1. Debrief 1 1

2. Did you join the management team or the fire brigade? 2

3. Debrief after round 1 Your first experience with The Fresh Connection –What went well? –What did not go so well? –Was everything clear? Please give us your reflection in headlines Review team results –Team ranking –Individual rankings –KPI benchmarks 3

4. Maturity scan: Strategy Stage of evolution Characteristics Stage I: Ad hoc Ad hoc decisions, fire fighting problems, no clear strategy Stage II: Functional Functional organization with each function making separate decisions in its own silo, based on a functional vision and policy Stage III: Integral Shared cross functional strategy and vision, translation to all functional areas not yet implemented on tactical level Stage IV: Visionary Shared cross functional strategy and vision, clear translation to all functional areas, guideline for all tactical measures 4

5. Strategy& Strategy into Action 5

6. A Supply Chain and its traditional conflicts Lowest purchase price Full truckloads High utilization % Long runs – minimize changeovers Low unit costs High service level Safety stocks High inventory turns Maximum flexibility Finished productComponents SupplyProductionDistribution VP Supply Chain VP PurchasingVP OperationsVP Sales 6

7. Competitive strategy What must your supply chain excel at? Benefit driven by customer value Flexibility customization variety volume Flexibility customization variety volume Quality: top quality consistent quality Quality: top quality consistent quality Time delivery speed on-time delivery development speed Time delivery speed on-time delivery development speed Cost: low cost Cost: low cost 7

8. Companies should know their Order Winners (and Order Qualifiers) 8 Competitive factors: If customers value these Performance objectives: Then we need to excel at these Low price Cost High quality Quality Fast delivery Speed Reliable delivery Dependability Innovative products and services Flexibility (product/service) Wide range of products and services Flexibility (mix) The ability to change the timing or quantity of products and services Flexibility (volume and/or delivery) An order winner is a characteristic that will win the bid or customer's purchase. To provide order winners, firms must be better than their competitors. An order qualifier is a characteristic that is required for a product or service to be considered by a customer. Firms must provide the qualifiers to get into or stay in a market. To provide qualifiers, they need only to be as good as their competitors. Source: Hill, 2000

9. The relation between competitive strategy and supply chain strategy Value is created through a chain of value adding processes/functions that must be performed for a successful sale. Other process/functions support and facilitate Supply chain strategy: determines the nature of material procurement, transportation of materials, manufacture of product or creation of service, distribution of product Consistency and support between supply chain strategy, competitive strategy, and other functional strategies is important New product development Marketing and Sales OperationsDistributionService Finance, Accounting, IT and HR Value Chain Supply Chain Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007 9

10. Supply Chain strategy Supply chain strategy must fit with competitive strategy Supply Chain Strategy Resources Processes Competencies Cost Flexibility Quality Time Competitive Strategy Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007 10

11. Achieving strategic fit Step 1: Understanding the customer and the company’s value proposition Step 2: Understanding the supply chain capabilities Step 3: Achieving strategic fit Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007 11

12. A one-dimensional world Fisher (1997) distinguishes two product types … and just two relevant supply chain strategies 12 Functional products Stable, predictable demand Innovative products Dynamic, unpredictable demand responsiveness efficiency Source: Marshall L. Fischer ‘What is the right supply chain for your product?’, HBR 1997

13. Differences in demand Functional products Innovative products Product life cycleMore than 2 years3 months to 1 year Contribution margin5% to 20%20% to 60% Product varietyLowHigh Avg. forecast error10%40% to100% Avg. stockout rate1% to 2%10% to 40% Avg. forced season- end markdown 0%10% to 25% Source: Marshall L. Fischer ‘What is the right supply chain for your product?’, HBR 1997 13

14. Different supply chains Physically efficient supply Chain Market responsive supply chain Primary goal Supply efficiently a lowest possible cost Quickest possible response Manufacturing focus High utilizationCapacity flexibility Inventory strategy High inventory turns, minimize inventory Buffer stocks Lead time focus Reduce but not at expense of higher costs Invest aggressively to reduce lead time Supplier selectionCost and quality Speed, flexibility and quality Source: Marshall L. Fischer ‘What is the right supply chain for your product?’, HBR 1997 14

15. Match products and supply chain product   responsiveness innovative efficiency functional Strategy standardize innovate refocus on efficiency refocus on responsiveness Source: Marshall L. Fischer ‘What is the right supply chain for your product?’, HBR 1997 15

16. Achieving a strategic fit: Choose your ‘right’ supply chain Demand uncertainty spectrum Responsive supply chain Efficient supply chain Functional products Innovative products Responsiveness spectrum Zone of Strategic Fit Low shelflife % High shelflife % Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007 16

17. Supply Chain Performance Two key points –there is no right supply chain strategy independent of competitive strategy –there is a right supply chain strategy for a given competitive strategy All functions in the value chain must support the competitive strategy to achieve strategic fit Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007 17

18. Company Mission Key Strategies & Objectives Actions by Per Role Measures / scorecard / dashboard Strategy exercise 18

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20. Strategy into action Levels in version 2013 ThemeSalesSCMOperationsPurchasing Level 1 Reliability Service level Order deadline Shortage rule Safety stocks # Shifts # Pallet locations # FTE Delivery window Delivery reliability Level 2 Batches and frequencies Shelf life Trade unit Lotsizing in production and purchasing SMED Increase speedTrade unit Level 3 Speed and qualityPayment termsFrozen period Intake time Preventive maintenance Solve breakdowns training Raw materials inspection Supplier selection Payment terms Quality Transport mode

21. Extensions in version 2013 ThemeSalesSCMOperationsPurchasing Extension a S&OP Promotional pressure Category management Forecasting Production interval tool Resource selectionDual sourcing Extension b External collaboration Promotion horizon VMI Outsourcing warehouse (MCC) Inflate PET VMI Supplier development Extension c CO 2 footprint Sustainabilty CO 2 slaDecrease of water usage Decrease of energy usage Decrease of start up productivity loss Extension d KPIs and targetsKPI selection Extension e Supply chain risk management Risk events Relaunch (horizon) Scenarioplanner Tracking & tracing Quarantine Risk events Pooling warehouse FTE Contract duration Supplier development Dual sourcing Risk events