Operate a Logistics Operate a Logistics Company (Case Study 3)Company (Case Study 3)(Overview and first 3 Runs)(Overview and first 3 Runs)

EGN 5621 Enterprise Systems CollaborationFall, 2011

Learning ObjectivesLearning Objectives

Gain the experience of running a logistics company

Learn to use process management as a competitive edge.

Learn to use the ERP system to support business strategies

Appreciate the concepts and benefits of enterprise systems systems integration

Logistics GameLogistics Game

Each team consists of up to 4 members.Each team operates a logistics company

selling dairy products.Using standard reports, each team makes

business decisions in order to optimize the profitability of its operations.

Dairy Products Dairy Products

Business Environment DesignBusiness Environment Design

Each company owns a main warehouse which receives and stores products ithas purchased from a dairy cooperative.

Products DetailsProducts Details

The Market’s PreferencesThe Market’s PreferencesEach 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 16You 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 fees with care in order to maximize your company’s profits.

Transportation FeesTransportation Fees

Cost : 1000 € per

PO

Cost : 1000 € per

PO

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

Logistics StrategyLogistics Strategy

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

OR

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

A Pull Logistics StrategyA Pull Logistics Strategy

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

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 through your 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 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 suppliers: 1 – 3 daysLead time to customers: 1 – 3 days

Major Business ActivitiesMajor Business ActivitiesPlan for independent requirement for each

finished product (MD61)Run MRP (MD01)Covert purchase requisitions to purchase orders

(ME59N)Transfer stock (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)

Major Business ActivitiesMajor Business ActivitiesMake sure that the regional warehouses

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

To excel, each company must have a good strategy; departments must coordinate their efforts efficiently, respond to market requirement/changes quickly, and use the ERP system effectively.

Game layoutGame layout

10 days15 min

10 days15 min

10 days15 min

Round 1

Round …

Round 8

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

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

Login informationLogin information

Client will be provided by the instructor

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

15 min

10 days10 days

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

15 min

10 days10 days

Logistics Game: Logistics Game: Round 1Round 1

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

Now start the simulator for 10 days

15 min

10 days10 days

Logistics Game: Logistics Game: Round 2 - 8Round 2 - 8