Operate a Manufacturing Operate a Manufacturing Company (Case Study 2)Company (Case Study 2)

(Rounds 2 and 4)(Rounds 2 and 4)Part 2Part 2

EGN 5621 Enterprise Systems CollaborationFall, 2011

New product developmentNew product development

New product developmentNew product development

Review of the major rulesReview of the major rulesYou may not change the recipe of a product

if you are still carrying inventoryCustomers 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 strategyElements of a winning strategy

Use the ERP system efficientlyDo not run out of stockDo not lose your production capacitySetup right prices for different products

at different distribution channelsTeam organization is more important

DC10: HypermarketsDC10: Hypermarkets

Buy 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

DC12: Grocery chainsDC12: Grocery chains

Buy 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 grocersOnly 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

Production improvementsProduction improvements

Warehousing cost, Warehousing cost, automatically automatically chargedcharged

Each team has 3 warehouse storage areas:◦Finished product - space for 250,000 boxes◦Raw materials - space for 250,000 kg◦Packaging - space for 1,000,000 boxes and

space for 1,000,000 bagsAdditional warehouse space can be rented:

◦100,000 boxes (or part thereof), @ € 200/step (less than € 0.01 per box per step)

◦100,000 kg (or part thereof), @ € 350/step (more expensive because it's raw food product)

◦100,000 boxes AND/OR bags (or part thereof), @ € 50 step

Risk premium on credit ratingsRisk premium on credit ratings

Production planning decisionProduction planning decision

Lot size decision (MM02)Lot size decision (MM02)

Procurement decisionProcurement decision

Production execution decisionProduction execution decision

Production improvement decisionProduction improvement decision

Pricing decisionPricing decision

Marketing decisionMarketing decision

Tasks for the Manufacturing Case Tasks for the Manufacturing Case Study (Rounds 2 and 4)Study (Rounds 2 and 4)

No Roles Functions Transaction Code

1 CEO Financial statement F.01Price market report ZMarketSummary sales report ZVC2

Sales & Marketing Sales order report ZVA05Summary sales report ZVC2Price market report ZMarketMarketing expense ZADSChange price VK32

3 Production & Planning Forecast – create planned independent Requirements

MD61

MRP run MD01Release production orders CO41Modify BOM ZCS02Monitor production schedule ZCOOISProduct cost analysis ZCK11Check RM cost per Prod. order ZKSB1

4 Procurement Management Automatic generate of POs ME59Track PO report ZME2NMRP results display MD07

Warehouse Management Check stock level MD04Inventory report ZMB52

2

Raw material cost per PORaw material cost per PO

Check Production Cost (ZCK11)Check Production Cost (ZCK11)