SCMission

2023
CIRCULAR SUPPLY CHAIN
ROUND 3 CASE
1. INTRODUCTION

"CreamWorks" has been a leading player in the Australian dairy industry for more than two
decades, with a robust global presence. The company has established a reputation for
producing top-quality dairy products, but recognizes the need to evolve its business
practices to remain competitive in the long term. In response, "CreamWorks" is exploring the
circular economy model as a means of eliminating waste, optimizing resource use, and
enhancing overall efficiency.

By adopting circular practices, "CreamWorks" can reduce its environmental impact, lower
costs, and create value for stakeholders. The circular supply chain model is particularly
appealing given the mounting pressure from consumers, regulators, and investors to adopt
sustainable practices. By implementing circularity, "CreamWorks" can not only address
these concerns but also improve its reputation.

To this end, the company's leadership has tasked a cross-functional team with designing a
plan to establish a circular system. The initial phase of the plan will be piloted in Australia,
and your team has been charged with developing the necessary decisions to achieve
circularity within the supply chain.

2. CURRENT SITUATION
Product mix:
The product portfolio of “CreamWorks” is quite solid with 36 products belonging to 5
different product subcategories:
● Fresh Cream: 10 products
● Fresh White Milk: 12 products
● UHT Cream: 6 products
● UHT Flavoured Milk: 1 product
● UHT White Milk: 7 products

More detailed information regarding the products can be found in the attached file under
“Product Master”

Suppliers:
CreamWorks currently sources plastic bottles and cartons from two separate suppliers that
also offer to recycle used products. CreamWorks receives a discount in return if it transports
to-be-recycled material itself.

For now, each carton and plastic bottle have 5% and 10% recycled content respectively. By
implementing this plan, this rate can be increased to 70%. In the attached file, you will find
the weight of each packaging and the associated CO2 for sourcing them.
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Logistics Network:
To establish a circular system, "CreamWorks" plans to construct collection points throughout
the country to gather empty glass and plastic bottles as well as cartons. These empty
packages will be collected while dropping off shipments to retailers. The company has
decided to transport the plastic bottles and cartons back to the packaging suppliers for
recycling, while glass bottles will be cleaned and reused at the Plants.

To facilitate this process, "CreamWorks'' will need to carefully choose the location, capacity,
and associated CO2 and costs for each collection point. Attached to this document is a file
that includes the longitude and latitude of each point, as well as the relevant information on
capacity, CO2, and costs. This data will be crucial in determining the optimal placement of
collection points, as well as ensuring that the circulatory system is cost-effective and
environmentally sustainable.

You and your team will analyze this data carefully and recommend the best collection points
(including quantity and capacity) to be constructed to enable "CreamWorks" to achieve
circularity within its supply chain.

Circular KPIs:
To have a better assessment of this implementation, the team must follow these focal KPIs,
established by the World Business Council for Sustainable Development:

% material circularity
company/business
unit/production facility

% circular inflow total % circular outflow total

(% circular inflow A* mass A) (% circular outflow D* mass D)
+ (% circular inflow B * mass B) +(% circular outflow E * mass E)
+ (% circular inflow C* mass C) +(% circular outflow F * mass F)
total mass A+B+C total mass D+E+F
company/business unit/facility level
product/component/material level

% circular inflow X % circular outflow X

% renewable % recovery potential X*
or % non-virgin content % actual recovery

% recovery potential X % actual recovery X

YES - full potential => 100% standard recovery rates or regional
NO - no potential => 0% recovery rates or manual recovery
some potential => X% or % rate + justification
biodegradable

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In which, the % material circularity equals the average percentage of circular inflow total and
circular outflow total.

Alternative calculation method % circular inflow:

% circular inflow
(mass of renewable inflow + mass of non-virgin inflow) x 100%
total mass of all inflow

GHG emissions:
The impact on GHG emissions is calculated using the following formula for the absolute
amount of CO₂ equivalents:

(Mx x GHGxr) - [ (Mxr X GHGxr) + (Mxv x GHG xv)]

Or the following formula for a percentage value:

(Mx x GHGxr) - [ (Mxr X GHGxr) + (Mxv x GHG xv)]

(Mxr X GHGxr) + (Mxv x GHG xv)

Mx : Total weight material X

GHGxr: GHG emission factor recycled material X
Mxr: Weight of recycled content material X
Mxv: Weight of virgin content material X
GHGxv: GHG emission factor virgin material X

The result is the percentage of GHG emissions saved if the material were made of a
determined percent of recycled materials as opposed to the GHG emissions resulting from
its current composition.

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3. FIRST TASK
Following the attached file, there are some small cleaning exercises for you and your team to
do as the initial phase of doing exploratory analysis. Specifically, there are some
inconsistencies in the master data that need to be consolidated or removed.

Since the customers disperse across the country, clustering emerges as a necessary task for
“CreamWorks” to implement the collection points plan. This is to enhance the efficiency of
routing (reduces transportation costs), and customer service (brings collection points closer
to customers), and to build adequate capacity for each cluster. Therefore, the next step is to
conduct the analysis to cluster customers. This can be done by using the K-means clustering
method. Be aware that, for this case, the number of clusters can differ depending on how
you and your team perceive what is optimal. This analysis can be done using Programming
Languages, including Python or R, or even Microsoft Excel.

4. SECOND TASK
After achieving the clusters, you and your team will choose how to set up collection points
(quantity and capacity measured in the number of pallets) for each cluster. This might be
based on the weekly volume of each cluster since these empty packages would be
transferred to plants/suppliers in a weekly manner. Then, you should propose the percentage
of circular inflow, related costs, and CO2 emissions (incurred from building collection points
and how much GreenHouse Gas is reduced) if this is applied to the 2022 sales data.

Be aware that, from the retailer's side, it is predicted that if this plan is implemented, the
package's return rate would be 50% of the total sales volume, and they’re returned in carton
boxes. The capacity of collection points in total must cover all of those returned packages.

5. THIRD TASK
Once finalized the optimization study you will have to present to the company Leadership the
result of the scenario analysis.

Besides the key metrics that you use to evaluate your final proposition, don’t forget to
highlight business aspects that are relevant to the company's Leadership, for example:
- What other benefits come from applying the new strategy in the expected context of high
uncertainty?
- What additional measures would you recommend to further increase the circularity of the
business profitability?
- What strategy would you recommend moving forward?

Please, prepare a PowerPoint deck (submitted in PDF format), in English, of a maximum of

10 slides, meant to be presented in the final round. Be aware that in the short time available
and with an audience that is not familiar with all details and calculations, you are concise and
effective in sharing your key ideas and results.
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6. HAND OVER MATERIAL

There are two attached files:

- SCMission 2023_Round 3 Data, with the inputs for the analytical problem
- Case_Answer, with the template to answer the First and Second Tasks questions

You will have to submit the “Case_Answer” file with the gray cells properly filled, without
changing the tab layout, or format, or adding any information, comment, or result outside the
gray cells. The “SCMission 2023_Round 3 Data” file is not meant to be edited.

You must add any necessary tab with the exercise calculations in the same “Case_Answer” file.

Furthermore, you and your team are allowed to submit any supplemental material (Jupyter
Notebook, Rmarkdown report, etc.), but this would not be the focus of the scoring process*.

The material will be evaluated based on the following parameters:

● Precision (over expected answer)
● Clarity (calculation tabs to support the answers)
● Accuracy

*Any additional materials provided by the team will be reviewed at the discretion of the jury
and due to a large amount of documentation provided, might not be reviewed at all.