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Optimizing CMSC Supply Chain

Optimizing CMSC Supply Chain. Team Kunat Sandeep Repaka Kasey Carter Kunat Chongcharoenpaisarn Curt Isenbarger. Agenda (Sandeep). The CMSC network Issues Options Recommendation Strategy & Implementation Conclusion Questions. The CMSC Network (Sandeep).

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Optimizing CMSC Supply Chain

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  1. Optimizing CMSC Supply Chain Team Kunat Sandeep Repaka Kasey Carter Kunat Chongcharoenpaisarn Curt Isenbarger

  2. Agenda (Sandeep) • The CMSC network • Issues • Options • Recommendation • Strategy & Implementation • Conclusion • Questions

  3. The CMSC Network (Sandeep) • Customized products for Eaton’s Electrical Sector • 16 CMSCs across the USA to serve local and regional customers • Source major portion of materials from Eaton’s plants at Sumter, SC and Fayetteville, NC • Enhance both the brand image and customer relationships

  4. Issues (Sandeep) Optimizing Supply Chain Network Short Term Reduce the frequency of premium freight shipping Lower days of inventory on hand of west coast sites Long Term Maintain a supply chain network that sustains the growth of two of Eaton’s business sectors – Electrical and Power Distribution Systems

  5. Options(Sandeep) Option 1 - Build one or more CMSCs + Supports long term goals, reduces regional logistics costs, increases demand responsiveness and improves inventory turnover - Costs of setting up new CMSCs could be high, talent acquisition can be a barrier Option 2 - Build a major warehouse May not necessarily address long term goal since new warehouse only stock for the Electrical Sector - + Supports short term goals, alleviates pressure on existing warehouses Option 3 - Extend storage of CMSCs May not fully support short term and long term goals Requires less investment, improves performance of local CMSCs - +

  6. Recommendation(Kasey) Short Term Expand Dallas DBN warehouse to the size of W34 (Largest volume CMSC site) 85% of total PO $ sourced from P.R. & W34!

  7. Recommendation(Kasey) Inefficient frontier

  8. Recommendation(Kasey) Long Term Build new CMSC near Salt Lake City and/or Las Vegas Provides help to where it is most needed Supports new West Coast tech companies Enables further expansion for Eaton

  9. Strategy & Implementation(Kunat) • Implementation period - EOY 2014 • Pay Back Period - Y 2021 Financial impact

  10. Strategy & Implementation(Kunat) Inventory pooling

  11. Strategy & Implementation(Kunat) Inventory pooling

  12. Strategy & Implementation(Kunat) 6 major locations in West Coast can order from new warehouse, without building a Factory or relying on Premium Shipping Inventory pooling

  13. Conclusion(Curt) • More targeted distribution network • Transportation waste can be decreased • Less reliance on premium shipping • Expand Dallas DBN to full-size warehouse • Immediately reduce premium shipping to Dallas – the largest market • New CMSC in the West • Response to increasing West Coast demand • Shorter lead time for demanding tech companies

  14. Questions?

  15. Appendix

  16. Cost Analysis

  17. Cost Analysis

  18. Pooling Inventory Analysis Impact on DIO (DOH) : Inventory / COGS

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