SuChaFu Team

Le Huynh Minh Tam

Tran Viet Thanh
VSCC 2021
Challenge C
Hong Huu Phuc
Nguyen Thi Quynh Nhu
 ● Overview R4
● Sales
Table of ● Supply Chain
contents
● Operation
● Purchasing

SuChaFu Team
 Overview
Round 4

SuChaFu Team
 OVERVIEW R4

Sales Supply Chain Operation Purchasing

0.7% 98.4% 77% 95.3%

Obsolete product Component availability Run time (%) of bottling Delivery reliability

Gross margin = 1,251,701 € Stock component (w) = 3.7 Run time per week (hours) = 61.7 Rejection component = 2.3%

Penalty = 302,415 € Stock product (w) = 2 Unused capacity per week Raw material cost = 36.7%
(hours) = 3.6
Service level outbound = 90.7%
Production adherence = 81,8%

ROI = 6.7%
SuChaFu Team
 Sales

SuChaFu Team
 SALES

Decision (Promotion Decision

Round 3 Round 4 Round 3 Round 4
pressure) (SL)

All-Round Middle Light All-Round 93.3% 94.5%

Domus Middle Heavy Domus 90% 92%

Tecco Middle None Tecco 93% 95%

Decision
Round 3 Round 4
(Shelf life)

All-Round 76% 76%

Domus 69% 70%

Tecco 73% 73%

SuChaFu Team
 SALES

Descriptive - What happened?

Lower SL than agreed lead to huge amount of penalty

SuChaFu Team
 SALES
Diagnotics - Why happened?

Fail to deliver products on time, in full

Possible causes

Promotion pressure -> demand increased -> more component

availability (reliability of suppliers, intake time, number of labour,
stock), more productive in manufacturing (number and quality of
labour, efficiency of machines for production) and stocks for
products are required -> fail to fulfill the requirements -> lower
service level than agreed

SuChaFu Team
 SALES
Predictive - What will happen?

● Manage to fulfill the requirements to have consistency with agreed service

level
● Reduce stock out situation when demand increased significantly
➝ Reduce Penalty

SuChaFu Team
 SALES

Prescriptive - What to do with “what will happen”?

★ Reduce penalty

● Keep service level as round 4 to get the high revenue

● Adjust other departments to be consistent with service level required in
Sales Department
● Reduce Shelf life agreed to ensure that we can keep stock for longer and
more flexible when demand increases (All Round: 75%, Domus: 67%,
Tecco: 71%)
● Change promotion pressure for All-Round to NONE to reduce pressure
for Operation and Supply Chain Departments
● Expected revenue: 3.006.602

SuChaFu Team
 Supply
Chain

SuChaFu Team
 SUPPLY CHAIN

Descriptive - What happened?

★ Low level of product stocks

Fressie Orange PET Fressie Orange/Mango +C 1L Fressie Orange 1L

SuChaFu Team
 SUPPLY CHAIN
Diagnostic - Why happened?
Low level of product stocks
(Fressie Orange 1L , Fressie Orange/Mango +C 1L, Fressie Orange PET)

Possible causes Actual

● Low safety stock Only at some points have out-of-stock

● Low component availability Component availability is at 98.4%
● High frozen period Frozen period is 3, not really high
● High production interval PI set for 3 above-mentioned SKUs are 4-5 days
● Low production adherence Production adherence = 81.8% ➝ LOW

SuChaFu Team
 SUPPLY CHAIN
Diagnostics - Why happened?
Low level of product stocks
(Fressie Orange 1L , Fressie Orange/Mango +C 1L, Fressie Orange PET)

Root causes Tasks

● High frozen period Decrease frozen period

● Low Production adherence Increase Production adherence (Operation VP
in charge)

SuChaFu Team
 SUPPLY CHAIN
Predictive - What will happen?
● Solve the out-of-stock problem for 3 SKUs: Fressie Orange 1L , Fressie
Orange/Mango +C 1L, Fressie Orange PET
● Keep the current level of component availability(1) ➡ make sure TFC has
enough components for production and reliable suppliers (Purchasing VP)

(1): Data and calculation for components’

SuChaFu Team lot size from sheet SC - Lot size
 SUPPLY CHAIN

Prescriptive - What to do with “what will happen”?

★ Solve the FG out-of-stock

● Decrease Frozen period 3 ➝ 2 : Make the production more flexible

and adaptive to any changes in production plan
● Adjust the Finished goods Safety stock as below(1):

SuChaFu Team (1): Data and calculation from sheet SC - Finished goods
 SUPPLY CHAIN

Prescriptive - What to do with “what will happen”?

★ Keep the current level of component availability

● Ensure the reliability of suppliers (Purchasing VP in charge)

● Adjust the Component Safety stock as below(1):

SuChaFu Team (1): Data and calculation from sheet SC - Components

 Operation

SuChaFu Team
 OPERATION

Descriptive - What happened?

★ Low cube utilization rate in ★ Low production plan adherence

inbound and outbound warehouse

Usage Capacity Cube ● Production plan

utilization adherence is only
rate
81.8% compared to
Raw materials 537 900 59.7%
89.5% of the previous
warehouse
round
Tank yard 1 4 32.9%

Finished goods 529 630 84.0%

warehouse

SuChaFu Team
 OPERATION

Diagnostics - Why happened?

Low cube utilization rate in inbound and outbound warehouse

Root causes Actions

● Cannot adjust the inbound

warehouse number of pallet Adjust in next round if possible
locations and tank yards
● Aiming to reduce overflow in
outbound warehouse Carefully balance the overflow and

● Overestimating when adjusting the cube utilization in next round

outbound slots

SuChaFu Team
 OPERATION

Diagnostics - Why happened?

Low production plan adherence

Root causes Actions

● Low number of shifts Increase number of shifts from 2 to 3

● Out-of-stock at some points Slightly increase safety stock (by 0.1-0.2)
(SCM VP in charge)
● High changeover time (22.8%) Increase production interval (SCM VP in
charge), continuously implement SMED
● High breakdown time (7.9%) Continuously implement preventive
maintenance and solve breakdown training
SuChaFu Team
 OPERATION

Predictive - What will happen?

● Improve cube utilization in inbound and outbound warehouse

from 59.7% and 84.0% to ~90% Reduce stock costs by ~650,000$,
Overflow may rise a little bit (~7%)
● Increase production plan adherence from 81.8% to ~90%
Increase permanent employees costs for production to 320,000$

SuChaFu Team
 OPERATION

Prescriptive - What to do with “what will happen”?

★ Consider to change the bottling lines

● Ensure the production plan and finished goods availability

● Reduce permanent employees costs

SuChaFu Team
 Purchasing

SuChaFu Team
 PURCHASING

Descriptive - What happened?

★ Mango supplier was less reliable than agreed to

Component Supplier Agreed reliability (R4) Actual reliability (R4)

Pack 1L BelgaPack 95.0% 94.1%

PET LuPET 94.0% 96.6%

Orange Corcovado 98.0% 97.9%

Mango Toro Arma. 92.0% 85.5%

Vitamin C TM Additives 95.0% 94.0%

SuChaFu Team
 PURCHASING
Diagnostic - Why happened?
Low actual delivery reliability
(Mango: Toro Amarillo)

Possible cause 1 - Supplier agreements Actual

Low reliability agreement Increased from 90.0% in R3 to 92.0% in R4

Low free capacity All mango suppliers had low free capacity

No certification Toro Amarillo already had certification

Ouaga d’Espana Jungle Lagos Toro Porto

free capacity 3% 4% 2% 4% 4% 4%

certificate No Yes No No Yes Yes

SuChaFu Team
 PURCHASING
Diagnostic - Why happened?
Low actual delivery reliability
(Mango: Toro Amarillo)

Possible cause 2 - Stock components Actual

Low safety stock There were no out-of-stock situations.

R3 R4

Safety stock (week) 2.0 2.0

Actual stock (week) 23.8 3.7

Availability 95.3% 98.1%

SuChaFu Team
 PURCHASING
Diagnostic - Why happened?
Low actual delivery reliability
(Mango: Toro Amarillo)

Root cause Task

Change suppliers from Porto to Toro Evaluate suppliers

Very bad relationship with suppliers Change supplier agreement

Supplier Location Lead time Window Payment CI Reliability

R3 Porto Brazil 40 days 1 day 3 weeks 1.0168 80.6

R4 Toro A. Spain 20 days 2 days 3 weeks 1.2442 85.5

SuChaFu Team
 PURCHASING
Predictive - What will happen?

● New supplier with higher delivery reliability agreement for mango

● Normal relationship with all suppliers to keep the current
component availability and mitigate risks.

SuChaFu Team
 PURCHASING

Prescriptive - What to do with “what will happen”?

★ Evaluate suppliers (Mango)

Ouaga d’Espana d’Espana Jungle Lagos Toro Toro Porto

(Truck) (Boat) (Truck) (Boat)

Lead time 30 days 10 days 20 days 35 days 30 days 10 days 10 days 40 days

Basic 0.9600 1.2500 1.2500 0.9800 0.9500 1.2500 1.2500 1.000

index

Free 3.0% 4.0% 4.0% 2.0% 4.0% 4.0% 4.0% 4.0%

capacity

Risk Fruit disease Fruit Fruit Earthquake

disease disease

SuChaFu Team
 PURCHASING

Prescriptive - What to do with “what will happen”?

★ Evaluate suppliers (Mango)(1)

Ouaga d’Espana d’Espana Jungle Lagos Toro Toro Porto

(Truck) (Boat) (Truck) (Boat)

Lead time 0.6 0.9 0.6 0.3 0.6 0.9 0.6 0.3

Basic index 0.6 0.2 0.2 0.4 0.6 0.2 0.2 0.4

Free capacity 0.6 0.9 0.9 0.6 0.9 0.9 0.9 0.9

Risk 0.8 0.6 0.8 0.6 0.6 0.8 0.8 0.6

Total score 2.4 2.8 2.5 1.9 2.7 2.8 2.5 2.2

SuChaFu Team (1): Data and calculation from sheet Purchasing - Supplier evaluation
 PURCHASING

Prescriptive - What to do with “what will happen”?

★ Offer favorable supplier agreements (Mango)

Supplier

Contract index Trade unit Tank

Quality High Delivery window Consider 1-2 days

Transport mode Boat Development

Payment terms 3 weeks VMI (min)

Contract duration (Must be longer) VMI (max)

SuChaFu Team
 PURCHASING

Prescriptive - What to do with “what will happen”?

★ Offer favorable supplier agreements

Considerations Effects Financial Effects Factors

Supplier Reliability increases 30,000EUR per round Contract duration

development Quality increases Relationship

VMI Control of stock 2,500EUR per round Stock limits, lead

CI decreases time, component

Contract Relationship CI decreases if Risk factors

duration Delivery reliability duration is longer

SuChaFu Team