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Optimization of Eaton’s Electrical Sector’s Supply Chain

Optimization of Eaton’s Electrical Sector’s Supply Chain. Team Name: Team Awesome Eric Mirro Siyi Ren Zhao Cui. Presentation Agenda (Eric Mirro ). General Overview (Eric Mirro). Eaton Corporation $22 billion in Sales as of 2013 Industry: Power Management

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Optimization of Eaton’s Electrical Sector’s Supply Chain

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  1. Optimization of Eaton’s Electrical Sector’s Supply Chain Team Name: Team Awesome Eric Mirro Siyi Ren Zhao Cui

  2. Presentation Agenda (Eric Mirro)

  3. General Overview (Eric Mirro) • Eaton Corporation • $22 billion in Sales as of 2013 • Industry: Power Management • Four Sectors: Electrical (largest), Aerospace, Vehicle, Hydraulic • Customer Manufacturing Solution Centers (CMSC) • Sixteen locations in the U.S. • Two major plants: Sumter, SC and Fayetteville, NC • Two major warehouses: W34 (Duncan, SC) and W87 (Los Angeles, CA)

  4. Problem Statement (Eric Mirro) • How to improve overall inventory levels and reduce premium freight costs in short term and ensure growth for long-term?

  5. Recommendation (Eric Mirro)

  6. Alternative options (Eric Mirro)

  7. Assumptions (Eric Mirro) • The Electrical Sector will continue to grow • The demand from large tech companies such as Google will continue to grow • The other parts of the supply chain such as the CSMCs, will be stable • The risk of stockout at warehouse and CSMCs is high

  8. Qualitative Analysis (Siyi Ren) • Underlying issue: stockout risk from warehouses and CSMCs • This starts the cycle that leads to the other issues mentioned • True problem Cycle of inventory and costs

  9. Stockout of W87(Siyi Ren) Western sites which are close to W87 Similar Amounts of Order from W87 and W34

  10. High Premium Freight Frequency& High Inventory Level (Siyi Ren) Monthly Inventory >Monthly Sales 7.81% of total sale

  11. Location and Level of Inventory (Siyi Ren)

  12. Potential CMSC Location(Siyi Ren) Sites with growth in 2013: Chicago-SVC, Dallas-SAT, Denver-SAT, Houston-SVC, Los Angeles-SVC, San Francisco-SAT, Seattle-SAT

  13. Recommended Inventory Level (Siyi Ren) (Total Orders from Western Sites – Orders from Western Sites to W87)*20% =$8,189,448.29

  14. Implement& Plan-Short Run (Zhao Cui)

  15. Implement& Plan-Long Run (Zhao Cui)

  16. Potential Risks and Mitigation (Zhao Cui) Cycle could occur to other sectors Repeat procedure for other sectors

  17. Problem and Recommendation (Zhao Cui) • How to improve overall inventory levels and reduce premium freight costs in short term and ensure growth for long-term? • Build a new dedicated warehouse somewhere in California and then, for the long run, invest in more CMSCs as needed

  18. Q&A

  19. Appendix

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