Case Study 4 Operate a Manufacturing Company II

Case Study 4: Operate a Manufacturing Company II (Extension) EGN 5621 Enterprise Systems Collaboration (Professional MSEM) Fall, 2011

Corporate Roles Designation CEO ◦ Check Financial Statement ◦ Make investment for production ◦ Check summary sales report ◦ Check price market report Market & Sales Manager ◦ Check sales order report ◦ Check summary sales report ◦ Check price market report ◦ Maintain and change market expenditure ◦ Change selling prices for finished goods 2

Corporate Roles Designation Production and Planning Manager ◦ Create planned independent requirement ◦ Run MRP ◦ Release production orders ◦ Modify BOM ◦ Monitor production schedule ◦ Check product costs ◦ Check raw materials cost per production order MM Manager ◦ Convert purchase requisitions to purchase orders ◦ Track PO report ◦ Check MRP results ◦ Check individual stock level ◦ Check inventory report 3

Tasks for the Manufacturing Case Study No Roles Functions 1 CEO 2 Sales & Marketing Manager 3 Production & Planning Manager Check financial statement Create GL Post (Investment) Check Price market report Check Summary sales report Check Sales order report Check Summary sales report Check Price market report Maintain marketing expense Change selling price for FG Create planned independent Requirements Run MRP Release production orders Modify BOM Monitor production schedule Check finished product cost Check RM cost per Prod. order Automatically generate POs Track PO report Display MRP results Check stock level Check Inventory report 4 MM Manager Warehouse Management Transaction Code F. 01 FB 50 ZMarket ZVC 2 ZVA 05 ZVC 2 ZMarket ZADS VK 32 MD 61 MD 01 CO 41 ZCS 02 ZCOOIS ZCK 11 ZKSB 1 ME 59 N ZME 2 N MD 07 MD 04 ZMB 52

What’s New in Mfg Extension? Company can design own products based on specified rules 2. Distribution channel 14 is available 3. Company can make investment to improve production capacity 1. 1) Reduce set-up time 2) Increase production capacity 4. No starting inventory. Each company should do planning, run MRP, and convert purchase requisitions to POs before starting game.

What’s New in Mfg Extension? Depreciation of fixed assets is assessed 6. Fixed overheads are assessed 7. Inventory storage cost for excess stock is assessed 5.

1. Develop New Products At beginning of the game, each company has six finished products with a preset recipe for each product. You can change the recipe of a product during the simulation by changing its bill of material with Tcode ZCS 02. During simulation, your company always has six BOMs of finished products. If your company still has inventory of the finished product, the system doesn’t allow you to change its BOM. Your new product must meet the guideline for recipes. When the system accepts your changes in BOM, it will change the description in the material master 7 to match the new content and weight.

Muesli Manufacturing Association Label Regulation

List of Master Data Created for the Simulation Master Data Alphanumeric codes 6 Finished products $$-F 01 $$-F 02 $$-F 03 $$-F 04 $$-F 05 $$-F 06 6 Raw materials $$-R 01 $$-R 02 $$-R 03 $$-R 04 $$-R 05 $$-R 06 4 Packaging materials $$-P 01 $$-P 02 $$-P 03 $$-P 04 2 Vendors V 01 V 02 6 Bill of materials $$-F 01 $$-F 02 $$-F 03 $$-F 04 $$-F 05 $$-F 06 1 Work center $$ 6 Routings $$-F 01 $$-F 02 $$-F 03 $$-F 04 $$-F 05 $$-F 06 3 x 6 price lists (DC 10, 12, and 14) $$-F 01 $$-F 02 $$-F 03 $$-F 04 $$-F 05 $$-F 06 6 info-records and 6 source lists for raw materials V 01 -$$-R 01 V 01 -$$-R 02 V 01 -$$-R 03 V 01 -$$-R 04 V 01 -$$-R 05 V 01 -$$-R 06 4 info-records and 4 source lists for packaging materials V 02 -$$-P 01 V 02 -$$-P 02 V 02 -$$-P 03 V 04 -$$-P 04 1 profit center $$ 1 coster center $$

Change BOM for New Product 10

Change BOM for New Product 11

2. Distribution Channel 14 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 12

3. Investment for Improvement of Production Capacity 1) Reduce set-up time The default set-up time is 12 hours for changing product in your production line. If you want to keep product variety and wish to run small production batches, you can make investment to reduce the set-up time. The following table shows the set-up time as a function of your investment. If your investment is zero, the set-up time is 12 hours. If you invest 44, 117. 75, then the set-up time reduces to 10. 5 hours. 13

Investment for Reducing Set-up Time 14

Investment for Reducing Set-up Time in the First Quater In the first quarter, every company must invest 5, 000 euros to reduce set-up time. After the first investment, it’s your company decision if to make more investment. 15

Investment in SAP to Reduce Set-up Time Use T-code: FB 50 G/L Account: 113300 (Weizen bank) D/C: credit Amount: 5, 000 (first investment) G/L Account: 478000 (Lean manufacturing expense) D/C: debit Amount: 5, 000 (first investment) Cost center: $$ 16

Investment for Reducing Set-up Time in SAP 17

Investment for Increasing Production Capacity Your company can make investment into production equipments to increase your production capacity. This may be your strategic weapon. When you start the simulation, you have 5 million euro production equipment with a production capacity of 21, 000 boxes per day. 18

Increase Production Capacity For an investment of 100, 000 euros you can increase production capacity by 400 boxes per day. In order to obtain a daily capacity of 25, 000 boxes, you need to invest 1 million euros. Formula for capacity improvement: Total daily capacity = 21, 000 + (0. 004 x additional machinery investment). 19

Investment for Improving Production Capacity in SAP Use T-code: FB 50 G/L Account: 113300 (Weizen bank) D/C: credit Amount: Your investment G/L Account: 11000 (Machinery & equipment) D/C: debit Amount: Your investment 20

Investment to Improve Production Capacity in SAP 21

4. No Starting Inventory. Each company should plan and complete the following steps before simulation: - Planning for finished products (T-code: MD 61), - Run MRP (T-code, MD 01), and - Convert purchase requisitions to Purchase orders (Tcode: ME 59 N)

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

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

Execute MRP

Create Purchase Orders from Purchase Requisitions (ME 59 N)

Convert Purchase Requisitions into Purchase Orders

Convert Planned Orders to Production Orders After simulation started and you received required raw and packaging materials, your planning manager needs to convert planned orders to production orders (Tcode: CO 41)

Collective Conversion of Planned Order (CO 41)

Release Production Order

Release Production Orders (CO 41)

5. Depreciation of fixed assets is assessed (ZCK 11) Annual depreciation is calculated as 5% of building value and 10% of machinery value at 5 million.

5. Depreciation of fixed assets is assessed (ZCK 11)

6. Fixed Mfg Overhead Fixed mfg overhead is assessed (T-code: ZCK 11)

7. Inventory Storage Cost Each team has 2 warehouse storage areas: ◦ Finished product (02) - space for 250, 000 boxes ◦ Raw materials (88) - space for 250, 000 kg of raw materials and space for 500, 000 boxes and space for 500, 000 bags Additional ◦ ◦ warehouse space can be rented: 100, 000 boxes of finished products (or part thereof), @ € 200/step (less than € 0. 01 per box per step) 100, 000 kg (or part thereof), @ € 350/step (more expensive because it's raw food product) 100, 000 boxes AND/OR bags (or part thereof), @ € 50 step The cost of additional storage will be automatically billed, and paid immediately.

User Menu for Mfg Extension

User Menu for Mfg Extension

Participant’s Job Aid & Menu for Mfg Extension

Participant’s Job Aid & Menu for Mfg Extension

Game Layout 30 min 30 steps

Rules of the game • • • 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

Login Information Client 265 Login : ext_$# $ = Team, # = User 1 to User 4 Password: ERPSIM