1. Case Study 3: Operate a Manufacturing Company (Introduction) EGN 5621 Enterprise Systems Collaboration Professional (MSEM) Fall, 2012

2. Objective The objective of this manufacturing case study is to provide a hands-on experience of an integrated business process in the simulated environment, which integrates basic operation functions of planning, sales, production, procurement, marketing, and financial accounting for learning how to run a manufacturing operation and make business decisions.

3. Corporate Roles Designation CEO (Team Leader) ◦Read financial statement ◦Read price market report ◦Read summary sales report ◦Monitor sales and market data ◦Read inventory Report Marketing Manager ◦Plan marketing expense ◦Read price market report ◦Monitor sales and market data 3

4. Corporate Roles Designation Sales Manager ◦Change prices ◦Work with the material manager on forecasting ◦Read sales and market data ◦Check summary sales report Material Manager ◦Forecast (to create planned independent requirements) ◦Run MRP ◦(Automatically) generate POs ◦Track purchase orders ◦Release production orders ◦Monitor production schedule ◦Check inventory report ◦Analyze product cost 4

5. Operations activities

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

7. Organizational elements

8. Organizational Elements

11. Master Data Used in this study

12. Definition of Master Data (1/2)

13. Definition of Master Data (2/2)

14. List of Master Data

15. Muesli Cereals Raisins Oats Strawberries Wheat Blueberries Nuts

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

17. Data Model of product $$-F06 $$ $$-F06 $$-P01 $$-P02 $$-R01 $$-R02 $$-R03 $$-R05 $$-R04 $$-R06

18. German market North DC10: 2 retailers DC12: 19 retailers South DC10: 7 retailers DC12: 23 retailers West DC10: 3 retailers DC12: 17 retailers

19. Muesli Manufacturing Association Label Regulation

20. Input Cost at Low Seasonal Price

21. Number of Stores by Geographical Area

22. 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

23. 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

24. DC14: Independent grocers (to be used in the Extension Case) 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

25. Number of Retailers Per Locations

26. Risk Premium on Credit Ratings

27. Major Operation Rules You don’t change the recipe of a product in this mfg introduction game Customers’ preferences do not change throughout the game; you may like to 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.

28. Operations tips Develop your team’s operations strategy Monitor and modify the strategy, when necessary Use the ERP system efficiently Do not run out of stock Be aware of delays and production capacity constraints Team organization and communication are important.

29. Game Layout 30 steps 25 min 30 steps 25 min 30 steps 25 min

30. Game Rules 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

31. Participant’s job Aid

32. Let’s Get Started! Create your team : Max 6 persons : User 1 to User 6 Up to 26 company : A to Z Develop your team’s operations strategy Log in using user name and password given by the instructor

33. Login Information Client 810 Login : $ # $ = Team, # = User 1 to User 6 Password: ERPSIM

34. SAP Menu & Navigation

35. Introductory Game: Round 1 30 steps 25 min

36. Cost, Inventory & Initial Pricing Material$$-F01$$-F02$$-F03$$-F04$$-F05$$-F06 Name Nut Muesli 1.0 kg. Blueberry Muesli 1.0 kg. Strawberry Muesli 1.0 kg. Raisin Muesli 1.0 kg. Original Muesli 1.0 kg. Mixed Fruit Muesli 1.0 kg. 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 € 5.18 € 5.43 € 3.92 € 4.17 € 3.87 € 4.12 € 4.75 € 5.00 Initial stock100,000

37. The Introductory Game: Round 1 (30 Steps- Days) You have initial inventory for each finished product (100,000 for each finished product) You will sell your available products in Q1. You can’t buy any raw materials in Q1. You can’t make plan, run MRP, and produce any finished goods in Q1.. You need to know how to : Maintain price list and make plan for marketing investment Watch available stock Monitor sales orders Monitor your profit !

38. Participant’s Job Aid & Menu

39. Check product costing

40. Maintain Prices for DC 10 & DC 12

41. Marketing Expense

42. Stock in Material Overview

43. Check Sales Summary Report

44. Check Sales Order Report

45. Check Market Report

46. Check Financial Statements

47. The Introductory Game: Round 1 (30 steps – 30 days) We start the simulator for 30 steps

48. Introductory Game: Round 2 30 steps 25 min

49. The Introductory Game: Round 2 (30 Steps- Days) You finished goods will be carried over to the round 2 if your still have inventory at the end of the round 1. You have initial raw materials which are enough to make 100,000 of your each product. You can’t buy any raw materials in Q2. Planned orders for all six finished products have been created by ERPsim. You can produce your products in Q2 by converting planned orders to production orders. You can’t change the planned orders, and can’t run MRP You continue to maintain your prices and make investment in market.

50. Game Parameters

51. Participant’s Job Aid & Menu

52. Release Production Order

53. Release Production Orders (CO41)

54. Check Production Schedule

55. The Introductory Game: Round 2 (30 Steps - Days) We start the simulator for 30 steps

56. Introductory Game: Round 3 30 steps 25 min

57. The Introductory Game: Round 3 (30 Steps- Days) You finished goods and raw materials will be carried over to the round 3 if your still have inventory at the end of the round 2. You can buy any raw materials in Q3. You can produce your products in Q3. You need to 1)create independent requirement plan for your products, 2)run MRP to create purchase requisitions and planned orders, 3)convert purchase requisitions to purchase orders, and 4)release planned orders to production orders. You continue to maintain 1)Prices for finished products, and 2)make investment in market.

58. Participant’s Job Aid & Menu

59. Create Planned Independent Requirement for 6 Finished Products (MD61) AA-F

60. Forecasting Sales

61. Execute MRP

62. After the MRP Run

63. Automatic Creation of Purchase Orders from Requirement (ME59)

64. Convert Purchase Requisitions Into Purchase Orders

65. Track Purchase Orders

66. Purchase Order Tracking(ZME2N)

67. Raw Material Cost Per PO

68. Collective Conversion of Planned Order (CO41)

69. Release Production Order

70. Release Production Orders (CO41)

71. Check Production Schedule

72. The Introductory Game: Round 3 (30 Steps – 30 Days) We start the simulator for the last 30 steps