1. The Fresh Connection

2. 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

3. Introduction round Who are you? Your background, company and role?
What is your experience with The Fresh Connection?
What are your expectations?

4. 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

5. Program day 1
Introductions & Kick off Short break Round 1 of The Fresh Connection Evaluation Round 1 and introduction SC Strategy Lunch Round 2 of The Fresh Connection Evaluation Round 2 and introduction S&OP Short break Round 3 of The Fresh Connection Evaluation of Round Wrap up of the day End

6. Program day 2
Kick off Introduction SCRM and round 4 of TFC Evaluation Round Short break All role settings/decisions in TFC Introduction of Market Dynamics, CO2 and round 5 of TFC Lunch Evaluation of Round Back office: calculation, scores, users, reports Intro External collaboration and round 6 of TFC Evaluation of Round Evaluation and Certification Wrap up End

7. Voting session
Hello, my name is Bob, Bob McLaren, CEO of The Fresh Connection. You probably expected a guy up here, called Hans Kremer. Well sadly for him, I fired him, him and the whole management team. Why? Because our company is in trouble and we need a new management team now, will you help me? Repeat if necessary: WILL YOU HELP ME?
Or shall I perhaps first tell you who we are?

8. 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
Poor performance:
1. Unhappy customers because we do not meet promised service levels
2. Inventories either too low or too high
3. Obsolescence
4. Production costs are too high
5. Questionable supplier selection.
A new management team has been appointed, well that is you, since I just did that, and you need the make the company profitable again
Strategic and tactical choices, the simulation in the background pretends half a year goes by, daily operations are taken care off automatically

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

10. Assortment Two packaging types Three flavors
1L carton
0.3L PET bottle
Three flavors
Orange
Orange C-Power
Orange/Mango
Shelf life of finished products is 20 weeks

11. The Fresh Connection’s Supply Chain
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
MtS, leadtime customers of 1 day (delivery next day)

12. Shelf life agreement= 75%
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 agreement= 75%
Internal shelflife
Shelf life is 20 weeks

13. Market Three customers Retailer Food & Groceries Retailer Land market
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)
Promise
Contract index
Basic price
Sales price
Much
1.1
1.50
1.65
Little
0.9
1.35
We will see in more detail how this works, once we get to Sales and Purchasing decisions

15. Performance evaluation
Costs
Operational costs
Improvement projects
highest
ROI
Revenue
Price:
Customer satisfaction
Volume:
Portfolio
Investments
Working capital
Equipment
Buildings
1. Explain that revenue  = price x volume. Actual sales price can go up and down influenced by contract index (note, that if you do not deliver on your promises, you get penalties)
2. Sales promotions have an effect on volume, the more promotion pressure you accept, the more your volume will grow

16. Quick Tour testgig3 1. Cockpit: negative ROI, all other kpis
2. Finance: revenues, penalties (solve them!), direct costs (purchasing and production), stock (overflow warehouse inbound), handling (flex manpower), investments
3. Information tab: basic pricing, unit
4. Roles only high level
testgig3

17. 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
Explain the set up

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

19. Purchasing - PET Current supplier, no change
Current supplier, high quality
More reliable supplier, high quality and FTL
Nearby top supplier, high quality and FTL
Trio (current)
Trio (high quality)
Plantin
Philyp Jones
Leadtime in days 10 15 5
Service level %
94%
96%
98%
Certified No
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
1. Go to Purchasing
2. Show current contract with supplier
3. Show Component report, purchase value is in the Component report and in Finance (it includes transport costs and rejection rate).
4. Notice delivery reliability, rejection rate AND transport costs)

20. Purchasing - Oranges Back to roles
Current supplier, payment term 4 weeks
Current supplier, payment term 6 weeks (contract index %)
Current supplier, payment term 8 weeks (contract index %)
Current supplier, payment term 2 weeks
(contract index – 0.13%)
Interest rate is 15% annually
1. Go to Purchasing
2. Show current contract with supplier, highlight the payment term
3. Show Component report, calculate purchase value minus transport costs is component costs. Divide by current CI (1.0040) and multiply by CI when payment term is 8 weeks (1,0091), the difference is extra costs of less than 2 K
4. The upside is 4 weeks extra money in the bank at annually 15% or 7.5% per round. In other words, 402 K x 15% divided by 13 (4 weeks out of 52 weeks) is less than 5 K
5. No brainer
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
1. Show Warehouse report: capacity, usage, overflow of 10.0%, whilst on average cube utilization is 92.5% (833/900)
2. Show Finance report: overflow warehouse costs
Actuals: 900 pallet locations and 5 people, no incoming inspection and rather long intake time
Warehouse is very flexible in adjustments, upward and downward
Explain costs

22. Operations – Bottling Back to roles Increase speed Go to three shifts
Introduce SMED
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
1. Show Production report: capacity, usage, overtime, breakdown, change over, production plan adherence
2. Run time + Change over + Breakdown + Unutilized = Available capacity + Overtime
Actuals: 2 shifts = 80 hours and no additional measures
Operation is very flexible in adjustments, upward and downward
Explain costs
Back to roles

23. Sales – Shelf life Shelf life for all customers to 70%
Every 5% increase gives 75 K extra revenue
Every 5% increase means 1 week less time internally
1. Show existing contracts, shelf life promise
2. Show Customer report, especially attained shelf life
Q: Do we want to be ambitious or conservative?
3. Show kpi Obsoletes (and in Finance Pur and Prod costs, obsolete costs sit there, they are a percentage of demand and need to be repurchased, reproduced and delivered as a backorder)
4. Show Product report: obsoletes per product

24. Sales – Service level Back to roles
Service level for all customers to 90%
(- 545k)
Service level for all customers to 92.5%
(- 119k)
Service level for all customers to 95%
(current promise)
Service level for all customers to 97.5%
(+ 68k)
1. Show existing contracts, service level promise
2. Show Customer report, especially attained service level, then show Finance (penalties)
Challenge: Either do what you promise: now we are underperforming, so promise less or perform better, or a combination of the two
Remember, what did we do with shelf life already
3. Enter decisions in negotiations screens, show how contract index works
4. Write decisions on flip chart for a complete overview later
Back to roles

25. SCM – Frozen period Frozen period to 4 weeks Frozen period to 3 weeks
1. Explain the effects of a frozen period

26. SCM – Production frequency
All products every day
All products every two days
All products every week
All products every two weeks
1. Show Product report from SCM, service level and inventory over time
2. Obsoletes are related to stock height
Safety stocks are fixed for now
Back to roles

27. SCM – Batch size raw materials
Which raw material do you want to give a batchsize of 1 week ?
Carton
PET bottle
Orange
Vitamin C
1. Show component report from SCM
Back to roles

28. Results Predictable financial results are important.
What do you expect for the next half year?
Increase of the ROI
Decrease of the ROI

29. ?

30. Get Started

31. Strategy into action Levels in version 2013
Theme
Sales
SCM
Operations
Purchasing
Level 1
Reliability
Service level
Order deadline
Shortage rule
Safety stocks
# Shifts
# Pallet locations
# FTE
Delivery window
Delivery reliability
Level 2
Batches and frequencies
Shelf life
Trade unit
Lotsizing in production and purchasing
SMED
Increase speed
Level 3
Speed and quality
Payment terms
Frozen period
Intake time
Preventive maintenance
Solve breakdowns training
Raw materials inspection
Supplier selection
Quality
Transport mode

32. Extensions in version 2013 Theme Sales SCM Operations Purchasing
Extension a
S&OP
Promotional pressure
Category management
Forecasting
Production interval tool
Resource selection
Dual sourcing
Extension b
External
collaboration
Promotion horizon
VMI
Outsourcing warehouse (MCC) Inflate PET
Supplier development
Extension c
CO2 footprint
Sustainabilty
CO2 sla
Decrease of water usage
Decrease of energy usage
Decrease of start up productivity loss
Extension d
KPIs and targets
KPI selection
Extension e
Supply chain risk management
Risk events
Relaunch (horizon)
Scenarioplanner
Tracking & tracing
Quarantine
Pooling warehouse FTE
Contract duration

33. Getting started Divide roles within your team
Go to
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

34. Good luck!