Operate a Logistics Company Operate a Logistics Company

EGN 5621 Enterprise Systems Collaboration(Professional MSEM )

Fall, 2011

Objectives:Objectives:To understand the practice side of running

a logistics operation.To learn how the ERP system is used to

support business strategiesTo develop decision making skills using an

enterprise softwareTo appreciate the tangible benefits of

enterprise integration firsthand

The Logistics GameThe Logistics GameIn groups of 5 participants, each team has

to operate a company selling dairy products.

Using standard reports, participants must make business decisions in order to optimize the profit of their operations.

Six Dairy Products Six Dairy Products

Products DetailsProducts Details

Logistics Operation DesignLogistics Operation Design

Your company owns a main warehouse which receives and stores products you have purchased

from a dairy cooperative.

The Market’s SettnigsThe Market’s SettnigsEach region has unique preferences related to the products it wishes to purchase from your company. Preferences change every game.

One Price List in Distribution One Price List in Distribution Channel 16Channel 16

You will need to set-up prices for your products. The price for each product will be applied to all 3 regions.

You will have to manage transportation costs carefully as they negatively affect your company’s profit.

Transportation CostsTransportation Costs

Cost : 1000 € per

PO

Cost : 1000 € per

PO

Cost : 100 € per regional tranferCost : 100 € per regional tranfer

Logistics StrategyLogistics StrategyYou must determine a logistics strategy in order to make your products available for sales through your regional storage location.

OR

Push Logistics StrategyPush Logistics Strategy

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

PushPush Logistics Strategy Logistics StrategyThe simulator will deliver the specified quantity

to the three regional storage locations, as defined in the delivery interval.

If the stock in the main warehouse is more than the required quantity, excess material remains at the main warehouse.

If the stock in the main warehouse is less than the specified for transfer to the three regional storage locations, the available stock will be divided proportionally according to the specified quantity for each region, such that more stock will be sent to the region with a higher specified quantity

The Pull Logistics StrategyThe Pull Logistics Strategy

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

PullPullThe simulator will deliver the balance between the

target quantity and current stock quantity at each local storage every time according to your selected scheduling days.

If there is enough stock in the local storage, then no transfers is generated for the local storage.

If the main warehouse does not have enough stock to meet a need, available stock will be divided proportionally according to the generated stock transfer for each regional storage location, such that ones with a larger gap between current and target stock will receive more transfer.

Rules of the GameRules of the GameEach round will last 10 days

(a bit more than one minute per day)No initial inventory for each product.End-of-round inventory is carried over to

the next round.You may sell a product only if the stock is

available at each regional storage location.

You are competing against other teams.Your objective is to maximize profits.

Rules of the GameRules of the GameThere are warehousing costs whenever

the company’s total inventory (inventory in both the main warehouse and three local storages) exceeds 4,000 boxes. The cost is 100 € per day for each additional 100 boxes exceeding 4,000.

Market size: About € 6,000 per company per day.

Lead time from supplier: 1 – 3 daysLead time to local locations: 1 – 3 days

Activities in Each CompanyActivities in Each CompanyCreate 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 products (VK32)Check reports

◦ Purchase order report (ZME2N)◦ Inventory report (ZMB52)◦ Summary sales report (ZVC2)◦ Sales report (ZVA05)◦ Financial statement (F.01)

Activities in Each CompanyActivities in Each Company Must make sure that the regional warehouses

have the required stock needed to meet demand while reducing the delivery, purchase order numbers, warehouse cost.

In order to excel, each company have a good strategy, all departments must coordinate their efforts, correctly and quickly respond to market requirement/changes, and use the ERP system effectively.

Game layoutGame layout

10 days15 min

10 days15 min

10 days15 min

Round 1

Round …

Round 6

Job Aids (1/2)Job Aids (1/2)

Job Aids (2/2)Job Aids (2/2)

Login informationLogin information

Client: 530

Login:logistics_$#

Where $ is your team letterAnd # is your number

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

SAP Menu & NavigationSAP Menu & Navigation

Top Menu: Extras / Settings / Display technical names

Logistics Game: Logistics Game: Round 1Round 1

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

ForecastingForecastingFirst Screen

Second Screen

Execute MRPExecute MRP

Convert purchase requisitions into Convert purchase requisitions into purchase orderspurchase orders

Track purchase ordersTrack purchase orders

Logistics Transfer PlanningLogistics Transfer Planning

Stock in material overviewStock in material overview

Maintain Prices for DC 16Maintain Prices for DC 16

16

Check sales summary reportCheck sales summary report

Check financial statementCheck financial statement

The Logistics Game:The Logistics Game:Round 1 (10 days)Round 1 (10 days)

We start the simulator for 10 days

Debriefing:Debriefing:Round 1Round 1

Questions?Questions?

What are your first impressions?How was the communication during Round

1?What information was exchanged among

teammates?Who made decisions in your team?Were you satisfied with the organization in

your company?

Logistics Game: Logistics Game: Round 2Round 2

The Logistics Game:The Logistics Game:Round 2 (10 days)Round 2 (10 days)

We start the simulator for 10 days

Debriefing:Debriefing:Round 2Round 2

Questions?Questions?

How was the communication during Round 2?

What information was exchanged among teammates?

Who made the decisions in your team?Were you satisfied with the organization in

your company?

Logistics Game: Logistics Game: Round 3Round 3

The Logistics Game:The Logistics Game:Round 3 (10 days)Round 3 (10 days)

We start the simulator for the last 10 days

Debriefing:Debriefing:Round 3 - 6Round 3 - 6

Questions?Questions?

How was the communication during Round 3 - 6?

What information was exchanged among teammates?

Who made the decisions in your team?Were you satisfied with the organisation in

your company?

Questions?Questions?

Did your role and relevance within your team changed from Round 3 to Round 6?

How were the decisions made?Based on your experience, how well did

your operation make use of the entreprise system?

How could an enterprise system transform company’s organization and operation?