Case Study 2:
Operate a Logistics Company
EIN 6133
Enterprise Engineering
Summer B, 2015
Logistics Game :
Pedagogical Objectives





Understand the importance of process
management as a source of organization
competitiveness.
Learn how the ERP system supports business
strategies
Develop a hands-on understanding of the
concepts underlying enterprise systems
Experience the tangible benefits of enterprise
integration firsthand
Develop technical skills at taking decision
using an enterprise software
Logistics Game
In groups with 3 - 4 participants, each
team has to operate a company selling
dairy products.
 Using standard reports, participants must
make business decisions in order to
ensure the profitability of their
operations.

Dairy Products
Logistics Game Design

Each company owns a main warehouse which
receives and stores products you have
purchased from a dairy cooperative.
Products Details
Market’s Preferences

Each region has unique preferences
related to products it wishes to
purchase from your company. Yet,
preferences change every game.
One Price List in Distribution
Channel 16

You may set up a price for each of your
products. The price for each product will
apply to all 3 regions.
Transportation Fees
•
You will have to consider transportation fees carefully in
order to maximize your company’s profits.
Cost :
1000 €
per PO
Cost : 100 € per
regional tranfer
Logistics Strategy

You must select a logistics strategy to make
your products available for sales through your
regional storage locations.
OR
A Push Logistics Strategy

A Push strategy specifies the quantity of
each product to be delivered to each area
and the number of days between
deliveries.
Push

Simulator will deliver the chosen quantity to your
three storage locations every time in the defined
number of days.

If more stock in the main warehouse than
required by the transfer, excess material remains
at the main warehouse.

If less material available in the main warehouse
than required by the transfer, the generated stock
transfers divided available stock, so that regions
with higher stock transfer amounts receive more
stock
Push
In the Logistics case, you have 1,000 boxes of Milk in your main warehouse, 250
boxes of Milk in North, 300 boxes of Milk in South, and 300 of Milk in West local
storage. Which of the following statements is correct based on the stock transfer
planning below using Push strategy.
a. 50 to North, 0 to South, and 50 to West
b. 300 to North, 250 to South, and 350 to West
c. No transfer
d. 300 to North, 300 to South, and 300 to West
Push
In the Logistics case, you have 450 boxes of Milk in your main warehouse, 250
boxes of Milk in North, 300 boxes of Milk in South, and 300 of Milk in West local
storage. Which of the following statements is correct based on the stock transfer
planning below using Push strategy.
a.
b.
c.
d.
150 to North, 125 to South, and 175 to West
300 to North, 250 to South, and 350 to West
No transfer
150 to North, 150 to South, and 150 to West
A Pull Logistics Strategy

A Pull strategy specifies the target
quantities for each product in each
area and the number of days between
deliveries.
Pull



System will deliver the balance between the
target quantity and current stock quantity for
each local storage every time according to your
selected scheduling days.
If there is enough stock in the local storage, then
no transfers will be generated for the local storage
and the exceeding quantity will remain in the
main warehouse.
In case there are less products available in the
main warehouse, the generated stock transfers
divide available stock so that the local storages
with large gaps between current and target stock
are prioritised.
Pull
In the Logistics case, you have 900 boxes of Milk in your main warehouse,
250 boxes of Milk in North, 300 boxes of Milk in South, and 300 of Milk in
West local storage. Which of the following statements is correct based on
the stock transfer planning below using Pull strategy.
a.
b.
c.
d.
50 to North, 0 to South, and 50 to West
300 to North, 250 to South, and 350 to West
No transfer
300 to North, 300 to South, and 300 to West
Pull
In the Logistics case, you have 300 boxes of Milk in your main warehouse,
200 boxes of Milk in North, 50 boxes of Milk in South, and 50 of Milk in
West local storage. Which of the following statements is correct based on
the stock transfer planning below using Pull strategy.
a.
b.
c.
d.
300 to North, 250 to South, and 350 to West
50 to North, 100 to South, and 150 to West
No transfer
100 to North, 100 to South, and 100 to West
Pull
In the Logistics case, you have 900 boxes of Milk in your main warehouse,
300 boxes of Milk in North, 250 boxes of Milk in South, and 350 of Milk in
West local storage. Which of the following statements is correct based on
the stock transfer planning below using Pull strategy.
a.
b.
c.
d.
300 to North, 250 to South, and 350 to West
50 to North, 100 to South, and 150 to West
No transfer
100 to North, 100 to South, and 100 to West
Rules of the Game
Each round will last 10 days
 Each purchase order costs €1,000 and each
transfer from the main warehouse to a
regional location costs €100
 There is an interest charge
 There is no initial inventory for each product.
 No marketing expense
 End-of-round inventory is carried over to the
next round.
 You may sell a product only if the stock is
available through the regional storage location.
 You are competing against other teams.
 The objective is to maximize the profit.

Rules of the Game
There are warehousing costs whenever
the company’s total inventory (in both
the main warehouse and three local
storages) exceeds 4,000 boxes. The cost
is €300 per day for each additional
1,000 boxes exceeding 4,000.
 Market size: About € 12,000 per
company per day.
 Lead time from suppliers: 1 – 3 days
 Lead time to customers: 1 – 3 days

Activities in Each Company

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Create 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 product (VK32)
Check reports
◦
◦
◦
◦
◦
Purchase order report (ZME2N)
Inventory report (ZMB52)
Summary sales report (ZVC2)
Sales report (ZVA05)
Financial statement (F.01)
Activities in Each Company

Make sure each regional warehouse has
the required stock needed to meet
demand while reducing the delivery, the
number of purchase orders, and
warehousing cost.

In order to compete, each company has a
good operations strategy. Manager
must coordinate their efforts timely,
respond to market requirement/changes
quickly, and use the ERP system
effectively.
Job Aids (1/2)
Job Aids (2/2)
Login information
Client: 360
Login:
$#
Where $ is your team letter
And # is your number
For Pilot run: $ = I, J, K, L
For Real run: $ = M, N, O, P
Password: ERPSIM
You will have to change your
password the first time you enter
SAP Menu & Navigation
Top Menu: Extras / Settings / Display technical names
Logistics Game:
Round 1
Participant’s job aid & Menu
Check initial financial statement
Forecasting
First Screen
ZZ-T
Second
Screen
Execute MRP
Convert purchase requisitions into
purchase orders
Track purchase orders
Logistics Transfer Planning
Stock in material overview
Maintain Prices for DC 16
16
Check sales summary report
Check financial statement
The Logistics Game:
Round 1 (10 days)
We start the simulator
for 10 days
Debriefing:
Round 1
Questions?

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What were your first impressions?
How did your operations strategy work?
How was the communication during
Round 1?
What information was exchanged among
teammates?
Who made decisions in your team?
Were you satisfied with the team
organisation of your group?
Logistics Game:
Round 2
The Logistics Game:
Round 2 (10 days)
We start the simulator
for 10 days
Debriefing:
Round 2
Questions?





How was the communications during
Round 2?
How did your operations strategy work?
What information was exchanged among
teammates?
Who made decisions in your team?
Were you satisfied with the team
organization of your group?
Logistics Game:
Round 3
The Logistics Game:
Round 3 (10 days)
We start the simulator
for the last 10 days
Debriefing:
Round 3 - 6
Questions?




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How was the communication during
Rounds 3 - 6?
How did your operations strategy work?
What information was exchanged among
team mates?
Who made the decisions in your team?
Were you satisfied with the team
organisation of your group?
Questions?
Did your role and relevance within your
team changed from Round 3 to Round 6?
 How was a decision made?
 Based on your experience, what is an
Entreprise system?
 How can an enterprise system tranform
an organization?

Team Homework:
(Due date -7/8/2015)
1. Presentation of performance analysis for case 2:
Run a Logistics company (a hard copy and an
electronic file in MS Power point)
2. A written report for Case 2 (a hard copy and an
electronic file in MS Word)