Operate a Logistics Company EGN 5621 Enterprise Systems Collaboration (Professional MSEM ) Fall, 2011

Objectives: To understand the practice side of running a logistics operation. To learn how the ERP system is used to support business strategies To develop decision making skills using an enterprise software To appreciate the tangible benefits of enterprise integration firsthand

The Logistics Game In groups of 5 participants, each team has to operate a company selling dairy products. Using standard reports, participants must make business decisions in order to optimize the profit of their operations.

Six Dairy Products

Products Details

Logistics Operation Design Your company owns a main warehouse which receives and stores products you have purchased from a dairy cooperative.

The Market’s Settnigs Each region has unique preferences related to the products it wishes to purchase from your company. Preferences change every game.

One Price List in Distribution Channel 16 You will need to set-up prices for your products. The price for each product will be applied to all 3 regions.

You will have to manage transportation costs carefully as they negatively affect your company’s profit. Transportation Costs Cost : 1000 € per PO Cost : 100 € per regional tranfer

Logistics Strategy You must determine a logistics strategy in order to make your products available for sales through your regional storage location. OR

Push Logistics Strategy A Push strategy specified the quantity to be delivered of each product to each area and the number of days between deliveries.

Push Logistics Strategy The simulator will deliver the specified quantity to the three regional storage locations, as defined in the delivery interval. If the stock in the main warehouse is more than the required quantity, excess material remains at the main warehouse. If the stock in the main warehouse is less than the specified for transfer to the three regional storage locations, the available stock will be divided proportionally according to the specified quantity for each region, such that more stock will be sent to the region with a higher specified quantity

The Pull Logistics Strategy A Pull strategy specified the target quantities for each product in each area and the number of days between deliveries.

Pull The simulator will deliver the balance between the target quantity and current stock quantity at each local storage every time according to your selected scheduling days. If there is enough stock in the local storage, then no transfers is generated for the local storage. If the main warehouse does not have enough stock to meet a need, available stock will be divided proportionally according to the generated stock transfer for each regional storage location, such that ones with a larger gap between current and target stock will receive more transfer.

Rules of the Game Each round will last 10 days (a bit more than one minute per day) No initial inventory for each product. End-of-round inventory is carried over to the next round. You may sell a product only if the stock is available at each regional storage location. You are competing against other teams. Your objective is to maximize profits.

Rules of the Game There are warehousing costs whenever the company’s total inventory (inventory in both the main warehouse and three local storages) exceeds 4,000 boxes. The cost is 100 € per day for each additional 100 boxes exceeding 4,000. Market size: About € 6,000 per company per day. Lead time from supplier: 1 – 3 days Lead time to local locations: 1 – 3 days

Activities in Each Company Create planned independent requirement for each finished product (MD61) Run MRP (MD01) Covert purchase requisitions to purchase orders (ME59N) Stock transfer (ZMb1B) Maintain prices for each products (VK32) Check reports ◦Purchase order report (ZME2N) ◦Inventory report (ZMB52) ◦Summary sales report (ZVC2) ◦Sales report (ZVA05) ◦Financial statement (F.01)

Activities in Each Company Must make sure that the regional warehouses have the required stock needed to meet demand while reducing the delivery, purchase order numbers, warehouse cost. In order to excel, each company have a good strategy, all departments must coordinate their efforts, correctly and quickly respond to market requirement/changes, and use the ERP system effectively.

Game layout 10 days 15 min 10 days 15 min 10 days 15 min Round 1 Round … Round 6

Job Aids (1/2)

Job Aids (2/2)

Login information Client: 530 Login: logistics_$# Where $ is your team letter And # is your number Password: ERPSIM You will have to change your password the first time you enter

SAP Menu & Navigation Top Menu: Extras / Settings / Display technical names

Logistics Game: Round 1

Participant’s job aid & Menu

Forecasting First Screen Second Screen

Execute MRP

Convert purchase requisitions into purchase orders

Track purchase orders

Logistics Transfer Planning

Stock in material overview

Maintain Prices for DC 16 16

Check sales summary report

Check financial statement

The Logistics Game: Round 1 (10 days) We start the simulator for 10 days

Debriefing: Round 1

Questions? What are your first impressions? How was the communication during Round 1? What information was exchanged among teammates? Who made decisions in your team? Were you satisfied with the organization in your company?

Logistics Game: Round 2

The Logistics Game: Round 2 (10 days) We start the simulator for 10 days

Debriefing: Round 2

Questions? How was the communication during Round 2? What information was exchanged among teammates? Who made the decisions in your team? Were you satisfied with the organization in your company?

Logistics Game: Round 3

The Logistics Game: Round 3 (10 days) We start the simulator for the last 10 days

Debriefing: Round 3 - 6

Questions? How was the communication during Round 3 - 6? What information was exchanged among teammates? Who made the decisions in your team? Were you satisfied with the organisation in your company?

Questions? Did your role and relevance within your team changed from Round 3 to Round 6? How were the decisions made? Based on your experience, how well did your operation make use of the entreprise system? How could an enterprise system transform company’s organization and operation?