The Fresh Connection Game Presentation, Rounds 1-6 Spring Semester 2017, RTU / Riga

1. THE FRESH
CONNECTION
BUSINESS GAME
ANA CORREA
CLAUDIA GOMEZ
KAMILA HURKOVA
MERVE NUR TAŞ
TOMMI VEROMAA
THE FRESH CONNECTION | TEAM 2 1
T E A M 2

2. EXECUTIVE SUMMARY
WHAT DID WE ACHIEVE:
✓ The company obtained profit in each period, growing uninterruptedly in the first 4 rounds and with
a slight decrease in the last 2 rounds.
✓ Since round 1, ROI has always been positive.
WHAT WAS THE GENERAL STRATEGY :
✓ Make decisions integrating all departments, evaluating the possible positive or negative effects on
them in order to minimize costs and maximize the benefit to the company.
✓ Evaluate the decisions made in each period, provide feedback and take corrective actions to make
better use of company resources.
PROBLEMS ENCOUNTERED:
✓ Difficulties in predicting how some decisions will impact the performance of the company.
(The simulator restrained some functionalities at the first stages of the game)
✓ Align strategic decisions of departments in a common goal
THE FRESH CONNECTION | TEAM 2 2

3. CONTENTS
TEAM & RESPONSIBILITIES
◦ SALES
◦ OPERATIONS
◦ SUPPLY CHAIN
◦ PURCHASING
FINANCIAL RESULTS & CONCLUSIONS
THE FRESH CONNECTION | TEAM 2 3

4. Cube utilization %
Prod.Plan Adherence %
Unused capacity %
Nr. of shifts
Responsibilities:
Optimize and control
production and
warehouses
Components %
Stock Components
Stock Products
Responsibilities:
Coordinate different
departments, inventory
control and production
Rejection Components %
Raw Material Costs %
Delivery Reliability
Suppliers
Responsibilities:
Purchasing components,
negotiating with suppliers
Service level %
Obsoletes %
Gross Margin
Responsibilities:
Sell all produced goods
with highest possible
price
TEAM & RESPONSIBILITIES
THE FRESH CONNECTION | TEAM 2 4
R O I %
PURCHASING
SUPPLY
CHAIN
OPERATIONSSALES

5. SALES – GROSS MARGIN
THE FRESH CONNECTION | TEAM 2 5
✓ Increase gross margin as much as possible
prioritizing biggest customers
✓ Try not to lose gross margin on smaller customers
significantly
✓ Introduce promotional pressure for customers
during later rounds
I. STRATEGY II. RESULTS
✓ Gross began to grow on F&C and Dominick’s during
round 3 when customer order priorization was
implemented
✓ Further increases in later rounds with promotional
pressure
✓ Overall increase in gross for F&C and Dominick’s
was attained without losing gross margin on Land
Market
✓ F&C gross increased by almost 5 000 and
Dominick’s by 3000 during 6 periods
III. ANALYSIS
11610
14510
22486
27303

6. SALES – NEGOTIATIONS
THE FRESH CONNECTION | TEAM 2 6
✓ Align capacity of SC and Operations to match
negotiated service and shelf life levels
✓ Take advantage of one customer with full product
range to decrease potential obsoletes
✓ Trade unit: Pallets for all and VMI for F&C and
Dominick’s to reduce outbound stress
✓ Customer priorities: 1. F&C, 2. Dominick’s, 3. LM
I. STRATEGY
✓ Obsoletes were solved with having LM with shelf
life of 62-65%
✓ Negotiated service level % was calculated and
estimated based on improvements in SC and
Operations
✓ Decision-making in Sales was first based on
improvements made in SC and Operations, further
the decisions in SC and Operations were changed
based on Sales.
III. ANALYSIS
II. RESULTS

7. 900 900 920 900 900 900 900
1500
1200
1050
950 930
975 1000
98% 99%
94% 96% 97% 100%
108%
71%
79%
85%
95% 97%
101% 101%
0%
20%
40%
60%
80%
100%
120%
0
200
400
600
800
1000
1200
1400
Round 0 Round 1 Round 2 Round 3 Round 4 Round 5 Round 6
CubeUtilisation
WarehouseCapacity
Inbound Capacity Outbound Capacity
Inbound Cube Utilisation Outbound Cube Utilisation
OPERATIONS - WAREHOUSES
THE FRESH CONNECTION | TEAM 2 7
✓ Optimise pallet allocations (to avoid overflow and
outsourcing / too large unsued capacity)
✓ Allocate adequate number of shifts
✓ Reduce variability in processes and smooth raw
materials income and finished goods storage (align
with Supply Chain and Purchasing)
✓ Be ready to handle all demand (align with Sales)
I. STRATEGY II. RESULTS
✓ Round 4 was the most successful
✓ Starting in Round 5, the demand overpassed the
warehouses‘ capacities and it was not adjusted
correctly
✓ Outsourcing of warehouses would lead to
significantly higher costs
III. ANALYSIS

8. 79%
94%
87%
92% 93% 94%
89%
78%
58%
73% 73% 73%
53%
81%
5%
25%
6%
10% 11%
39%
10%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Round 0 Round 1 Round 2 Round 3 Round 4 Round 5 Round 6
Production Plan Adherence Runtime Unused Capacity
OPERATIONS - PRODUCTION
THE FRESH CONNECTION | TEAM 2 8
´
✓ Allocate adequate number of shifts
✓ Select wisely new investments to smooth
production and increase ROI (mixing and botteling)
✓ Minimize production costs, unused capacity,
changeover and breakdown times
✓ Maximize production plan adherence
✓ Align with all other functions to be ready to satisfy
all demand at lowest cost
I. STRATEGY II. RESULTS
✓ In Round 5, the bottling line was changed and
shifts increased too much  this mistake was
corrected in round 6
✓ New investment lead to higher production costs
and consequently lower ROI (lack of alignment
with other functions)  on longterm, the company
would improve its business results (lower variability in
production, less rejection component rate, less breakdown,
low unused capcity, high runtime %, etc.)
III. ANALYSIS

9. 98.8% 98.9%
99.6%
99.8% 99.9% 99.8%
90.0%
92.0%
94.0%
96.0%
98.0%
100.0%
102.0%
0
5
10
15
20
25
30
35
40
45
50
Round 1 Round 2 Round 3 Round 4 Round 5 Round 6
ANALYSIS PER COMPONENTS
Mango Orange Pack 1 liter
PET Vitamin C Stock Availability %
SUPPLY CHAIN - COMPONENTS
THE FRESH CONNECTION | TEAM 2 9
✓ Guarantee availability of components to meet
demand (depending on supplier reliability, lot sizes
and safety stock )
✓ Keep cost of stock at min level (in accordance with
operations decisions) – Pet and Pack 1L (1-2
rounds)
✓ Adequate lot sizes depending on the stock cost and
transport costs given by procurement
I. STRATEGY II. RESULTS
✓ It was possible to guarantee availability over 99%
but in some cases compromising average stock –
which increased the cost
✓ Increasing supplier reliability in some products
(vitamin C) was key to have a better stock control
✓ Round 3 and 4 best results obtained
✓ Round 6 problem lack alignment with other
departments
III. ANALYSIS
Low availability of Vitamin
C – High stock PET and
Pack 1
Adjust Pack 1 –
Reduction of lot sizes
Increased Stock
per Week PET –
increase demand

10. SUPPLY CHAIN – FINISHED GOODS
THE FRESH CONNECTION | TEAM 2 10
✓ Lower average stock weeks of demand and %
obsolete products without compromising service
level - in accordance with contract index per
customer
✓ Adjust production interval to decrease overall cost
and increase utilization rate (7 day)
✓ Frozen period allows to keep flexibility to react to
demand changes
I. STRATEGY II. RESULTS
✓ Achieved to keep obsoletes between (0%-1%) –
Round 6 increase -> due to plan adherence bottling
line involving PET related products and production
interval
(Increasing production due to increase in demand)
✓ Round 2 and Round 6 lowest prod plan adherence
– higher production interval increase average stock
III. ANALYSIS
5.64 5.24 5.50 5.56 5.67 5.32
20%
0% 0% 1% 1% 3%
97% 95% 96% 96% 98%
97%
94% 87% 92% 93%
94%
89%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
0
1
2
3
4
5
6
7
8
9
10
Round 1 Round 2 Round 3 Round 4 Round 5 Round 6
Stock(weeksofdemand) Stock per week Average % Obsoletes
Average % Service Level Average % Product Plan Adherance

11. PURCHASING –Component Focus
THE FRESH CONNECTION | TEAM 2 11
✓ Ensure high delivery reliability and low rejection
rates, for the best price.
✓ Make sure lead times & trade units and expected
amounts are planned and aligned with operations.
I. STRATEGY II. RESULTS
✓ Round 4: Supplier is changed
✓ Round 5: Supplier Development Plan is introduced
Lower rejection rate is obtained
Other benefits of the SDP may be observed in
further rounds
III. ANALYSIS
3.40% 3.50% 3.60% 3.20% 2.40% 2.30%
0.99
0.995
1
1.005
1.01
1.015
1.02
1.025
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
1 2 3 4 5 6
Pack 1 Liter
Delivery reliability (%) Rejection(%) Contract Index

12. PURCHASING – Component Focus
THE FRESH CONNECTION | TEAM 2 12
✓ Round 2: Trade unit is changed
✓ Round 3: Supplier is changed
✓ Round 5: Supplier is changed & Bottling Line is changed with a
more tolerant one.
✓ Round 2: Trade unit is changed
✓ Round 4: Higher delivery reliability rate is negotiated.
5.60% 5.70% 3.10% 3.30% 2.10% 2.00%
0.94
0.95
0.96
0.97
0.98
0.99
1
1.01
1.02
1.03
1.04
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
1 2 3 4 5 6
PET
Delivery reliability (%) Rejection(%) Contract Index
1.00% 1.00% 0.90% 0.90% 0.80% 0.70%
0.996
0.998
1
1.002
1.004
1.006
1.008
1.01
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
1 2 3 4 5 6
Orange
Delivery reliability (%) Rejection(%) Contract Index

13. PURCHASING – Component Focus
THE FRESH CONNECTION | TEAM 2 13
✓ Round 2: Higher delivery reliability rate is negotiated. ✓ Round 3: Supplier is changed & Higher deliveriy reliability
rate is negotiated.

14. PURCHASING – Raw Material Costs (%)
THE FRESH CONNECTION | TEAM 2 14
✓ Raw material cost (%) (purchase costs as a
percentage of total revenue) is one of the crucial
KPI’s of the company
✓ It is calculated taking into consideration the bonus
& penalties
✓ Strategy: Lower Values
I. STRATEGY II. RESULTS
✓ Decreasing Trend during the first 5 rounds
✓ High obsolete products in round 6 Causes
unnecessary purchases
✓ Unmatched Service Level Agreements in round 6
Causes high penalties
✓ Best performance: Round 4 & 5
III. ANALYSIS
1,014,346
857,446
828,373 839,319 840,809 861,096
37.48
34.14
32.47 32.14
30.96
31.70
10.00
15.00
20.00
25.00
30.00
35.00
40.00
1 2 3 4 5 6
500,000
600,000
700,000
800,000
900,000
1,000,000
1,100,000
Purchase Costs (%) - Purchase Value
Purchase Value Purchase Costs (%)

15. FINACIAL RESULTS & CONCLUSIONS
THE FRESH CONNECTION | TEAM 2 15
✓ The average of goods sold in the 6 rounds was $ 2.66 million. The periods
with the highest sales were rounds 1, 5 and 6.
✓ The cost of goods sold drastically influenced the gross margin, the average of
this in the 6 rounds was $ 1.37 million. It can be seen that the periods with
the highest cost of goods sold were 1 and 5.
✓ The ROI went from negative in the first period to positive in the second,
having the best percentages in periods 3 and 4 and lower results in periods 5
and 6 caused by lack of alignment on following factors:
• Change of filling line
• Increased demand
• Decreased production interval
• Not sufficiently increased warehouse capacity
Not allocating the capacity correctly lead to
• High obsoletes % and penalty costs
• High cube utilisation % in warehouses
• Low production plan adherence
✓ The weighted average was 4%
I. RESULTS
FINANCE
ROI EVOLUTION
II. CONCLUSIONS

16. BACK UP:
Decisions per each round
THE FRESH CONNECTION | TEAM 2 16

17. SALES - Decisions
THE FRESH CONNECTION | TEAM 2 17
ROUND 1
✓ Understand how the game works
✓ Use real life experience in decisions
✓ Find correlations between other
departments when making decisions
ROUND 2
✓ Get rid of high % of obsoletes by
drastically decreasing shelf life and
introducing FIFS shortage rule
✓ Calculate service level based on changes
made in SC and Operations
ROUND 3
✓ Calculate service level and shelf life based
on changes made in SC and Operations
✓ Obsoletes value at 0,2%
✓ Set goal to increase obsoletes to 1-2% in
order to find how much « air » is in
between actual capacity and negotiated
ROUND 4
✓ Obsoletes still at 0,2% -> Increase shelf
life more
✓ Calculate service level and shelf life based
on changes made in SC and Operations
ROUND 5
✓ Install VMI for 1 customer
✓ Trade unit to Pallet for all customers
✓ Communicate promotional pressure and
implemented changes VMI to SC and
Operations
ROUND 6
✓ Calculate service level to align with
achieved service levels from round 5
✓ VMI for 2 customers
✓ Communicate promotional pressure and
implemented VMI to SC and Operations

18. OPERATIONS - Decisions
THE FRESH CONNECTION | TEAM 2 18
Decision Period 0
Period 1
30.03.17
Period 2
06.04.17
Period 3
20.04.17
Period 4
20.04.17
Period 5
27.04.17
Period 6
27.04.17
Inbound
(Raw materials)
Pallets location 900 920 900
Shifts 5 3 2 3
IntakeTime days N/A 5 6
Inspection N/A No Pets,Pack 1 liter Pets, Plastics
Mixing Mixer Type Fruit Mix MQ
Bottling
Shifts 2 3 2 3 2
Projects - SMED - -
Preventive
Maintenance
N/A A little A lot
Solve
Breakdown
Training
N/A Yes No
Bottling Line Swiss Fill 2 Multi Flex 1
Outbound
(finished
goods)
Pallets location 1500 1200 1050 950 930 975 1000
Shifts 4 3 4

19. SUPPLY CHAIN - Decisions
THE FRESH CONNECTION | TEAM 2 19
ROUND 1
✓ Safety Stock: increased Vitamin C, decrease safety
for all finish products (depending on the shelf life)
✓ Lot Size: decreased for PET and Pack 1
✓ Production Interval: Increased production interval of
Freassie Orange/c-Power 1 liter, Fressie Orange PET,
Fressie Orange/C- power PET
✓ Frozen Period: 3
ROUND 2
✓ Safety Stock: reduced Pack 1L and brought back
Vitamin C , unified to 2 SS of finished goods
✓ Lot Size: Decreased Pack 1 liter, orange, mango and
Vitamin C
✓ Production Interval: unified to 8
✓ Frozen Period: 3
ROUND 3
✓ Safety Stock: increased Vitamin C, Fressie Orange/C-
power
✓ Lot Size: decrease Vitamin C
✓ Production Interval: Changed back to 7 Fressie
Orange 1 liter, Fressie Orange/c-Power 1 liter, Fressie
Orange/Mango PET, Fressie Orange/C - power PET
✓ Frozen Period: 4
ROUND 4
✓ Safety Stock: lower vitamin C
✓ Lot Size: no changes
✓ Production Interval: no changes
✓ Frozen Period: 3
ROUND 5
✓ Safety Stock: Fressie Orange 1 liter, Fressie Orange
/C-Power
✓ Lot Size: Reduced for orange and mango
✓ Production Interval: unified to 7
✓ Frozen Period: 3
ROUND 6
✓ Safety Stock: decreased orange, mango, vitamin c
✓ Lot Size: no changes
✓ Production Interval: no changes
✓ Frozen Period: 3

20. PURCHASING – Detailed Information
THE FRESH CONNECTION | TEAM 2 20
0.000
-0.024
-0.002
-0.013
0.035
0.183
0 0.004
0.064
0.004
0.007
0.000
-0.060
-0.030
0.000
0.030
0.060
0.090
0.120
0.150
0.180
0.210
1 2 3 4 5 6
Contract Index - Purchase Value Graph
Purchase Value (%D) Contract Indexes (%D)
20.00%
0.23% 0.22%
1.23% 0.95%
2.52%
0.00%
4.00%
8.00%
12.00%
16.00%
20.00%
24.00%
1 2 3 4 5 6
Obsolete Products (%) -Average
✓ Percentage Change Graph ✓ Obsolete Products