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Sustainable Growth through Network Optimization Afief Baasir Botao Shao Hery Sofiaji Pengyu Zhai Team Name: Guerilla Consulting Slide 2 GSCMI 2014 Case Competition 2 Team Overview Botao Shao Hery Sofiaji Afief Baasir Pengyu Zhai Botao Shao MBA of 2015 MBA of 2014 MSIA of 2014 MSHRM of 2014 Slide 3 GSCMI 2014 Case Competition 3 Agenda Botao Shao Current Condition & Challenges Operation Analysis Future Look Recommendation Slide 4 GSCMI 2014 Case Competition 4 Current Condition of Eaton Botao Shao Condition & Challenges Operation Analysis Future Look Recommendation Q & A SC Network 2 production plants 16 CMSCs 2 major warehouses CDC & DBN Eaton Overview Power management Comprise of 4 sectors Material flow Kanban system 2 modes of transportation Slide 5 GSCMI 2014 Case Competition 5 Key Challenges Botao Shao High utilization of warehouses and DBN High inventory level at CMSCs in the west and south High Inventory Level High expense for air freight to the CMSCs in the west and south High Frequency of Premium Freight Condition & Challenges Operation Analysis Future Look Recommendation Q & A Slide 6 GSCMI 2014 Case Competition 6 Operation Analysis Afief Baasir Air shipment mostly occur from west coast CMSC SF & LA contribute the biggest portion of air shipment in the west coast Dallas DBN does not overcome the air shipment problem Condition & Challenges Operation Analysis Future Look Recommendation Q & A Order by Premium Shipment Slide 7 GSCMI 2014 Case Competition 7 Operation Analysis Afief Baasir There are a huge different between the two warehouse capacity W34 (SC) has about 7 times bigger capacity compared to W87 (CA) Condition & Challenges Operation Analysis Future Look Recommendation Q & A Order by Source Slide 8 GSCMI 2014 Case Competition 8 Operation Analysis Afief Baasir Enormous differences between air and ground shipping cost Condition & Challenges Operation Analysis Future Look Recommendation Q & A Slide 9 GSCMI 2014 Case Competition 9 Operation Analysis Afief Baasir LA offer lowest distance to other CMSC in west coast Condition & Challenges Operation Analysis Future Look Recommendation Q & A Slide 10 GSCMI 2014 Case Competition 10 Operation Analysis Afief Baasir Change into ground shipping would led into significant cost reduction Condition & Challenges Operation Analysis Future Look Recommendation Q & A Assumption if all item shipped by ground in west coast: Slide 11 GSCMI 2014 Case Competition 11 CMSC Performance Comparison Hery Sofiaji Condition & Challenges Operation Analysis Future Look Recommendation Q & A Slide 12 GSCMI 2014 Case Competition 12 Eatons Options Hery Sofiaji OptionsBenefitsDrawbacks Build new CMSC site Build a major warehouse Extending plant storage at CSMC Increases responsiveness to demands change Improve inventory turnover Enhance market presence Can consolidate supplier orders Shorten distance of supply to some CSMC site Reduce high utilization of W34 & W87 The least expensive investment and costs Can support local area Need a lot of investments The facility will need a lot of costs to be operated Less responsive to support market fluctuation from farther location Can not increase responsiveness to fluctuation of customer demand Condition & Challenges Operation Analysis Future Look Recommendation Q & A Slide 13 GSCMI 2014 Case Competition 13 Valuating the options Hery Sofiaji Condition & Challenges Operation Analysis Future Look Recommendation Q & A Cost Responsive- ness Build new CSMC High Low High Build new warehouse Extend plant storage of CMSC Slide 14 GSCMI 2014 Case Competition 14 Building a new warehouses Hery Sofiaji Condition & Challenges Operation Analysis Future Look Recommendation Q & A Slide 15 GSCMI 2014 Case Competition 15 Recommendation Pengyu (Peter) Zhai Short-term Objectives Leverage the performance between the west and the east Improve the existing supply chain network Creating new CMSC sites Building a major warehouse Extending the plant storage of CMSCs Condition & Challenges Operation Analysis Future Look Recommendation Q & A Slide 16 GSCMI 2014 Case Competition 16 Recommendation Pengyu (Peter) Zhai From inventory level perspective, expand capacity of plant storage in LA, Houston, and Dallas. From future developmental perspective, also expand capacity of plant storage in LA, Houston, and Dallas. From transportation optimization perspective, build warehouse in Los Angeles New CMSCs are costly, but suitable for long term expansion Four CMSCs with Highest Average Monthly Inventory Level Los Angeles- SAT 150715231566166917171710158616021748174316581624 Houston-SVC133115821556141513911340136614241625179015941397 Dallas-SAT1102122310719469381011118613991461149515181245 Los Angeles- SVC 101810681212121411041152119210981051100410361100 Condition & Challenges Operation Analysis Future Look Recommendation Q & A Slide 17 GSCMI 2014 Case Competition 17 Recommendation Pengyu (Peter) Zhai Long-term Objectives Develop a sustainable network for future growth within the entire distribution system Promote Eaton Power Distribution Systems at every medium to large size city Employing Efficient Technology(i.e.:ERP, Cloud Computing, RFID.etc.) Comprehensive Valuation System Principle of Lean Condition & Challenges Operation Analysis Future Look Recommendation Q & A Slide 18 GSCMI 2014 Case Competition 18 Recommendation Pengyu (Peter) Zhai Efficiency & Sustainability Lean Principle Technology Condition & Challenges Operation Analysis Future Look Recommendation Q & A Slide 19 GSCMI 2014 Case Competition 19 Recommendation Pengyu (Peter) Zhai Staff Training Future Demand Forecasting Condition & Challenges Operation Analysis Future Look Recommendation Q & A Slide 20 GSCMI 2014 Case Competition 20 Q & A Thank you! Guerilla Consulting Condition & Challenges Operation Analysis Future Look Recommendation Q & A