ERPSIM Visualization & Analysis Project HEC Montreal Advanced Game

TABLE OF CONTENTS:

EXECUTIVE SUMMARY …………………………………………………………. 2

INTRODUCTION ……………………………………………………………………. 3

STRATEGIC PROBLEM …………………………………………………………. 3

RECOMMENDATIONS …………………………………………………………. 10

OPERATIONAL PROBLEM …………………………………………………… 12

RECOMMENDATIONS …………………………………………………………. 21

CONCLUSION ……………………………………………………………………… 22

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Executive Summary

1. Purpose The purpose of this report is to evaluate our team’s performance through our nine rounds of the HEC Montreal ERPsim Advanced Manufacturing game. Our goal was to maximize production and sales in order to gain the highest net income and company valuation, not only to win the game but also to challenge ourselves and put into practice the skills we gained while studying cost accounting. This report aims to identify the problems we encountered that hindered our overall performance and further understand the causes of those problems.

2. Problems Our team identified two main problems we suffered during the nine-round game, one strategic and one operational. Strategically, we failed to identify the most opportune markets in which to produce and sell products. Operationally, we struggled to hold a sufficient amount of inventory as illustrated by the rate our inventory was leaving the warehouses. These problems were chosen as the main issues we wanted to tackle because after analyzing our data, we believe that they had the most significant impact on our overall performance

3. Findings We found that a potential reason for our strategic problem was the inopportune timing of market entry and exit in certain markets. This caused our company to lose out on potential profits and was an opportunity cost to producing other products. Additionally, we placed relatively large material requisition orders which essentially gave us a fixed production schedule, leaving little room for flexibility if we wanted to switch between products. For our operational problem, we believe the root of our inventory depletion problem came from setting the price below the market average and not shipping enough goods from the main warehouse to the regional ones. These two causes resulted in our inability to optimally sell all of the products we produced. 4. Recommendations To improve our ability to identify the most propitious markets to sell products, we should not only enter successful markets based on the ZMARKET data, but also hypothesize where we might be able to gain an edge in niche markets during the wait for the data to be prepared. Secondly, having smaller and more constant production runs will correct our timing of market entry and exit. Regarding our operation problems of depleted inventory and insufficient shipping quantities to regional warehouses, our recommendations are to monitor prices better and proactively change prices every 5 days to remain competitive. In addition, we want to enhance our communication between sales, production, and shipping and explore factors that affect shipping through increased analysis.

Introduction

Our group, Team O, ranked No. 2 in the ERPsim Advanced Game over a series of nine rounds. We divided our roles into pricing, production, shipping, and marketing. Together, our goal was to work cohesively in order to earn the maximum potential net income and company valuation. Our strategy before starting the game was to sell only a few product lines and place our focus on distribution channels 12 and 14 in order to utilize price leverage via marketing to gain higher margins. Despite our slow start in round one, we were able to quickly solidify ourselves as one of the top performing teams. However, after five rounds of play, we not able to keep our first place position. Ultimately, due to a combination of external and internal issues, we ended the nine rounds in second place.

After analyzing our performance, we identified a strategic and an operational issue that we were unable to correct during the nine rounds of play. We were also able to identify several potential causes of these two main issues. Regarding the strategic problem we faced, we failed to identify opportune markets to produce and push our products into to obtain significant market share. Operationally, our inventory sold out quickly in several rounds, leaving little inventory in our regional warehouses to sell. In this report, we will go in-depth about the strategic and operational issues we faced, explore the various potential causes of these problems, and discuss recommendations we would make going forward into the final six rounds of the Advanced Game.