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

Case Study 2:Case Study 2:

Operate a Logistics Company Operate a Logistics Company

EGN 5621 Enterprise Systems Collaboration

Summer B, 2014

Logistics Game : Logistics Game : Pedagogical ObjectivesPedagogical ObjectivesUnderstand 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 GameLogistics GameIn 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 Dairy Products

Logistics Game DesignLogistics Game Design Each company owns a main warehouse which

receives and stores products you have purchased from a dairy cooperative.

Products DetailsProducts Details

The Market’s PreferencesThe 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 One Price List in Distribution Channel 16Channel 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 FeesTransportation Fees

Cost : 1000 € per

PO

Cost : 1000 € per

PO

Cost : 100 € per regional tranferCost : 100 € per regional tranfer

Logistics StrategyLogistics Strategy You must select a logistics strategy to make

your products available for sales through your regional storage locations.

OR

A Push Logistics StrategyA 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.

PushPushSimulator 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 StrategyA Pull Logistics Strategy

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

PullPullThe 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 GameRules of the GameEach round will last 10 daysEach PO costs €1,000 and each transfer from

the main warehouse to a regional location costs €100

There is an interest chargeThere is no initial inventory for each product.No initial marketing expenseEnd-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 GameRules of the GameThere 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 daysLead time to customers: 1 – 3 days

Activities in Each CompanyActivities in Each CompanyCreate 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 CompanyActivities in Each CompanyMake 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 layoutGame layout

10 days10 min

10 days10 min

10 days10 min

Round 1

Round …

Round 6

Job Aids (1/2)Job Aids (1/2)

Job Aids (2/2)Job Aids (2/2)

Login informationLogin information

Client: 495

Login:$#

Where $ is your team letterAnd # is your numberFor Pilot run: $ = I, J, K, LFor Real run: $ = M, N, O, P

Password: ERPSIMYou will have to change your password the first time you enter

SAP Menu & NavigationSAP Menu & Navigation

Top Menu: Extras / Settings / Display technical names

Logistics Game: Logistics Game: Round 1Round 1

Participant’s job aid & MenuParticipant’s job aid & Menu

ForecastingForecastingFirst Screen

Second Screen

Execute MRPExecute MRP

Convert purchase requisitions into Convert purchase requisitions into purchase orderspurchase orders

Track purchase ordersTrack purchase orders

Logistics Transfer PlanningLogistics Transfer Planning

Stock in material overviewStock in material overview

Maintain Prices for DC 16Maintain Prices for DC 16

16

Check sales summary reportCheck sales summary report

Check financial statementCheck financial statement

The Logistics Game:The Logistics Game:Round 1 (10 days)Round 1 (10 days)

We start the simulator for 10 days

Debriefing:Debriefing:Round 1Round 1

Questions?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: Logistics Game: Round 2Round 2

The Logistics Game:The Logistics Game:Round 2 (10 days)Round 2 (10 days)

We start the simulator for 10 days

Debriefing:Debriefing:Round 2Round 2

Questions?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: Logistics Game: Round 3Round 3

The Logistics Game:The Logistics Game:Round 3 (10 days)Round 3 (10 days)

We start the simulator for the last 10 days

Debriefing:Debriefing:Round 3 - 6Round 3 - 6

Questions?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?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: Team Homework: (Due date -7/14/2014)(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))