Overview and Case Study 2: ERPsim Manufacturing (I) EGN 5621 Enterprise Systems Collaboration Fall, 2011

Objective The objective of the Manufacturing introductory ERPsim is to provide a quick hands-on experience of an integrated business process through an ERP manufacturing ERPsim, which combines basic operation functions, such as planning, sales, production, procurement, marketing, investment, and financial accounting for learning how to make business strategy and business decisions.

Corporate Roles Designation CEO (Team Leader) Watch financial statement Price market report Check summary sales report Check sales and market data Check inventory Report Marketing Manager Marketing Expense Planning Sales Manager Change price MM Manager Forecast – create planned indep. Req. MRP run Automatic generation of POs Purchase Order Tracking 3 3

Operations in the cash-to-cash cycle

The Virtual Business Environment Simulation of a market Automation of administrative tasks Simulation of the passing of time 5

Organizational elements

Organizational elements

Organizational elements

Organizational elements

Data model of the main master data used in the simulation game

Definition of master data (1/2)

Definition of master data (2/2)

List of master data to create for the simulation

Muesli Cereals Wheat Oats Nuts Raisins Blueberries Strawberries

Your 6 products 40% wheat 40% oat 20% nut 1 box 1 bag 40% wheat 20% raisin 1 box 1 bag 40% wheat 40% oat 20% blueberry 1 box 1 bag 50% wheat 50% oat 1 box 1 bag 35% wheat 35% oat 10% raisin 10% nut 5% strawberry 5% blueberry 1 box 1 bag 40% wheat 40% oat 20% strawberry 1 box 1 bag

Data model of product Y$$-F06

German market North West South DC10: 2 retailers DC12: 19 retailers

Muesli Manufacturing Association Label Regulation

Input Cost at low seasonal price

Number of stores by geographical area

DC10 Hypermarkets Buy only large boxes (1 kg) Payment delay of 20 steps More sensitive to price Less sensitive to advertising Will have a stronger preference for 3 particular products during the simulation

DC12 Grocery chains Buy small boxes (0.5 kg) and large boxes (1 kg) Payment delay of 10 to 15 steps Will have a stronger preference for 4 particular products during the simulation

DC14 Independent grocers (will be used in Extension ERPsim) 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

Number of retailers per Locations

Risk premium on credit ratings

Production improvements (will be used in extension ERPsim)

Warehousing cost automatically charged Each team has 3 warehouse storage areas: Finished product - space for 250,000 boxes Raw materials - space for 250,000 kg Packaging - space for 1,000,000 boxes and space for 1,000,000 bags Additional warehouse space can be rented: 100,000 boxes (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

Fixed costs per week

Review of the major rules You may not change the recipe of a product if you are still carrying inventory Customers preferences do not change throughout the game, hence you may learn from their past behavior The company displaying the highest shareholder’s equity at the end of the simulation wins the game You must behave ethically at all times The end of game inventory will be value at cost price in the final balance sheet. Therefore, you shouldn’t sell under cost at any time during the game.

Elements of a winning strategy Use the ERP system efficiently Do not run out of stock Delays, production capacities and liquidity constraints are important elements of the game Exploration and exploitation Team organization is more important than you think

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

Participant’s job aid

Let’s get started! Create your team : Max 4 persons : User 1 to User 4 Up to 26 company : A to Z Log in using user name and passwords giving by your teacher

Login information Client 265 Login : intro_$# $ = Team, # = User 1 to User 4 Password: ERPSIM Login information

SAP Menu & Navigation Show some navigation. Begin by changing the setting to view the transaction codes. Browse the SAP menu to illustrate the depth of the system.

Introductory Game: Round 1 30 min 30 steps

Cost, inventory & initial pricing Material $$-F01 $$-F02 $$-F03 $$-F04 $$-F05 $$-F06 Name Nut Muesli 1.0 kg. Blueberry Muesli Strawberry Raisin Muesli Original Mixed Fruit Raw material Cost € 1.53 € 1.97 € 1.38 € 1.36 € 1.76 Standard cost € 2.48 € 3.09 € 2.50 € 2.65 € 2.89 Initial price 10 12 € 4.24 € 4.49 € 5.18 € 5.43 € 3.92 € 4.17 € 3.87 € 4.12 € 4.75 € 5.00 Initial stock 100,000

The Introductory game: Round 1 (30 steps- days) You need to maintain the price of your 6 products and invest in marketing. What do you need to know in order to make that decision ? You need to know how to : Maintain price list See available stock Monitor sales orders Monitor competitors Monitor your profit !

Participant’s job aid & Menu

Check product costing

Maintain Prices for DC 10 & 12

Marketing expense

Stock in material overview

Check sales summary report

Check sales order report

Check market report

Check financial statements

The Introductory game: Round 1 (30 steps – 30 days) We start the simulator for 30 steps Change the prices for Distribution Channel (DC) 12 and 10. The current price are 3 euros above cost of goods.

Introductory game: Round 2 30 min 30 steps

Participant’s job aid & Menu

Release production order

Check production schedule

Parameters of the game Present briefly the parameters of the game. Mention that the parameters will be different in Game 2.

The Introductory game: Round 2 (30 steps - days) We start the simulator for 30 steps

Introductory game: Round 3 30 min 30 steps

Participant’s job aid & Menu

Raw material cost per PO 58

Forecasting

Execute MRP

After the MRP run

Convert purchase requisitions into purchase orders

The Introductory game: Round 3 (30 steps – 30 days) We start the simulator for the last 30 steps

Track purchase orders

Profit center analysis

Liquidity planning