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

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 with 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

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

Push In 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 West b. 300 to North, 250 to South, and 350 to West c.No transfer d.300 to North, 300 to South, and 300 to West

Push In 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 West b.300 to North, 250 to South, and 350 to West c.No transfer d.150 to North, 150 to South, and 150 to West

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 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.

Pull In 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 West b.300 to North, 250 to South, and 350 to West c.No transfer d.300 to North, 300 to South, and 300 to West

Pull In 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 West b.50 to North, 100 to South, and 150 to West c.No transfer d.100 to North, 100 to South, and 100 to West

Pull In 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 West b.50 to North, 100 to South, and 150 to West c.No transfer d.100 to North, 100 to South, and 100 to West

Rules of the Game Each round will last 10 days Each purchase order 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 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 €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 days Lead time to customers: 1 – 3 days

Activities in Each Company 1) 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 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.

Job Aids (1/2)

Job Aids (2/2)

Login information Client: 200 Login: $# Where $ is your team letter And # is your number For Pilot run: $ = A, B C, D, E, F, G For Real run : $ = H, I, J, K, L, M, N Password: ERPSIM You will have to change your password the first time you enter Client: 200Server: Merida

Login information Server: Merida

SAP Menu & Navigation Top Menu: Extras / Settings / Display technical names

Logistics Game: Round 1

Participant’s job aid & Menu

Check initial financial statement

Forecasting First Screen Second Screen ZZ-T

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

Team Homework: (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)