Overview
This lecture introduces The Fresh Connection, a web-based business simulation where teams manage a virtual fruit juice company. Participants make tactical and strategic decisions to improve company performance, focusing on value chain alignment and collaboration.
Simulation Structure
- The Fresh Connection is an advanced simulation designed to challenge teams in value chain management and alignment.
- Teams consist of four roles: sales, operations, supply chain management, and purchasing.
- Each round represents half a year in the company’s operations; a full course typically includes 3–6 rounds.
- Participants work together to turn around a struggling virtual fruit juice producer and make it successful.
Interface and Key Performance Indicators (KPIs)
- The My Company screen serves as the main dashboard, displaying essential KPIs and role overviews.
- The top of the screen shows the four functional roles.
- The blue column on the left provides access to general information such as inbox, ranking, info center, and finance.
- The vertical orange bar allows navigation between current and previous rounds, enabling review of past decisions and KPIs by department.
- The vertical yellow bar displays competitor performance for benchmarking.
- Alerts on the right side offer feedback on KPI performance and provide tips for improvement.
Department Overviews and Issues
- Sales: Faces negative ROI, low service level (92%), and high obsolete stock (8%), leading to customer dissatisfaction and waste due to expired products.
- Operations: Struggles with low production plan adherence and a full inbound warehouse, causing inefficiencies and the need for overflow storage.
- Purchasing: Experiences issues with supplier quality and reliability, reflected in low delivery reliability and a high rejection rate.
- Each department’s performance is tracked through specific KPIs, and detailed reports are available for further analysis.
Product and Customer Management
- The product assortment includes six SKUs, combining two packaging types (1L carton and 0.3L PET bottle) with three flavors (Orange Pure, Orange with extra vitamin C, and Orange with mango).
- The customer base consists of three local customers:
- Food & Groceries: The largest customer, accounting for over 50% of sales volume and considered the supply chain leader.
- Landmarket: A smaller retailer.
- Dominics: A chain of gas stations that only purchases PET bottles.
- Service level promises to customers affect the contract index and sales price; failing to meet promised service levels results in penalties.
- Shelf life is 20 weeks, with shelf life agreements (e.g., 75% promised to customers) impacting inventory management and the level of obsolete stock that must be scrapped.
Supply Chain and Production
- The value chain starts with sourcing raw and packaging materials from global suppliers, which are stored in the inbound warehouse (pallet warehouse and tank yard).
- Production consists of two steps: mixing and bottling, followed by storage in the outbound warehouse before distribution to retailers.
- Operations management includes decisions on warehouse size, staffing, improvement projects, and bottling line infrastructure (with options to buy or sell lines).
- Supply chain management involves setting safety stock levels and determining batch production intervals (e.g., producing every 10 working days), which affect inventory levels and the frequency of production changeovers.
- Reports from previous rounds provide insights into inventory performance, service levels, and warehouse utilization.
Financial Analysis and Success Metrics
- Financial performance is analyzed in the Finance tab, which details costs, revenues, and investments.
- The main KPI for success is Return on Investment (ROI), requiring teams to align decisions across departments to manage costs, revenues, and investments effectively.
- Detailed financial breakdowns are available, and comparing columns helps teams understand the impact of their decisions from round to round.
Learning Objectives and Adaptability
- The simulation teaches the importance of purpose, strategic objectives, and organizational capabilities.
- Participants learn how to translate strategy into action, manage the supply chain cross-functionally, and improve collaboration and communication between departments.
- The experience emphasizes breaking down functional silos, managing trade-offs, and understanding the end-to-end value chain.
- The simulation can be tailored to different learning objectives, participant backgrounds, time constraints, and delivery formats (online, classroom, or hybrid).
- The level of complexity and variant of the simulation are chosen based on course requirements and constraints such as budget and travel.
Key Terms & Definitions
- Value Chain: The sequence of steps from sourcing raw materials to delivering finished products to customers.
- Key Performance Indicator (KPI): A measurable value used to assess performance in specific business areas.
- ROI (Return on Investment): A financial metric indicating profitability relative to invested capital.
- Obsolete Stock: Inventory that is too old to sell and must be scrapped, resulting in waste.
- Shelf Life: The period during which a product remains sellable, starting from its production date.
- Service Level: The percentage of customer demand fulfilled as promised, influencing contracts and pricing.
- Contract Index: A multiplier that adjusts the sales price based on contract terms and service level agreements.
Action Items / Next Steps
- Access the simulation through the portal and play all four roles for two available rounds to gain initial experience.
- Use the Calculate button to progress to the next round, advancing half a year in the simulation.
- For questions or support, contact [email protected].