a ‘contract index’• Contract index determines the sales/purchasing price
• Example (sales)
Promise Contract index Basic price Sales price
Much 1.1 1.50 1.65
Little 0.9 1.50 1.35
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highestROI
RevenuePrice:
Customer satisfactionVolume:Portfolio
CostsOperational costs
Improvement projects
InvestmentsWorking capital
EquipmentBuildings
Performance evaluation
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QuickTour
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• 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
The Challenge –The Start
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Where do we start?
A. PurchasingB. OperationsC. SalesD. Supply chain management
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A. Current supplier, no changeB. Current supplier, high qualityC. More reliable supplier, high quality and FTLD. Nearby top supplier, high quality and FTL
Purchasing - PET
Trio (current) Trio (high quality) Plantin Philyp Jones
Leadtime in days 10 10 15 5
Service level % 94% 94% 96% 98%
Certified No No Yes Yes
Price (contract index) 0.9620 0.9660 0.9860 1.022
Component price 0.0289 0.0290 0.0296 0.0307
Price (relative) 100 100.4 102.5 106.2
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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
Purchasing - Oranges
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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
Operations –Inbound Warehouse
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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
downtimeBack to roles
Operations – Bottling
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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
Sales – Shelf life
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A. Service level for all customers to 90%
(- 545k)
B. Service level for all customers to 92.5%
(- 119k)
C. Service level for all customers to 95%
(current promise)
D. Service level for all customers to 97.5%
(+ 68k)
Sales – Service level
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A. Frozen period to 4 weeks
B. Frozen period to 3 weeks
C. Frozen period to 2 weeks
D. Frozen period to 1 week
SCM – Frozen period
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A. All products every day
B. All products every two days
C. All products every week
D. All products every two weeks
SCM –Production frequency
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Which raw material do you want to give a batchsize of 1 week ?
A. Carton
B. PET bottle
C. Orange
D. Vitamin C
SCM – Batch sizeraw materials
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Predictable financial results are important.What do you expect for the next half year?
A. Increase of the ROIB. Decrease of the ROI
Results
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Get Started
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Strategy into actionLevels in version 2013
Theme Sales SCM Operations Purchasing
Level 1 ReliabilityService level
Order deadlineShortage rule
Safety stocks# Shifts
# Pallet locations# FTE
Delivery windowDelivery reliability
Level 2 Batches and frequencies
Shelf lifeTrade unit
Lotsizing in production and purchasing
SMEDIncrease speed Trade unit
Level 3 Speed and quality Payment terms Frozen period
Intake timePreventive
maintenanceSolve breakdowns
trainingRaw materials
inspection
Supplier selectionPayment terms
QualityTransport mode
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Extensionsin version 2013
Theme Sales SCM Operations Purchasing
Extension a S&OPPromotional pressureCategory management
ForecastingProduction interval
toolResource selection Dual sourcing
Extension b External collaboration
Promotion horizonVMI
Outsourcing warehouse (MCC)
Inflate PETVMI
Supplier development
Extension c CO2 footprintSustainabilty
CO2 sla Decrease of water usage
Decrease of energy usage
Decrease of start up productivity loss
Extension d KPIs and targets KPI selection KPI selection KPI selection KPI selection
Extension e Supply chain risk management
Risk eventsRelaunch (horizon) Scenarioplanner
Tracking & tracingQuarantineRisk events
Pooling warehouse FTE
Contract durationSupplier development
Dual sourcingRisk events
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• Divide roles within your team• 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)
• Calculating results is done centrally
Getting started
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Good luck!
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