Case Study ICase Study I

EGN 5621 Enterprise Systems CollaborationSummer B, 2014

Operate a Distribution Operate a Distribution CompanyCompany

(Operations & Trial Run)(Operations & Trial Run)

EGN 5621 Enterprise Systems Collaboration

TeamsTeams

Each time should have 3-4 participants.

Each team operates a bottle distribution company.

Participants make business decisions to ensure the profitability of their operation, using standard reports.

The (German) MarketThe (German) Market

North45 retailers

South38 retailers

West40 retailers

• 6 products (boxes of 12x1L and 24x500mL)• 3 areas with distinct marketing accounts• One distribution channel: 18• Market size of about € 6,000 per company per step

The 6 Products The 6 Products

Product Code Product Description Units in box Cost of boxes

$$-B01 1L ClearPure 12 bottles 11.99 $$-B02 1L Spritz 12 bottles 14.99 $$-B03 1L Lemon Spritz 12 bottles 16.99 $$-B04 500mL ClearPure 24 bottles 16.99 $$-B05 500mL Spritz 24 bottles 19.99 $$-B06 500mL Lemon Spritz 24 bottles 22.99

The Game Layout DesignThe Game Layout Design

20 steps

20 min20 steps

20 min20 steps

20 min

Rules of the gameRules of the game

Each round will be of 20 steps (a bit more than 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

ABC of the Enterprise systemABC of the Enterprise systemAn enterprise system is built around an

integrated databaseA system such as SAP contains tens of

thousands of data tablesWhen a user creates, changes or views data in

the system, he or she performs a transactionData changed or created by one user can be

exploited by all other users in the same team (ex. reporting, tracking, execution of orders, etc.)

All transactions are traceable, transactions with financial impacts can be reversed, never erased

User interfaceUser interface• Users interact with the enterprise system

through transactions. • A large number of pre-programmed

transactions exist in SAP• Each transaction has a transaction code –

one can call a transaction if one knows the transaction code

• The SAP menu allows to browse and find the desired transaction

• One can create a user menu or a list of favorites with the commonly used transactions

SAP Menu & NavigationSAP Menu & Navigation

Extras / Settings / Display Technical Names

Reports and queriesReports and queries

• Reports and queries are transactions that allow users to view existing data

• A typical query is performed as follows:• In the first page of the transaction, you must

enter the selection criteria for the query (ex. Company code, product code, etc.)• Then, click on to execute the query• A table containing the requested data will

appear• The display and layout can sometimes be

modified

Entering new dataEntering new dataSome transactions are designed to

change or create new data (change forecast, release purchasing orders, change sale price, etc.)

The interface varies according to data required by the system

The system will not allow you to save information if all the compulsory fields have not been filled

You must save/release/confirm before exiting the transaction

Other useful buttonsOther useful buttonsUse the navigation buttons to go back or

get out of a transactionYou can open up to 6 sessions. Click on

to open a new sessionDelete , search , select all , view

, enter .

Participant’s job aidParticipant’s job aid

SAP ERPsim Server, and Client for SAP ERPsim Server, and Client for DistributionDistribution

Server: Vichy

Client: 495

Application Server: vichy.cob.csuchico.edu

System ID: VICSystem #: 31

SAP ERPsim Server, and Client for SAP ERPsim Server, and Client for DistributionDistribution

Getting Started:Getting Started:Set up teams: • Companies : A to D for Pilot Run and E to H for real.• 3- 4 persons in a team

Userid: $#◦Where ◦ $ = Assigned team letter, ◦ # = User 1 to User 4

Password: ERPSIM

Login informationLogin information

Client = 495

Login: $#Where

$ = Team, # = User 1 to

User 4

Password: ERPSIMYou will have to change your password the first time you enter

The Distribution Game:The Distribution Game:Round 1 Round 1 (20 steps)(20 steps)

Now start the simulator for 20 steps

20 min

20 steps20 steps

Distribution Game: Distribution Game: Round 1Round 1

Check initial inventory Check initial inventory

Check Financial StatementCheck Financial Statement

Check Financial StatementCheck Financial Statement

Check Initial Financial StatementCheck Initial Financial Statement

The Distribution Game:The Distribution Game:Quarter 1 (20 virtual steps)Quarter 1 (20 virtual steps)

Initial Financial Status:◦11000 Fix Assets 250,000◦70000 Common Stock (500,000)◦113300 Bank Cash Account 146,060◦792000 Finished Goods 103,940

Cost, inventory & initial Cost, inventory & initial pricingpricing

Material $$-B01 $$-B02 $$-B03 $$-B04 $$-B05 $$-B06

Name 1L ClearPure 1L Spritz 1L Lemon Spritz

500mL ClearPure 500mL Spritz 500mL Lemon

Spritz

Size 1L 1L 1L 500mL 500mL 500mL

Number of bottles in package 12 12 12 24 24 24

Cost €11.99 €14.99 €16.99 €16.99 €19.99 €22.99

Initial price €14.99 €17.99 €19.99 €19.99 €22.99 €25.99

Initial stock 1,000 1,000 1,000 1,000 1,000 1,000

The Distribution Case: Round 1 The Distribution Case: Round 1 (20 steps)(20 steps)You need to maintain the price of your 6 products

and invest in marketing.Need to know the following in order to make

decisions:◦ Maintain price list◦ See available stock◦ Monitor sales orders◦ Monitor competitors

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

Maintain Prices for DC 18Maintain Prices for DC 18

Marketing expensesMarketing expenses

On marketingOn marketing

Enter your daily marketing budget for each product and for each region

The impact of marketing in one region depends on your share of all marketing expenses in this region

Marketing induces customers to find your product “more desirable”

The daily marketing budget can be changed at any time

Stock in material overviewStock in material overview

Check sales summary reportCheck sales summary report

Check market reportCheck market report

Check sales order reportCheck sales order report

20 min

20 steps20 steps

Distribution Game: Distribution Game: Round 2Round 2

It’s time to replenish !It’s time to replenish !

You need to replenish. Replenishment will allow you to purchase the same quantity that you have sold.

Material $$-B01 $$-B02 $$-B03 $$-B04 $$-B05 $$-B06

Name 1L ClearPure 1L Spritz 1L Lemon Spritz 500mL ClearPure 500mL Spritz 500mL Lemon

Spritz

Initial forecast 1,000 1,000 1,000 1,000 1,000 1,000

Replenishment lead time Up to 3 steps Up to 3 steps Up to 3 steps Up to 3 steps Up to 3 steps Up to 3 steps

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

Create Planned Ind. RequirementsCreate Planned Ind. Requirements

Create Planned Ind. RequirementsCreate Planned Ind. Requirements

Execute MRPExecute MRP

After the MRP runAfter the MRP run

Convert purchase requisitions into Convert purchase requisitions into purchase orderspurchase orders

Track purchase ordersTrack purchase orders

The Distribution Game:The Distribution Game:Round 2Round 2 (20 steps) (20 steps)

Now start the simulator for 20 steps

20 min

20 steps20 steps

Distribution Game: Distribution Game: Round 3Round 3

It’s time to replenish !It’s time to replenish !

You need to replenish. Change your forecast to adapt the replenishment levels to your needs

What do you need to know in order to make that decision ?

Material $$-B01 $$-B02 $$-B03 $$-B04 $$-B05 $$-B06

Name 1L ClearPure 1L Spritz 1L Lemon Spritz

500mL ClearPure 500mL Spritz 500mL Lemon

Spritz

Initial forecast 1,000 1,000 1,000 1,000 1,000 1,000

Replenishment lead time 3 steps 3 steps 3 steps 3 steps 3 steps 3 steps

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

ForecastingForecasting

The Distribution Game:The Distribution Game:Round 3Round 3 (20 steps) (20 steps)

Now start the simulator for the last

20 steps

Cash managementCash management

• You started with 146,060 in cash• You can reimburse your bank loan at

anytime and save on interest payment• You can use all your cash to stock products,

but …• If you run out of cash, your bank loan will be

extended but you credit rating will go down and your interest payments will go up

• Holding to much stock reduce your ability to response to customers’ preferences

51

Premium on credit ratingsPremium on credit ratingsCre dit ra tings Risk PremiumAAA 0.00% AA+ AA- A BBB+ BBB BBB- BB+ BB CC 10.00%

Check financial dataCheck financial data

53

Financialstatements

Productcosting

Analysis of Your Distribution Analysis of Your Distribution OperationOperation