A Comprehensive Supply Chain Simulation Game Played in 4 rounds. Every rounds present new variables and correspondence decisions from our team. This was a course project for DSO557b for MSGSCM cohort of USC Marshall.

1. TEAM 2
NATURESIP
Yixue Yang (VP of Sales)
Kevin Mitchell (VP of Supply Chain)
Elmira Mirmalek (VP of Operations)
Yu Sai Leung (VP of Purchasing)
Karly Kiser (Advisor)

2. Fresh Connection
Introduction
• 3 flavors, 2 sizes of packaging
• Food & Groceries, Land
Market, and Dominick’s are
their customers
• Components and Products
are stored in Pallets in TFC
warehouses.
• Manufacturing In-house.
• 2 Components are
purchased from either local
and regional suppliers, or
fruit traders and producers
around the world.
The Goal and Strategy
• The Goal is to create a good
end-to-end supply chain flow,
while securing a good ROI and
provide an analytical
mechanism to be used for
performance measurement and
improvements to make further
strategic decisions.
• Nature of the TFC - fresh juice
business involves mass
production process. Based on
the standardization and the
costs embedded in the
operations, we thought the low-
cost strategy is more aligned
with the TFC business.
KPIs
• For evaluating the performance
towards the strategy and goal, we use
the following KPIs as guidance:
bonus and penalties, obsolete level,
component availability & production
plan adherence.

3. Round 1 Analysis
ROI : -3.96% (penalties of $168K
and operating loss of $157K)

4. Sales
● Service level reduced for all
customers
● Shelf life for DM & LM reduced by
3%
Supply Chain
● No change
Operations
● Modify the pallet locations
for both the warehouses
● Add SMED action
Purchasing
● Due to the limitation on
supplier selection and
negotiation, only adjusted
the delivery reliability levels
to Vitamin C and PET
suppliers.
Round 1 Decisions

5. Our Expected Outcome VS Actual Results - R1
Expected Results Actual Results
● The lowered customer service level promises
and shelf life promises will turn penalties to
bonuses.
● As expected, gained bonuses of $39K.
● Reduction in warehousing costs, and
changeover time
● Saved 8k in Warehousing Costs
● Increase in the Overflow of the finished
goods because of the improved operational
efficiency (Production Plan Adherence
increased by 4.3%)

6. Lessons Learned from
Round 1
• Need to have a clear strategy and goal
to follow with in the long term, and
ensured that all roles are making the
corresponding decisions in line with the
goal.
• The lowered promises to customers led
to reduced revenue level, although we
turned penalties to bonuses.
• Going forward, if we are to follow the
low-cost strategy, we need to look at
reducing our supply chain costs to
increase profitability.

7. Round 2 Analysis

8. Sales
● Increased Land Market contract
index (still remained at discount)
and also increased Service Level.
● Increased Dominick’s contract
index to 1.008 for premium and
increased Service Level.
Supply Chain
● Decreased lot size on all raw
materials by 25% except
Orange to lower
costs/maintain high availability
● Decreased DC safety stock
levels for all products by 10%
Operations
● Increase capacity in both
warehouses to eliminate
the overflow costs.
● Increase Speed of bottling
line
Purchasing
● Unable to terminate poor
performing suppliers &
contract new ones, only slight
adjustments made to contract
indexes.
Round 2 Decisions

9. Our Expected Outcome VS Actual Results - R2
Expected Results Actual Results
● Get positive ROI ● As expected - positive ROI with
significant bonuses
● Overflow expenses to decrease while
maintaining production schedule
● Production plan adherence rose and
overflow pallet expenses decreased by
92% for raw materials and by 46% for
finished goods
● Avoid raw material stock-outs while
maintaining strict stock levels
● No change in component availability
from previous round

10. Lessons Learned from
Round 2
• Achieved positive ROI for first time
• Lowered Space costs under Overhead by
8.7% by calculating the number of pallets
and considering the overflow expenses
• Increased Bonuses by 49% with attaining
service level and shelf life, potential for more
revenues in the coming rounds
• The importance of component availability,
made team decision to focus on this attribute
particularly for future rounds to achieve
99.8% goal.

11. Round 3 Analysis

12. Sales
● Increase Shelf-life for all
customers, and service level for
two based on the attained level
of last round, hoping to get
better revenue while keeping
the bonuses
Supply Chain
● No Change
Operations
● Reduce number of employees in raw
material warehouse to increase the
capacity utilization
● Preventive maintenance and solve
breakdown training to reduce the
10h breakdown time
● Increase pallet location in finished
goods warehouse
Purchasing
● Terminated contract with current
packaging suppliers - Trio PET & Mono
Packaging, selected the ones with
certification (more reliable delivery
and standard quality guaranteed.)
Also, terminate contract with Seitan
Vitamins - to reduce risk of long lead
time issues.
Round 3 Decisions

13. Our Expected Outcome VS Actual Results - R3
Expected Results Actual Results
● Better Negotiations with
customers in terms of service
level and shelf-life would help
us increase the revenue.
● Increased revenue by $16K, but
lost the bonuses by $47K.
● High cost of scrap ($85k) which
increased more than doubled
than R2.
● Better reliability and component
availability due to new suppliers
and contracts
● Reliability for PET increased
from 75% to 93%.
● Spike increase in the overflow of
raw materials by $10K

14. Lessons Learned from
Round 3
• Needed to anticipate the need for pallet
locations in the raw material warehouse
upon changing the suppliers.
• Were not ready in the supply chain to
increase the service level and shelf life.
• Able to achieve an increase in
component availability this round.
• Lack of focus on demand patterns for
different products, need to address it in
next round by adjusting production
interval to achieve further production
efficiency.

15. Round 4 Analysis

16. Sales
● Service level remained the
same; while increased shelf
life promises to all
customers, with intention to
reduce safety stock level
(finished goods).
Supply Chain
• Reduced DC safety stock,
provided we increased our
shelf-life promises.
• Reduced component safety
stock due to overflow raw
materials warehouse.
• Reduced lot sizing for some of
the components to reduce
inventory.
• Modified the production
intervals by taking into account
the different product demands.
Operations
● No breakdown
training (high
operating costs), A
little preventive
maintenance
● Increase raw material
pallet locations
Purchasing
● Contracted new mango
supplier - Dalima Mango
due to previous delivery
reliability issue.
● Negotiated with suppliers
with contract index level
very close to 1 by adjusting
trade units, terms of
payment & delivery
windows.
Round 4 Decisions

17. Our Expected Outcome VS Actual Results - R4
Expected Results Actual Results
● Reduced safety stock levels and lot sizing
would help addressing issues on raw
materials warehouse overflow.
● Reduction in component availability by 3%.
Stock-out of components led to inability to
produce and ship products and hence suffer
from heavy penalties of $500K in this round.
● Increased shelf life promises hoping to offer
customers fresher products with higher
contract indexes.
● Our supply chain cannot support the increase
in shelf-life / freshness promises; obsoletes
increased by 1%.
● The new supplier contract indexes have
adjusted to a level close to zero hoping to
reduce purchasing costs.
● Increased overall raw material costs by 8%,
that was mainly due to the increase
transportation cost with smaller lot sizing
and the high obsolete level (18.9%).

18. Lessons Learned from
Round 4
• It was not an ideal decision to improve shelf-
life promises (by 5%), given that there was
already a high obsolete level at 17.9% in last
round. Not until our obsolete level is at a
very minimum level close to zero.
• The low component availability has also
proven that we have overshot our reduction
in component safety stock which resulted in
stock-out and eventually affects production
and product delivery to customers.
• In terms of suppliers relationship and
management, it is important to offer
competitive terms that would help attracting
Suppliers in doing business with us, hence
improving delivery reliability and quality.
Setting contract index less than or close to 1
would not necessarily leads to a low
purchasing costs.

19. Round 5 Analysis

20. Sales
● Increase sales forecast by 5% to
Orange 1-Ltr product, based on
customer demand and profitability
level.
● Significantly reduced shelf-life
promises (due to high obsolete
level).
● Heavy promotional level applied to
Land Market.
Supply Chain
● Increase component
safety stock levels to
avoid stock-out,
particularly, for
oranges to cover
additional forecast
and heavy discount.
● Increase lot sizing.
● Maintain production
interval that follows
demand pattern.
Operations
● Due to lack of liquidity and
profitability, stick with the current
Mixer and Bottling line.
● Raw material inspection on PET to
reduce the rejection rate
● Reduce the capacity in raw material
warehouse to help the ROI on
cutting costs.
Purchasing
● New mango supplier’s poor
performance & its effect on
low component availability,
contracted back with
previous certified mango
supplier with less rejection
rate and better reliability.
Round 5 Decisions

21. Our Expected Outcome VS Actual Results - R5
Expected Results Actual Results
● Reduction in raw materials rejection rate and
overall purchasing costs by selecting better
supplier and the additional raw materials
inspection conducted in warehouses.
● Average rejection rate reduced by 0.5% and
purchasing costs reduced by 10%.
● Reduction in obsolete level by setting lower
shelf-life promises, also, the increase in safety
stock will improve component availability and
avoid stock out. Eventually supplying as to
what customers demanded and generating
bonuses.
● Decreased obsolete level by 8.8%. Increased
component availability by 2.8%. Generated
bonus of approximately $50K.
● Better production plan with the new
production interval which align to the increased
forecast and different product demand.
● Improved production plan adherence by 8%.

22. Lessons Learned from Round 5
● The most challenging round, need to address the problems in Round 4, at the same
time responding to the new business scenarios.
● Moderate forecast increase followed by increase in safety stock, while operated in a
more efficient production plan with better supplier management to ensure reliable
sourcing of components.
● ROI results greatly improved from -12.2% to 1.82%.
● Better communication this round by informing and recognizing the possible impacts
that could bring from each role’s decisions.

23. Conclusion
• Alternative approaches to play the game, what can we do
better?
• Better alignment when making departmental decisions
to achieve the common goal - maximizing profit and
minimizing costs. This makes a huge difference than
working in silos which undermines the linkages in the
end-to- end supply chain.
• Evaluate the departmental decisions made after each
round, learn from each experience for further
improvement.
• Need to have a clear long-term strategy to follow with,
rather than taking corrective actions only in each round.

24. Thank You for Listening!
Questions and Answers
谢谢
‫مرسی‬
merci