The Fresh Connection - SAS

1 1 Familiar? Are workplace silos a drain on your company? Is your Sales department over promising to the market place? Is your Procurement manager pursuing low component cost but ignoring higher total cost? Do you loseservice level as a result of aggressive inventory reductions by Supply Chain? Does your company lack flexibility as a result of record efficiencies by Operations?5 Alignment In today sworldcompanies suffer a lot fromdisalignment Corporate strategy and supply chain strategy strategy and execution Functional departments Partners in the supply chain Long term and short term Today s session is about creating alignment67 Creating Alignment The Fresh Connection is a producer of fruit juices In NW Europe sufferingseverelossesin the last year becauseof poorperformance A new management team has been appointed The assignmentis to makethe companyprofitableagain Bymakingstrategicand tacticalchoicesThe Challenge8 Finished productComponentsSupplyProductionDistrib utionVP Supply ChainVP PurchasingVP OperationsVP SalesThe Management Team9

2 Supplierfootprint10NO8 DOMangoSpainTrioPETS painMonoCartonFranceMiamiOrangeUSSeitanV itaminsVitamin CChinaTFCN etherlandsAssortment Twopackagingtypes 1L carton PET bottle Three flavors Orange Orange C-Power Orange/Mango Shelflife of finishedproductsis 20 weeks11 Shelf life Ifthe shelflife agreement is 75%, the internalshelflife becomes25% In otherwords, ifthe customer is promiseda remainderof shelflife of 15 weeks at the moment of delivery, inventoryof finishedproductsmaynotrisehigherthan5 weeks Finishedproductsare NOT distributedtoa customer ifthe shelflife agreement is violatedShelflife is 20 weeksShelflife agreement= 75%Internal shelflife12 Market Three customers RetailerFood& Groceries 500 stores Supply chain leader Retailer Land Market 300 stores Discounter Chain of gas stations Dominick s 50 stores OnlyPET bottles14 Three warehouses and overflow warehouses whenneeded Twostage production.

3 Mixingand bottling Bottlingline(s) andmixer(s) for allproducts MtS, leadtime customers of 1 day (delivery next day)palletspalletsFinished productComponentsSRMM ixingCRMThe FreshConnection sSupply ChaintankyardBottling15 Contract indexPrice setting You cannot negotiate directly 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)PromiseContract indexBasic : Customer satisfactionVolume:PortfolioCostsOperati onal costsImprovement projectsInvestmentsWorking capitalEquipmentBuildingsPerformance evaluation1718 QuickTour18 Makethiscompanyprofitableagain Youhave oneround(half a year) toprove youcando thisjob How?

4 A management team meeting In thecurrentsetup we needONE laptop per teamThe Challenge The Start19 Connect tohotel wifi: Savoy_Guest Voucher login: SAS Go to in withyourusername/password Duringgame savenew settings(dealin PurchasingandSales) Calculatingresultsis donecentrallyGettingstarted20 Management team Level Policy Policy Level Agreements with CustomersSLA customers23 Increaseservice (plus 62 K)Risk of PenaltiesProConDecreaseservice level report: Customer | FINANCE statementRevenuedecrease(minus 110 K)Riskof PenaltiesFeel free tochooseothervaluesandtodifferentiateser vice level per customer24 Inventory Policy for Finished ProductsInventory Policy FinishedProducts25 Longerproductioninterval (15 days)Change overInventory finishedproducts(obsolescence)Volatility in warehouseProConShorterproductioninterval (5 days)SCM Report : Product | SAL Report : Product | OPS Report.

5 Mixing and BottlingChange overInventory finishedproducts(obsolescence)Volatility in warehouseIncreasesafetystockto4 weeksReliabilityInventory finishedproducts(obsolescence)Decreasesa fetystocks to2 weeksReliabilityInventory finishedproducts(obsolescence)Feel free tochooseothervaluesandtodifferentiateper product26 Capacity ManagementBottlingLine Capacity27 Ops:From2 to3 shifts(40 extra hours)OvertimeProdplan adherenceFixedcosts(100 K)ProConOps:Introduce SMEDC hange over time (30%)OvertimeProductionplan adhProject costs(10 K)Breakdown time (50%)OvertimeProductionplan adhCapacityneededformaintenance (3hrs/wk)Ops: PreventivemaintenanceOPS Report : Mixing and Bottling | SCM Report : Product | FINANCE statementOvertimeProductionplan adhProject costs(15 K)Ops:10% extra capacity28 Inventory Policy forRaw MaterialsInventory policy rawmaterials29 Increasesafetystockto3 weeksComponent availabilityInventoryOverflowProConDecre asesafetystocks to1 weeksSCM Report : Component | OPS Report.

6 Warehousing | FINANCE statementComponentavailabilityInventoryO verflowDecreaselotsizesto1 weekInventoryOverflowVolatilitywarehouse ShipmentsOrdersFeel free tochooseothervaluesandtodifferentiateper component30 Supplier ManagementPET bottlesupplier31 CurrentsupplierHigh qualityRejectionrateBreakdownsContractin dexProConChange to(nearby) certifiedsupplier, FTLHigh qualityRejectionrateBreak downTransportation costsContractindexOPS Report : Mixing and Bottling | PUR Report : Supplier Predictablefinancialresultsare youexpectfor the next half year? the the ROIR esults3233 Creating Alignment34 Source: TrevorandVarcoe, A Simple Way toTest YourCompany sStrategic Alignment, HBR, May 16, 2016 The best companies are the best alignedVery best chance of winningBest of intentions,but incapableBoldly goingnowhereNot long for this worldAlignedNot alignedNot alignedAlignedHow well alignedis your strategywith your organizational capabilities?

7 How well alignedis your strategywith your longtermpurpose? strategy effectivenessOrg effectA challenge for corporate leaders is how to make sense of strategic alignment at both the team / business unit level (or division or department, however it is classified) and at the enterprise StrategyExecutionWe allmeanwell, but we get nowhereWe need a bridgeNo ownership, high forecast bias, no identificationof gapsbetweenforecast, plan, budget of whatwe know, we velearnedin class room settingAbout20% we velearnedfromcolleaguesA mere70% we velearnedjustbydoingourjob, ..justbytrial anderror!!!We needtobeeducatedandtrainedaboutalignment 36 Althoughpowerfullin childhood, trial anderror canbeexpensivein business setting.

8 The gap betweenaction andconsequence, bothin time andplace, is simplytoowideBut learningbydoinghas someweakpoints37company strategyNowonder thatourorganizationssuffer fromdisalignment38 Thereare otherwaystoeducateandcreatealignment39 Cross functional learning experiencesAround managing value chainsTocreatea lastinglearningeffectParticipation in teamsBridging the gap from strategy to executionCreating alignmentTocreatealignmentbytappingintot he full learning & development potential of your people: Class room learning (10%) Learning from colleagues (20%) Learning by doing(70%)A learningexperienceup to10 timesas effectiveas traditional programmesLast but notleast: theforgettingcurve40 Learning experience needs to be configured The Fresh Connection is a learningenvironment whichcanbeconfiguredtospecificneeds, basedon Learningobjectives Level andmix of the audience Availabletime Configurationpossibilities Availabledecisionsper round, no.

9 Of roundsetc. Gameplay Team dynamics Complexitybuildup (level structure) Training material/ exercisesin betweenthe rounds 15 languages ScriptingVariantsof the trainingTraining intensity(# rounds, training betweenrounds)Complexityof the experience(Static vsDynamicenvironment, decisions)Teambuilding event(0,5 day)Workshop(1 day)Training(2-3 days)Academy(spread out in time)Global Challenges(nweeks)Training modules aroundTFCS trategyintoAction (level1,2,3)S&OP-Basic-Advanced-AppliedS CRisk MgtCO2 FootprintExternalColla-borationCreatinga lignmentKPIs-Selection-Targets-PlanningT eam / leadership challenges Communication & decisionmaking Alignment/ consistency In-andexternalcollaboration Get out of the box, experiment & learnSC Fundamentals (e-learning/class room) Inventory management Capacitymanagement Demandmanagement Supplier relationship managementLogisticsFootprintStrategySegm en-tation44 Track RecordHistory Since2008 we have grownto 7,000+ professionals annually from600+ companies 15,000+ studentsannually from200+ universities in 30+ countrieswhotrain withThe FreshConnection In 2016 sixthGlobal Pro Challenge.

10 300 teams In 2016 fifthGlobal Student Challenge: 500 teams, in collaborationwithAPICS Incorporatedin numerousincompanytraining programs andin universitylearningprograms (MIT, GeorgiaTech, Michigan State andPennState) Bonus: APICS certifiedprofessionals get CertificationMaintenance pointsTFC Challenge Partners 201646 The Fresh Connectiona global experienceName-droppingAbbott LogisticsDuPontShellCoca-ColaMcDonaldsKP MGAkzo NobelDHLS torkBayerNutriciaInforAppleBASFTNTGSKP hilipsOracleBoschDSMGKNDHLABInBevTycoCan onFloraHollandKLMUTIR ockwellUnileverCapgeminiPhilipMorris IntKodakAmgenSCAUPSAB InBevHeinekenKuehne + NagelVal oSchenkerWalt DisneyDeloitteMerck SeronoAstellas48 Thankyou!Hans Kremer, CPIM, CIRM, CSCPR each out tome on LinkedInemail: info