Fresh Connection Game
Fresh Connection Game
The ‘Fresh Connection’ company could improve its financial performance by engaging in the strategic management of its supply chain processes reducing its operational expenses and improving its capital utilization. Usually, financial performance would be reflected in the return on assets and investments, cash flow statements and various margins such as operation and profit margins. To achieve these objectives that would lead to improved financial performance, the company needs to ensure that first, its supply chain is integrated with its business goals. This means that the company should adopt an all-inclusive planning process at all levels of its business activities to ensure that its corporate business planning process in integrated with the operations and sales planning rather than employing a functional silo approach as evidenced by the simulation game. In this aspect, the company should have a unified and coherent strategy that permeates through the entire organization such that the strategy and the vision of the company is shared and translated clearly across all the functional areas of the company while offering guidance to all tactical measures undertaken by the company. The integrated planning process should be able to reveal the demand and supply levels that would then influence and inform the decisions that would be undertaken regarding sales, operations, supply chain and purchasing activities in the company as indicated in the simulation game. In this case, forecasting demand, which then informs the production, inventory and suppliers policies, would facilitate the optimization of resources. According to the simulation game, the demand forecasting should be undertaken on a real-time basis to ensure that inventory minimization is achieved and maintained thus reducing the costs associated with inventory and the maintenance of large safety stocks. Qrunfleh and Tarafdar (2014) acknowledge the reduction of costs emanating from inventory management and real-time demand forecasting that is enables by information systems that facilitate the ordering and inventory-tracking processes. In addition, Wagner, Grosse-Ruyken and Erhun (2012) found that higher return of assets, which is a financial benefit to a firm, can be achieved through ensuring of the supply chain fit which should be assured by the integrated supply chain planning process.
Secondly, the company should consider being responsive to the market demands and forces, considering that it is involved with the manufacture of a fast moving consumer product, which has a limited shelf life due to its perishability. This means that the company should employ a demand-pull approach also known as the demand chain, rather than employing a supply push approach. According to the game, this means that the company should be able to react promptly to unpredictable demand in the fruit juice market, considering that the market has many players that make it highly competitive and therefore the switching costs of the buyers is low. In addition, such an approach would inform the company activities related to operations, supply chain and purchasing processes in the company. From another perspective, the game indicated that product obsolescence and large quantities of unprocessed fruits influenced the operating margins negatively thus undermining cost management. However, deciphering demand on a real-time and continuous basis calls for rapid acquisition and analysis of demand data, which gives credence to the application of technology enabled data acquisition strategies and data analytics to make sense of the huge amounts of date that reach the company. In this aspect, Wuttke et al. (2013) found that big data analytics could facilitate predictive decision-making in supply chain management. In addition, they reiterated that companies that were data driven posted better financial results than those that employed traditional management approaches. Therefore, the company should ensure that it obtains data related to sales, consumers, and inventory to make demand predictions to the financial benefit of a firm.
Thirdly, the company should employ sound and proven processes, tools and practices to facilitate its decision making and operational activities. The simulation game acknowledges the important of having a collaborating culture among the human resource involved in different process in the company as well as the importance of information technology as a facilitative tool. As such, attainment of efficiency was paramount in ensuring that that the company achieved a decent return on investment in the long term because it involves reduction of cost and capital and leverages the flexibility of the human resource. Related to this aspect, Ellinger and Ellinger (2014) insist that investing in the training of human resource in a firm could facilitate the understanding of concept of supply chain management and in turn, encourage collaboration that would yield operational efficiency.
The ‘Fresh Connection’ company could improve its non-financial performance by engaging in the strategic management of its supply chain processes in various ways that aim at enhancing the company reputation and competitiveness, customer value and satisfaction, and innovativeness. According to the simulation game, return to competitiveness of the company in the market place can be achieved if the company’s reputation is positive, customers are satisfied with the products of the company and the company is responsive to the client’s needs and preferences by being innovative in its product and service offerings. For instance, ensuring that the juice product do not suffer from obsolescence due to long inventory overlays, the company news to ensure frequent product changeovers. As such, the responsive strategy is emphasized in the game because of its prompt rewards and its ability to respond to customers’ demands, which is pertinent in enhancing customer satisfaction and loyalty, and eventually building the positive reputation of the company based on its brand image. According to Bosona and Gebresenbet (2013), customers derived satisfaction in food product when they are able to trace their sources. As such, food traceability was a pertinent determinant of customer satisfaction with companies such as the ‘Fresh Connection’ company. In addition, the company could engage in responsible supply chain management, which is aimed at protecting the corporate reputation by facilitating positive customer and public sentiments through proactive public relation initiatives as discovered by Hoejmose, Roehrich and Grosvold (2014). In addition, innovation is evidence that the company is customer-centric in its business and supply chain strategies, which endears clients to the company, thus fostering customer loyalty. However, innovativeness thrives in a responsive strategy particularly in the food industry where tastes and preferences can shift rapidly and the competition among rivals is fierce as evidenced in the simulation game. As such, Pradabwong, et al. (2017) acknowledged the place of innovativeness that was anchored on sharing of ideas among supply chain planners and decision makers and the making of joint-decisions that were coherent to the strategies of the organization.
Supply chain disruptions can lead to negative consequences on the company, which at the worst, can threaten the survivability of the company, in addition to affecting adversely the financial, reputational, marketing and operational circumstances of the company. To manage disruptions in the supply chain, the simulation game advocates analysis of risks through assessment of their probability of occurrence and their effects, and managing the risks through prevention initiatives and mitigation of the effects of the risks. Specifically, by identifying the lead times in all the juice making processes a map of the supply chain can be obtained, which addresses the risks that could lead to disruptions in the supply chain. In this case, the disruptions in the supply chain can be occasioned by processes that have a long lead-time such as the supply of Orange and vitamin C, which have lead-timed of 30 and 40 days respectively, which are the longest in the supply chain. As such, the long lead-time for the supply of vitamin C can be considered a disruptive risk due to its domino effect on the supply chain as observed by Chopra and Sodhi (2014). According to Chopra and Sodhi (2014), disruptive risks can be addressed through resilience although such an approach would lead to additional costs in the supply chain through measures such as the used of multiple suppliers. While the game provides two strategic alternatives that aim at either supply chain efficiency emanating from resilience and stability or supply chain responsiveness and adaptability, an analysis of the tradeoffs between the two approaches need to be undertaken. Therefore, an analysis of the tradeoffs between the building of resilience and stability, and the increased supply chain costs need to be performed to inform the best approach of risk management (Chopra & Sodhi, 2014). In this case, the use of network optimization approaches can help the company plan proactively for disruptions in its supply chain by evaluating the effects of the likely unplanned events, determining mitigation strategies that are most cost effective and formulating of contingency plans to counter the effects of disruption risks. This would be preferable to approaching and responding to risks with a firefighting mindset in which risk as considered as they arise in a silo structure, as illustrated in the simulation game. In addition, Vakharia and Yenipazarli (2009) call for constant evaluation and trading-off of lean supply chain strategies against high supply chain responsiveness, which are characterized by low cost and high cost respectively.
The distant location of some of the suppliers from the premises of the company is a cause of concern regarding supply chain disruptions if there were to be transportation breakdowns. Specifically, the supplier of Mango is located in the United States and the supplier of vitamin C is located in China, which are geographically dispersed from Europe as evidenced in the simulation game. Indeed, unexpected disruptions caused by natural calamities that could occur in these distant countries are unpredictable and unforeseen if the company was to not have taken considerable mitigation initiatives or had contingency plans. As such, the delays in the arrival of these vital ingredients of the juice products would aggravate the already lengthy lead times presented by their supply to the company. As such, the company is often forced to retain large safety stocks of the products, which bulge the inventory and drive up operation costs by hoarding resources. To mitigate such risks, the company should engage supplier network-wide analysis that is based on information related to demand forecasts, on-site and in-transit inventory levels, financial and operational measures, and information on bill of materials. To this end, Simchi-Levi, Schmidt and Wei (2014) advocate the time to recovery (TTR) model in which a risk exposure index is calculated after assessing the suppliers and historical experiences of the suppliers and the company. The time to recovery model determines and stipulates the time that would be taken by the facility of the supplier, its transportation hub or its distribution center to be re-established to full functionality after the occurrence of an unprecedented disruption. According to Simchi-Levi, Schmidt and Wei (2014), a generation of the operational and financial performance impact of the supplier node in the network is undertaken, after which the company determines the optimal response to the disruption. In addition, undertaking a supply chain design at the initial levels of supplier engagement would help the company understand the supply chain risks that would emanate from different suppliers because it would inform investment decisions made by the company. Melnyk, Narasimhan, and DeCampos (2014) called for a supply chain design approach, which incorporates planning and execution of the plan, with the advantage of being more focused on the peculiarities of the different suppliers and being targeted towards problems and issues such as relationships, process and resources. Supply chain design calls for consideration of influencers, design decisions and building blocks that underpin supply chains. While influencers deal with environmental factors, design decisions focus on the physical design of the physical network while the building blocks are a consideration of the specific investments that would need to be made to end up with the supply chain this desirable by the company. In the same breadth, Baghalian, Rezapour and Farahani (2013) also considered supply chain design as a pertinent undertaking in managing supply chain risks that involve disruptions of the supply chain. However, they found that a consideration of the uncertainties presented by the demand side of the supply chain would facilitate the understanding of the supply side disruptions, which should be undertaken early in the supply chain network design stage of the planning process.
I was satisfied with the performance of my team and I because we were able to turn around the performance of the supply chain of the ‘Fresh Connection’ company within the time provided for the simulation game. Specifically, by applying different strategies to attain performance parameters that were very close to those stipulated in the contract, the individual and group performance can be termed as satisfactory. Indeed, the simulation game provided my group and I an opportunity to engage in consultative activity that emphasized on collaborative decision making across the different departments. This enhanced my and our communication skills considering that we had to work closely towards a common goal of turning around the ‘Fresh Connection’ company. I also realized the importance of cross-functional collaboration between department managers because each manager had a pertinent yet unique input that influenced the success of the company both financially and non-financially as well. An example of the cross-functional collaboration is that between the supply chain manager and the sales manager in which, the two departments collaborated in facilitating the promotion of organizational flexibility through reduction of product obsolescence by reducing the frozen period and increasing the shelf life of the juices beyond what was required in the contract. Bruckner et al. (2013) recommended a predictive shelf life model that could optimize the storage management of perishable food products in which the concept of first in first out (FIFO) is employed to reduce frozen time.
If I were to play the game again, I would focus on improving the service level of the company to enhance customer satisfaction and loyalty and improve the company reputation. As such, I would focus on raising to at least 95 % through the reduction of obsolete products to less than 5 %. This would require an increase in the adaptability and flexibility of the company such that it responds to the demands of the customers more efficiently and promptly. This would require a considerable reduction of the lead-time for the supply of vitamin C and Mango to quicken the production time. In this case, I would consider engaging alternative suppliers who are certified yet located closer to the company to reduce the lead times that are compromising the performance of the current suppliers in China and the United States. This would lower the transportation cost that would then be reflected in the cost efficiency of the company. In addition, the reduction of the change and break times should be reduced to through improved breakdown training and enhancement of preventative maintenance, which would also contribute to faster production times and effective employment of the shifts.
The simulation game facilitated the understanding of supply chain theories by not only exposing one to the theories and underlying concepts but also by providing an opportunity form putting the theories into practice and providing prompt and timely feedback of the performance of the theory application. This provided a hand on feel of how it would be to execute the theories in a real life situation in an organization. In addition, the respite provided by the intervals between the round allow for reflection of the outcomes of the application of different theories which helps place managerial decisions into perspective that is related to the effects of such decisions on the performance of an organization. Altogether, the entire process allow for internalization of the theories learnt that leaves a lasting impact that can be employed in real life situations later.
The company can also enhance its resilience against supply chain risks by ensuring that it remains resistant to shocks in the supply chain and able to cope with any changes therein. According to Wieland and Wallenburg (2013), resilience in the supply chain is characterized by its robustness and agility, which are developed from relational competencies. This approach gives credence to the development of a supply chain network in which communication, cooperation and integration are the underlying principles of developing network relations that can enhance the company’s anticipation, preparedness, visibility and reaction to impeding changes in the supply chain.
Baghalian, A., Rezapour, S., & Farahani, R. Z. (2013). Robust supply chain network design with service level against disruptions and demand uncertainties: A real-life case. European Journal of Operational Research, 227(1), 199-215.
Bosona, T., & Gebresenbet, G. (2013). Food traceability as an integral part of logistics management in food and agricultural supply chain. Food control, 33(1), 32-48.
Bruckner, S., Albrecht, A., Petersen, B., & Kreyenschmidt, J. (2013). A predictive shelf life model as a tool for the improvement of quality management in pork and poultry chains. Food Control, 29(2), 451-460.
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Hoejmose, S. U., Roehrich, J. K., & Grosvold, J. (2014). Is doing more doing better? The relationship between responsible supply chain management and corporate reputation. Industrial Marketing Management, 43(1), 77-90.
Pradabwong, J., Braziotis, C., Tannock, J., & Pawar, K. S. (2017). Business process management and supply chain collaboration: effects on performance and competitiveness. Supply Chain Management: An International Journal, 22(2).
Qrunfleh, S., & Tarafdar, M. (2014). Supply chain information systems strategy: Impacts on supply chain performance and firm performance. International Journal of Production Economics, 147, 340-350.
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Vakharia, A. J., & Yenipazarli, A. (2009). Managing supply chain disruptions. Foundations and Trends® in Technology, Information and Operations Management, 2(4), 243-325.
Wagner, S. M., Grosse-Ruyken, P. T., & Erhun, F. (2012). The link between supply chain fit and financial performance of the firm. Journal of Operations Management, 30(4), 340-353.
Wieland, A., & Marcus Wallenburg, C. (2013). The influence of relational competencies on supply chain resilience: a relational view. International Journal of Physical Distribution & Logistics Management, 43(4), 300-320.
Wuttke, D. A., Blome, C., Foerstl, K., & Henke, M. (2013). Managing the innovation adoption of supply chain finance—Empirical evidence from six European case studies. Journal of Business Logistics, 34(2), 148-166.
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