1.Discuss how the ‘Fresh Connection’ company could improve its financial and non-financial performance by engaging in the strategic management of its supply chain processes. Use appropriate examples from the game and theory from academic literature to support your answer. 

2. Discuss how strategic risk management is useful to manage supply chain disruption. Use relevant information and examples from the ‘Fresh Connection’ game and academic literature to support your answer.
 

Answer:

Answer 1:

Supply Chain Management (SCM) is defined as the production and logistic process of a network of firms, who compose the production chain of the firm. Supply chain follows end-to-end flow of products, information, and money from on party of the business to another (Lu & Swaminathan, 2015). Supply chain encompasses various areas of decision making in terms of logical sequence. This part of the report is meant to analyze these decision-making strategies and find out how Fresh Connection can use these strategies to improve its non-financial and financial performance.

Forecasting demand:

Demand forecasting is an essential factor for every firm in order to assess their aggregate market demand (Stadtler, 2015). It includes both the current and projected demand of the goods and services in the market that a firm produce and depending upon this forecasting firms take decisions of production (Monczka et al., 2015). Forecasting demand for the Fresh Connect will aid the company to enhance customer satisfaction and reduce the stock outs of their inventory. Besides this, it will aid the firm to manage its logistics better and improve their pricing strategies to bring in more prospect buyers towards their products. 

Supplier agreements and selection:

Fresh Connection is a juice company that need to send its final products to the end customer through retailers. The help of a seasoned supplier of the inputs can do it smoothly and thus it is highly important for the firm to look into closely before selecting and signing agreement with the supplier (Mangan & Lalwani, 2016). Selection process of the supplier need to start from cost analysis of the supplier and then comes the quality and capacity analysis (Azadi et al., 2015). Most importantly, Fresh Connection needs to look into the customer base and certification of the proposed supplier before signing contracts in order to eliminate the change of theft or mishandling the products.

Consumer service:

Consumer satisfaction ins one of the essential things that every business considers as the parameter to assess their performance. With a great customer service and customer satisfaction a firm can reach to the zenith of success and bad service can lead the firm towards the verge of destruction (Wang et al., 2015). When it comes to juice producing firms like Fresh Connection, then it is important for the firm to consider consumer service seriously because using the responses from the customer they can assess the demand of their customer and restructure their service according to that (Agrawal & Smith, 2015). According to the supply chain management if the Fresh Connection wants to provide good consumer service, then it has follow the below mentioned things (Fernie & Sparks, 2014):

• They have to deliver products with higher amount of accuracy and as fast as possible
• Need to provide customer online tracking facility of their deliverables
• Create a healthy relation with the logistics to overcome any issues like theft or ignorance of duty
• Need to keep the customer feedback in mind so that the firm can arrange itself according to the demand of the customers

Capacity plan for outbound and inbound warehouse:

Warehouses are the integral parts of every production houses. Fresh Connection too have warehouse, where they store their produce and capitals. Capacity plan for inbound and outbound warehouses is necessary for the firms in order to manage optimum inventory, which will give them potential to withstand any supply or demand side shock (Rushton, Crouscher & Baker, 2014). Being a juice producer, Fresh Connect needs to follow the Lead Capacity Strategy and maintain an optimal stock of their produce so that in case of certain rise in demand or reduction in demand can be handled smoothly (Slack, 2015). Optimal level f inbound and outbound warehouse will aid the brand to withstand any uncertain rise in cost of materials, which can raise the overall budget for the firm too. 

Inventory policy for raw materials:

Raw materials are the lifeline of every production house because without them, a factory can produce nothing (Pal, Sana & Chaudhuri, 2014). As a juice producer, Fresh Connection uses inputs like fruits, preservative, water and various other things. Without utilizing inventory for raw materials, firms will lose all of their inputs and may face loss. Thus, the firm need to optimize their batch size, amount of safety stock and ideal capacity of warehouse so that the firm can withstand any demand or supply side shock.

Supply Chain Management is one of the important factors that can enhance the financial condition of a firm. With effective SCM, managers can introduce better management in the organisation and aids to grow better communication among the different players of the production (Wisner, Tan & Leong, 2014). With the SCM, Fresh Connection can bring in all of their suppliers under a single roof virtually and diminish the risk level. Moreover, it will aid the company to grow a healthy relationship among its various branches of production.

Answer 2:

Strategies of supply are complex by nature, when it comes to supply chain disruption, and then it is one of the major issues with all the industries. Supply chain disruptions affect the business activities negatively; and if the elasticity of demand is high, then the magnitude is much higher (Sawik, 2014). Fresh Connection being a producer of juices, it has high elasticity of demand and if there were any supply chain disruption, then it would lead the firm’s revenue to deteriorate. Considering this, the firm need to assess its risks and reduce the scope of escalation in its revenue. Risks for the supply chain disruption for the Fresh Connection are mentioned below: 

Contamination:

Fresh connection is a juice company and the scope of contamination in its produce is much higher (Giannakis & Papadopoulos, 2016). Owing to the fact that it uses raw materials like fruits, preservatives, water and various other natural ingredients, it can easily be contaminated. Thus, the firm need to use proper measurement and use disinfectants to reduce the scope of contamination.

Pandemic:

Being located in UK, Fresh Connection follows strict safety mechanism. However, there is always a scope to be contaminated and produce such products by mistake which are not healthy to consume (Bode &Wagner, 2015). It can lead to pandemic and deteriorate the revenue of the firm and good will as well.  Thus, the firm need to bring in strict hygienic mechanism and always maintain industry parameters regarding cleanliness to rduce the scope of pandemic.

Loss of Power:

Power loss is another major issue that can hamper the production of the firm. If there no power supply, then the firm will not be able to produce any production and it will deteriorates its sustainability (Chopra & Sodhi, 2014). With rise in production, firm will also increase, which will enhance the requirement of power. Thus, firm need to invest more in its infrastructure to overcome the scope of power shortage and it will be better if they go for green energy, which will increase the Corporate Social Responsibility too.

Loss of Water:

Water is essential input for the fruit juice produces. Thus, if there is water scarcity it will reduce the productivity of the firm and lead the firm to face lowered revenue. In order to overcome this issue, the firm need to invest more on its water source.

Loss of IT:

Information Technology is necessary for the firm in order to enhance its productivity and efficiency. With better IT on board of the Fresh Connection, the company can enhance its product variety, customer and various other crucial details. Loss of IT will cause potential threat to the security breach for the firm and they may loss their good will as well as customers (Heckmann, Comes & Nickel, 2015). Thus, company should put more pressure on its IT segment and it will help the firm to enhance its overall security and performance as well as efficiency.

Loss of Logistics:

Logistic is one of the most important parts of any supply change management system. With rise in business of a firm, necessity of logistics also rise and if the firm lose logistics support, then it will lose its competitive advantage too (Christopher, 2016). Thus, company need to consider the importance of logistics and risk related to it. To curtail the risk of the logistics, Fresh Connection needs to select proper carrier for both the outward and inward transportation.

Rise in Price of Raw Materials:

This one is another risk, which is always present in every firm. However, magnitude of risk of rise in cost of raw materials gets aggravated largely for the firm that uses input from various suppliers (Monczka et al., 2015). For Fresh Connection, if there is a rise in cost of any raw materials, then the cost of production will be altered leading to an alteration in the business cycle of the firm. Thus, the firm need to take the cost analysis seriously and assess any chance of rise of raw materials properly beforehand 

Return on investment: 

Return on Investment (ROI) is one of the primary risks for every firm and it need to be considered while performing supply change management. With higher ROI, firm can generate higher amount profit margin and invest it into the business to let it grow further (Rackley, 2015). There is always a scope to reduction in ROI with rise in competition in the market. If the ROI were less than desired amount, then it would hamper the performance of the firm and asset management (Area, 2014). With proper evaluation of risk and selecting ideal vendor, Fresh Connection can reduce this problem on behalf of the firm.

From the above risk analysis of the supply chain disruption, it can be seen that there are various factors that can alter the financial condition for the Fresh Connection. To conclude, it can be said that, if the firm can take necessary steps to control these risks, then the firm can certainly have higher growth and enhanced scope to develop beyond its domestic boundary. 

Reference:

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Bode, C., & Wagner, S. M. (2015). Structural drivers of upstream supply chain complexity and the frequency of supply chain disruptions. Journal of Operations Management, 36, 215-228.

Chopra, S., & Sodhi, M. S. (2014). Reducing the risk of supply chain disruptions. MIT Sloan Management Review, 55(3), 73.

Christopher, M. (2016). Logistics & supply chain management. Pearson UK.

Fernie, J., & Sparks, L. (2014). Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan page publishers.

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Heckmann, I., Comes, T., & Nickel, S. (2015). A critical review on supply chain risk–Definition, measure and modeling. Omega, 52, 119-132.

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Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and supply chain management. Cengage Learning.

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Rackley, J. (2015). Return on Investment. In Marketing Analytics Roadmap (pp. 71-85). Apress.

Rushton, A., Croucher, P., & Baker, P. (2014). The handbook of logistics and distribution management: Understanding the supply chain. Kogan Page Publishers.

Sawik, T. (2014). Optimization of cost and service level in the presence of supply chain disruption risks: Single vs. multiple sourcing. Computers & Operations Research, 51, 11-20.

Slack, N. (2015). Operations strategy. John Wiley & Sons, Ltd.

Stadtler, H. (2015). Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer Berlin Heidelberg.

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Wisner, J. D., Tan, K. C., & Leong, G. K. (2014). Principles of supply chain management: A balanced approach. Cengage Learning.