The Fresh Connection: LearningsA report submitted to Instructor: Prof. Saral Mukherjee Academic Associate: Ms. Jahnvi V Trivedi In partial requirements of the course Supply Chain Management (2015-16) By- Tejaswi K (14383) On 29th February 2016 Indian Institute of Management, Ahmedabad higher obsolescence etc. . supply chain management and sales so as to synergize everything and achieve maximum ROI. larger trade unit. This is why. Now to be a cost leader. Having higher promotion time is also part of the strategy so as to plan the production effectively so as to improve utilization. Priority of the customers will be decided by the amount of sales to be done. In operations. but we can provide them at a lower cost which is what we compete on. This would reduce the cost of employees and also overhead costs. with high capacity so as to make sure that it has high utilization and low cost.The Fresh Connection Game: The fresh connection game is aimed at achieving correct strategy between the 4 departments of purchasing. It would be cheaper to maintain an outbound warehouse. Higher volume customers are given higher priority than lower volume products. we have to discontinue products having lower sales and higher variability. In supply chain. All the decision variables are interconnected and we should see. we need to run at maximum efficiency. outsourcing is cheaper but for this strategy. but it would add time towards bottling lines. operations. We should use only one mixer. which would result in higher cost on outbound warehouse. but service levels might suffer a little because of that. We should choose to inflate PET bottles. we planned to offer lower service levels. what kind of collective set of decisions give us higher ROI. At lower levels. I will describe the decision variables and the causal connections it has to other decision variables and how it will affect ROI. this will result in larger frozen period. and higher promotions are all part of the cost leadership strategy. Earlier order deadline. as it would result in huge cost saving in terms of inbound warehouse. So discontinue C power 1 ltr and C power Pet as they have lower sales. VMI need not be done in this case as an elephant can be blind. we should not outsource. we cannot promise very high service levels and as such we have to promise lower service levels and shorter shelf life. in category management. so we need to run only 2 bottling shifts. If we follow production planning. this will result in higher outbound inventory and a larger warehouse for outbound products. higher lot sizes and lower safety stock for both components and products and also production interval for each product will be higher. Relationships between different decision variables and causal loops: Cost Leadership Strategy: First. so as to get as good contract index as possible. reducing the number of shifts. We need not do SMED action as we are following cost leadership strategy and would be doing very low responsive planned production. later order deadline. we look for reliable suppliers who can have longer lead times. This is to be more responsive and plan more regularly based on new information supplied. higher shelf lifetime. each customer had and who is willing to pay a higher margin for the product. Time Responsive Strategy: In time responsive strategy. who can allow VMI. this will result in smaller frozen period. as we are trying to compete on service rather than cost. We should also train our employees in breakdown training. we should sell the products. Certification is not always. Priority of customers. As long as we can get high margins. we can agree to a delivery window of around 2 days and promise late payments to make the interest costs lower. smarter startups and lower water consumption so as to minimize the overhead costs and improve CO2 footprint. investing in water and energy saving measures etc. A little preventive maintenance would go a long way in helping this also. so we have to choose only those customers. fixed costs and break-even sales so as to not go into losses. we should promise higher service levels. but closer to production so as to reduce transportation costs and we should choose high quality and high reliable suppliers.so to improve the efficiency we need to increase the speed. smaller trade unit and no promotions as a part of the time responsive strategy to improve the contract index. so as to improve breakdown time and reduce it. changeover costs are not very high. We can reduce CO2 by reducing transportation costs. Due to this. and then decide on which products to sell. So we should sell all the products to these two customers. smaller lot sizes and higher safety stock for both components and products and also production interval for each product will be lower. To prepare a time responsive strategy. . In purchasing. We should also look at our investments. We should invest in lower energy. we sell only to Land Market and Food & Groceries and not to Dominick. required. the customer is most important and we need to have the eyes inside the customer business to understand what is happening. In supply chain. would be on the amount of variability. and we definitely need to do VMI so as to improve our responsiveness. Trade units should be large to accommodate larger deliveries. just enough so that our CO2 footprint matches what we promised. A little preventive maintenance would go a long way in helping this also. changeover costs can be very high. We cannot reduce CO2 by reducing transportation costs. We should also train our employees in breakdown training. At lower levels. which would result in lower cost on outbound warehouse.. so as to improve breakdown time and reduce it. but closer to production so as to reduce transportation costs and we should choose high quality and high reliable suppliers. Causal Loops: Whatever strategy. so we should outsource for this strategy. we have to ensure that everything is aligned. each one small. This would increase the cost of employees but the responsiveness would increase by a lot. reducing the number of shifts. outsourcing is cheaper.In operations. we chose. One of them should be a primary source can be of a slightly higher lead time and higher delivery window person. We should also dual source so as to improve our ability to get components. We should use more than 1 mixer and each of them of smaller capacity for this strategy to work well. If we run a time responsive factory. smarter start-ups and lower water consumption so as to minimize the overhead costs and improve CO2 footprint. We need to do SMED action as we are following time responsiveness strategy and would be doing very high responsive un-planned production. In purchasing. so we are playing on higher fixed costs and lower margins and higher volumes. this will result in lower outbound inventory and a smaller warehouse for outbound products. We should invest in lower energy. and it would not compromise the responsiveness. We should choose to inflate PET bottles. we can agree to a delivery window of around 4 hours so as to be highly responsive and to never lose time responsiveness due to unavailability in components. Certification is required. so we need three shifts. so as to reduce our CO2 footprint. Higher ROI is maintained by making costs lower in all possible ways and have higher revenues by volumes. low delivery window and also very high responsiveness. we look for reliable suppliers who have shorter lead times. So by choosing to have only 2 bottling shifts and 3-4 week frozen period. the responsiveness of the firm decreases and also due to no change in the production plan for 3-4 . we need highly responsive bottling to happen. In the Cost leadership strategy. as it would result in huge cost saving in terms of inbound warehouse. This will help us greatly in ensuring responsiveness. Trade units should be small to accommodate larger number of deliveries. but the dual source should be of very short lead time. one of the two strategies could be chosen and then applied consistently across all the dimensions so as to have strategic alignment between all the decisions.weeks. so that obsolescence levels would be lower and the cost of scraping the finished product would be lower. Conclusion: To maximize the ROI. shelf life decreases. we are trying to ensure that the product does not stay for lot of time on our customer’s shelfs and will quickly move. of the firm. It would be much cheaper to have an outbound warehouse. and as we had already planned on what to do and due to higher production frozen period. Also by sending in large amounts. By choosing high promotion levels. we would choose a cheaper supplier which would result in lower cost. Production planning adherence should be high in this strategy as we are basically changing our plan rarely and as such costs will be lower. By increasing the lead time. we can order earlier and compensate for higher lead time. This requires co-ordination between all the functions and if everyone tries to run their function at the absolute best they can then the overall strategy. Number of order lines would be lower and the amount of time. so shelf life will be lower and outsourcing costs will be very high. might be lost because of mis-alignment of strategies. In this strategy all decisions would be taken with only one important principle in mind. a finished product stays in the inventory will be higher here. . we decrease the transportation cost but this also increases the cost of outbound storage. whether this would reduce the overall costs for the firm or not.