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Transcript of Sustainable Growth Through Network Optimization Team Name: Q lean Yunyang Liu Jennifer Lu Hiroaki...
Sustainable Growth Through Network Optimization
Team Name: Q leanYunyang LiuJennifer Lu
Hiroaki TanakaXueqing Wang
GSCMI 2013 Case Competition 2
Agenda Company overview
Current situation
Recommendation
Alternatives analysis
Future outlook
Conclusion
GSCMI 2013 Case Competition 3
Overview
Company highlight
• Domestic power Management company
• $22 billion of sales in 2012, 100 million employees, product exported to 175 countries
• Four main business sector: Electrical, Aerospace, Vehicle and Hydraulics
• Products• SAT and SVC
• System structure• 16 CMSCs• Two plants• Two warehouses• 1 DBN• 1 CDC (third-party)
Electrical Sector
GSCMI 2013 Case Competition 4
Current Situation-Western sites struggle to achieve lean operations -Premium shipping cost is high at western sites
-Procurement strategy needs to be updated
-Redundant logistics mapping countrywide
-W87 stocks out frequently
-DBN has been inefficiently used
GSCMI 2013 Case Competition 5
Process Flow
Order at CMSCs
CMSC BOM
System
CMSC Inventory
Internal Procurement
DBN
CDC
Two Plants
W87,W34
External Suppliers
Order satisfied
GSCMI 2013 Case Competition 6
Current Situation-Western sites struggle to achieve lean operations -Premium shipping cost is high at western sites
-Procurement strategy needs to be updated
-Redundant logistics mapping countrywide
-W87 stocks out frequently
-DBN has been inefficiently used
GSCMI 2013 Case Competition 7
Premium Cost Problem
Average % of premium per month
Atlant
a-SAT
Atlant
a-SVC
Baltim
ore-
SAT
Chicag
o-SAT
Chicag
o-SVC
Clevela
nd-S
AT
Dallas
-SAT
Dallas
-SVC
Denve
r-SAT
Denve
r-SVC
Hartfo
rd-S
AT
Hartfo
rd-S
VC
Houst
on-S
AT
Houst
on-S
VC
Los
Angele
s-SAT
Los
Angele
s-SVC
New J
erse
y-SAT
Orland
o-SAT
Phoen
ix-SAT
Portla
nd-S
VC
Raleigh
-SAT
San fr
ancis
co-S
AT
Seattl
e-SAT
St Lou
is-SAT
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Average amount of premium freight per month (pounds)
GSCMI 2013 Case Competition 8
Current Situation-Western sites struggle to achieve lean operations -Premium shipping cost is high at western sites
-Procurement strategy needs to be updated
-Redundant logistics mapping countrywide
-W87 stocks out frequently
-DBN has been inefficiently used
GSCMI 2013 Case Competition 9
Atlant
a-SAT
Atlant
a-SVC
Baltim
ore-
SAT
Chicag
o-SAT
Chicag
o-SVC
Clevela
nd-S
AT
Dallas
-SAT
Dallas
-SVC
Denve
r-SAT
Denve
r-SVC
Hartfo
rd-S
AT
Hartfo
rd-S
VC
Houst
on-S
AT
Houst
on-S
VC
Los
Angele
s-SAT
Los
Angele
s-SVC
New J
erse
y-SAT
Orland
o-SAT
Phoen
ix-SAT
Portla
nd-S
VC
Raleigh
-SAT
San fr
ancis
co-S
AT
Seattl
e-SAT
St Lou
is-SAT
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
Average DOH (month)
GSCMI 2013 Case Competition 10
Current Situation-Western sites struggle to achieve lean operations -Premium shipping cost is high at western sites
-Procurement strategy needs to be updated
-Redundant logistics mapping countrywide
-W87 stocks out frequently
-DBN has been inefficiently used
GSCMI 2013 Case Competition 11
Recommendation
Establish a West coast Specialized Warehouse (WSW)
GSCMI 2013 Case Competition 12
Alternatives overview
Overall, there are two other alternatives that can potentially solve the problems
Create New CMSCs In West Coast
Build a Warehouse in West Coast
GSCMI 2013 Case Competition 13
Create New CMSCs In West Coast
Benefits Costs/Risks Cost savings from logistics
Increased responsiveness to regional demand change
Enhancing market presence
Further enhancing the brand image and market share
Potential increase in setup and running costs
Highly networked and complicated supply chain
High market occupancy from existing local companies
Learning curve
GSCMI 2013 Case Competition 14
Build a Warehouse in West Coast
Benefits Costs/Risks Help consolidate supplier orders
Shorten the distance of supply to some CMSCs
Alleviate the pressure of two highly utilized warehouses
Primarily serve Electrical Sector
Higher costs of investment
Higher costs of maintenance
Learning Curve
GSCMI 2013 Case Competition 15
Extend the Plant storage of CMSCs Building a new WSW to serve exclusively for Electrical
Sector will alleviate the pressure of existing warehouses.
Benefits Costs/Risks
Less investment in establishment and maintenance
Easier and faster to implement
Reduce the premium freight frequency from CMSCs in West Coast
Lower the inventory level in West Coast sites
Help other CMSCs and alleviate the load of W34
Capacity is smaller than normal warehouses
Impact is smaller than other alternatives
GSCMI 2013 Case Competition 16
Atlant
a-SAT
Baltim
ore-
SAT
Chicag
o-SVC
Dallas
-SAT
Denve
r-SAT
Hartfo
rd-S
AT
Houst
on-S
AT
Los
Angele
s-SAT
New J
erse
y-SAT
Phoen
ix-SAT
Raleigh
-SAT
Seattl
e-SAT
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
11,977
8,731
5,178
11,188
Average amount of premium freight per month (pounds)
6%
9%
5%
6%
2%
4%
1%
2%
2%
2% 3
%3%
54%
Dallas-SATDallas-SVCHouston-SATHouston-SVCLos Angeles-SATLos Angeles-SVCPhoenix-SATPortland-SVCSan francisco-SATSeattle-SATDenver-SATDenver-SVCOthers
Breakdown of POs from CMSCs to W34
GSCMI 2013 Case Competition 17
West Coast Specialized Warehouse
WhatHybrid of DBN and Warehouse served exclusively for Electrical Sector
WhereNear the CMSC in Los Angeles
How Expected Capacity: 638,050 Lbs / year (twice the size of DBN) Short term (As soon as possible)
GSCMI 2013 Case Competition 18
Total Dollar Amount of Purchase Order From CMSC 2013 ($)
Fayetteville, NC Sumter, SC
W34W87
CDC & DBN(2:1) CDC
DBN
0
5000000
10000000
15000000
20000000
25000000
30000000
35000000
WSW
GSCMI 2013 Case Competition 19
Shipping Cost per ($/Lb) West to West
DenverHouston
LAPhoenix
SFSeattle
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
GSCMI 2013 Case Competition 20
DBN Inventory level
GSCMI 2013 Case Competition 21
Future Outlook
Dallas Inventory level Los Angeles Inventory level
Phoenix Inventory level
GSCMI 2013 Case Competition 22
Conclusion
We are going to build a WSW(westcoast specialized warehouse) that exclusively serve CMSCs at Los Angeles to solve the current challenges as well as support the rapid growth of western sites business.
GSCMI 2013 Case Competition 23
Back Up Frequency of using premium shipping cost and days of on-
hand inventory level in west coast
Premium Shiping Frenquency DOH
west coast 9.56% 40.60 east coast 5.73% 37.86
DBN has been inefficiently used DBN serves only 3.55% SAT and 0.05% SVC in Dallas
GSCMI 2013 Case Competition 24