Case Study 3 Operate a Manufacturing Company Introduction

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

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.

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

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

Operations activities

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

Organizational elements

Organizational Elements

Organizational Elements

Organizational Elements

Master Data Used in this study

Definition of Master Data (1/2)

Definition of Master Data (2/2)

List of Master Data

Muesli Cereals Wheat Nuts Blueberries Oats Raisins Strawberries

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

Data Model of product $$-F 06 $$-P 01 $$ $$-P 02 $$-R 01 $$-F 06 $$-R 02 $$-F 06 $$-R 03 $$-R 04 $$-R 05 $$-R 06

German market North DC 10: 2 retailers DC 12: 19 retailers West DC 10: 3 retailers DC 12: 17 retailers South DC 10: 7 retailers DC 12: 23 retailers

Muesli Manufacturing Association Label Regulation

Input Cost at Low Seasonal Price

Number of Stores by Geographical Area

DC 10: 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

DC 12: Grocery Chains Buy small boxes (0. 5 kg) and large boxes (1 kg) Payment Will delay of 10 to 15 steps have a stronger preference for 4 particular products during the simulation

DC 14: 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

Number of Retailers Per Locations

Risk Premium on Credit Ratings

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.

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.

Game Layout 25 min 30 steps

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

Participant’s job Aid

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 •

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

SAP Menu & Navigation

Introductory Game: Round 1 25 min 30 steps

Cost, Inventory & Initial Pricing Material $$-F 01 $$-F 02 $$-F 03 Nut Muesli Blueberry Strawberry 1. 0 kg. Muesli Name 1. 0 kg. $$-F 04 $$-F 05 $$-F 06 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 € 3. 92 € 4. 17 € 3. 87 € 4. 12 € 4. 75 € 5. 00 100, 000 100, 000 Initial stock

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 Q 1. You can’t buy any raw materials in Q 1. You can’t make plan, run MRP, and produce any finished goods in Q 1. . You need to know how to : • Maintain price list and make plan for marketing investment • Watch available stock • Monitor sales orders • Monitor your profit !

Participant’s Job Aid & Menu

Check product costing

Maintain Prices for DC 10 & DC 12

Marketing Expense

Stock in Material Overview

Check Sales Summary Report

Check Sales Order Report

Check Market Report

Check Financial Statements

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

Introductory Game: Round 2 25 min 30 steps

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 Q 2. Planned orders for all six finished products have been created by ERPsim. You can produce your products in Q 2 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.

Game Parameters

Participant’s Job Aid & Menu

Release Production Order

Release Production Orders (CO 41)

Check Production Schedule

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

Introductory Game: Round 3 25 min 30 steps

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 Q 3. You can produce your products in Q 3. 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

Participant’s Job Aid & Menu

Create Planned Independent Requirement for 6 Finished Products (MD 61) AA-F

Forecasting Sales

Execute MRP

After the MRP Run

Automatic Creation of Purchase Orders from Requirement (ME 59)

Convert Purchase Requisitions Into Purchase Orders

Track Purchase Orders

Purchase Order Tracking(ZME 2 N)

Raw Material Cost Per PO

Collective Conversion of Planned Order (CO 41)

Release Production Order

Release Production Orders (CO 41)

Check Production Schedule

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