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Eaton corporation

Eaton corporation. AIESECers Consulting. AGENDA. Problem Statement. Reccom . Alternatives. Analysis. Implementation. Risks. Future Plans. Appendix. Pranav. Problem Statement . How should Eaton Electrical Section choose to improve its supply chain network in the short-run ?

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Eaton corporation

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  1. Eaton corporation AIESECers Consulting

  2. AGENDA Problem Statement Reccom. Alternatives Analysis Implementation Risks Future Plans Appendix GSCMI 2014 Case Competition

  3. Pranav Problem Statement • How should Eaton Electrical Section choose to improve its supply chain network in the short-run? • Reduce premium freight frequency • Lower inventory level • Level the east and west coasts’ performance • How can it ensure a sustainable growth in the long-run? • Promote Power Distribution Systems • Improve management efficiency Problem Statement Reccom. Alternatives Analysis Implementation Risks Future Plans Appendix GSCMI 2014 Case Competition

  4. Frequent stockouts at W87 in recent years • Orders from CMSC don’t necessarily get high priority • One employee manages both CDC & DBN • The current KB levels were determined six years ago • Three-day rotation systems need to be updated • The western site: a. higher inventory levels & transportation costs; b. rely more on premium freight • Difficulty in meeting delivery demand from growing high-tech companies • Difficulty in demand forecast for the new customers in the west coast sites Pranav Key challenges Problem Statement Reccom. Alternatives Analysis Implementation Risks Future Plans Appendix GSCMI 2014 Case Competition

  5. Pranav Recommendations 1. Pareto your inventory 2. Reduce replenishment lead times 3. Revise order cycles/quantities 4. Improve your forecasting 5. Eliminate obsolete stock 6. Centralize your inventory 7. Lower your service level 8. Reduce SKU counts 9. Reduce variability of demand and supply 10. Align your metrics Problem Statement Reccom. Alternatives Analysis Implementation Risks Future Plans Appendix GSCMI 2014 Case Competition

  6. Pranav Alternatives Problem Statement Reccom. Alternatives Analysis Implementation Risks Future Plans Appendix GSCMI 2014 Case Competition

  7. Askar CDC in Los Angeles, CA • Reasoning: • W87 has only supplied $5.7mil worth of orders. • W87 in Los Angeles experiences frequent stockouts. • CDC in North Carolina supplied similar amount of orders as W87. • Doubling inventory capacity in Los Angeles will decrease lead time, inventory level and premium frequency in CSMCs at the west • Challenges: • Urgent orders might not be fulfilled Problem Statement Reccom. Alternatives Analysis Implementation Risks Future Plans Appendix GSCMI 2014 Case Competition

  8. Askar CDC site LA, CA Problem Statement Reccom. Alternatives Analysis Implementation Risks Future Plans Appendix GSCMI 2014 Case Competition

  9. Askar NEW warehouse • High orders and high inventory levels in Los Angeles, Dallas, Houston and Denver • Currently 65% of all orders are from North and South Carolina regions • Denver and Houston order 66% and 78% from North Carolina • San Francisco orders 24% by premium shipping • Challenges: • Estimating an optimal location • High cost of establishing new major warehouse Problem Statement Reccom. Alternatives Analysis Implementation Risks Future Plans Appendix GSCMI 2014 Case Competition

  10. Kenny new WAREHOUSE& Three-day rotation A C B W60 Albuquerque, New Mexico Problem Statement Reccom. Alternatives Analysis Implementation Risks Future Plans Appendix GSCMI 2014 Case Competition

  11. Kenny new WAREHOUSE Albuquerque • Central location determined based on premium shipping cost and weight. • Located along major highway networks. (I-25 and I-40) • Annual savings of $5mil in terms of premium frequency reduced. • Investment of a $10mil warehouse would breakeven in 3.5 years. • Provides flexibility with order delivery. Three Day Rotation Plan • Three routes : A (Denver – Seattle - Portland), B (Phoenix - Los Angeles - San Francisco), C (Dallas – Houston) • Average travel time : ~ 19 hours • Urgent request to Portland and Seattle could be fulfilled by W87. GSCMI 2014 Case Competition

  12. Kenny Assumptions • Warehouse saves 2/3 premium costs • Tax rate is at 10% • Standard shipping rate is 1/3 of premium shipping rate • Central coordinates of cities GSCMI 2014 Case Competition

  13. Jialu Implementation Problem Statement Reccom. Alternatives Analysis Implementation Risks Future Plans Appendix GSCMI 2014 Case Competition

  14. Jialu RISK EVALUATION • Growing gas price • High cost in insurance • Natural disasters (earthquakes) • Increase in base wage and taxes • Changing in government regulations/policies Problem Statement Reccom. Alternatives Analysis Implementation Risks Future Plans Appendix GSCMI 2014 Case Competition

  15. Jialu Future plans Problem Statement Reccom. Alternatives Analysis Implementation Risks Future Plans Appendix GSCMI 2014 Case Competition

  16. Jialu Executive summary Problem Statement Reccom. Alternatives Analysis Implementation Risks Future Plans Appendix GSCMI 2014 Case Competition

  17. Thank you! Questions? GSCMI 2014 Case Competition

  18. Appendix Problem Statement Reccom. Alternatives Analysis Implementation Risks Future Plans Appendix GSCMI 2014 Case Competition

  19. Inventory level Problem Statement Reccom. Alternatives Analysis Implementation Risks Future Plans Appendix GSCMI 2014 Case Competition

  20. Order proportion Problem Statement Reccom. Alternatives Analysis Implementation Risks Future Plans Appendix GSCMI 2014 Case Competition

  21. Warehouse location (Weight) Problem Statement Reccom. Alternatives Analysis Implementation Risks Future Plans Appendix GSCMI 2014 Case Competition

  22. Warehouse Location (P.Shipping) GSCMI 2014 Case Competition

  23. Site analysis - Albuquerque GSCMI 2014 Case Competition

  24. Economic Analysis of new warehouse GSCMI 2014 Case Competition

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