ITM 608 ERP Simulation Paper

TEAM B

Prasad, Mohammad, Dinesh

ERP Simulation
ERP simulation was a part of ITM-608 course. It is designed to provide students
an exposure cum access to live SAP system and strengthen the foundations of
Supply Chain Management concepts learned by applying them and competing
against other participating teams.
This simulation involved planning, production and advertising and selling of six
varieties of cereals across 3 different regions and three different market
segments consisting of hyper markets, independent grocery chains and . This
required keeping a tab on production schedule, inventory, market reports,
financial statements and formulating a strategy accordingly. We were team B in
the competition.
The Strategy and its execution
We decided to focus only on 1 kg products. It was based on our experience
during practice simulations, in which we decided to make both 500g and 1kg
products. But making a change in composition left us with the only option to
produce 500g. So, in spite of selling at highest gross margin of over 120%, we
were in the bottom teams.
Therefore, in the final competition, we decided to make only 1 kg products.
Mohammad was assigned the task of keeping a tab on all reports, and advertise
accordingly. Prasad was responsible for changing prices across all markets and
selling the products. Dinesh was handling forecasting, ordering raw materials
and production. Our selling strategy was to sell products a little over market
prices. For example, if market rate for Mixed Fruit cereal was 3.25 at a time, we
put it for sale at 3.27 to 3.30. We chose to sell one product at a time and
stimulating demands by advertising for it in target markets. The targets markets
were selected on the basis of number of stores in a region, that is, higher the
number of store type in a region, more our advertising budget was allocated to
that, and more we focussed to sell in that region. The team started executing
this strategy by discharging assigned duties.
What went wrong?
We were producing and selling all our goods perfectly and that too at good
prices. Our stock was getting over regularly and it seemed that everything was
going perfectly fine. Still we could not figure it out that why we were making
losses in-spite of selling all our goods at good prices and we were continuously
selling our goods. Finally when results were out, we performed not that well and
when we introspected, we found out that we failed to pay attention on our
production schedule and it went overboard. All the time we checked our
inventory levels but missed out on production schedule. So we kept buying all
the raw materials and finally we could not use all the raw materials we
purchased resulting in huge inventory of raw materials and subsequently we
went into losses in-spite of good sales.
Final Results and Take Away
It was a learning experience that to run a business, we need to be very careful of
each and every thing and we cannot just neglect any one of the department. We
had good sales and revenue generation in the market, but neglecting the
production schedule lead to accumulation of raw material and inventory of over
1.3 million dollars. This single mistake washed away the efforts of advertising
and marketing team and dragged the business to heavy losses. In the simulation

ITM 608 ERP Simulation Paper

TEAM B

Prasad, Mohammad, Dinesh

environment it was acceptable, but in actual production environment, such

mistakes can cost dearly in terms of monetary losses as well as termination from
the job.
The second take away was getting familiar to SAP GUI. Implementing the Supply
chain management related lessons learnt in classroom on a live ERP system
boosted our morale, and now we find ourselves more confident in working in a
professional environment on such a system.