Case Study 2: Operate a Logistics Company EIN 6133 Enterprise Engineering Fall, 2015

Case Study 2:Case Study 2:

Operate a Logistics Company Operate a Logistics Company

EIN 6133 Enterprise Engineering

Fall, 2015

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 with 4 - 5 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

Market’s PreferencesMarket’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 : 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

PushPushIn the Logistics case, you have 1,000 boxes of Milk in your main warehouse, 250 boxes of Milk in North, 300 boxes of Milk in South, and 300 of Milk in West local storage. Which of the following statements is correct based on the stock transfer planning below using Push strategy.

a. 50 to North, 0 to South, and 50 to Westb. 300 to North, 250 to South, and 350 to Westc. No transferd. 300 to North, 300 to South, and 300 to West

PushPushIn the Logistics case, you have 450 boxes of Milk in your main warehouse, 250 boxes of Milk in North, 300 boxes of Milk in South, and 300 of Milk in West local storage. Which of the following statements is correct based on the stock transfer planning below using Push strategy.

a. 150 to North, 125 to South, and 175 to Westb. 300 to North, 250 to South, and 350 to Westc. No transferd. 150 to North, 150 to South, and 150 to West

A A PullPull Logistics Strategy Logistics Strategy A Pull strategy specifies the target quantities

for each product in each area and the number of days between deliveries.

PullPullSystem 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.

PullPullIn the Logistics case, you have 900 boxes of Milk in your main warehouse, 250 boxes of Milk in North, 300 boxes of Milk in South, and 300 of Milk in West local storage. Which of the following statements is correct based on the stock transfer planning below using Pull strategy.

a. 50 to North, 0 to South, and 50 to Westb. 300 to North, 250 to South, and 350 to Westc. No transferd. 300 to North, 300 to South, and 300 to West 

PullPullIn the Logistics case, you have 300 boxes of Milk in your main warehouse, 200 boxes of Milk in North, 50 boxes of Milk in South, and 50 of Milk in West local storage. Which of the following statements is correct based on the stock transfer planning below using Pull strategy.

a. 300 to North, 250 to South, and 350 to Westb. 50 to North, 100 to South, and 150 to Westc. No transferd. 100 to North, 100 to South, and 100 to West 

PullPullIn the Logistics case, you have 900 boxes of Milk in your main warehouse, 300 boxes of Milk in North, 250 boxes of Milk in South, and 350 of Milk in West local storage. Which of the following statements is correct based on the stock transfer planning below using Pull strategy.

a. 300 to North, 250 to South, and 350 to Westb. 50 to North, 100 to South, and 150 to Westc. No transferd. 100 to North, 100 to South, and 100 to West 

Rules of the GameRules of the GameEach round will last 10 daysEach purchase order 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 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 €300 per day for each additional 1,000 boxes exceeding 4,000.

Market size: About € 12,000 per company per day.

Lead time from suppliers: 1 – 3 daysLead time to customers: 1 – 3 days

Activities in Each CompanyActivities in Each Company1) Create planned independent requirement

for each finished product (MD61)2) Run MRP (MD01)3) Covert purchase requisitions to purchase

orders (ME59N)4) Stock transfer (ZMb1B)5) Maintain prices for each product (VK32)6) 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.

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

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

Login informationLogin information

Client: 200

Login: $#Where $ is your team letterAnd # is your numberFor Pilot run: $ = A, B C, D, E, F, GFor Real run: $ = H, I, J, K, L, M, N

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

Client: 200Server: Merida

Login informationLogin informationServer: Merida

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

Check initial financial statementCheck initial financial statement

ForecastingForecastingFirst Screen

Second Screen

ZZ-T

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

Team Homework: Team Homework: (Due date -11/7/2015)(Due date -11/7/2015)

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)