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The Fresh Connection 1. Introductions Hans Kremer, CPIM, CIRM, CSCP, partner of Involvation Interactive Involvation Interactive is a spin off of Involvation,

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Presentation on theme: "The Fresh Connection 1. Introductions Hans Kremer, CPIM, CIRM, CSCP, partner of Involvation Interactive Involvation Interactive is a spin off of Involvation,"— Presentation transcript:

1 The Fresh Connection 1

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 2

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

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 4

5 09.00-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 Program day 1 5

6 09.00-Kick off Introduction SCRM and round 4 of TFC Evaluation Round Short break All role settings/decisions in TFC Introduction of Market Dynamics, CO 2 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 Program day 2 6

7 Votingsession 7

8 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 8

9 Finished productComponents SupplyProductionDistribution VP Supply Chain VP PurchasingVP OperationsVP Sales The Roles 9

10 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 10

11 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 Finished product Components SRMMixingCRM The Fresh Connection’s Supply Chain tankyard Bottling 11

12 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 12

13 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 13

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) PromiseContract indexBasic priceSales price Much Little

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

16 QuickTour testgig3 16

17 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 17

18 Where do we start? A.PurchasingPurchasing B.OperationsOperations C.SalesSales D.Supply chain managementSupply chain management Results 18

19 A.Current supplier, no change B.Current supplier, high quality C.More reliable supplier, high quality and FTL D.Nearby top supplier, high quality and FTL Purchasing - PET Trio (current)Trio (high quality)PlantinPhilyp Jones Leadtime in days Service level %94% 96%98% CertifiedNo Yes Price (contract index) Component price Price (relative)

20 A.Current supplier, payment term 4 weeks B.Current supplier, payment term 6 weeks (contract index %) C.Current supplier, payment term 8 weeks (contract index %) D.Current supplier, payment term 2 weeks (contract index – 0.13%) Interest rate is 15% annually Back to roles Purchasing - Oranges 20

21 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 21

22 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 Operations – Bottling 22

23 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 23

24 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 24 Back to roles

25 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 25

26 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 Back to roles 26

27 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 size raw materials Back to roles 27

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

29 ? 29

30 Get Started 30

31 Strategy into action Levels in version 2013 ThemeSalesSCMOperationsPurchasing 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 speedTrade unit Level 3 Speed and qualityPayment termsFrozen period Intake time Preventive maintenance Solve breakdowns training Raw materials inspection Supplier selection Payment terms Quality Transport mode 31

32 Extensions in version 2013 ThemeSalesSCMOperationsPurchasing Extension a S&OP Promotional pressure Category management Forecasting Production interval tool Resource selectionDual sourcing Extension b External collaboration Promotion horizon VMI Outsourcing warehouse (MCC) Inflate PET VMI Supplier development Extension c CO 2 footprint Sustainabilty CO 2 slaDecrease of water usage Decrease of energy usage Decrease of start up productivity loss Extension d KPIs and targetsKPI selection Extension e Supply chain risk management Risk events Relaunch (horizon) Scenarioplanner Tracking & tracing Quarantine Risk events Pooling warehouse FTE Contract duration Supplier development Dual sourcing Risk events 32

33 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 Getting started 33

34 Good luck! 34

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