Fresh Connection Business Game Round 1 Supply Chain Summary

THE FRESH
CONNECTION
BUSINESS GAME
Sales: Tommi Veromaa
Supply Chain Management: Kamila Hurkova
Operations: Merve Nur Tas
Purchasing: Claudia Gomez
2018
(Advanced Level)
2018 Technische Hochschule Wildau - The Fresh Connection 1

STAKEHOLDER ANALYSIS
Internal Stakeholders
ü VP Supply Chain Management
ü VP Purchasing
ü VP Operations
ü VP Sales
ü Finance
External Stakeholders
ü Suppliers
ü Customers
ü Environment
With this analysis finding the effects of the decisions each role is able make in the game is
aimed. The results of the anayisis can be found in the following slides. In order to move on to
game rounds, jump to slide 10.

STAKEHOLDER ANALYSIS – SALES I
DECISION INTERNAL IMPACT EXTERNAL IMPACT
• Service level (SL) (%) • Customers pay based on the attained service level
(penalties or bonuses)
• Shelf life (%) • SCM
(Needs to work more efficient if SL is high)
• Operations
(Need to work more efficient if SL is high)
• Customers:
• Product obsolescence
• On shelf availability
• Attained Shelf life
• Order deadline • SCM
(workload should be equally divided throughout the
day)
• VMI stables the demand pattern as we
control the customers inventory
• Operations
(workload should be equally divided throughout the
day)
• Customers
• Decreases contract index if DL is earlier
• VMI lets us to manage customers
inventory(more stable deliveries)
• Trade unit • Operations
(Larger trade unit means less labor)
• Customers minimum order size is one pallet
• Decreases contract index slightly
• Payment term (weeks) • Finance
(Have to work with less capital for payment term
duration)
• Customers
• The time customer has to pay for the bill
of ordered products
• Carbon footprint
(kg CO2 / liter)
• Purchasing
(needs to use CO2 friendly transportation)
• Customers
(penalized if CO2 goal is not met, bonuses if CO2
goal is overcome)
• Environment
(The less CO2 footprint the better)

STAKEHOLDER ANALYSIS – SALES II
• Promotional pressure • SCM
(The higher the pressure, the bigger the demand
spike will be)
• Affects outbound warehouse workload
• Frozen period
• Operations
• Affects outbound warehouse workload
• Customers
• Provides higher demand for customers
and therefore for us as well
• Promotion horizon • SCM
(Time limit before launching campaign the customers
inform us, i.e Medium=4 weeks in advance)
• Operations
(Time to prepare for upcoming campaign)
• Customers
• Decreases contract index slightly with
customer
• Category Management • SCM
(Less products, less variety and more easier for SCM)
• Purchasing
(Raw material purchases affected if high demand
products are removed)
• Operations
(Less variety in products, less space needed per
product)
• Customers
• The type of products each customer is sold
• Ord. Mgt. Priority • SCM
• Manages which customers are prioritized
during shortage of products
• Customers
• With higher priority, increases the service
level during shortages of products

STAKEHOLDER ANALYSIS – SCM
• Components SS • Operations
(the higher SS, the higher warehouse capacity needed,
reliable production)
• Finance
(the higher SS, the more costs)
• Suppliers
(with lower SS, reliability of suppliers important)
• Components lot size • Operations
(large lot sizes cause peaks in requirements of inbound
warehouse, overall less handling needed)
• Finance
(large lot sizes affect inventory costs and investment in
working capital)
• Suppliers
(the larger the lot size, the less frequent supplies
needed)
• Production frozen
period
• Operations
(the lower the frozen period, the harder to forecast
need for employees, machine usage capacity and
storage requirements)
• Sales
(the lower the frozen period, the more flexible
production to changes in customer demand à higher
service level)
• Customers
(the lower the frozen period, the higher customer
service)
• Production interval • Operations
(the lower the prod.interval, the least stock of finished
product but more set up and changeover times)
• Environment
(the lower the interval the more pollution, the more
carbon footprint)
• Finished products SS • Sales
(the higher SS the less shelf life for customers –
possibly obsolete products)
• Finance
(the higher SS, the more costs, investment in working
capital)
• Customers
(the more shelf life of products the better for
customersl)
• Environment
(the higher SS, the more scrap, the more energy
needed, the higher carbon footprint)

STAKEHOLDER ANALYSIS – OPERATIONS
• Raw Materials
Inspection
• Sales & Operations:
It will result in a decrease of breakdowns at
the bottling lines and/or a decrease rejects of
finished products.
Requires additional time
• Customers:
Increase in general product quality &
decrease in rejected products
• Suppliers:
• Relationships
• Raw Materials
Warehouse
• Purchasing
• SCM
• Suppliers: Trade Units
• Preventive
Maintenance
• SCM & Operations:
it will reduce breakdowns significantly.
• Customers:
Higher Plan Adherence Levels, thus better
service levels
• Solve breakdowns
training
• SC & Operations:
it will save 40 % in total breakdown time.
• Customers: Higher Plan Adherence Levels,
thus better service levels
• Inflate PET bottles • Purchasing:
Change in components and component price
• SCM
• Operations:
Save Place
• Finance:
Big investment
• Customers:
The time customer has to pay for the bill of
ordered products
• Finished Goods
Warehouse
• Sales:
Trade units, promotional pressure and
horizon
• Customers:
Demand Flexibility

STAKEHOLDER ANALYSIS – PURCHASING
Decision: Selection and terms of contract with suppliers
TERMS OF CONTRACT INTERNAL IMPACT EXTERNAL IMPACT
• Quality • Operations: breakdown bottling lines, production plan
adherence
• Supply Chain: availability of components, if quality not good SS
should increase
• Finance: increase of purchasing cost
• Suppliers: higher quality higher the contract
index – supplier makes a commitment
• Payment Terms • Finance: increase of cash flow • Suppliers: prefer shorter payment terms
• Carbon Footprint • Environment: low supplier development/wrong
usage of materials lead to more carbon
footprint
• Customer: green products
• Lead Time • Supply Chain: availability of components – not certified
suppliers‘ delays may increase impact
• Environment: the longer the lead time the
higher the carbon footprint
• Mode of
transportation
• Supply Chain: increased lead time may decrease availability
• Finance: unnecessary costs if wrong trade unit
• Environment: the more trips needed, the more
pollution
• Trade unit • Operations: affects required space in warehouse, shelf life of
components
• Supply chain: average stock levels, lot sizes
• Suppliers: prefer higher trade unites – decrease
handling and administration cost
• Delivery Reliability • Supply chain: availability of products, may need to increase SS
– would increase average stock and cost
• Operations: planning of space
• Suppliers: if bad reliabality – switch of supplier
possible
• Delivery Window • Operations: production plan adherence • Suppliers: prefer a large delivery window.

OUR COMPETITIVE STRATEGY
SALES
Aligning
contract index
with
operations/SCM
SUPPLYCHAIN
Synchronizing
all departments
to meet
production
expectations
OPERATIONS
Guarantee
quality of
processes and
avoid
breakdowns and
defect products
PURCHASING
High quality
suppliers and
certified
Competitive strategy based on high service level

Notes
Rounds:
In total, 6 Rounds are played.
Each round is presented with four slides respectively to the roles in the game, by the
players themselves.
The presentation here is shortened and does not include all the decisions made in
the game, as to ensure fairness for the next players in future. However, all the
numbers given are the exact ones.
The game is advanced level, but what is different?
In this version of the Fresh Connection, the players have wider options than the basis
version. CO2 emission is a part of the game and it is possible to get ponuses or
penalties because of your carbon footprint. Natural disasters, or political situations
that might affect the suppliers’ delivery availability can also take place.

ROUND 1 - SALES
Changes & Expectations:
• Service level
• Expected to be more aligned with
actual Service Level
• Also improvements in SCM and
Operations are likely to increase
the SL
• Shelf-life
• Expected to be aligned with
actual Shelf Life
• Lowered Shelf-life for Domus to
act as a ”dump” for obsolete
products
• Increased ShL for All-Round as it’s
the biggest customer
• Trade Unit
• Changed Trade Unit to pallet for
all customers because of changes
made in category management
• Obsoletes
• Very high obsolescence value in Mango 1L,
C-power and Mango PET
• Service level
• Service level increased more than expected
• Bias
• Not aligned with product forecasting for
Mango 1L and Mango PET

ROUND 1 – SUPPLY CHAIN MANG.
ü Guarantee availability of components to meet demand (depending on supplier reliability, lot
sizes and safety stock )
ü Keep cost of stock at min level (in accordance with operations decisions)
ü Adequate lot sizes depending on the stock cost and transport costs given by procurement
ü Lower average stock levels and % obsolete products without compromising service level - in
accordance with contract index per customer
ü Adjust production interval to decrease overall cost and increase utilization rate
ü Frozen period allows to keep flexibility to react to demand changes
Components
Finished Goods

ROUND 1 - OPERATIONS
KPI ROUND 0 ROUND 1
ROI -4.0 % 1.7 %
Cube utilization raw
materials warehouse
83.4 % 68.9 %
Cube utilization
finished goods wh.
50.5 % 102.1 %
Production plan
adherence
84.6 % 93.7 %
Permanent
Employment
Flexible
Employees(FTE)
0 1
1.3 0.5
Changeover
Time(%)
0 1
8.3% 8.3%
Innovative
Projects
Raw material
Inspections
Breakdown
time(%)
0 1
8.7% 2.8%
Employee
Training
Breakdown time
per week(hours)
0 1
10 3

ROUND 1 - PURCHASING
1. Eliminate quality issues:
• Rejection % (Vitamin C, Orange, Pet) - quality of all suppliers is high
2. Improve reliability
• Mango, Vitamin C and PET
• All % reliability higher than 96%
3. Improve carbon footprint
• All suppliers are average or below average
4. Increase cost of purchasing
• Despite attempt to balance with payment terms and unit load if
capacity allowed
ü Overalll cost only increased 0,8%
ü The strategies were good to solve general problems of reliability and
quality
ü Suppliers of Vitamins and Mango – very high level expected increased
the costs
Results
Expectations

ROUND 2 - SALES
Expectations
• Service level
• Expected to retain high service level
• Service level will be more aligned
with actual SL
• Shelf-life
• Expected to be aligned with actual
ShL
• Lowered Shelf-life for Domus to act
as a ”dump” for obsolete products
• Forecasting
• Align forecasting with bias
• Expected Increase in ROI and Profit
Results:
• Service level dropped 97,8% -> 94,9%
• Caused penalties of 220k
• Obsoletes decreased from 10% -> 1,3%

COMPONENTS
FINISHED PRODUCTS
Changes Why? Expectations
Lowered SS - Too high inventory levels
- Stock values almost never fell
below the previous SS
- Lower average inventory in stock
Lowered Lot Size - Too high inventory levels
- In some cases supplier lead time
changed (in case of higher lead
time, lower lot size required)
- In case of lower demand per week,
higher lot size possible (not much
stock)
- Less peaks in inbound warehouse
- Keep the component availability at
high level
Lowered SS - Too high inventory levels
- Too high nr. of obsoletes
- Lower obsoletes %
- Deliver goods with higher shelf life
(higher customer service)
- Less peaks in outbound
warehouse
Lowered production intervals
(to different extends)
- No alignment with demand
- Too many peaks
- Too high nr. of obsoletes
Production interval lowered - To enable higher flexibility to
answer customer demand
- Higher service level

KPI ROUND 1 ROUND 2
ROI 1.7 % 2.2%
Cube utilization
raw materials wh.
68.9 % 46.1%
Cube utilization
finished goods wh.
102.1 % 63.3%
Production plan
adherence
93.7 % 91.6%
Inbound
• Due to decreased lot sizes and safety stocks, we cannot utilize our inbound warehouse fully.
Mixing
• Machine change.
Bottling
• Machine change.
• Keep preventive maintenance and solve breakdowns training. – Effective results
• Introduce Energy Savings project. Expected decrease energy consumption & carbon footprint – Effective results
Outbound
• Decrease in the number of pallet locations was not enough, utilization is very low.
• Because of the lowered stock, there is no need for 3 permanent employees.
New
Machines
Innovative
Projects

Component Expectation
PACK
ü Reduce purchased cost (around 15%)
ü Maintain high quality and changed to certified supplier
ü Improve 1-2% delivery reliability
ü Slight increase transport costs (The Netherlands to Belgium)
PET
ü Maintain supplier – high quality
ü Collaboration with supplier VMI – since expected increase in utilization of warehouse, small
reduction in purchase value compensates investment
ORANGES
ü Maintain same supplier – high quality and good price
ü Slight increase in delivery window (orange is the only component present in all the products
ü Trade unit (tanks) – to cope with utilization rate warehouse (Operations)
MANGO
ü Main objective reduce raw material cost – contract index too high did not add value
ü High quality but non certified supplier – compensated higher safety stock
ü Potential increase in transport cost – higher lead time – lower mode of transp.
VITAMIN
ü Main objective reduce raw material cost – contract index too high did not add value
ü High quality and higher delivery reliability
ü Potential increase in transport cost – higher lead time – lower mode of transp.

ROUND 3 - SALES
Expectations
• Less penalties in CO2 footprint
• Shelf-Life increased more to
match attained shelf-life
• C-vitamin research
• Climb back to high service
level fully
Results:
• Overall service level of 90,4%
• Service level was plummeted by
randomness of Mango products
• Extremely high service level
attained in other products
• Shelf-life was aligned for all customers
• Can still be fixed for problem
products to attain lesser obsoletes
rate
• CO2 costs decreased by 30k

COMPONENTS
FINISHED PRODUCTS
Increase SS
(especially Orange, Mango, Vitamin C)
- There is enough unused capacity in
the inbound warehouse
- Orange and Mango components are
from risky ares (USA – Hurricane)
- Demand for products with Vitamin C
might increase (better to have
stock, the self life is long)
- Higher inbound warehouse
usage
- High availability of components
(100%)
For some components increased lot
size
(pet, orange, mango)
- High transportation costs - Lower transportation costs
- Higher inbound warehouse usage
Increase SS
(orange/mango, orango/mango +C,
orange pet)
- Low service level for these products - High service level
- Keep low number of obsoletes
- Respond to changing demand
quicklyFor some components decrease
production interval
(orange/mango, orango/mango +C,
orange C-power)
- Be more flexible in terms of
production quantities
- Unreliable forecast of demand
Keep production interval at the
minimum
- Be flexible regarding production

KPI ROUND 2 ROUND 3
ROI 2.2 % -6.9%
materials wh.
46.1 % 68.0%
Cube utilization
finished goods wh.
63.3 % 66.1%
Production plan
adherence
91.6 % 83.9%
Inbound
• Higher utilization compared to last round, but it is still low.
• We could not receive mango for 7 weeks, which resulted in distruptions in our production and high penalties.
• However, one week of demand for mango takes only 3 pallets locations in the warehouse, thus this did not reflect to
the inbound warehouse.
• The intake of deliveries takes 1 hour per order line and 6 minutes per pallet, while making a pallet available for production
takes 6 minutes. Lot size of the mango was 3 weeks, this translates into 3 missing orders during the 7 weeks and one more
missing order at the end of the round. With another raw material, we could have observed that the need for the workers (working
Hours) is decreased.
Bottling
• Run time increased to 59.3 % from 49.1%
Permanent
Employment
Innovative
Projects

ü Did not meet expectations:
ü Mango Supplier (40 days of stock-out)
Strategy and expectations - Kraljic Matrix
Leverage item Strategic
Items
Non critical
Items
Bottleneck
items
ü Pack (8%)
ü Mango (12%)
+
+-
ü Oranges (45%)
ü PET (28%)
ü Long-term
commitments
ü Maintain very good
relationship
ü substituting
products or
suppliers
ü Placing high-volume
orders
ü Keeping higher
stock levels
(reliability)
No supplier is consider
non critical
Expectation is to guarantee
availability of components
(Risk Management
approach)
ü Vitamin C (7%)
-

ROUND 4 - SALES
Expectations
• Randomness of vitamin research
• Raw material reliability especially for
high value products to be able to
satisfy high service level expectations
• Shelf-life to remain at high level and
to fix high obsolescence of low
demand products
• CO2 footprint contract terms to
provide less penalties
• Positive ROI
Occurs
Does
not
occur
Positive
Negative
0.5
Research
Vitamin C
0.5
0.5
0.5
à P (Double demand) = 25%
à P (No demand) = 25%
à P (Unchanged demand) = 50%
Results
• Randomness of vitamin research
• Vitamin research results came in as negative
outcome
• CO2 penalties slightly decreased
• Excellent ROI
• Excellent service level
• Excellent profit
• Good % of obsolescence
• Overall demand increase of 3235 products per week
• Overall price per sold unit increased for 22%

ROUND 4– SUPPLY CHAIN MANG.
COMPONENTS
FINISHED PRODUCTS
Increase SS of
- Orange
- Mango
- Vitamin C
- Important components
- There is still enough unused space in
the inbound warehouse
- We cannot afford to not to produce
again because of low stock of
components
- High components availability even if
any disruptions occure
Increase lot size for vitamin C - Very low quanitites ordered
- Better to have deliveries at lower
frequencies to take advantage of
economies of scale for transportation
- Slightly less transportation costs and
carbon footprint
Decrease production interval of
- Fressie Orange/Mango
- Fressie Orance C-Power
- These two products have high obsoletes % à
if producing for less time, less stock needs to
be kept
- Lowere obsoletes % of Fressie
Orange/Mango and Fressie Orance C-
Power
Increase SS of
- Orange/Mango +C
- Orange/Mango 1L
- Fressie Orange PET
- There was stock out due to unexpected peak
in demand (around week 80 in period 3)
- No stock outs
- High service level

KPI ROUND 3 ROUND 4
ROI -6.9% 10.1 %
materials wh.
68.0% 77.7 %
Cube utilization
finished goods wh.
66.1% 84.9 %
Production plan
adherence
83.9% 95.4 %
Permanent
Employment
Mixing
• Introduce Track & Trace technology to overcome possible operation errors in the mixing process.
Bottling
• Decrease the shifts for the bottling machine due to low utilization rate.
• Keep preventive maintenance and solve breakdowns training.
Innovative
Projects

Component Relation
Delivery Reliability
% Rejection % Contract Index
Pack 1L Normal 98% 2.30% 0.8475
PET Very Good 91.50% 1.70% 1.0043
Vitamin C bad 96.90% 4.80% 0.984
Mango bad 98.90% 1.10% 1.213
Orange Normal 97.80% 0.80% 1.222
ü Expectations were meet
ü Good relationship with PET supplier and safety stock
calculations were able to cope with PET crisis (2.2 weeks)
ü Next round maintain and improve relationship with suppliers,
increase contract durations

ROUND 5 - SALES
Expectations:
• Attempt to retain the high
service level
• Adjust to the C-vitamin research
results with relaunch period
• Product forecast -50% on
vitamin C products
Results:
• ROI from 10,1% to 11,4%
• Service level from 98,3% to 99,1%
• Profit from 12,7% to 13,9%
• Obsoletes from 2,9% to 1,8%
• Obsolescence issue
• Solved Mango 1L
• New minor problem emerged with Mango PET(8,8%)

COMPONENTS
FINISHED PRODUCTS
Increase SS of PET - Relatively low delivery reliability
- There is enough unused space in the
inbound warehouse
- High PET component reliability
Decrease SS of vitamin C - There will be a relaunch in 3 weeks - No obsoletes of raw materials
Decrease production interval of Fressie
Orange Mango 1L
& decreasse its SS
- High obsoletes of this product - Lower obsoletes of Fressie Orange
Mango 1L
Decrease production interval of Fressie
Orange C-Power PET
- To produce for max 3 weeks because of
the relaunch concerning products with
vitamin C
- No increase in obsoletes for Fressie
Orange C-Power PET neither for
Fressie Orange Mango 1L

KPI ROUND 4 ROUND 5
ROI 10.1 % 11.4 %
materials wh.
77.7 % 78.7 %
Cube utilization
finished goods wh.
84.9 % 79.4 %
Production plan
adherence
95.4 % 98.6 %
Permanent
Employment
Mixing
• Keep Track & Trace technology to overcome possible operation errors in the mixing process.
Bottling
• Introduce SMED again, due to high changeover times.
Outbound
• Increase number of pallet locations, since we have observed some overflow ( 2.9 %)
• Introduce Pool Workforce to get rid of flexible manpower expenses.
Innovative
Projects

Component Relation
Pack 1L Good 98.2% 2.0% 0.8475
PET Very Good 97.9% 1.80% 1.0043
Vitamin C bad 97.4% 4.60% 0.984
Mango Normal 98.90% 1.40% 1.213
Orange Good 97.80% 0.70% 1.222
ü Improve relationship with suppliers (Pack, Mango and orange)
ü Next round maintain and improve relationship with Orange
(strategic Supplier) and Vitamin C.
ü Next step financial feasibility of supplier program development
for VITAMIN C supplier with rejection rate of 4.60%

ROUND 6 - SALES
Expectations:
• Minor decrease in
service level caused by
increased demand
• Increased sales
• Increased ROI
Results:
• ROI remains positive but less than Round 5
• Demand dropped on vitamin C products for an unknown reason
• High obsolescence is observed in vitamin C products
• Demand increased in Mango 1L products as expected
• Service level kept increasing upto 99,4%

COMPONENTS
FINISHED PRODUCTS
Make sure the VMI „setting“ correspons to
SS (Pack and PET)
- Observed variances - Higher SS of PET and PACK
Increase SS of Vitamin C - No drop in demand – back to sourcing
as in Round 4
- Higher stock of Vitamin C
Decrease production inerval for Fressie
Orange Mango PET
Higher obsoletes value (8.8%) - Decrease obsoletes % for Fressie
Orange Mango PET
Increase SS for Fressie Orange 1L Stock out due to peak in demand around
day 100
- No stock outs
Make sure sales forecast is aligned with
demand and production
There was stock out of products incl
Vitamin C because lower demand was
forecasted and hence less volume was
produced
- No stock outs of products with
Vitamin C

KPI ROUND 5 ROUND 6
ROI 11.4 % 6.0 %
materials wh.
78.7 % 89.1 %
Cube utilization
finished goods wh.
79.4 % 105.1 %
Production plan
adherence
98.6 % 98.7 %
v 9.2 % overflow in the outbound warehouse.
v Very good Production plan adherence level.
Permanent
Employment
Innovative
Projects

Component Relation
Pack 1L Good 98.2% 2.2% 0.8475
PET Very Good 98.2% 1.8% 1.0043
Vitamin C Normal 98.2% 4.4% 0.984
Mango Normal 98.7% 0.0% 1.213
Orange Good 97.5% 0.8% 1.222
ü Improve relationship with suppliers (Vitamin c)
ü Next step would be to implement supplier program
development for VITAMIN C supplier with rejection rate of 4.4%

FINAL RESULT & CONCLUSIONS
ü Weighted ROI was 5.74% after all Rounds --> best result compared to other teams
ü Final ROI was 6.00% in Round 6 - positive result
ü Forecasts DO NOT necessarily reflect reality
ü Synchronization of activities between all departments is CRUCIAL to win in this game.

Fresh Connection Business Game Round 1 Supply Chain Summary

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