Improving Financial and Non-Financial Performance in Fresh Connection

This report delves into the strategic supply chain management of the Fresh Connection company, examining how its processes can be optimized to enhance both financial and non-financial performance. It explores key elements such as sales agreements, gross margins, negotiation strategies, and shelf-life considerations. Furthermore, it analyzes the operational aspects, including inbound and outbound warehousing, mixing and bottling, and production processes. The report also addresses supply chain components like safety stock, finished goods, and procurement strategies. Finally, it discusses the importance of strategic risk management in mitigating supply chain disruptions, emphasizing the need for adaptable structures and effective risk management approaches. The analysis includes financial performance metrics and ratio analysis to evaluate the return on investment and overall supply chain efficiency.

Running head: STRATEGIC SUPPLY CHAIN MANAGEMENT
Strategic Supply Chain Management
Name of the Student
Name of the University
Author Note

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Table of Content
1. Discussing how the “Fresh Connection “ company could improve its financial and non-
financial performance by engaging in the strategic management of its supply chain processes.....2
2. Discussing how strategic risk management is useful to manage supply chain disruption -........7
References and Bibliography.........................................................................................................11

2STRATEGIC SUPPLY CHAIN MANAGEMENT
1. Discussing how the “Fresh Connection “ company could improve its financial and non-
financial performance by engaging in the strategic management of its supply chain
processes.
It is certain that in order to create a positive impact on financial and non-financial
performance, the supply chain processes of the company are to be in place supported with the
strategic management strategies (Janvier-James, 2012). Several small and medium size
companies might not have the resource in-house to deal with the challenges associated with
logistics. However, the Fresh Connection produces the ultimate value chain learning experience.
A well-enhanced supply chain strategy of Fresh Connection is supported by tactical skills and
knowledge (DE Leeuw, SchipperS & Hoogervorst, 2015). The following are some of the
strategic management elements existing in the supply chain network of Fresh Connection, which
certainly helps to improve financial and non-financial performance.

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Figure 1: Supply chain elements in Fresh Connection Game
(Source: Janvier-James, 2012
Sales-
Agreement
Service-level- Certainly, the service level is the most significant of the agreements, which can
positive influence the financial performance through sales. As put forward by Monczka et al.,
(2015), the customers naturally demand a high service level but they offer a high contract index
in return. However, in order to keep this level in place, the service level has to be effective
because the failure to the promised service, the customers may want a substantial discount on the
contract index, which could be detrimental to the ultimate sales price.

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Sales- Gross margin
 Fresh Connection needs to maximize the gross margin as much as possible insisting on
the large potential customers
 The organization should try not to lose gross margin on the small customers significantly
 The organization could introduce a promotional pressure for the consumers during the
later rounds
Sales –Negotiation
The organization should align the capacity of supply chain and operations to match the
negotiated and service as well as the self-life levels.
Shelf-life- It is observed that all the customers tend to focus on having a part of total shelf period
of a finished product, which is the requested shelf life percentage. Usually, the customers
demand a highest percentage of that shelf life, allowing them to keep the product in stock for a
longer period and offer customers a greater shelf-life (Stadtler, 2015). However, the longer time
the consumers can keep the product in stock, in a shorter time period, Fresh Connection can
implement so. Thus, the probability of the finished goods expiring increase in proportion to the
percentage of shelf life assured to the customers. It is necessary to understand that assured shelf
life has a wide impact on the whole operation as highly assured shelf-life minimizing the amount
of time that finished goods could be kept in stock.
Operation
Inbound- The delivered packaging is stored or kept in the raw material warehouse, whereas fruit
pulp as well as additives produced in “Intermediate Bulk Containers” are kept in the same

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warehouse (Ashby, Leat & Hudson-Smith, 2012). The costs related to the raw material
warehouse should be around € 200 for each pallet location annually. Hence, the financial
performance of the Fresh Connection will not be affected because increasing and decreasing the
pallet location involves no additional expenditure. The organization always plays the fixed rate
for each pallet location annually. The required amount of pallet location depends on the supply
of goods and safety stock levels. Fresh Connection developed a component safety stock level are
high, so if the company increases the lot size, the required location will be high (Leeuw,
Schippers & Hoogervorst, 2015). Nevertheless, if the components arrive in tanks, the
organization does not need to reserve pallet location for them in the law materials because they
can be stored in the tank yard only.
Outbound-
Warehousing- The above-mentioned discussion suggests the utilization of the inbound
warehouse with the inclusion of tank yard and the finished goods warehouse. Hence, both the
utilization of space and utilization of labor should be reported. If the overflow remains high, the
capacity could be too large.
 The organization optimizes the pallet allocation to avoid overflow and outsourcing
 The organization could also allocate a proper number of shifts. It can reduce the
variability in processes and smooth earning from the raw materials
 The company has to be ready to deal with all sort of demands
Mixing and bottling- To reduce the operational cost, the organization needs to make use of the
mixing machine as well as availability of bottling machine.

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Production- The organization needs to allocate adequate number of shifts and they should select
new investment appropriately to smooth production and maximize the return on investment. In
addition, the firm also needs to minimize the production cost, unused capacity as well as
breakdown time.
Supply Chain
Component- (Safety Stock)- As put forward by Sarkis (2012) the safety stock that organization
sets aside to avoid uncertainty in terms of production requirements as well as supply reliability
from the supplier. If the organization increases the stock, it can lower the risk of running out of
stocks and so, with increasing safety stock. Moreover, with a high safety stock, the company can
assure reliability of supply to production. As put forward by Vierasu & Balasescu (2011), a high
safety stock may also lead to high stock expense and increased capital demand. The safety stock
of Fresh Connection is expressed in forecast weeks. At the time of frozen period of production,
the production planning should be fixed and likewise, the demand should also be fixed (Cao &
Zhang, 2011). Hence, the company needs to be aware of the fact that if one of the components is
missing it might affect the production of one or more finished products. In addition, it can be
mentioned that components can be stored for a long time and will be storing them not to have
any influence on the freshness of the finished products. Thus, the decision of safety stock level
remains as the tradeoff between the storage cost and the use of CO2 versus reliability.
 The firm should guarantee the availability of components to satisfy the demands
 The firm needs to keep the cost of stock at the min level.
 The adequate lot size should depend on the stock cost as well as the transport cost given
by procurement.

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Finished goods
 The firm needs to lower average stock weeks of demand and obsolete products without
compromising service level according to contract index per customer
Purchasing
 The organization needs to make sure high diversity reliability as well as low rejection rate
for the best price
 Purchasing unit of the company also needs to ensure the lead time and trade. Hence,
expected amount should be planned and aligned with the operation.
Raw materials
 Raw materials cost is one the significant KPIs of Fresh Connection. Hence, purchase cost
remains as the percentage of total revenue
2. Discussing how strategic risk management is useful to manage supply chain disruption -
The major aim of the supply chain strategy is to reach the stage of the integrated supply
chain with the major goal of achieving a greater level of efficiency via reduction of costs. The
“Hudd Team 28” in Fresh Connection Game had the goal to accomplish an efficient supply
chain strategy to implement long-term partnership with the consumers (Cai et al., 2013). As put
forward by Savino, Manzini and Mazza (2015), the supply chain risk management is an
integrated management approach which remains along with whole chain particularly with a view
to deal with the exposure to serious business disruption appearing from the risks within the
supply chain and risk external to the supply chain. On the other side, the strategic risk
management helps to evaluate how a broad range of possible events as well as scenarios could

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affect the strategy and its implementation and the eventual impact on organization’s value
(Wieland & Marcus Wallenburg, 2012). Hence, risk is all- inclusive, encompassing everything
from product innovation risk as well as market risk to supply chain risk.
The risk management strategies directly control the supply chain design framework. The
architecture of supply chain should be appropriately enhanced in terms of shipping, location of
sources and warehouse. As put forward by Tang and Musa (2011), a proper design could deliver
cost, performance and emission response that consumers demand. SRM strategies at Fresh
Connection are developed to reshape the supply chain network during the stable times. The
strategies enable the supply chain operators to synthesize internal and external data and
increasingly take actions to reduce the influence of disruption.
Moreover, Fresh Connection has a wide supply chain network, the financial challenge
remains as the significant risk. Hence, the organization should use the approach of reshaping the
supply chain structure adaptable and agile, thereby, it can be easy to quickly adjust and respond
to the market as well as economic conditions. In addition to this, Cai et al., (2013) mentioned
that transparent organizational structure, with a clearly defined corporate structure and a
coordinated departments with clear responsibilities could help to reduce confusion and disruptive
event occurs. As the risk management approach, the supply chain managers of Fresh Connection
should strike a balance between efficiency and effectiveness (DE Leeuw, SchipperS &
Hoogervorst, 2015). They require a diversity of activities, reach of marketers and suppliers
instead of an overspecialization in one sector.
As the strategic risk management approach, in the supply chain department, the safety
stock management could handle the reduction of the stock as well as the handling cost. On the

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other side, the relationship between the customer management handled by the sales department
as well as supply chain management could affect the decision that should be taken to enhance the
efficiency of the organization.
Return on Investment
The below-mentioned chart demonstrates the Return on Invest of Fresh Connection had with the
6 round game.
Figure 2: Return on Investment (ROI) Diagram
(Source: Savino, Manzini & Mazza 2015)
To implement an effective strategic management in the supply chain management, the
organization has to make use of the advantages to respond to their return on investment. Hence,
this different leverages has been assessed through the ratio that backs the organization to
supervise and control its progress over the game period.

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Figure 3: Ratio Analysis
(Source: Cai et al., 2013)
The above mentioned ratio analysis helps to learn that profitability ratio demonstrates the
return on investment of the organization have gone through a larger hole to eventually come out
with a large amount of profits. Hence, the analysis helped to encountered was a high level of raw
materials and finished products obsolescence, which certainly influences the cost of products
sold and also influenced the operating margin.

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References and Bibliography
Ashby, A., Leat, M., & Hudson-Smith, M. (2012). Making connections: a review of supply chain
management and sustainability literature. Supply Chain Management: An International
Journal, 17(5), 497-516.
Cai, X., Chen, J., Xiao, Y., Xu, X., & Yu, G. (2013). Fresh-product supply chain management
with logistics outsourcing. Omega, 41(4), 752-765.
Cao, M., & Zhang, Q. (2011). Supply chain collaboration: Impact on collaborative advantage
and firm performance. Journal of operations management, 29(3), 163-180.
DE Leeuw, S. A. N. D. E. R., SchipperS, M. C., & Hoogervorst, S. J. (2015). The Fresh
Connection. The Handbook of Behavioral Operations Management: Social and
Psychological Dynamics in Production and Service Settings, 359.
Janvier-James, A. M. (2012). A new introduction to supply chains and supply chain
management: Definitions and theories perspective. International Business Research, 5(1),
194.
Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and
supply chain management. Cengage Learning.
Sarkis, J. (2012). A boundaries and flows perspective of green supply chain management. Supply
Chain Management: An International Journal, 17(2), 202-216.