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The Fresh Connection

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Submitted By kaukasus
Words 599
Pages 3
The Fresh Connection
- Kick off -

1

The Fresh Connection – Kick off –

Outline
• „The Fresh Connection“ is a business simulation
• implemented as a Matlab programm accessible via HTML (a browser game)
• Round-based simulation on tactical/strategic level  one round equals 6 month
• A team consists of 4 players representing the management of the company
• Each player is responsible for a business unit and can set control parameters affecting the company’s profit
• Final goal is increase ROI

The Fresh Connection – Kick off –

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

3

The Fresh Connection – Kick off –

The Company
Components
pallets

Finished product pallets SRM

Mixing

Bottling

CRM

tankyard

• Three warehouses and overflow warehouses when needed
• Two stage production: mixing and bottling
• Bottling line(s) and mixer(s) for all products
• Make-to-stock production
• Lead time to customers: 1 day (delivery next day)

The Fresh Connection – Kick off –

The Roles
VP Supply Chain

Components

Finished product

Supply

Production

VP Purchasing

VP Operations

Distribution

VP Sales

5

The Fresh Connection – Kick off –

Assortment
• Two packaging types
– Cartons
– PET bottles

• Three flavors
– Orange
– Orange C-Power
– Orange/Mango

6

The Fresh Connection – Kick off –

Customer 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
8

The Fresh Connection – Kick off –
Inbound

Outbound

Orange
OR 1L

Mango

Mixing

OR-C 1L

Orange

OR-M 1L

Mango

Vit C
Vit C

Pack 1L

Pack 1L

Bottling

Food and
Groceries in
The Fresh
Connection

OR pet

OR-C pet

OR-M pet

LAND Market
In The Fresh
Connection

PET

PET
Overflow

Overflow

Dominick’s in
The Fresh
Connection

The Fresh Connection – Kick off –

The concept of Shelf Life
Idea: all products can be sold for 20 weeks after production (best before date)
• products spent time in FNC outbound storage (storage time) + customer shelfs (shelf time/life) • in customer contracts, a minimum shelf life is promised (i.e. a maximum age of products at the delivery date)  the higher promised shelf life, the higher revenue (i.e. price/item)
• products exceeding the maximum age cannot be sold to the customer (and are disposed)

Loss

Realised storage time

Max. storage time (e.g. 5 weeks)

Promised shelf life (e.g. 15 weeks)

Maximum product age until best before (=20 weeks)

Cut off

The Fresh Connection – Kick off –

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, reversed for purchasing)
Shelf life
Promise

Contract index

Basic price

Sales price

High

1.1

€ 1.5

€ 1.65

Low

0.9

€ 1.5

€ 1.35

11

The Fresh Connection – Kick off –

Performance measures - KPIs
ROI
Purchasing

Operations

Sales

SCM

Rejected components Utilization inbound WH

Gross margin

Service level raw materials

Raw material cost Utilization outbound WH

Loss outbound Reach inbound Supplier reliability Production plan realization

Service level outbound Reach outbound + financial key figures (revenues, costs, surcharges, …)

The Fresh Connection – Kick off –

Fields of action
Purchasing
Supplier contracts
• Supplier selection • Raw material quality • Service level
• Lead time
• …

Operations
Production setup
• inspections
• WH capacities
(inbound + outbound) • Production flexibility • …

Sales
Customer contracts
• Promised shelf life • Promised service level
• priorities
• Order units
• …

SCM
Inv. management
• Lot sizing inbound • Lot sizing production • Safety stocks
• …

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