Case Study 3: Operate a Manufacturing Company (Introduction) EIN 6133 Logistics Engineering Summer B, 2015 Objective The objective of this manufacturing case study is to provide a hands-on experience of an integrated business process in the simulated environment, which integrates basic operation functions of planning, sales, production, procurement, marketing, and financial accounting for learning how to run a manufacturing operation and make business decisions. The Virtual Business Environment Simulation of a market Automation of administrative tasks Simulation of the passing of time Corporate Roles Designation CEO (Team Leader) Review financial statement Coordinate operating activities Review price market report Review summary sales report Monitor sales and market data Review inventory Report Sales & Marketing Manager Change sales prices Plan marketing expense Provide advices to material manager for forecasting Review sales and market data Check summary sales report Review price market report 4 Corporate Roles Designation Production Planning Manager Create planned independent requirements Run MRP to create: 1) purchase requisitions (PRs) for raw and packing materials, and 2) planned orders for finished products. Convert purchase requisitions to Purchase orders Track purchase orders Analyze product cost Material Manager Review planned orders for each product Control and release production orders if required raw materials are available Monitor production schedule Track purchase orders Check inventory report 5 Operations activities Organizational elements Organizational Elements for Extended Mfg Organizational Elements $$ $$ $$ for Extended Mfg $$ Master Data Used in this study Definition of Master Data (1/2) Definition of Master Data (2/2) List of Master Data 2 Muesli Manufacturing Association Label Regulation Muesli Cereals Raisins Oats Strawberries Wheat Blueberries Nuts Your 6 products 40% wheat 40% oat 20% nut 1 box 1 bag 35% wheat 35% oat 10% raisin 10% nut 5% strawberry 5% blueberry 1 box 1 bag 50% wheat 50% oat 1 box 1 bag 40% wheat 40% oat 20% raisin 1 box 1 bag 40% wheat 40% oat 20% strawberry 1 box 1 bag 40% wheat 40% oat 20% blueberry 1 box 1 bag Product Design and German Market Data Model of product $$-F06 $$ $$-F06 $$-P01 $$-P02 $$-R01 $$-R02 $$-R03 $$-R05 $$-R04 $$-R06 German market North DC10: 2 retailers DC12: 19 retailers South DC10: 7 retailers DC12: 23 retailers West DC10: 3 retailers DC12: 17 retailers Input Cost at Low Seasonal Price Number of Stores by Geographical Area DC10: Hypermarkets Buy only large boxes (1 kg) Payment delay of 20 steps More sensitive to price Less sensitive to advertising Will have a stronger preference for 3 particular products during the simulation DC12: Grocery Chains Buy large boxes (1 kg) and small boxes (0.5 kg, only for Mfg Extended case) Payment delay of 10 to 15 steps Will have a stronger preference for 4 particular products during the simulation Number of Retailers Per Locations Risk Premium on Credit Ratings Major Operation Rules You dont change the recipe of a product in this mfg introduction game Customers preferences do not change throughout the game; you may like to learn from their past behavior The company displaying the highest shareholders equity at the end of the simulation wins the game You must behave ethically at all times The end of game inventory will be value at cost price in the final balance sheet. Therefore, you shouldnt sell under cost at any time during the game. Operations tips Develop your teams operations strategy Monitor and modify the strategy, when necessary Use the ERP system efficiently Do not run out of stock Be aware of delays and production capacity constraints Team organization and communication are important. Game Layout 30 steps 15 min 30 steps 15 min 30 steps 15 min Game Rules Each round will be of 30 steps (approx 0.5 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 Participants job Aid Lets Get Started! Create your team : 3 4 persons Up to 26 company : A to Z Develop your teams operations strategy Log in using user name and password given by the instructor Login Information Client 445 Login : $ # $ = Team, Pilot run: A, B, C, D Real run: E, F, G, H # = User 1 to User 4 Password: ERPSIM SAP Menu & Navigation Introductory Game: Round 1 30 steps 15 min Cost, Inventory & Initial Pricing Material$$-F01$$-F02$$-F03$$-F04$$-F05$$-F06 Name Nut Muesli 1.0 kg. Blueberry Muesli 1.0 kg. Strawberry Muesli 1.0 kg. Raisin Muesli 1.0 kg. Original Muesli 1.0 kg. Mixed Fruit Muesli 1.0 kg. Raw material Cost 1.53 1.97 1.38 1.36 1.76 Standard cost 2.48 3.09 2.50 2.65 2.89 Initial price 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 stock100,000 Initial Inventory in Round 1 Initial Financial Statement in Round 1 The Introductory Game: Round 1 (30 Steps- Days) You have initial inventory for each finished product (100,000 for each finished product) You will sell your available products in Q1. You cant buy any raw materials in Q1. You cant make plan, cant run MRP, and cant produce any finished goods in Q1.. You need to know how to : Maintain price list and make plan for marketing investment Watch available stock Monitor sales orders Monitor your profit ! Participants Job Aid & Menu Maintain Prices for DC 10 & DC 12 Marketing Expense Check product costing Stock in Material Overview Check Sales Summary Report in Your Company Code Check Sales Order Report in Your Company Code Check Market Report for All Company Codes Check Financial Statements in Your Company Code The Introductory Game: Round 1 (30 steps 30 days) We start the simulator for 30 steps Introductory Game: Round 2 30 steps 15 min The Introductory Game: Round 2 (30 Steps- Days) You finished goods will be carried over to the round 2 if your still have inventory at the end of the round 1. You have initial raw materials which are enough to make 100,000 of your each product. You cant buy any raw materials in Q2. Planned orders for all six finished products have been created by ERPsim. You can produce your products in Q2 by converting planned orders to production orders. You cant change the planned orders, and cant run MRP You continue to maintain your prices and make investment in market. Game Parameters Participants Job Aid & Menu Release Production Order Release Production Orders (CO41) 1.Select planned orders to be converted to production orders, and 2.Click on the button Convert to release. Check Production Schedule The Introductory Game: Round 2 (30 Steps - Days) We start the simulator for 30 steps Introductory Game: Round 3 30 steps 15 min The Introductory Game: Round 3 (30 Steps- Days) You finished goods and raw materials will be carried over to the round 3 if your still have inventory at the end of the round 2. You can buy any raw materials in Q3. You can produce your products in Q3. You need to 1)create independent requirement plan for your products, 2)run MRP to create purchase requisitions and planned orders, 3)convert purchase requisitions to purchase orders, and 4)release planned orders to production orders. You continue to maintain 1)Prices for finished products, and 2)make investment in market. Participants Job Aid & Menu Create Planned Independent Requirement for 6 Finished Products (MD61) AA-F Forecasting Sales Execute MRP After the MRP Run Convert to Purchase Orders from Purchase Requisitions (ME59) Convert Purchase Requisitions to Purchase Orders Track Purchase Orders Purchase Order Tracking(ZME2N) Raw Material Cost Per PO Collective Conversion of Planned Order (CO41) Release Production Order Release Production Orders (CO41) Check Production Schedule The Introductory Game: Round 3 (30 Steps 30 Days) We start the simulator for the last 30 steps