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The Fresh Connection

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

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The Fresh Connection

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  1. The Fresh Connection

  2. Introductions • Hans Kremer, CPIM, CIRM, CSCP, partner of Involvation Interactive • InvolvationInteractive 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

  3. Introduction round • Who are you? • Your background, company androle? • What is your experience with The Fresh Connection? • What are yourexpectations?

  4. The program The Train-the-Trainer program covers • How the simulation software works • Learning points of the simulation • Coaching tips forstruggling teams • Available support material • Back office functionalitiesand support

  5. 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

  6. 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, CO2andround 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

  7. Voting session

  8. The Challenge • The Fresh Connection • is a producer of fruit juices • In NW Europe • sufferingseverelosses in the last year • because of poor performance • A new management team has been appointed • The assignment is to make the companyprofitableagain • Bymakingstrategic and tacticalchoices

  9. The Roles VP Supply Chain Components Finished product Supply Production Distribution VP Purchasing VP Operations VP Sales

  10. Assortment • Twopackaging types • 1L carton • 0.3L PET bottle • Three flavors • Orange • Orange C-Power • Orange/Mango • Shelf life of finishedproducts is 20 weeks

  11. The FreshConnection’s Supply Chain Components pallets Finished product pallets SRM Mixing Bottling CRM tankyard • Three warehouses and overflow warehouses whenneeded • Two stage production: mixing and bottling • Bottling line(s) and mixer(s) for allproducts • MtS, leadtime customers of 1 day (delivery next day)

  12. Shelf life • If the shelf life agreement is 75%, the internalshelf life becomes 25% • In otherwords, if the customer is promised a remainder of shelf life of 15 weeks at the moment of delivery, inventory of finishedproductsmaynotrisehigherthan 5 weeks • Finishedproducts are NOT distributedto a customer if the shelf life agreement is violated Shelf life agreement= 75% Internal shelflife Shelf life is 20 weeks

  13. Market • Threecustomers • RetailerFood & Groceries • 500 stores • Supply chain leader • Retailer Land market • 300 stores • Discounter • Chain of gas stations Dominick’s • 50 stores • Only PET bottles

  14. 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)

  15. Performance evaluation Costs Operational costs Improvement projects highest ROI Revenue Price: Customer satisfaction Volume: Portfolio Investments Working capital Equipment Buildings

  16. Quick Tour testgig3

  17. The Challenge –The Start • Makethiscompanyprofitableagain • You have oneround (half a year) to prove youcan do this job • How? • We make pairs of twopeople • Each pair has onevote • Hand out ABCD forms • Majorityrules • All roles are played in a verylimitedformat

  18. Where do we start? • Purchasing • Operations • Sales • Supply chain management Results

  19. Purchasing - PET • Currentsupplier, no change • Currentsupplier, high quality • More reliablesupplier, high quality and FTL • Nearby top supplier, high quality and FTL

  20. Purchasing - Oranges • Currentsupplier, payment term 4 weeks • Currentsupplier, payment term 6 weeks (contract index + 0.21%) • Currentsupplier, payment term 8 weeks (contract index + 0.51%) • Currentsupplier, payment term 2 weeks (contract index – 0.13%) • Interest rate is 15% annually Back to roles

  21. Operations –Inbound Warehouse • Warehouse size 750 pallet locations • Warehouse size 1,000 pallet locations • Warehouse size 1,250 pallet locations • Warehouse size 1,500 pallet locations • Inhouse: 200 per location per year • Overflow: 3 per location per day

  22. Operations – Bottling • Increase speed • Go to threeshifts • Introduce SMED • Introducepreventivemaintenance • Increase speed, costs: 15 K, 10% more speed • Extra shift, costs: 200 K annually • SMED, costs: 10 K, 30% lesschangeover time • Prev maintenance, takes 3 hours/week, 50% lessdowntime Back to roles

  23. Sales – Shelf life • Shelf life for all customers to 70% • Shelf life for all customers to 75% • Shelf life for all customers to 80% • Shelf life for all customers to 85% • Every 5% increase gives 75 K extra revenue • Every 5% increase means 1 week less time internally

  24. Sales – Service level • Service level for all customers to 90% (-351k) • Service level for all customersto 92.5% (-180k) • Service level for all customers to 95% (-61k) • Service level for all customersto 97.5% (+14k) Back to roles

  25. SCM – Frozen period • Frozenperiod to 4 weeks • Frozenperiod to 3 weeks • Frozenperiod to 2 weeks • Frozenperiod to 1 week

  26. SCM –Production frequency • All productseveryday • All productseverytwodays • All productsevery week • All productseverytwo weeks Back to roles

  27. SCM – Batch sizeraw materials Whichrawmaterial do you want to give a batchsize of 1 week ? • Carton • PET bottle • Orange • Vitamin C Back to roles

  28. Results Predictablefinancialresults are important. What do youexpect for the next half year? • Increase of the ROI • Decrease of the ROI

  29. ?

  30. Get Started

  31. Strategyinto actionLevels in version 2013

  32. Extensionsin version 2013

  33. Gettingstarted • Divideroleswithinyour 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) • Calculatingresults is donecentrally

  34. Good luck!

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