MANUAL FOR INSTRUCTORS

THE FRESH CONNECTION

Manual for instructors

Involvation Interactive B.V.Prinsenlaan 3

3732 GN De BiltThe Netherlands

Tel +31 30 221 77 66

Fax +31 30 221 78 66

www.thefreshconnection.biz

info@thefreshconnection.biz

Content of this ManualSummary

Introduction: this manual 3

1 THE FRESH CONNECTION 4

Content of The Fresh Connection 4

Winning The Fresh Connection 6

Levels and extensions of The Fresh Connection7

Learning dynamics and the learning cycle 10

Individual Learning paths: E-learning modules 12

2 T O P I C S V I C E P R E S I D E N T P U R C H A S I N G

Purchasing’s scope of decision making 13

Relevant theoretical frameworks 14

Relevant literature and references 15

3 T O P I C S V I C E P R E S I D E N T S U P P L Y C H A I N

Supply Chain’s scope of decision making 16

Relevant theoretical frameworks 17

Relevant literature and references 18

4 T O P I C S V I C E P R E S I D E N T S A L E S

Sales’ scope of decision making 19

Relevant theoretical frameworks 20

Relevant literature and references 21

5 T O P I C S V I C E P R E S I D E N T O P E R A T I O N S

Operations’ scope of decision making 22

Relevant theory and frameworks 23

Relevant literature and references 23

SummaryThe Fresh Connection is a web- based Value Chain Management learning environment built around a cross functional business simulation. Participants are making strategic and tactical decisions in the value chain of The Fresh Connection, a virtual producer of fruit juices.

As this virtual company is suffering severe losses, a new management team has been appointed. Four participants take up a role in this new management team as either Vice President Purchasing, Vice President Sales, Vice President Operations or Vice President Supply Chain.

The team has the task to realise the highest possible Return on Investment (ROI) for the Fresh Connection.

The Fresh Connection takes the full scope of the value chain into account and covers major value chain topics and trade-offs. Per role the following topics are included in the scope of decision making:

- Vice President Purchasing: Supplier Management and Total Cost of Ownership

- Vice President Sales: Demand and Portfolio Management- Vice President Operations: Capacity and Production Management- Vice President Supply Chain: Inventory Management and Planning

Participant take decisions in their functional area only, so adherence to the chosen value chain strategy, cooperation and aligning decisions are key factors to successfully play The Fresh Connection. Besides the internal collaboration, external collaboration with suppliers and customers is an important element of The Fresh Connection.

The learning philosophy of The Fresh Connection is learning by experience as participants are implementing their value chain strategy in the simulated environment of The Fresh Connection. Main observations and experiences are:

• The Fresh Connection is an active and inspiring way of teaching and learning;

• Participants experience what it is like to deal with conflicting interests and trade offs that exist within the value chain area in a complex situation with many variables;

• The experience creates a steep learning curve. Participants learn from decisions made as the simulation shows the impact of decisions taken.

• The Fresh Connection is very suitable for team building and for getting insight into group processes.

Introduction: this manual This introduction explains the goal, the usage and the content of this manual.

This manual has been developed to give insight into the value chain topics and learning dynamics of The Fresh Connection. This document will be distributed to instructors who are active in the area of Higher and Academic Education intending to use The Fresh Connection in their curriculum.

In this manual relevant theoretical frameworks and literature suggestions are presented. In combination with the exercises and materials of the Standard Script Education which has been developed for The Fresh Connection, instructors can integrate The Fresh Connection in an existing course or design a new course based on The Fresh Connection.

Structure of this manual:

Chapter 1 presents the content of the Fresh Connection. A special emphasis is given to the different levels and extensions of The Fresh Connection In this chapter also the learning cycle which has been designed for using The Fresh Connection will be presented in combination with the available learning materials and exercises which can be used to enhance the understanding and learning experience.

In chapters 2 to 5, the relevant value chain topics and main theoretical frameworks will be presented for each functional area.

The Fresh Connection

Introduction

iChapter

1

This chapter deals with the content and structure of The Fresh Connection and the different functional roles in The Fresh Connection. Also the different levels and extensions of The Fresh Connection will be discussed. This chapter concludes with the learning cycle which has been designed for The Fresh Connection and the learning dynamics.

Content of The Fresh Connection The Fresh Connection is an web- based Value Chain Management experience built around a cross- functional business simulation.

Teams of four participants representing the functional roles of Vice President Purchasing, Vice President Sales, Vice President Operations and Vice President Supply Chain go through a number of rounds of The Fresh Connection.

The goal of the team is to achieve the highest Return on Investment by making tactical and strategic changes in the value chain of The Fresh Connection, a virtual producer of fruit juices.

The Fresh Connection takes the full scope of the value chain into account and covers major value chain topics and trade-offs. Per functional role, the following topics are included in the scope of decision making:

- VP Purchasing: Supplier Management and Total Cost of Ownership- VP Sales: Demand and Portfolio Management- VP Operations: Capacity and Production Management- VP Supply Chain: Inventory Management and Planning

Participant take decisions in their functional area only, so adherence to the chosen value chain strategy, cooperation and aligning decisions are key factors to

successfully play The Fresh Connection. The figure below shows the decision making scope per function:

In chapters 2 to 5 the scope of decision making of each individual area will be discussed in further detail.

The main learning of The Fresh Connection for participants are:

• Value and Supply Chain Management is not only the responsibility of one functional area or manager, it is teamwork;

• Coordinated decision making is critical; functional silos need to be broken down !

• A strategy is necessary to have a common direction;

• A structured process (S&OP) is necessary to translate strategy into action

• The quality of the value chain has a big impact on the company’s profitability;

• The right management information is very important;

• Internal and external collaboration is key to success.

Winning The Fresh Connection

he winning team is the team that creates the most profitable value chain. Profitability is measured by means of the Return on Investment (ROI). The figure below shows the factors used in calculating the ROI:T

Levels and extensions of The Fresh Connection

The Fresh Connection is a value chain learning environment which can be configured to specific learning needs, depending on the learning objectives, the level of the audience and the available time.

The main learnings of The Fresh Connection are the need to break down functional silos and to coherently translate the chosen Value Chain Strategy into a set of tactical decisions, i.e. Strategy into Action. Depending on the learning objectives, different themes can be added on top of these main elements as represented below:

In the figures on the next page, the decisions per level and per theme are displayed. It is possible to increase the level of complexity per round by adding new decisions and extensions. But it is also possible to play two or more levels on the same level before adding new decisions and themes.

9

10

Based on our experience with many In Company trainings and the use of The Fresh Connection by many universities, business schools and universities of applied sciences worldwide*, we would like to advise to follow the following principles in designing a course / workshop / training:

• Buildup complexity gradually to enable the participants to manage complexity before increasing complexity by adding new decisions;

• The minimum number of rounds that is needed to get the participants in a good learning curve and to create a good understanding of the interrelationship between decisions is three rounds;

• Before adding themes, we advise that participants first play three rounds in the first three levels of The Fresh Connection to experience the need to breakdown functional silos and to translate their strategy into action.

For references: www.thefreshconnection.biz

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Learning dynamics and the learning cycle The Fresh Connection offers a value chain learning experience based on the philosophy of learning by experiencing as depicted in the figure below. By publishing the results per round, participating teams can compare their results and KPI’s to competing teams which enhances the competitive element of The Fresh Connection.

To enhance the learning experience it is important that the learning cycle is completed and participants also reflect on their decisions and decision making process, next to the instructor offering supporting literature and lectures to put the decisions and themes within the relevant theoretical framework. In this way the participants can link theoretical frameworks to practice and apply their insight in the value chain learning environment of The Fresh Connection according to the model presented below:

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Reflect

Experience

Apply

elsewhere

Macro cycle

Conceptualize

- Real life- Business Simulations (micro cycle)

- Feedback- Evaluations- Discussions- Presentations

- Models & Tools- Presentations- Case studies

- Real life- Exercises- Workshops- Coaching

To further enhance the learning effect and create a deeper understanding of Value Chain Management and the value chain concepts in The Fresh Connection, we have designed a Standard Script Education..

In this Standard Script Education we have created a standardised script for the use of The Fresh Connection in a course. Inbetween the rounds we have designed a number of exercises and learning materials to enhance the understanding and learning experience for the participants.

These exercises and learning materials have a modular structure, which means that the order of topics and exercises can be changed, that certain items can be left out and that materials can be added at will.The building blocks of the Standard Script Education can therefore be used as a basis for designing a course. We also added an estimation of the time spend for students per exercise (this time spend excludes reading relevant literature and further supporting lectures on Value and Supply Chain Management).

Below the setup of the Standard Script Education is given, including the topics and exercises inbetween. The underlying files and materials will be send over separately per your request.

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Individual learning paths: the E-learning modules As described before The Fresh Connection is played in teams of four participants.

To also allow individual learning paths and / or allow participants to already practice the fundamentals of Value and Supply Chain Management in preparation of the team experience, we also developed E-learning modules around The Fresh Connection. Each of the E-learning modules is linked to a functional role in The Fresh Connection. Therefore there are four E-learning modules of The Fresh Connection:

- Supplier Management (Vice President Purchasing) - Demand Management (Vice President Sales)- Capacity Management (Vice President Operations) - Inventory Management (Vice President Supply Chain)

In the E-learning modules of The Fresh Connection, the relevant concepts and tools for each functional area are explained followed by a number of exercises and questions related to the concepts and tools. Next to that, also exercises in the value chain learning environment of The Fresh Connection have been added. So participants are taken through the learning environment of The Fresh Connection by means of questions and information they have to look up. These exercises are followed by an integration assignment where the participants have to demonstrate they have gained the needed insights and knowledge. After passing this integration assignment, the participant plays three rounds of The Fresh Connection in the specific functional role of the module taken as show in the figure below:

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Topics Vice President Purchasing In this chapter a number of topics will be presented that are in the Vice President Purchasing’s scope of decision making. The Vice President Purchasing needs to make decisions in relation to these topics. These topics are supported by the main relevant theoretical frameworks and a number of literature suggestions and references.

Vice President Purchasing’s scope of decision making In the figure below the area in which the Vice President Purchasing needs to make decisions is presented. The Vice President Purchasing is responsible for taking decisions in the area indicated below in blue:

Finished productComponents

Supply Production Distribution

VP Supply Chain

VP Purchasing VP Operations VP Sales

Relevant theory and theoretical frameworks within The Fresh Connection in relation to the function Vice President Purchasing are the following:

• Supplier Relationship Management, Supplier Selection and Supplier Collaboration

15

Chapter

2

• Total Cost of Ownership

• Negotiating Supplier Reliability, Trade Units and Payment terms

• Single versus Multiple Sourcing

• Buyer’s view versus suppliers’s view

Relevant theoretical frameworks for the VP Purchasing • Framework A. van Goor, M. Ploos van Amstel en W. Ploos van Amstel: Value

Density and Packaging Density

• Supplier Relationship Management by Kraljic

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BusinessImpact

Kraljic Matrix

• Move• Ensure supply

continuity

• Developstrategic relationships

• Simplify acquisitionprocess

• Exploitcommercially

Strategic

Routine

Leverage

Supply Market Complexity

High

Low

BottleneckLow

High

BusinessImpact

Kraljic Matrix

• Move• Ensure supply

continuity

• Developstrategic relationships

• Simplify acquisitionprocess

• Exploitcommercially

Strategic

RoutineRoutine

LeverageLeverage

Supply Market Complexity

High

Low

BottleneckLow

High

• Buyer’s view versus suppliers’ view

Relevant literature for the VP Purchasing • Kraljic, P., Purchasing must become Supply Management, Harvard

Business Review, September- October 1983

• Liker, J.K. and Choi, T.Y. , Building Deep Supplier Relationships, Harvard Business Review, December 2004

• Echtelt, F.E.A. van, Wynstra, F., Weele, A.J. van, Duysters, G, Managing supplier involvement in new product development, a multiple-case study, Journal of Product Innovation Management 25 (2008): 180-201

• Baily, P. , Farmer, D. , Jessop, D. , Jones, D. , Purchasing Principles and Management, Prentice Hall, ninth edition, 2005

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Relative Valueof Business

Account Attractiveness

• Nurture• Expand business• Seek opportunities

• Cosset• Defend vigorously• Expand if possible

• Move • Give low attention• Lose without pain

• Exploit commercially

• Risk losing

Nuisance

Exploitable Core

Development

Supplier’s view

High

High

Buyer’s view

• Move• Ensure supply

continuity

• Developstrategic relationships

• Simplify acquisitionprocess

• Exploitcommercially

Strategic

Routine

Leverage

Supply Market Complexity

High

Low

BottleneckLow

High Low

Low

Relative Valueof Business

Account Attractiveness

• Nurture• Expand business• Seek opportunities

• Cosset• Defend vigorously• Expand if possible

• Move • Give low attention• Lose without pain

• Exploit commercially

• Risk losing

NuisanceNuisance

ExploitableExploitable Core

DevelopmentDevelopment

Supplier’s view

High

High

Buyer’s view

• Move• Ensure supply

continuity

• Developstrategic relationships

• Simplify acquisitionprocess

• Exploitcommercially

Strategic

RoutineRoutine

LeverageLeverage

Supply Market Complexity

High

Low

BottleneckLow

High Low

Low

• Carr, L. and Ittner, C. , Measuring the Cost of Ownership, Cost Management, 1992

• Degreave, Z. and Roodhooft, F. , Effectively selecting suppliers using Total Cost of Ownership, Journal of Supply Chain Management: a global review of purchasing and supply, 1999

Topics Vice President Supply Chain In this chapter a number of topics will be presented that are in the Vice President Supply Chain’s scope of decision making. The Vice President Supply Chain needs to make decisions in relation to these topics. These topics are supported by the main relevant theoretical frameworks and a number of literature suggestions.

Vice President Supply Chain’s scope of decision making In the figure below the area in which the Vice President Supply Chain needs to make decisions is presented. The Vice President Supply Chain is responsible for making decisions in the area indicated below in blue:

Finished productComponents

Supply Production Distribution

VP Supply Chain

VP Purchasing VP Operations VP Sales

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Chapter

3

Relevant theory and theoretical frameworks within The Fresh Connection in relation to the function Vice President Supply Chain are the following:

• Inventory Management, safety stock settings for components and finished products

• Production management: fixed period and production intervals

• Determining lotsizes for Purchasing

Relevant theoretical frameworks for the VP Supply Chain • The Supply Chain Strategie, M.L.Fisher

Characteristics for different supply chains  Cost efficient supply chain:

focus on costs Market-responsive supply chain: focus op

responsivenessObjective Reliability against lowest cost Responsiveness: quick responseCapacity Maximum utilization: push

drivenBuffer capacity in the chain: pull driven

Inventory levels Minimal inventories within the chain

Smart inventories in the chain; substitute inventory for information

Lead times Reduce when leading to lower costs

Aggressively reduce lead times

Cooperation Based on costs, reliability and quality

Based on velocity, flexibility and costs

Product and chain design

Design at minimal cost Modular design / postponement

Organization Centralized Decentralized ICT drivenSource: W.Ploos van Amstel, based on M.L. Fisher ‘What is the right supply

chain for your product ?

• Outcome Driven Supply Chains, S.Melnyk

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• Collaborative Planning, Forecasting & Replenishment (CPFR, source www.vics.org)

 

• The layer model by A. van Goor

• SCOR model, Supply Chain Council

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Relevant literature for the VP Supply Chain • Fisher, M.L. , What is the right supply chain for your product ?, Harvard

Business Review,  March-April 1997

• Melnyk, S. et al, Outcome-driven supply chains, MITSloan Management Review, 2010

• Christopher, M. , Logistics and Supply Chain Management, creating value-added networks, Prentice Hall, 2005

• Chopra, S. and Meindl, Supply Chain Management, Pearson Education, third edition, 2007

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Topics Vice President Sales In this chapter a number of topics will be presented that are in the Vice President Sales’ scope of decision making. The Vice President Sales needs to make decisions in relation to these topics. These topics are supported by the main relevant theoretical frameworks and a number of literature suggestions.

Vice President Sales’ scope of decision making In the figure below the area in which the Vice President Sales needs to make decisions is presented. The VP Sales is responsible for making decisions in the area indicated below in blue:

Finished productComponents

Supply Production Distribution

VP Supply Chain

VP Purchasing VP Operations VP Sales

Relevant theory and theoretical frameworks within The Fresh Connection in relation to the function Vice President Sales are the following:

• Negotiating service level agreements (service level, shelf life agreement, order deadline, trade units)Allocation policy in case of shortage / shortage rule

• Pareto / ABC analyses as basis for customer differentiation

• Managing demand variability by negotiating promotional pressure and promotion horizon

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Chapter

4

• Collaboration with customers: VMI, collaborative forecasting, on-shelf-availability

Relevant theoretical frameworks for the VP Sales • Customer priority setting / ABC analyses (on turnover, volume, margin, et

cetera)

• Competitive strategies (Porter)

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• Market growth strategies (Ansoff)

Relevant literature suggestions for the Vice President Sales• Wallace, Thomas, F. , Sales & Operations Planning, Wallace & Co, third

edition, 2008

• Global Commerce Initiative and Capgemini, 2016 Future Supply Chain, 2007

• Kralingen, R. van en Jansen, M. , The end of traditional mass brands, brandchannel.com

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Topics Vice President OperationsIn this chapter a number of topics will be presented which are in the Vice President Operations’ scope of decision making. The Vice President Operations needs to make decisions in relation to these topics. These topics are supported by relevant theoretical frameworks and a number of literature suggestions.

Vice President Operations’ scope of decision making In the figure below the area in which the Vice President Operations needs to make decisions is presented. The VP Operations is responsible for making decisions in the area indicated below in blue:

Finished productComponents

Supply Production Distribution

VP Supply Chain

VP Purchasing VP Operations VP Sales

Relevant theory and theoretical frameworks within The Fresh Connection in relation to the function VP Operations are the following:

• Setup times and Single Minute Exchange of Die (SMED) techniques

• Lean Manufacturing / Kaizen / 5 S model / TQM / TOC

• Capacity management and Product(ion) Planning

• Layout of production processes (line production vs functional setup vs multiple skilled workers)

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Chapter

5

• ‘Make or buy’ in the area of warehousing

• Conventional versus a fully automated warehouse

Relevant theoretical frameworks for the VP Operations

• Balloon model, Theeuwes en Adriaansen

Relevant literature for the VP Operations • Adriaansen, J. , Towards a well-balanced, agile company, Every Angle,

August 2005

• Slack, N. , Chambers, S. and Johnston, R. , Operations Management, Prentice Hall, 5th edition, 2007

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Strategy: How do we addressthe value expectation,in continuouschanging

circumstances ?

Business

BBusinessBusiness

B

Operations Management:How do we realize that ?

ValueConcept

Capacity

Human ResourcesMachine capacityBuildings / space

NetworksI nventory

Oper.Mgt.

Control burden

AssortmentMarketsVolumesQualityPrice

Lead-timeLead-time reliability

Flexibility

Finished productSemi-fi nished product

Work in processRaw materials

I nf ormationKnowledge

Money

Strategy: How do we addressthe value expectation,in continuouschanging

circumstances ?

Business

BBusinessBusiness

B

Operations Management:How do we realize that ?Operations Management:How do we realize that ?

ValueConcept

ValueConcept

Capacity

Human ResourcesMachine capacityBuildings / space

NetworksCapacityCapacity

Human ResourcesMachine capacityBuildings / space

NetworksI nventoryInventory

Oper.Mgt.

Control burden

Oper.Mgt.

Control burden

Oper.Mgt.Oper.Mgt.

Control burden

AssortmentMarketsVolumesQualityPrice

Lead-timeLead-time reliability

Flexibility

Finished productSemi-fi nished product

Work in processRaw materials

I nf ormationKnowledge

Money