Case Study 3: Operate a Manufacturing Company - II (Extension) EGN 5621 Enterprise Systems Collaboration (Professional MSEM) Fall, 2011

Corporate Roles Designation CEO Check Financial Statement Make investment for production Check summary sales report Check price market report Sales & Market Manager Check sales order report Check price market report Maintain and change market expense Change selling prices for finished goods 2 2

Corporate Roles Designation Production and Planning Manager Create planned independent requirement MRP run Release production orders Modify BOM Monitor production schedule Check product costs Check raw materials cost per production order MM Manager Convert purchase requisitions to purchase orders Track PO report MRP results display Check stock level Check inventory report 3 3

Tasks for the Manufacturing Case Study No Roles Functions Transaction Code 1 CEO Check financial statement F.01 Create GL Post (Investment) FB50 Check Price market report ZMarket Check Summary sales report ZVC2 Sales & Marketing Manager Check Sales order report ZVA05 Maintain marketing expense ZADS Change selling price for FG VK32 3 Production & Planning Manager Create planned independent Requirements MD61 Run MRP MD01 Release production orders CO41 Modify BOM ZCS02 Monitor production schedule ZCOOIS Check finished product cost ZCK11 Check RM cost per Prod. order ZKSB1 4 MM Manager Automatically generate POs ME59N Track PO report ZME2N Display MRP results MD07 Warehouse Management Check stock level MD04 Check Inventory report ZMB52 2

What’s New with Mfg Extension? Company can design own products based on specified rules Distribution channel 14 is available Company can make investment to improve production capacity Reduce set-up time Increase production capacity No starting inventory. Each company should do planning, run MRP, and convert purchase requisitions to Pos before starting game.

What’s New with Mfg Extension? Depreciation of fixed assets is counted Fixed overheads are counted Inventory storage cost for excess stock is counted

1. Develop New Products At beginning of the game, each company has six finished products with a preset recipe for each product. You can change the recipe of a product during the simulation by changing its bill of material with T- code ZCS02. During simulation, your company always has six BOMs of finished products. If your company still has inventory of the finished product, the system doesn’t allow you to change its BOM. Your new product must meet the guideline for recipes. When the system accepts your changes in BOM, it will change the description in the material master to match the new content and weight. 7 7

Muesli Manufacturing Association Label Regulation

List of Master Data to Create for the Simulation Alphanumeric codes   6 Finished products $$-F01 $$-F02 $$-F03 $$-F04 $$-F05 $$-F06 6 Raw materials $$-R01 $$-R02 $$-R03 $$-R04 $$-R05 $$-R06 4 Packaging materials $$-P01 $$-P02 $$-P03 $$-P04 2 Vendors V01 V02 6 Bill of materials 1 Work center $$ 6 Routings 3 x 6 price lists (DC 10, 12, and 14) 6 info-records and 6 source lists for raw materials V01-$$-R01 V01-$$-R02 V01-$$-R03 V01-$$-R04 V01-$$-R05 V01-$$-R06 4 info-records and 4 source lists for packaging materials V02-$$-P01 V02-$$-P02 V02-$$-P03 V04-$$-P04 1 profit center 1 coster center

Change BOM for New Product 10 10

Change BOM for New Product 11 11

2. Distribution 14 Available Only buy small boxes (0.5 kg) Less price sensitive Sensitive to advertising Payment delay of 5 to 15 steps Will have a stronger preference for 3 particular products during the simulation 12 12

3. Investment for Improvement of Production Capacity Reduce set-up time The default set-up time is 12 hours for changing product in your production line. If you want to keep product variety and wish to run small production batches, you can make investment to reduce the set-up time. The following table shows the set-up time as a function of your investment. If your investment is zero, the set-up time is 12 hours. If you invest 44,117.75, then the set-up time reduces to 10.5 hours. 13 13

Investment for Reducing Set-up Time 14 14

Investment for Reducing Set-up Time in the First Quater In the first quarter, every company must invest 5,000 euros to reduce set-up time. After the first investment, it’s your company decision if to make more investment. 15 15

Investment in SAP to Reduce Set-up Time Use T-code: FB50 G/L Account: 113300 (Weizen bank) D/C: credit Amount: 5,000 (first investment) G/L Account: 478000 (Lean manufacturing expense) D/C: debit Amount: 5,000 (first investment) Cost center: $$ 16 16

Investment for Reducing Set-up Time in SAP 17 17

Investment for Increasing Production Capacity Your company can make investment into production equipments to increase your production capacity. This may be your strategic weapon. When you start the simulation, you have 5 million euro production equipment with a production capacity of 21,000 boxes per day. 18 18

Increase Production Capacity For an investment of 100,000 euros you can increase production capacity by 400 boxes per day. In order to obtain a daily capacity of 25,000 boxes, you need to invest 1 million euros. Formula for capacity improvement: Total daily capacity = 21,000 + (0.004 x additional machinery investment). 19 19

Investment for Improving Production Capacity in SAP Use T-code: FB50 G/L Account: 113300 (Weizen bank) D/C: credit Amount: Your investment G/L Account: 11000 (Machinery & equipment) D/C: debit Amount: Your investment 20 20

Investment to Improve Production Capacity in SAP 21 21

4. No Starting Inventory. Each company should plan and complete the following steps before simulation: - Planning for finished products (T-code: MD61), - Run MRP (T-code, MD01), and - Convert purchase requisitions to Purchase orders (T-code:ME59N)

Create Planned Independent Requirement for 6 Finished Products (MD61)

Create Planned Independent Requirement for 6 Finished Products (MD61)

Execute MRP

Create Purchase Orders from Purchase Requisitions (ME59N)

Convert Purchase Requisitions into Purchase Orders

Convert Planned Orders to Production Orders After simulation started and you received required raw and packaging materials, your planning manager needs to convert planned orders to production orders (T- code: CO41)

Collective Conversion of Planned Order (CO41)

Release Production Order

Release Production Orders (CO41)

5. Depreciation of fixed assets Depreciation of fixed assets is counted (ZCK11) Annual depreciation is calculated as 5% of building value and 10% of machinery value at 5 million.

5. Depreciation of fixed assets Depreciation of fixed assets is counted (ZCK11)

6. Fixed Mfg Overhead Fixed mfg overhead is counted (T-code: ZCK11)

7. Inventory Storage Cost Each team has 2 warehouse storage areas: Finished product (02) - space for 250,000 boxes Raw materials (88) - space for 250,000 kg of raw materials and space for 500,000 boxes and space for 500,000 bags Additional warehouse space can be rented: 100,000 boxes of finished products (or part thereof), @ € 200/step (less than € 0.01 per box per step) 100,000 kg (or part thereof), @ € 350/step (more expensive because it's raw food product) 100,000 boxes AND/OR bags (or part thereof), @ € 50 step The cost of additional storage will be automatically billed, and paid immediately.

User Menu for Mfg Extension

User Menu for Mfg Extension

Participant’s Job Aid & Menu for Mfg Extension

Participant’s Job Aid & Menu for Mfg Extension

Data Analysis

Tools to Analyse Data Tools to analyze data range from simple to complex Reports and graphs Advanced statistics forecasting models Advanced optimization models and tools Having the right people matters Having data modeling 41

A Large Quantity of Quality Data All analytic methods feeds on data – in large quantity and good quality Having good data can be turned into a competitive advantage Integrated organizations have a lot of data available, they must learn to exploit it 42

Interpreting Data Skills are required to create appropriate graphs, reports, and statistical analysis Skills are required to interpret correctly graphs, reports and statistics Skills are required to make the appropriate decisions from the analytics 43

Using Queries to Analyse Data Queries contain 2 basic elements: Key Figures, KPI Dimensions. Margins as a function of time Sales by country 44

An Example Dimensions Dimensions Measures At the heart of a 45

Elements of a Info Cube Key figures Dimensions 46

Types of Measures Additive : it makes sense to sum the measures across all dimensions Quantity sold across Region, Store, Salesperson, Date, Product … semi additive : additive only across certain dimensions Quantity on hand is not additive over Date, but it is additive across Store and Product non additive : cannot be summed across any dimensions A ratio, a percentage A measure that is non additive on one dimension may be the object of other data aggregations Average, Min, Max of quantities on hand over time 47

How DW Differs from a Transactional DB Characteristic DB DW Operation Real-time, transactional Decision support, strategic analysis Model Entity-Relationship Star Schema Redundant data Designed to avoid Permitted Data Raw data, current Aggregated, Historical data, # of users Many Few Update Immediate Deferred Calculated fields None stored Many stored Mental model Tabular Hypercube Queries Simple, some saved Complex, many saved Operations Read / Write Read Only Size Go (Gigabytes) To(Terabytes) 48

Doing Business Intelligence (BI) with ERPsim Data in MS Access

How to use ERPsimData.accdb Step 1: Download the ACCESS file ERPsimData.accdb from the site provided by your instructor Save the file ERPsimData.accdb on your hard drive You may open it to check its content 50

How to use ERPsimData.accdb Step 2: Use Pivot Table or normal table in Excel to analyze data Open an Excel file In the Excel file, on the “Data” tab, click on the “From Access” button. Look for ERPsimData.accdb on your hard drive Select the query or table you want to analyze 51

How to use ERPsimData.accdb Step 2 (cont’d): Select Pivot or normal Table report Select the fields you want to use in your report 52

Exploring Data

Plant A: An overview 54

Plant B : an Overview 55

Plant C an Overview 56

Trying to Maintain Stocks for All Products 57

Large Variations in Sales per Step 58

Small Production Runs 59

Long production runs 60

Manipulating Graphs

Key Figure or KPI Y-dimension 62

X (Row) dimension 63

Multiple Series: Column Dimension 64

Graph type: Scattered Bars 65

Graph Type: Scattered Lines 66

Graph Type: Lines 67

Graph Type: 3D Bars 68 68

An example 69

BI Questions

BI Question 1 Current assets include (i) cash (ii) receivables (iii) raw material inventory (iv) finished product inventory How well have the teams performed in managing the current assets over time? Hint: Use the financial data 71 71

BI Question 2 Did the winning team bring their highest margin product to market first? Did they charge a price premium while they were first to market? Can you see the impact of a competitor entering the market? Hint: Use the operational data 72 72

BI Question 3 One objective of materials management is to make sure that raw materials are available for production when needed Which company has managed this process well as shown by having the largest variety of products in stock? Hint: Use inventory data by products over time 73 73

BI Question 4 Companies may have different strategies for production management Some may prefer long productions to minimize setup losses, while others may prefer shorter runs to respond more quickly to market opportunities Can you determine what strategies were used by each team? Where there any production disruptions? Hint: Use production data over time and products. Filter for each individual company. 74 74

BI Question 5 Companies want to maximize sales If sales are too high, the price may be too low, and vice versa Can you tell sales is affected by prices? 75 75

BI Question 6 Who owns the market (as measured by market share) for each product? Hint: Use sales data filtered by product with drilldown across plant Use a stacked area chart 76 76

Game Layout 30 steps 30 min

Rules of the game Each round will be of 30 steps (approx 1 min per step) End-of-round inventory is carried over to the next round You can sell a product only if you have it in stock You compete against the other teams and importers Your objective is to maximize profit

Login Information Client 265 Login : ext_$# $ = Team, # = User 1 to User 4 Password: ERPSIM