tfc kick off nebraska(1)
DESCRIPTION
simTRANSCRIPT
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Kick Off
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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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The roles
Finished productComponents
SRM Production CRM
Supply Chain
Purchasing Operations Sales
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highestROI
RevenuePrice:
Customer satisfaction *Volume:Portfolio
* Customer satisfaction is calculated from flexibility, reliability, moq’s, leadtimes, offered shelf life, payment terms etc
CostsOperational costs
Improvement projects
InvestmentsInventory
Payment termsMachines
The performance
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Individual targets
Role Based onPurchasing Lowest Purchasing priceOperations Lowest Operational
costsSupply chain Lowest Inventory valueSales Highest Revenue
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• Three warehouses and overflow warehouses when needed• Two stage production: mixing and bottling•One bottling line and one mixer for all products (at the start)•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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Assortment
• Two packaging types– Carton– PET bottle
• Three flavours– Orange– Orange C-Power– Orange/Mango
• Shelflife of finished products of 20 weeks
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Shelf life
• If the shelf life agreement is 70%, the internal shelf life is 30%.
• Finished products are NOT distributed to that customer if the shelf life agreement is violated.
Shelflife is 20 weeks
Shelf life agreement= 70% 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 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
indexBasic price Sales price
Much 1.1 € 1.5 € 1.65Little 0.9 € 1.5 € 1.35
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Important elements
Delivery reliability
Availability components
Production reliability Service level
Leadtime Intake time Frozen period Order deadline
Delivery window
Finished productComponents
SRM Production CRM
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Important elements (cont)
Contractindex
Trade unit Lot size Production frequency Trade unit
Contractindex
Bonus and penalty
Shelf life %
Finished productComponents
SRM Production CRM
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Additional remarks
• Every round pictures half a year of TFC in a steady state. You don’t have to worry about fade in or fade out effects from one round to the next.
• Out of stock is not missed sales. The Fresh Connection works with backorders to their customers. So they are delivered at a later day.
• Graphs of inventory or demand in time are a snapshot of half a year out of a longer simulation period (to ensure predictable results).
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The challenge
• Make this company profitable again• You can take 3,5 years (7 rounds) to do so• The sooner the better
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Getting started
• Form a team and distribute roles
• 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)
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Good luck