Case Study 2: Operate a Logistics Company

1. Case Study 2:Operate a Logistics Company EIN 6133 Enterprise Engineering Summer B, 2015

2. 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 : Pedagogical Objectives

3. In groups with 3 - 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. Logistics Game

4. DairyProducts

5. Each company owns a main warehouse which receives and stores products you have purchased from a dairy cooperative. Logistics Game Design

6. Products Details

7. Eachregion has unique preferencesrelated to productsitwishes to purchasefromyourcompany. Yet, preferences change everygame. Market’sPreferences

8. You may set up a price for each of yourproducts. The price for eachproductwillapply to all 3 regions. One Price List in Distribution Channel 16

9. You will have to consider transportation fees carefully in order to maximize your company’s profits. Cost : 1000 € per PO Transportation Fees Cost : 100 € per regionaltranfer

10. You must select a logistics strategy to make your products available for sales through your regional storage locations. OR LogisticsStrategy

11. A Push strategy specifies the quantity of each product to be delivered to each area and the number of days between deliveries. A Push LogisticsStrategy

12. 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

13. 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. • 50 to North, 0 to South, and 50 to West • b. 300 to North, 250 to South, and 350 to West • No transfer • 300 to North, 300 to South, and 300 to West Push

14. 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. • 150 to North, 125 to South, and 175 to West • 300 to North, 250 to South, and 350 to West • No transfer • 150 to North, 150 to South, and 150 to West Push

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

16. 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

17. 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. • 50 to North, 0 to South, and 50 to West • 300 to North, 250 to South, and 350 to West • No transfer • 300 to North, 300 to South, and 300 to West Pull

18. 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. • 300 to North, 250 to South, and 350 to West • 50 to North, 100 to South, and 150 to West • No transfer • 100 to North, 100 to South, and 100 to West Pull

19. 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. • 300 to North, 250 to South, and 350 to West • 50 to North, 100 to South, and 150 to West • No transfer • 100 to North, 100 to South, and 100 to West Pull

20. Each round will last 10 days • Each purchase order costs €1,000 and eachtransferfrom 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

21. 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 eachadditional 1,000 boxes exceeding 4,000. • Market size: About € 12,000 per company per day. • Lead time fromsuppliers: 1 – 3 days • Lead time to customers: 1 – 3 days Rules of the Game

22. Create 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 Company

23. 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. Activities in Each Company

24. Job Aids (1/2)

25. Job Aids (2/2)

26. Client: 360 Login: $# Where $ is your team letter And # is your number For Pilot run: $ = I, J, K, L For Real run: $ = M, N, O, P Password: ERPSIM You will have to change your password the first time you enter Login information

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

28. Logistics Game: Round 1

29. Participant’s job aid & Menu

30. Check initial financial statement

31. First Screen ZZ-T Second Screen Forecasting

32. Execute MRP

33. Convert purchase requisitions into purchase orders

34. Track purchase orders

35. Logistics Transfer Planning

36. Stock in material overview

37. 16 Maintain Prices for DC 16

38. Check sales summary report

39. Check financial statement

40. We start the simulator for 10 days The Logistics Game:Round 1 (10 days)

41. Debriefing:Round 1

42. 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? Questions?

43. Logistics Game: Round 2

44. We start the simulator for 10 days The Logistics Game:Round 2 (10 days)

45. Debriefing:Round 2

46. 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? Questions?

47. Logistics Game: Round 3

48. We start the simulator for the last 10 days The Logistics Game:Round 3 (10 days)

49. Debriefing:Round 3 - 6

50. 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?