sustainable growth through network optimization

GSCMI 2013 Case Competition 1

Sustainable Growth through Network Optimization

Team Name: Consolidated ConsultingCarson Corporon

Xinlei FanPetra Ghicu

Ellie Lin


Introduction Petra Ghicu

Ellie LinJunior

MGMT & Finance

Xinlei FanSenior

MGMT & Acct

Petra GhicuJunior

MGMT & Acct

Carson CorporonJunior

Industrial MGMT


Assumptions Petra Ghicu

Plants have enough capacity to support CMSCs needs

Warehouses are not storing parts from external suppliers

W87 is limited on space and crowded by uncommon SAT parts

Customer orders will grow in West Coast


Problem Statement Petra Ghicu

Currently, Eaton is facing high premium freight and high overall inventory levels

which increases costs and limits sustainable growth.


Recommendations Carson Corporon Texas

Increase lean by adding additional capacity in warehouses in order to reduce highly utilized DBN and reduce premium shipping costs

West Coast

CDCthe CDC to a more optimal location as to reduce external order lead times.




West Coast Increase lean by removing inefficiencies and

adding additional capacity in warehouses in order to reduce stock-outs and accommodate future orders

CDCe the CDC to a more optimal location as to reduce external order lead times.





adding additional capacity in warehouses in order to reduce stock-outs and accommodate future orders

CDC Move the CDC to a more optimal location as to

reduce external order lead times


Analysis Carson Corporon

Large number of lbs. shipped via premium freight to California and Texas locations

High monthly ending inventory in Texas and California locations

W87 is highly underutilized compared to W34

Large number of lbs shipped long distances directly to Western locations


Large number of lbs. shipped premium to CA and TX

Atlanta

-SVC

Chicag

o-SVC

Dallas

-SVC

Denve

r-SVC

Hartfor

d-SVC

Housto

n-SVC

Los A

ngele

s-SVC

Portlan

d-SVC

Atlanta

-SAT

Baltim

ore-S

AT

Chicag

o-SAT

Clevela

nd-S

AT

Dallas

-SAT

Denve

r-SAT

Hartfor

d-SAT

Housto

n-SAT

Los A

ngele

s-SAT

New Je

rsey-S

AT

Orland

o-SAT

Phoen

ix-SAT

Raleigh

-SAT

San fra

ncisc

o-SAT

Seattle

-SAT

St Lou

is-SAT

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Premium Lbs. Shipped by Location


High monthly ending inventory in CA and TX

Atlanta

-SAT

Atlanta

-SVC

Baltim

ore-S

AT

Chicag

o-SAT

Chicag

o-SVC

Clevela

nd-S

AT

Dallas

-SAT

Dallas

-SVC

Denve

r-SAT

Denve

r-SVC

Hartfor

d-SAT

Hartfor

d-SVC

Housto

n-SAT

Housto

n-SVC

Los A

ngele

s-SAT

Los A

ngele

s-SVC

New Je

rsey-S

AT

Orland

o-SAT

Phoen

ix-SAT

Portlan

d-SVC

Raleigh

-SAT

San fra

ncisc

o-SAT

Seattle

-SAT

St Lou

is-SAT

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

Ending Inventory by Location


W87 is highly under-utilized compared to W34

Fayet-teville, NC

Sumter, SC

W34 W87 CDC & DBN

Arden, NC Beaver, PA

El Paso, TX

Raleigh, NC

Puerto Rico

NC -

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

Order Recipients


Large number of lbs. shipped long distances to Western locations

Atlanta

-SAT

Atlanta

-SVC

Baltim

ore-S

AT

Chicag

o-SAT

Chicag

o-SVC

Clevela

nd-S

AT

Dallas

-SAT

Dallas

-SVC

Denve

r-SAT

Denve

r-SVC

Hartfor

d-SAT

Hartfor

d-SVC

Housto

n-SAT

Housto

n-SVC

Los A

ngele

s-SAT

Los A

ngele

s-SVC

New Je

rsey-S

AT

Orland

o-SAT

Phoen

ix-SAT

Portlan

d-SVC

Raleigh

-SAT

San fra

ncisc

o-SAT

Seattle

-SAT

St Lou

is-SAT

-

200,000,000.00

400,000,000.00

600,000,000.00

800,000,000.00

1,000,000,000.00

1,200,000,000.00

1,400,000,000.00

Distance of Lbs. Shipped


Options Ellie Lin

• Upgrade Dallas DBN to Warehouse

Increase Lean in Texas

• Specialize W87 to Electronics only• Add DBN for motors to West Coast• Long term: transform DBN to General

Warehouse*

Increase lean in California

• Move CDC to Mid-West

Decrease lead time of external orders

* Could be a specialized warehouse if necessary


Options Ellie Lin




Warehouse*

Increase lean in California





Options Ellie Lin




Warehouse*

Increase Lean in California





Option 1: Upgrade Dallas DBN to Warehouse Xinlei Fan

Current Situations

Created as an intermediate

solution

Highly utilized at about 90%

Inefficient management



Current Issues

Large number of lbs. shipped via premium freight

High monthly ending inventory

Large number of long distance shipments



Pros Upgrades temporary

solution to permanent Increase warehouse usage

by other CMSC’s by having larger stock

Strong backup for W34 and W87 in case of any stock-out

Lower premium shipping cost for Dallas CMSCsinvestment



Pros Upgrades temporary

solution to permanent Increase warehouse usage

by other CMSC’s by having larger stock

Strong backup for W34 and W87 in case of any stock-out

Lower premium shipping cost for Dallas CMSCs

Cons Restructures Dallas

operation Requires capital

investment


Option 2 - Lean in CaliforniaEllie Lin

Current Situations

W87 is frequently stocked-out

LA has strong growth in SATs



Fayet-teville, NC

Sumter, SC

W34 W87 CDC & DBN


El Paso, TX

Raleigh, NC

Puerto Rico

NC -

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

Order Recipients



Fayett

eville

, NC

Sumter

, SC

W34 W87

CDC & D

BN

Arden,

NC

Beave

r, PA

El Pas

o, TX

Raleigh

, NC

Puerto

Rico N

C -

5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000

Order Recipients

Recommendations: Remove uncommon parts

from W87 to allow future expansion of the tech sector and prevent stock out

Add a small DBN to accommodate the less used SVC parts

Long Term: transform DBN to a general warehouse like W34

Take into account W87 and DBN usage when determining warehouse specialization



Fayett

eville

, NC

Sumter

, SC

W34 W87

CDC & D

BN

Arden,

NC

Beave

r, PA

El Pas

o, TX

Raleigh

, NC

Puerto

Rico N

C -

5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000

Order Recipients

Pros Prevent stock-out for

common parts Decreases lead time

Reduces premium shipping cost

Reduces ending inventory Cons

Restructures California operation

Requires capital investment Potential to overestimate

future need


Option 3: Move CDC to Mid West Petra Ghicu


Option 3: Move CDC to Mid West Petra Ghicu

Pros Less transit time to West

Coast Existing east coast plants

are able to supply CMSCs Political-- central corridor

states are wealthier than nearby states

Cons Short-term capital

investment Restructuring order

process for external sites Building a new relationship

with another company


Final Recommendation Xinlei Fan

Top priorities when analyzing the data: • Remove the current problems as quickly as possible • Prepare for future growthDecisions were made assuming profitability as there was no building cost data given.With that in mind, we recommend implementing all three options using the following timeline.


Implementation Carson Corporon

Upgrade DBN to warehouse

Dallas

Specialize W87 for

SATs in CA

Open New DBN

in CA

Move CDC to

IndyUpgrade CA.

DBN based on future

speculations

0 43 6521


Risk s Petra Ghicu

Capital investment risk: overestimating the demand of the areaAssume strong growth in the west coast

Extraordinary weather conditions (tornado)


Risk s Petra Ghicu

Capital investment risk: overestimating the demand of the areaAssume strong growth in the west coast



Risk s Petra Ghicu

Capital investment risk: overestimating the demand of the areaAssume strong growth in the West Coast



Conclusion Carson Corporon Texas

Increase lean by adding additional capacity in warehouses in order to reduce highly utilized DBN and reduce premium shipping costs within the next two years


adding additional capacity in warehouses in order to reduce stock-outs and accommodate future orders within the next 2-6 years

CDC Move the CDC to a more optimal location as to

reduce external order lead times in 4 years


Q&A?Thank you!


Large number of lbs. shipped premium to CA and TX

Atlanta

-SVC

Chicag

o-SVC

Dallas

-SVC

Denve

r-SVC

Hartfor

d-SVC

Housto

n-SVC

Los A

ngele

s-SVC

Portlan

d-SVC

Atlanta

-SAT

Baltim

ore-S

AT

Chicag

o-SAT

Clevela

nd-S

AT

Dallas

-SAT

Denve

r-SAT

Hartfor

d-SAT

Housto

n-SAT

Los A

ngele

s-SAT

New Je

rsey-S

AT

Orland

o-SAT

Phoen

ix-SAT

Raleigh

-SAT

San fra

ncisc

o-SAT

Seattle

-SAT

St Lou

is-SAT

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Premium Lbs. Shipped by Location


High monthly ending inventory in CA and TX

Atlanta

-SAT

Atlanta

-SVC

Baltim

ore-S

AT

Chicag

o-SAT

Chicag

o-SVC

Clevela

nd-S

AT

Dallas

-SAT

Dallas

-SVC

Denve

r-SAT

Denve

r-SVC

Hartfor

d-SAT

Hartfor

d-SVC

Housto

n-SAT

Housto

n-SVC

Los A

ngele

s-SAT

Los A

ngele

s-SVC

New Je

rsey-S

AT

Orland

o-SAT

Phoen

ix-SAT

Portlan

d-SVC

Raleigh

-SAT

San fra

ncisc

o-SAT

Seattle

-SAT

St Lou

is-SAT

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

Ending Inventory by Location


W87 is highly under-utilized compared to W34

Fayet-teville, NC

Sumter, SC

W34 W87 CDC & DBN


El Paso, TX

Raleigh, NC

Puerto Rico

NC -

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

Order Recipients


Large number of lbs. shipped long distances to Western locations

Atlanta

-SAT

Atlanta

-SVC

Baltim

ore-S

AT

Chicag

o-SAT

Chicag

o-SVC

Clevela

nd-S

AT

Dallas

-SAT

Dallas

-SVC

Denve

r-SAT

Denve

r-SVC

Hartfor

d-SAT

Hartfor

d-SVC

Housto

n-SAT

Housto

n-SVC

Los A

ngele

s-SAT

Los A

ngele

s-SVC

New Je

rsey-S

AT

Orland

o-SAT

Phoen

ix-SAT

Portlan

d-SVC

Raleigh

-SAT

San fra

ncisc

o-SAT

Seattle

-SAT

St Lou

is-SAT

-

200,000,000.00

400,000,000.00

600,000,000.00

800,000,000.00

1,000,000,000.00

1,200,000,000.00

1,400,000,000.00

Distance of Lbs. Shipped


Lbs. Shipped PremiumCMSC site Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec TotalSVC $11/lb lbs being shippied in premiumAtlanta-SVC 1,752 156 47 283 169 4 617 520 1,023 75 1,302 1,748 7,696Chicago-SVC 1,981 1,243 3,498 7,520 2,053 6,880 3,382 9,756 8,184 13,188 7,876 4,675 70,237Dallas-SVC 12,664 9,845 7,387 4,881 7,022 7,478 26,145 19,856 23,654 12,694 7,405 4,690 143,719Denver-SVC 3,392 1,070 5,536 755 2,368 2,464 1,041 1,284 776 1,531 1,732 1,097 23,045Hartford-SVC 1,648 1,705 2,541 1,467 3,824 2,026 1,911 1,313 3,190 5,094 3,730 1,486 29,936Houston-SVC 2,677 1,014 5,027 3,781 3,712 6,956 6,005 5,261 6,062 4,397 3,870 2,607 51,371Los Angeles-SVC 2,691 5,044 6,896 4,305 4,759 5,397 4,295 7,639 4,418 4,822 7,934 3,934 62,132Portland-SVC 1,455 3,444 5,486 1,282 8,053 1,810 2,110 3,696 1,854 3,425 2,447 1,020 36,082

SAT $9/lbAtlanta-SAT 1,728 866 4,863 2,457 1,402 6,509 1,329 6,497 3,230 3,765 1,490 1,789 35,923Baltimore-SAT 2,872 1,192 802 674 595 111 834 3,551 5,357 684 1,031 963 18,667Chicago-SAT 2,421 3,116 1,044 1,791 1,914 2,893 4,830 6,942 6,297 5,194 4,964 4,714 46,118Cleveland-SAT 2,975 2,646 2,720 2,136 1,416 3,590 2,442 2,854 3,475 2,444 3,383 1,457 31,539Dallas-SAT 1,990 827 1,282 1,696 2,801 3,559 2,179 2,171 4,385 3,242 1,574 3,113 28,817Denver-SAT 4,245 4,739 5,377 3,299 4,304 2,085 2,860 3,576 17,058 4,555 3,942 6,479 62,519Hartford-SAT 4,080 2,337 1,470 1,889 2,129 1,430 1,412 1,135 4,801 2,214 2,003 2,005 26,904Houston-SAT 762 2,080 1,697 1,876 2,302 986 3,387 7,044 6,250 3,652 3,822 7,314 41,172Los Angeles-SAT 13,237 9,558 8,047 4,383 9,770 4,532 7,444 21,755 5,380 6,611 6,186 7,872 104,775

New Jersey-SAT 4,088 5,707 2,265 2,237 1,927 2,856 5,252 2,652 2,782 1,726 3,318 1,715 36,525Orlando-SAT 3,646 1,355 1,786 807 5,136 1,003 2,900 2,073 7,894 5,944 3,425 3,055 39,022Phoenix-SAT 3,247 1,134 2,728 844 962 892 3,017 10,240 1,645 2,066 1,479 1,462 29,714Raleigh-SAT 6,738 6,214 2,543 1,619 4,099 6,116 2,829 1,916 2,269 8,694 2,855 2,425 48,317San francisco-SAT 3,532 4,718 3,944 7,807 3,542 16,663 8,246 21,396 27,242 11,896 10,849 14,416 134,250Seattle-SAT 1,629 2,104 2,820 1,345 2,327 9,169 3,746 2,722 2,397 6,095 2,703 5,106 42,164St Louis-SAT 909 1,439 689 2,194 1,026 3,246 1,499 1,332 1,515 2,683 2,356 869 19,758


Miles * Lbs. Shipped

CMSC siteFayetteville,

NC Sumter, SC W34 W87 Arden, NC Beaver, PA El Paso, TX Raleigh, NC Puerto Rico NC Total

Atlanta-SAT

22,731,518.38

30,395,689.10

21,720,060.50 937,460.03 2,363,273.52

32,239,124.23

20,219,811.44 3,066,870.54 - 1,443,596.63

135,117,404.3

7

Atlanta-SVC

146,617,314.5

1 -

18,741,000.75 653,928.96 - 6,708,045.61 - 708,373.94 - 5,836,862.00

179,265,525.7

8

Baltimore-SAT 7,983,648.84

35,248,723.35

49,329,548.96 1,560,795.76 9,770,174.23

15,591,413.39

21,804,527.40 4,927,207.09 - 1,451,256.78

147,667,295.8

0

Chicago-SAT

33,311,876.01

91,078,725.00

98,225,795.35 2,368,479.80

10,325,767.83

28,650,059.68

31,178,109.06

11,738,575.04 - 3,367,493.39

310,244,881.1

6

Chicago-SVC

274,920,931.6

4 11,152.91

108,826,979.7

3 5,510,269.24 - 4,531,425.35 12,259.42 1,105,998.19 - 5,082,928.85

400,001,945.3

3

Cleveland-SAT

19,874,197.30

56,145,793.73

91,535,503.35 2,570,211.64 4,757,866.21 6,169,809.54

41,032,076.31 7,431,704.93 3,900,664.17 2,398,246.61

235,816,073.8

0

Dallas-SAT

46,728,898.35

161,044,979.4

7

194,483,273.3

0 2,175,530.15 -

130,320,843.9

4

23,974,259.19

32,297,641.68 1,044,085.43

17,678,962.80

609,748,474.3

2

Dallas-SVC 6,345,977.53 2,318.01

232,530,417.8

4 - - 225,577.64 - -

977,391,978.7

8 -

1,216,496,269

.80

Denver-SAT

76,516,446.48

238,536,111.0

3

147,539,947.7

8

71,360,441.24 4,787,531.78

115,436,938.3

6

16,068,069.05

31,849,758.31 - 8,907,877.43

711,003,121.4

7

Denver-SVC

298,843,469.0

4 -

100,885,752.3

2

17,665,757.32 - 9,505,868.61 - 3,124,914.95 - 5,449,920.40

435,475,682.6

5

Hartford-SAT

24,018,798.09

87,141,672.11

134,550,922.6

5 2,610,837.75 2,045,636.26

33,595,298.28

52,784,737.02

10,863,324.46 657,956.74 2,317,877.03

350,587,060.4

0

Hartford-SVC

187,847,776.2

5 3,726.68

97,282,918.39 8,242,512.64 - 4,373,386.81 1,037.87 636,028.81 - 3,418,076.74

301,805,464.2

0

Houston-SAT

36,015,325.86

106,085,802.2

0

136,243,901.1

2 2,127,586.60 -

70,984,037.23

14,520,439.69

10,789,883.22 - 4,840,831.20

381,607,807.1

3

Houston-SVC

461,458,230.8

7 22,089.19

151,065,457.7

7 4,344,674.17 2,716,866.75

20,949,101.78 26,518.18 2,143,227.96 669,606.23 5,075,681.00

648,471,453.9

0

Los Angeles-SAT

154,825,681.6

2

510,152,111.1

9

168,997,700.8

3 -

67,996,660.05

280,115,451.6

1

46,965,729.65

24,286,848.19 - 9,275,220.14

1,262,615,403

.27

Los Angeles-SVC

781,404,205.9

2 120.59

213,592,891.7

2 - -

41,399,985.33 - 2,975,473.35 -

17,341,094.03

1,056,713,770

.93

New Jersey-SAT

18,783,006.88

60,832,212.51

53,253,137.07 1,898,512.45

15,873,246.68

10,773,550.69

33,953,201.86 2,693,407.55 - 802,746.15

198,863,021.8

5

Orlando-SAT

23,294,992.22

58,262,035.80

71,942,620.54 4,786,368.22 5,133,680.74

55,802,373.79

38,136,308.35

11,934,014.21 - 3,754,627.20

273,047,021.0

6

Phoenix-SAT

85,785,944.71

227,756,473.0

5

86,475,922.88

20,758,616.17

14,750,626.39

129,159,244.4

1

13,905,196.97

32,715,991.69 - 5,474,178.27

616,782,194.5

5

Portland-SVC

685,030,749.3

9 -

139,835,320.8

8

27,609,974.43 -

10,503,068.60 1,252.25 724,357.77 -

20,511,043.15

884,215,766.4

7

Raleigh-SAT 2,312,802.99

15,602,270.07

36,218,335.18 2,879,535.25 443,051.58

31,698,988.75

33,825,637.84 - - 122,727.58

123,103,349.2

3

San francisco-SAT

77,560,254.10

262,893,498.3

3

138,418,493.6

3

28,972,344.40 -

185,026,698.1

9

33,646,804.03

19,404,101.43

47,163,102.58

13,031,006.33

806,116,303.0

2

Seattle-SAT

65,919,468.52

194,073,571.8

6

183,622,195.3

0

61,043,020.77 -

114,394,112.4

1

39,023,486.56

32,248,461.70 -

25,493,266.50

715,817,583.6

2

St Louis-SAT

42,138,346.01

81,396,236.68

78,933,905.50 1,696,700.27 -

36,441,952.43

20,524,579.66 8,117,947.59 - 3,299,065.45

272,548,733.6

0


Miles Between Locations

CMSC site Fayetteville, NC Sumter, SC W34 W87 Arden, NC Beaver, PA El Paso, TX Raleigh, NC Puerto Rico NCAtlanta-SAT 323.9 231.9 153.5 1945 163.9 528.9 1285 358.2 - 318Atlanta-SVC 323.9 231.9 153.5 1945 163.9 528.9 1285 358.2 - 318Baltimore-SAT 318.7 425.1 428.5 2330 415.7 218.4 1747 264 - 248Chicago-SAT 662.4 674.1 562.7 1752 513.3 391.9 1242 639.4 - 637Chicago-SVC 662.4 674.1 562.7 1752 513.3 391.9 1242 639.4 - 637Cleveland-SAT 464.7 524.5 451.8 2060 410.2 89.79 1519 422.7 1,834 414Dallas-SAT 1032 948.9 852.9 1252 835.5 1061 568.8 1056 2,141 1,066Dallas-SVC 1032 948.9 852.9 1252 835.5 1061 568.8 1056 2,141 1,066Denver-SAT 1455 1410 1291 846.3 1254 1297 552.4 1456 - 1,460Denver-SVC 1455 1410 1291 846.3 1254 1297 552.4 1456 - 1,460Hartford-SAT 573.3 684.3 696.1 2525 682.9 403.9 1977 520.4 1,653 504Hartford-SVC 573.3 684.3 696.1 2525 682.9 403.9 1977 520.4 - 504Houston-SAT 1024 925.9 851.3 1381 846.7 1134 671.4 1058 - 1,071Houston-SVC 1024 925.9 851.3 1381 846.7 1134 671.4 1058 1,999 1,071Los Angeles-SAT 2235 2170 2060 0 2031 2130 711.8 2246 - 2,253Los Angeles-SVC 2235 2170 2060 0 2031 2130 711.8 2246 - 2,253New Jersey-SAT 424.6 535 547.4 2428 536.1 299.4 1858 371.2 - 355Orlando-SAT 472.8 377 443.5 2212 489.8 840.4 1513 527.6 - 543Phoenix-SAT 1887 1817 1710 365.1 1683 1811 350.5 1901 - 1,909Portland-SVC 2384 2357 2236 825.7 2194 2142 1284 2374 - 2,375Raleigh-SAT 54.81 164 206.9 2246 220.7 347.4 1616 0 - 16San francisco-SAT 2407 2355 2239 342.8 2204 2248 995.6 2410 3,627 2,415Seattle-SAT 2379 2359 2238 960.6 2194 2116 1374 2365 - 2,365St Louis-SAT 669.9 637.4 516.5 1597 474.3 548.1 1026 667.9 - 672

sustainable growth through network optimization

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