Case Study 2: Operate a Logistics Company EGN 5621 Enterprise Systems Collaboration Summer B, 2014

Logistics Game : Pedagogical Objectives Understand the importance of process management as a source of organization competitiveness. Learn how the ERP system supports business strategies Develop a hands-on understanding of the concepts underlying enterprise systems Experience the tangible benefits of enterprise integration firsthand Develop technical skills at taking decision using an enterprise software

Logistics Game In groups of at most 4 participants, each team has to operate a company selling dairy products. Using standard reports, participants must make business decisions in order to ensure the profitability of their operations.

Dairy Products

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

Products Details

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

One Price List in Distribution Channel 16 You may set up a price for each of your products. The price for each product will apply to all 3 regions.

You will have to consider transportation fees carefully in order to maximize your company’s profits. Transportation Fees Cost : 1000 € per PO Cost : 100 € per regional tranfer

Logistics Strategy You must select a logistics strategy to make your products available for sales through your regional storage locations. OR

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

Push Simulator will deliver the chosen quantity to your three storage locations every time in the defined number of days. If more stock in the main warehouse than required by the transfer, excess material remains at the main warehouse. If less material available in the main warehouse than required by the transfer, the generated stock transfers divided available stock, so that regions with higher stock transfer amounts receive more stock

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

Pull The system will deliver the balance between the target quantity and current stock quantity for each local storage every time according to your selected scheduling days. If there is enough stock in the local storage, then no transfers will be generated for the local storage and the exceeding quantity will remain in the main warehouse. In case there are less products available in the main warehouse, the generated stock transfers divide available stock so that the local storages with large gaps between current and target stock are prioritised.

Rules of the Game Each round will last 10 days Each PO costs €1,000 and each transfer from the main warehouse to a regional location costs €100 There is an interest charge There is no initial inventory for each product. No initial marketing expense End-of-round inventory is carried over to the next round. You may sell a product only if the stock is available through the regional storage location. You are competing against other teams. The objective is to maximize the profit.

Rules of the Game There are warehousing costs whenever the company’s total 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 suppliers: 1 – 3 days Lead time to customers: 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 product (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 Make sure each regional warehouse has the required stock needed to meet demand while reducing the delivery, the number of purchase orders, and warehousing cost. In order to compete, each company has a good operations strategy. Manager must coordinate their efforts timely, respond to market requirement/changes quickly, and use the ERP system effectively.

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

Job Aids (1/2)

Job Aids (2/2)

Login information Client: 495 Login: $# Where $ is your team letter And # is your number For Pilot run: $ = I, J, K, L For Real run : $ = M, N, O, P 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 were your first impressions? How did your operations strategy work? How was the communication during Round 1? What information was exchanged among teammates? Who made decisions in your team? Were you satisfied with the team organisation of your group?

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 communications during Round 2? How did your operations strategy work? What information was exchanged among teammates? Who made decisions in your team? Were you satisfied with the team organization of your group?

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 Rounds 3 - 6? How did your operations strategy work? What information was exchanged among team mates? Who made the decisions in your team? Were you satisfied with the team organisation of your group?

Questions? Did your role and relevance within your team changed from Round 3 to Round 6? How was a decision made? Based on your experience, what is an Entreprise system? How can an enterprise system tranform an organization?

Team Homework: (Due date -7/14/2014) 1.Presentation of performance analysis for case 2: Run a Logistics company (a hard copy and an electronic file in MS Power point) 2.A written report for Case 2 (a hard copy and an electronic file in MS Word))