gm/wayne state national case competition

R.H.D.&L.S. ConsultingGM/Wayne State Supply Chain Case CompetitionDesign, Build, and Sell the World's Best Vehicles

Abigail FoxTierney ReillyKevin Roepe

Marc Vinklarek

Overview

• Requirements & Objectives

• Assumptions

• Recommendation Overview

• Supplier Analysis

• SWOT Analysis

• Key Success Factors

• Corporate Strategy & Vision

• Future Values

• Business Model

• Conclusion

Case Requirements & Objectives

• Achieve Marketing's Increased Demand for ATS • Achieve Marketing's New Demand for Sonic• Meet Timing Requirements • Perform Total Enterprise Cost Analysis • Sourcing Recommendation

Assumptions

• Constant demand for Chevrolet Sonic's without Dockspot

• Every car manufactured is sold

• Supplier's will meet quality specifications

• Supplier's are responsible for second-tier supplier management

• Contingency plan for Tel Aviv

• Shipping cost based on per mile not load size

Powerful Vision, Powerful Strategy

Recommendation

Sole Source Talon Interiors

Market Share Leader

Economic Sustainability

Recommended Strategy Sole Sourcing from Talon Interiors

Recommended Strategy Sole Sourcing from Talon Interiors

$56,886,181$59,009,639

$55,500,000

$56,000,000

$56,500,000

$57,000,000

$57,500,000

$58,000,000

$58,500,000

$59,000,000

$59,500,000

Package Individual

Tota

l Co

st ($

)

Options

PACKAGE VS. INDIVIDUAL

4%

56,886,181

63,577,450

59,780,384

54,434,296

60,152,150

57,501,359

53,964,291

59,642,325

57,014,334

$- $50,000,000 $100,000,000 $150,000,000 $200,000,000

Talon

Liger

Pedro

Total Cost of Ownerships

S

u

p

p

l

i

e

r

s

Overview of Total Cost of OwnershipFY1

FY2

FY3

Pedro Industries Supplier Analysis

Beneficial Factors

• Long-standing relationship with GM

• Proven quality record

Areas of Concern

• High political risk

• Potentially increased lead times

• Frequent GM involvement

• 5% greater costs

FY1 FY2 FY3

Total Cost: Package Award $ 59,780,384.21 $ 57,501,359.21 $ 57,014,334.21

Total Cost : Independent ATS Award $ 43,299,974.00 $ 41,539,774.00 $ 41,139,574.00

Total: Independent Sonic Award $ 17,481,864.00 $ 16,892,344.00 $ 16,797,584.00

Pedro Industries Three Year Cost Overview

Liger Industries Supplier Analysis

Beneficial Factors

• Geographic proximity

• Top-rated supplier

• High service rating

Areas of Concern

• 12% higher costs

• History of price creep

Liger Industries Three Year Cost Overview

FY1 FY2 FY3




Talon Interiors Supplier Analysis

Beneficial Factors

•Most cost effective•Experienced consumer electronics supplier•Lucrative technology•ISO 14,001

Areas of Concern

• New supplier to General Motors

• Unproven quality

Talon Interiors Three Year Cost Overview

FY1 FY2 FY3




Supplier Cost Review Independent Awards

$38,000,000

$39,000,000

$40,000,000

$41,000,000

$42,000,000

$43,000,000

$44,000,000

FY1 FY2 FY3

ATS Independent Awards

Pedro Industries Liger Industries Talon Interiors

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

FY1 FY2 FY3

Sonic Independent Awards

Pedro Industries Liger Industries Talon Interiors

Supplier Cost Review Package Award

$48,000,000

$50,000,000

$52,000,000

$54,000,000

$56,000,000

$58,000,000

$60,000,000

$62,000,000

$64,000,000

FY1 FY2 FY3

Pedro

Liger

Talon

Packaged Deals Pedro Industries Liger Industries Talon Interiors

Strengths• Proven quality• Relationship with GM

• Proximity to GM• Service standards• Order processing• High quality

• Lucrative technology• Prior industry experience

• Lowest Total Enterprise Cost

Weaknesses

• Geographical risk• No prospective innovation• GM involvement

• Inventory and shipping costs• Largest tooling lead time• Price creep• No prospective innovation

• No TS16949 certification • Start up costs• Furthest distance in miles

Opportunities • Relocate manufacturing • Technological advancements

• Technological advancements• Lower costs

• Influence over quality management

• Future relationship with Preston Inc.

• Increased market share due to MR technology

• Relocate manufacturing

Threats

• Logistics and inventory risk• Political risks

• Un-competitive pricing• One manufacturing location• Supplier to competitor

Become Market Share Leader

Produce Quality Products

Strategically Source Parts and Materials

Continuously Innovate

Key Success Factors

GM Corporate Strategy

Current State

- Ensure economic viability

- Improve brand strength amongst Millennials

- Reinvest in a self-sustaining cycle

Future State

- Use advanced technology

- Reinvent transportation

- Create world-class products

Key Success Factors

- Become market leader

- Produce quality products

- Strategically source parts and materials

- Continuously innovate

- Transform our business

- Fortify our balance sheet

- Win in the marketplace

Corporate Vision

Implementing Future Values

• Sustain relationship

• Open-book and quarterly audits

• Supplier strategy development

• Tier 2 supplier development

• Heighten MR barriers of entry

• Negotiate for lower costs, fixed pricing

• Redesign container increased piece per shipment

• Protection against committed spend

• Require TS 16949 Certification

0.0230.047

0.0730.115

0.1540.179 0.194 0.207

0

0.05

0.1

0.15

0.2

0.25

1 2 3 4 5 6 7 8

% o

f to

tal s

ale

s

Years

Global Wireless Charger Handset Sales (% of Total)

Global Wireless Charger Handset Sales (% of Total)

Business Model

Value Propositions

• Produce World-Class, Technologically-Advanced, Reliable Automobiles

• Wireless Charging

Channels

• Dealerships

• Rental Agencies

Customer Relationships

• Customer Service

• Dependability

Revenue Streams

• Vehicle Sales and Leases

• Rental Agencies

• Fleet Sales

Customer Segments

• Millennials

• Young Professionals

• Tech-savvy consumers

Conclusion

• Sole sourcing Talon Interiors most economically sustainable option

• New supplier relationship brings innovation to GM

• Long-term relationship to ensure supplier sustainability

TalonFuture State

Thank you for your time and consideration

Appendix A

KSF’s

KPI’s

CriticalProcesses

Become Market Share Leader

Consistently produce quality

products

Strategically source parts and

materials

Continuously innovate

Increase Number of SalesImprove MarginsDecrease Costs

Minimize number of recallsIncrease residual value

DevelopComprehensiveSupplierscorecard

Utilize improved technologies in

vehicles

Raise brand awareness

Sell!

Implement 6 Sigma/Lean

practices

Perform Supplier Audits/

Development

Focus on Research and development.

Customer preferences

Use advanced technology to reinvent the future of transportation and create world-class products in order to transform our business, fortify our balance sheet and win in the marketplace.

Integrity, individual respect and responsibility

Innovative and trusting

Win with Integrity

Automotive manufacturer looking toensure economic viability throughimproving brand strength amongstmillennials and continuously

reinvesting in a self-sustaining cycle.

Vision:Future State

Mission:Current State

Motivators:Values

GM Corporate Strategy Map

Business Model CanvasKey Partners

• Talon Interiors

• PrestonIncorporated

• Original Equipment Manufacturers

Key Activities• Production

• Strategic Sourcing

• Research and Development

Value Propositions

• Produce world-class, technologically-advanced, reliable automobiles

• Wireless charging

Customer Relationships• Customer

Service

• Dependability

CustomerSegments

• Millennials (Sonic)

• Young Professionals (ATS)

• Tech-savvy consumers (Both)

Key Resources• Innovative

technology• Suppliers

Channels• Dealerships• Rental

Agencies

Cost Structure• Manufacturing • Labor• Marketing and Sales

Revenue Streams• Vehicle Sales and Leases • Fleet Sales • Rental Agencies

Transit Distances and Costs Pedro Industries

Pedro Industries(Saltillo, MX)

Lansing, MI Orion, MI

Distance 1,771.5 Miles 1,844.2 Miles

Costs

53’ Standard $49,705.31 $29,024.54

53’ Drop Deck $46,211.60 $51,135.19

53’ Standard IM $49,049.84 $28,342.2

60’ Boxcar $95,664.66 N/A

86’ Boxcar $134,200.00 N/A

53’ Expedited $50,785.94 $30,149.52

Transit Distances and Costs Liger Industries

Liger Industries(Michigan)


Distance Intercity Intercity

Costs

53’ Standard $46,895.00 $26,095.00

53’ Drop Deck $43,293.00 $48,093.00

53’ Standard IM N/A N/A

60’ Boxcar N/A N/A


53’ Expedited N/A N/A

Transit Distances and Costs Talon Interiors

Talon Interiors(San Diego, CA)


Distance 2,278 Miles 2,365 Miles

Costs

53’ Standard $50,535.92 $29,878.60

53’ Drop Deck $47,027.04 $51,973.20

53’ Standard IM $49,305.80 $28,601.50



53’ Expedited $52,176.08 $31,581.40

Containers per Transport Type

53’ Standard 53’ Drop Deck 60’ Boxcar 86’ Boxcar

Cadillac ATS 52 Containers 48 Containers 96 Containers 138 Containers

Arrangement (13L x 2W x 2H) (10L x 2W x 2H) (2L x 2W x 2H)

(16L x 2W x 3H) (23L x 2W x 3H)

Orientation (48” x 45” x 54”) (48” x 45” x 54”)(54” x 48” x 45”)

(45” x 54” x 48”) (45” x 54” x 48”)

Chevy Sonic 26 Containers 48 Containers 72 Containers 102 Containers

Arrangement (13L x 2W x 1H) (10L x 2W x 2H)(2L x 2W x 2H)

(12L x 2W x 3H) (17L x 2W x 3H)

Orientation (48” x 45” x 60”) (48” x 45” x 60”)(60” x 48” x 45”)

(60” x 48” x45”) (60” x 48” x 45”)

Transit Shipping Costs Pedro Industries

ATS – Package Sonic – Package ATS – Individual Sonic - Individual

53’ Standard $192,601.31 $56,628.54 $194,473.31 $57,864.54

53’ Drop Deck $178,115.60 $102,591.19 $179,843.60 $104,895.19

53’ Standard IM $191,945.84 $55,946.17 $193,817.84 $57,182.17

60’ Boxcar $359,452.66 N/A $362,908.66 N/A

86’ Boxcar $513,424.00 N/A $518,553.94 N/A

53’ Expedited $193,681.94 $57,753.52 $195,553.94 $58,989.52

Transit Shipping Costs Liger Industries


53’ Standard $191,663.00 $57,324.60 $192,599.00 $58,395.80

53’ Drop Deck $176,925.00 $106,307.40 $177,789.00 $108,304.20

53’ Standard IM N/A N/A N/A N/A

60’ Boxcar N/A N/A N/A N/A


53’ Expedited N/A N/A N/A N/A

Transit Shipping Costs Talon Industries


53’ Standard $190,935.92 $53,939.40 $193,431.92 $54,722.20

53’ Drop Deck $176,627.04 $96,824.40 $178,931.04 $98,283.60

53’ Standard IM $189,705.80 $52,662.30 $192,201.80 $53,445.10



53’ Expedited $192,576.08 $55,642.20 $195,072.08 $56,425.00

Total Cost of Ownership Pedro Industries Package Award

Package FY1 FY2 FY3

Start-Up Costs - - -

Total Piece Price $49,420,500.00 $48,917,000.00 $48,493,500.00

Tooling Cost + Expedited Costs $1,500,000.00 - -

Expedited Costs $200,000 - -

Transportation Cost $757,621.00 $763,966.00 $781,560.00

Carrying Cost $7,413,075.00 $7,337,550.00 $7,274,025.00

Package: Total Less Expediting $59,091,196.00 $57,018,516.00 $56,549,085.00

Package: Total Cost $59,291,196.00 $57,018,516.00 $56,549,085.00

Total Cost of Ownership Pedro Industries Independent ATS Award

Independent: ATS FY1 FY2 FY3




Expedited Costs $160,000.00 - -


Carrying Cost $5,376,600.00 $5,324,400.00 $5,272,200.00

Independent ATS: Total Less Expediting $42,420,600.00 $40,820,400.00 $40,420,200.00

Independent ATS: Total Cost $43,182,752.00 $41,428,544.00 $41,031,377.00

Total Cost of Ownership Pedro Industries Independent Sonic Award

Independent: Sonic FY1 FY2 FY3



Tooling Cost + Expedited Costs $400,000 - -

Expedited Costs - - -


Carrying Cost $2,198,880.00 $2,174,160.00 $2,161,800.00

Independent Sonic: Total Less Expediting $17,545,731.00 $16,959,073.00 $16,865,762.00

Independent Sonic: Total Cost $17,545,731.00 $16,959,073.00 $16,865,762.00

Total Cost of Ownership Liger Industries Package Award

Package FY1 FY2 FY3




Expedited Costs $1,200,000.00 - -


Carrying Cost $7,756,200.00 $7,677,600.00 $7,612,200.00

Package: Total Less Expediting $62,264,200.00 $58,861,600.00 458,360,200.00


Total Cost of Ownership Liger Industries Independent ATS Award





Expedited Costs $600,000.00 - -


Carrying Cost $5,411,362.50 $5,324,400.00 $5,272,200.00



Total Cost of Ownership Liger Industries Independent Sonic Award




Tooling Cost + Expedited Costs $600,000.00 - -

Expedited Costs - - -


Carrying Cost $2,459,520.00 $2,432,640.00 $2,419,200.00

Independent Sonic: Total Less Expediting $19,762,290.00 $18,956,210.00 $18,853,170.00

Independent Sonic: Total Cost $19,762,290.00 $18,956,210.00 $18,853,170.00

Total Cost of Ownership Talon Interiors Package Award

Package

FY1 FY2 FY3

Start-Up Costs $500,000.00 $ - $ -


Tooling Cost + Expedited Costs $1,400,000.00 $ - $ -

Expedited Costs $ - $ - $ -


Carrying Cost $7,051,815.00 $6,979,830.00 $6,918,525.00

Package: Total Less Expediting $56,179,672.00 $53,727,787.00 $53,257,782.00


Total Cost of Ownership Talon Interiors Independent ATS Award


Start-Up Costs $500,000.00 $ - $ -


Tooling Cost + Expedited Costs $1,000,000.00 $ - $ -



Carrying Cost $5,307,075.00 $5,255,550.00 $5,204,025.00



Total Cost of Ownership Talon Interiors Independent Award


Start-Up Costs $500,000.00 $ - $ -

Total Piece Price $12,645,600.00 $ 12,499,200.00 $ 12,426,000.00

Tooling Cost + Expedited Costs $ 400,000.00 $ - $ -


Transportation Cost $ 267,225.00 $ 267,225.00 $ 267,225.00

Carrying Cost $ 1,896,840.00 $ 1,874,880.00 $ 1,863,900.00

Independent Sonic: Total Less Expediting $ 15,709,665.00 $ 14,641,305.00 $ 14,557,125.00

Independent Sonic: Total Cost $ 15,709,665.00 $ 14,641,305.00 $ 14,557,125.00

EOQ Delivery Pedro Industries

Orion, Michigan (Package)

FY 1 FY 2 FY 3

53' Standard $ 577,803.93 $ 577,803.93 $ 577,803.93

53' Drop deck $ 534,346.80 $ 534,346.80 $ 534,346.80

53' IM $ 575,837.53 $ 575,837.53 $ 575,837.53

EOQ Delivery Pedro Industries

Orion, Michigan (Individual)

FY 1 FY 2 FY 3

53' Standard $ 226,514.15 $ 226,514.15 $ 226,514.15

53' Drop deck $ 307,773.57 $ 307,773.57 $ 307,773.57

53' IM $ 223,784.69 $ 223,784.69 $ 223,784.69

Pedro

Lansing, Michigan (Package)

(Package) FY1 FY2 FY3

53' Standard $ 770,405.24 $ 770,405.24 $

770,405.24

53' Drop deck $ 712,462.40 $ 712,462.40 $

712,462.40

53' IM $ 767,783.37 $ 767,783.37 $

767,783.37

60' Railcar $ 1,078,357.98 $ 1,078,357.98 $

1,078,357.98

86' Railcar $ 1,540,272.00 $ 1,540,272.00 $

1,540,272.00

PedroLansing, Michigan (Individual)

(Individual) FY1 FY2 FY3

53' Standard $ 777,893.24 $ 777,893.24 $

777,893.24

53' Drop deck $ 719,374.40 $ 719,374.40 $

719,374.40

53' IM $ 775,271.37 $ 775,271.37 $

775,271.37

60' Railcar $ 1,088,725.98 $ 1,088,725.98 $

1,088,725.98

86' Railcar $ 1,555,176.00 $ 1,555,176.00 $

1,555,176.00

Liger

Orion, Michigan (Package or Individual)

FY1 FY2 FY3

Standard 53' $ 312,550.00 $ 312,550.00 $ 312,550.00

Dropdeck 53' $ 305,970.00 $ 305,970.00 $ 305,970.00

Liger

Lansing, Michigan (Package or Individual)

FY1 FY2 FY3

Standard 53' $ 312,550.00 $ 312,550.00 $ 312,550.00

Dropdeck 53' $ 305,970.00 $ 305,970.00 $ 305,970.00

Talon

Orion, Michigan (Package)


53' Standard $ 215,757.60 $ 215,757.60 $

215,757.60

53' Drop deck $ 290,473.20 $ 290,473.20 $

290,473.20

53' IM $ 263,311.50 $ 263,311.50 $

263,311.50

Talon

Orion, Michigan (Individual)


53' Standard $ 273,611.00 $ 273,611.00 $

273,611.00

53' Drop deck $ 294,850.80 $ 294,850.80 $

294,850.80

53' IM $ 267,225.50 $ 267,225.50 $

267,225.50

Talon

Lansing, Michigan (Package)


53' Standard $ 763,743.68 $ 763,743.68 $ 763,743.68

53' Drop deck $ 706,508.16 $ 706,508.16 $ 706,508.16

53' IM $ 758,823.20 $ 758,823.20 $ 758,823.20

Talon

Lansing, Michigan (Individual)


53' Standard $ 773,727.68 $ 773,727.68 $ 773,727.68

53' Drop deck $ 715,724.16 $ 715,724.16 $ 715,724.16

53' IM $ 768,807.20 $ 768,807.20 $ 768,807.20

Appendix BFormulas

Total Cost of Ownership

• TCO = (Total Piece Price + Tooling Costs+ Expedited Tooling

Costs+ Transportation Costs + Carrying Costs)

EOQ Cost

• EOQ =√[2((Annual Demand )*Transportation Cost)/(Total Piece

Price*Carrying Cost)]

Total Piece Price

• Total Piece Price = (Piece Price * Annual Demand)

Expedited Tooling Cost

• Expedited Tooling Cost= ((Tooling Cost* Expedited Tooling Cost percentage)*(Number of weeks / Reduction weeks rate))

Distance Calculations

• Distances Calculated using Google Maps

• Saltillo, MX to Lansing, MI

• Saltillo, MX to Orion, MI

• San Diego, CA to Lansing, MI

• San Diego, CA to Orion, MI

• Intercity distances were not calculated

Transportation Costs

• Transportation Costs = ((Unit Price * Units per Trailer) * Shipping Costs)

Containers per Trailer

• Process for determining the number of containers that could fit in a specific trailer type

• Researched dimensions for all four trailer types

• Divide trailer length, width and height, by container length, width and height to identify maximum number of containers per dimension

• Visually modeled containers per trailer to determine best orientations and arrangements

• Assumed that containers could be rotated on all three axis to determine best combination

Units per Trailer

• Units per Trailer = (Number of Containers per Trailer * Number of Pieces per Container)

Shipping Costs

• The cost of shipping a truckload of sub-assemblies from supplier to manufacturing site

• Shipping Costs = (( Distance * Rate per Mile) + (Cost per Container * Containers per Trailer))

Carrying Costs

• Carrying Costs = (( Annual Demand * Piece Price) * 15%)

Percent Change in Global Handset Sales

• Used for supporting our choice of Talon Interiors based on the adaptation of MR Technology

• Percent Change=(%2020-%2014)

gm/wayne state national case competition

Business

independent sonic award

independent ats award

year cost overviewmarky

tel avivshipping cost

independent awardsaccess

talon interiors marky

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marketings new demand