The story of Eurofruit: a parable of resources and scheduling
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Transcript of The story of Eurofruit: a parable of resources and scheduling
Wholesale Telecoms Services Fruit Delivery
This presentation was originally given by Martin Geddes at a client customer event in February 2014. The author emphasises that Eurofruit is a fictional entity, and should not be confused with American Tangerine & Tomato, Lychee3, Global Cucumber, or
other well-known wholesale fruit delivery service providers.
Eurofruit Wholesale engages in the delivery of fruit from the UK to Belgium, contracted by
retail fruit suppliers
That’s where Eurofruit’s wholesale fruit delivery division is initially contracted to onward-ship the fruit…
…taking it to its final destination via contracts with other wholesale and retail fruit delivery networks.
Royalty eats succulent fresh fruits, and must never go without, or be old & squishy (let along have fungus).
Regular people get processed fruit products (tarts, cakes), occasional seasonal shortages are
OK. Can be squishy, but no fungus.
Rogues ferment their fruit and turn it into hard liquor, they’ll take whatever they can make. Can
have fungus, as long as it’s below toxic levels.
Customer satisfaction
()
Only royalty can afford fruit, and even they can’t rely on its freshness & availability
The result?
()
Overheads are being spread over more fruit. High volume means rotten fruit can just be discarded.
Eurofruit’s profit?
€ Same basic business model,
but with much bigger volumes. The fixed allocation of fruit to sailings means the ships are often less than full, and the
fruit rots on the trees and in transport.
Internal use only Slide
43
The merchant innovates in the business model, by adding fruit shipment aggregation,
warehousing, and palette packing.
The contract
High average daily weight delivered
Variable timing
Risk belongs to customer
Low, low prices
Customer satisfaction
At first, everyone is absolutely delighted with this innovation. The ships are all packed with fruit!
Eurofruit’s profit?
€ Profits grow, as the capital resource is being used more intensively, and fruit
has enough freshness…
Customer satisfaction
As demand increases, the high end of the market is not being serviced, as sometimes all the fruit has fungus
Customer satisfaction
As the best customers lose faith in Eurofruit, only the customers & fruits with high fungus tolerance remain
Customer satisfaction
This brings back some of the higher-paying customers and more perishable fruits
Their valuable insight is that by carefully selecting which palettes to put on which ships and when, you could
maintain adequate freshness for more fruit. The rot could be re-allocated to where it did least harm.
The contract
Minimum average daily quantity
Multiple timing levels
Risk belongs to customer
Price to freshness
Customer satisfaction
The ‘fast fruit lanes’ ensured that freshness was kept for the segments who were willing to pay for it
The mathematicians looked at how the whole end-to-end chain of fruit
delivery worked, and where the fungus was found.
They came up with ‘fruit transport agreements’ that told everyone exactly
how fresh the fruit needed to be at every stage of its journey.
They also devised different ‘classes of freshness’, with a special low-cost delivery class for mouldy fruit to satisfy
the Rogue market.
The contract
High quantity
Guaranteed timing
Risk belongs to wholesaler
Priced to value Value-added is in removing rot risk from customers.
We do this by making better ‘rot trades’ (at all timescales)
Customer satisfaction
At last it was possible to sustainably service all of the different fruit market segments (ho ho)
Demand is heterogeneous
2-way video, small cells, gaming
Interactive web, file downloads
Storage Area Networks, CDN pre-caching
Willingness to pay varies
Critical infrastructure, safety-of-life
Low-end consumer
Enterprise SMB SoHo
Our reality today
() ()
We have a variety of products that are able to satisfy some of the market needs, often at high cost
Those gaps mean there is an opportunity for growth
By using better scheduling to align supply and demand, we can both
deliver better experiences, and use resources more efficiently
Our three challenges
Marketing Characterise demand & sell assurance
Design Fit-for-purpose supply chain with trading space
Operations Manage QoE hazard space and exploit trades
Thank you
Martin Geddes www.martingeddes.com [email protected]
If it was easy, everyone would already be doing it. If you want to learn more about how to express ‘performance budgets’ and measure, model and manage that digital supply chain, then please do get in touch.