Case Study 2:Case Study 2:Operate a Manufacturing Operate a Manufacturing

Company (I)Company (I)

EGN 5621 Enterprise Systems Collaboration(Professional MSEM)

Fall, 2011

ObjectiveObjectiveThe objective of the Manufacturing

introductory ERPsim is to provide a quick hands-on experience of an integrated business process through an ERP manufacturing ERPsim, which combines basic operation functions, such as planning, sales, production, procurement, marketing, investment, and financial accounting for learning how to make business strategy and business decisions.

Corporate Roles DesignationCorporate Roles DesignationCEO (Team Leader)

◦Watch financial statement◦Price market report◦Check summary sales report◦Check sales and market data◦Check inventory Report

Marketing Manager◦Marketing Expense Planning◦Price market report◦Check sales and market data

3

Corporate Roles DesignationCorporate Roles DesignationSales & Marketing Manager

◦Change prices◦Check sales and market data◦Check summary sales report

MM Manager◦Forecast – create planned indep. Req.◦MRP run◦Automatic generation of POs◦Purchase Order Tracking◦Release production orders◦Monitor production schedule◦Check inventory Report◦Product cost analysis

4

Operations in the Operations in the cash-to-cash cyclecash-to-cash cycle

The Virtual Business EnvironmentThe Virtual Business Environment

Simulation of a market

Automation of administrative tasksAutomation of administrative tasks

Simulation of the passing of time

Organizational elementsOrganizational elements

Organizational elementsOrganizational elements

Organizational elementsOrganizational elements

Organizational elementsOrganizational elements

Data model of the main master Data model of the main master data used in the simulation gamedata used in the simulation game

Definition of master data (1/2)Definition of master data (1/2)

Definition of master data (2/2)Definition of master data (2/2)

List of master data to create for List of master data to create for the simulationthe simulation

Muesli CerealsMuesli Cereals

Raisins

Oats

Strawberries

Wheat

Blueberries

Nuts

Your 6 productsYour 6 products

40% wheat40% oat20% nut1 box1 bag

35% wheat35% oat10% raisin10% nut5% strawberry5% blueberry1 box1 bag

50% wheat50% oat1 box1 bag

40% wheat40% oat20% raisin1 box1 bag

40% wheat40% oat20% strawberry1 box1 bag

40% wheat40% oat20% blueberry1 box1 bag

Data model of product Y$-F06Data model of product Y$-F06

German marketGerman market

NorthDC10: 2 retailers

DC12: 19 retailers

SouthDC10: 7 retailersDC12: 23 retailers

WestDC10: 3 retailers

DC12: 17 retailers

Muesli Muesli Manufacturing Manufacturing Association Label Association Label RegulationRegulation

Input CostInput Cost

at low seasonal priceat low seasonal price

Number of stores by Number of stores by

geographical areageographical area

DC10DC10

HypermarketsHypermarketsBuy only large boxes (1 kg)Payment delay of 20 stepsMore sensitive to priceLess sensitive to advertisingWill have a stronger preference for 3

particular products during the simulation

DC12DC12

Grocery chainsGrocery chainsBuy 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

DC14 Independent grocersDC14 Independent grocers

(will be used in Extension ERPsim)(will be used in Extension ERPsim)

Only buy small boxes (0.5 kg)Less price sensitiveSensitive to advertisingPayment delay of 5 to 15 stepsWill have a stronger preference for 3

particular products during the simulation

Number of retailers per Number of retailers per

LocationsLocations

Risk premium on credit Risk premium on credit ratingsratings

Review of the major rulesReview of the major rulesYou don’t change the recipe of a product in

the mfg introduction gameCustomers preferences do not change

throughout the game, hence you may 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 timesThe 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.

Elements of a winning Elements of a winning strategystrategyUse the ERP system efficientlyDo not run out of stockDelays and production capacity

constraints are important elements of the game

Team organization is more important than you think

Game layoutGame layout

30 steps30 min

30 steps30 min

30 steps30 min

Rules of the gameRules 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

Participant’s job aidParticipant’s job aid

Let’s get started!Let’s get started!• Create your team : • Max 4 persons : User 1 to User 4• Up to 26 company : A to Z

• Log in using user name and passwords giving by your teacher

Login informationLogin information

Client 265

Login : intro_$#$ = Team, # = User 1 to User 4

Password: ERPSIM

SAP Menu & NavigationSAP Menu & Navigation

Introductory Game: Introductory Game: Round 1Round 1

30 steps30 min

Cost, inventory & initial pricingCost, inventory & initial pricing

Material $$-F01 $$-F02 $$-F03 $$-F04 $$-F05 $$-F06

Name

Nut Muesli1.0 kg.

BlueberryMuesli1.0 kg.

StrawberryMuesli1.0 kg.

Raisin Muesli1.0 kg.

OriginalMuesli1.0 kg.

Mixed FruitMuesli1.0 kg.

Raw material Cost € 1.53 € 1.97 € 1.97 € 1.38 € 1.36 € 1.76

Standard cost € 2.48 € 3.09 € 3.09 € 2.50 € 2.65 € 2.89

Initial price 1012

€ 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 stock 100,000 100,000 100,000 100,000 100,000 100,000

The Introductory game:The Introductory game:Round 1 (30 steps- days)Round 1 (30 steps- days)• You have initial inventory for each finished product (100,000 for each)• 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 maintain the price of your 6 products and invest in

marketing.• 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 & MenuParticipant’s job aid & Menu

Check product costingCheck product costing

Maintain Prices for DC 10 & 12Maintain Prices for DC 10 & 12

Marketing expenseMarketing expense

Stock in material overviewStock in material overview

Check sales summary reportCheck sales summary report

Check sales order reportCheck sales order report

Check market reportCheck market report

Check Financial StatementsCheck Financial Statements

The Introductory game:The Introductory game:Round 1 (30 steps – 30 days)Round 1 (30 steps – 30 days)

We start the simulator for 30 steps

Introductory game: Introductory game: Round 2Round 2

30 steps30 min

The Introductory game:The Introductory game:Round 2 (30 steps- days)Round 2 (30 steps- days)

• You finished goods will be carried over to the round 2 if your still have inventory in 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.• You can produce your products in Q2 by converting planned orders

to production orders.• You continue to maintain your prices and make investment in

market.

Parameters of the gameParameters of the game

Participant’s job aid & MenuParticipant’s job aid & Menu

Release production orderRelease production order

Release Production Orders (CO41)Release Production Orders (CO41)

Check Production ScheduleCheck Production Schedule

The Introductory game:The Introductory game:Round 2 (30 steps - days)Round 2 (30 steps - days)

We start the simulator for 30 steps

Introductory game: Introductory game: Round 3Round 3

30 steps30 min

The Introductory game:The Introductory game:Round 3 (30 steps- days)Round 3 (30 steps- days)

• You finished goods and raw materials will be carried over to the round 2 if your still have inventory in the end of the round 2.

• You can buy any raw materials in Q3.• You can produce your products in Q3.• You need to create independent requirement plan for your products,

run MRP to create purchase requisitions and planned orders, convert purchase requisitions to production orders, and

• release planned orders to production orders.• You continue to maintain your prices and make investment in

market.

Participant’s job aid & MenuParticipant’s job aid & Menu

Create Planned Independent Create Planned Independent Requirement for 6 Finished Requirement for 6 Finished Products (MD61)Products (MD61)

Forecasting salesForecasting sales

Execute MRPExecute MRP

After the MRP runAfter the MRP run

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

Convert purchase requisitions into Convert purchase requisitions into purchase orderspurchase orders

Track purchase ordersTrack purchase orders

Purchase Order Tracking(ZME2N)Purchase Order Tracking(ZME2N)

Raw material cost per PORaw material cost per PO

Collective Conversion of Planned Collective Conversion of Planned Order (CO41)Order (CO41)

Release production orderRelease production order

Release Production Orders (CO41)Release Production Orders (CO41)

Check Production ScheduleCheck Production Schedule

The Introductory game:The Introductory game:Round 3 (30 steps – 30 days)Round 3 (30 steps – 30 days)

We start the simulator for the last 30 steps