Case Study I EIN 6133 Enterprise Engineering Fall, 2015

Operate a Distribution Company (Operations & Trial Run)

Teams Each time should have 4-5 participants. Each team operates a bottle distribution company. Participants make business decisions to ensure the profitability of their operation, using standard reports.

The (German) Market North 45 retailers South 38 retailers West 40 retailers 6 products (boxes of 12x1L and 24x500mL) 3 areas with distinct marketing accounts One distribution channel: 18 Market size of about € 6,000 per company per s tep

The 6 Products Product CodeProduct DescriptionUnits in boxCost of boxes $$-B011L ClearPure12 bottles $$-B021L Spritz12 bottles $$-B031L Lemon Spritz12 bottles $$-B04500mL ClearPure24 bottles $$-B05500mL Spritz24 bottles $$-B06500mL Lemon Spritz24 bottles 22.99

The Game Layout Design 20 steps 20 min 20 steps 20 min 20 steps 20 min

Rules of the game  Each round will be of 20 steps (a bit more than 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

ABC of the Enterprise system  An enterprise system is built around an integrated database  A system such as SAP contains tens of thousands of data tables  When a user creates, changes or views data in the system, he or she performs a transaction  Data changed or created by one user can be exploited by all other users in the same team (ex. reporting, tracking, execution of orders, etc.)  All transactions are traceable, transactions with financial impacts can be reversed, never erased

User interface Users interact with the enterprise system through transactions. A large number of pre-programmed transactions exist in SAP Each transaction has a transaction code (T-code) – one can call a transaction if one knows the transaction code The SAP menu allows to browse and find the desired transaction One can create a user menu or a list of favorites with the commonly used transactions

SAP Menu & Navigation Extras / Settings / Display Technical Names

Reports and queries Reports and queries are transactions that allow users to view existing data A typical query is performed as follows: In the first page of the transaction, you must enter the selection criteria for the query (ex. Company code, product code, etc.) Then, click on to execute the query A table containing the requested data will appear The display and layout can sometimes be modified

Entering new data Some transactions are designed to change or create new data (change forecast, release purchasing orders, change sale price, etc.) The interface varies according to data required by the system The system will not allow you to save information if all the compulsory fields have not been filled You must save/release/confirm before exiting the transaction

Other useful buttons Use the navigation buttons to go back or get out of a transaction You can open up to 6 sessions. Click on to open a new session Delete, search, select all, view, enter.

Participant’s job aid

SAP ERPsim Server, and Client for Distribution Server: dijon Client: 520 Application Server: dijon.cob.csuchico.edu System ID: DIJ System #: 41

SAP ERPsim Server, and Client for Distribution

Getting Started: Set up teams: Companies : A to F for Pilot Run and G to L for real persons in a team Userid: $ # ◦ Where ◦ $ = Assigned team letter, ◦# = User 1 to User 5 Password: ERPSIM

Login information Client = 520 Login: $ # Where $ = Team, # = User 1 to User 5 Password: ERPSIM You will have to change your password the first time you enter

The Distribution Game: Round 1 (20 steps) Now start the simulator for 20 steps

20 min 20 steps Distribution Game: Round 1

Check initial inventory

Check Financial Statement

Check Initial Financial Statement

The Distribution Game: Quarter 1 (20 virtual steps) Initial Financial Status: ◦11000Fix Assets250,000 ◦70000Common Stock(500,000) ◦113300Bank Cash Account146,060 ◦792000Finished Goods103,940

Cost, inventory & initial pricing Material$$-B01$$-B02$$-B03$$-B04$$-B05$$-B06 Name 1L ClearPure1L Spritz 1L Lemon Spritz 500mL ClearPure 500mL Spritz 500mL Lemon Spritz Size1L 500mL Number of bottles in package Cost €11.99 €14.99 €16.99 €19.99 €22.99 Initial price €14.99 €17.99 €19.99 €22.99 €25.99 Initial stock1,000

The Distribution Case: Round 1 (20 steps) You need to determine: 1) prices of your 6 products, and 2) expense in marketing for 6 products in three regions. Need to know the following in order to make decisions: ◦Maintain price list ◦See available stock ◦Monitor sales orders ◦Monitor competitors

Participant’s job aid & Menu

Maintain Prices in DC 18

Marketing expenses

On marketing Enter your daily marketing budget for each product and for each region The impact of marketing in one region depends on your share of all marketing expenses in this region Marketing induces customers to find your product “more desirable” The daily marketing budget can be changed at any time

Stock in material overview (in your plant)

Check Detailed Sales Order report (in Your Company Code)

Check sales order report Show summary of sales order by products in your company code.

Check market report (for All Company Codes)

20 min 20 steps Distribution Game: Round 2

It’s time to replenish ! You need to replenish. Replenishment will allow you to purchase the same quantity that you have sold. Material$$-B01$$-B02$$-B03$$-B04$$-B05$$-B06 Name 1L ClearPure1L Spritz1L Lemon Spritz 500mL ClearPure 500mL Spritz 500mL Lemon Spritz Initial forecast1,000 Replenishment lead time Up to 3 steps

Participant’s job aid & Menu

Create Planned Ind. Requirements

Execute MRP

After the MRP run

Convert purchase requisitions into purchase orders

Track purchase orders

The Distribution Game: Round 2 (20 steps) Now start the simulator for 20 steps

20 min 20 steps Distribution Game: Round 3

It’s time to replenish ! You need to replenish. Change your forecast to adapt the replenishment levels to your needs What do you need to know in order to make that decision ? Material$$-B01$$-B02$$-B03$$-B04$$-B05$$-B06 Name 1L ClearPure1L Spritz 1L Lemon Spritz 500mL ClearPure 500mL Spritz 500mL Lemon Spritz Initial forecast1,000 Replenishment lead time 3 steps

Participant’s job aid & Menu

Forecasting

The Distribution Game: Round 3 (20 steps) Now start the simulator for the last 20 steps

Cash management You started with 146,060 in cash You can reimburse your bank loan at anytime and save on interest payment You can use all your cash to stock products, but … If you run out of cash, your bank loan will be extended but you credit rating will go down and your interest payments will go up Holding to much stock reduce your ability to response to customers’ preferences 51

Premium on credit ratings Cre dit ra tings Risk Premium AAA0.00% AA+ AA- A BBB+ BBB BBB- BB+ BB CC 10.00%

Check financial data 53

Analysis of Your Distribution Operation