Razor Expansion

CDC site4/17/14GSCMI 2014 Case Competition8AnalysisAlternativesProblem StatementReccom.ImplementationRisksFuture PlansAppendix

LA, CAAskarRecommendations 4/17/14GSCMI 2014 Case Competition5AnalysisAlternativesProblem StatementReccom.ImplementationRisksFuture PlansAppendix1. Pareto your inventory2. Reduce replenishment lead times3. Revise order cycles/quantities4. Improve your forecasting5. Eliminate obsolete stock6. Centralize your inventory7. Lower your service level8. Reduce SKU counts9. Reduce variability of demand and supply10. Align your metricsPranavProblem Statement AnalysisAlternativesProblem StatementReccom.ImplementationRisksFuture Plans4/17/14GSCMI 2014 Case Competition3AppendixHow should Eaton Electrical Section choose to improve its supply chain network in the short-run? Reduce premium freight frequencyLower inventory levelLevel the east and west coasts performance

How can it ensure a sustainable growth in the long-run? Promote Power Distribution SystemsImprove management efficiencyPranav3Key challengesAnalysisAlternativesProblem StatementReccom.ImplementationRisksFuture Plans4/17/14GSCMI 2014 Case Competition4AppendixFrequent stockouts at W87 in recent yearsOrders from CMSC dont necessarily get high priorityOne employee manages both CDC & DBNThe current KB levels were determined six years agoThree-day rotation systems need to be updatedThe western site: a. higher inventory levels & transportation costs; b. rely more on premium freightDifficulty in meeting delivery demand from growing high-tech companiesDifficulty in demand forecast for the new customers in the west coast sitesProblemsLong Lead TimesLack of Market UnderstandingIneffective Managerial processInefficient Order ProcessFrequent stockouts at W87Orders from CMSC dont necessarily get high priorityThe western sites rely more on premium freight and have higher inventory levelsDifficulty in meeting delivery demand from growing high-tech companiesOutdated KB SystemsCDC & DBN are undermannedPranav4Implementation4/17/14GSCMI 2014 Case Competition13AnalysisAlternativesProblem StatementReccom.ImplementationRisksFuture PlansAppendixReduce Inventory LevelsRevise KB systemsRevise the three-day rotation New major plant in the west coastLower Premium Freight FrequencyBuild new major warehouseand upgrade managerial decisionsNew CMSC sitesNew CDCJialu13Alternatives4/17/14GSCMI 2014 Case Competition6AnalysisAlternativesProblem StatementReccom.ImplementationRisksFuture PlansAppendixPranavCDC in Los Angeles, CA4/17/14GSCMI 2014 Case Competition7AnalysisAlternativesProblem StatementReccom.ImplementationRisksFuture PlansAppendixReasoning: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 westChallenges:Urgent orders might not be fulfilled

AskarNEW warehouse4/17/14GSCMI 2014 Case Competition9AnalysisAlternativesProblem StatementReccom.ImplementationRisksFuture PlansAppendixHigh orders and high inventory levels in Los Angeles, Dallas, Houston and DenverCurrently 65% of all orders are from North and South Carolina regionsDenver and Houston order 66% and 78% from North CarolinaSan Francisco orders 24% by premium shippingChallenges:Estimating an optimal locationHigh cost of establishing new major warehouseAskar

new WAREHOUSE& Three-day rotation

4/17/14GSCMI 2014 Case Competition10AnalysisAlternativesProblem StatementReccom.ImplementationRisksFuture PlansAppendix

W60Albuquerque, New MexicoACBKenny

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 PlanThree 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 W87.4/17/14GSCMI 2014 Case Competition11KennyAssumptionsWarehouse saves 2/3 premium costsTax rate is at 10%Standard shipping rate is 1/3 of premium shipping rateCentral coordinates of cities4/17/14GSCMI 2014 Case Competition12Kenny4/17/14GSCMI 2014 Case Competition14RISK EVALUATIONAnalysisAlternativesProblem StatementReccom.ImplementationRisksFuture PlansAppendixGrowing gas priceHigh cost in insuranceNatural disasters (earthquakes)Increase in base wage and taxesChanging in government regulations/policies

Jialu4/17/14GSCMI 2014 Case Competition15Future plansAnalysisAlternativesProblem StatementReccom.ImplementationRisksFuture PlansAppendixJialu4/17/14GSCMI 2014 Case Competition16Executive summaryAnalysisAlternativesProblem StatementReccom.ImplementationRisksFuture PlansAppendixJialuThank you! Questions?4/17/14GSCMI 2014 Case Competition17Inventory level4/17/14GSCMI 2014 Case Competition19AnalysisAlternativesProblem StatementReccom.ImplementationRisksFuture PlansAppendixOrder proportion4/17/14GSCMI 2014 Case Competition20AnalysisAlternativesProblem StatementReccom.ImplementationRisksFuture PlansAppendixWarehouse location (Weight)4/17/14GSCMI 2014 Case Competition21AnalysisAlternativesProblem StatementReccom.ImplementationRisksFuture PlansAppendixX (N)Y (W)Site WeightX*WY*WDallasSAT32.775896.79672471930.9981019516239274763DallasSVC32.775896.79672112797.0669248614204511783DenverSAT39.7392104.98471985762.7978912624208474710DenverSVC39.7392104.9847944737.7113754312199183005.1HoustonSAT29.762895.38311575230.6746883275150250385HoustonSVC29.762895.38312020297.6160129714192702249Los AngelesSAT34.05118.252902437.7898828006343213267Los AngelesSVC34.05118.251735502.6259093864205223185PhoenixSAT33.45112.06671561005.4552215632174936729PortlandSVC45.52122.68191179996.1453713424144764169San FranciscoSAT37.7083122.28031414542.9653340010172970738SeattleSAT47.6097122.33311432671.836820907617526318621336913.67591368772310768168X35.57857Y108.29908Warehouse Location (P.Shipping)4/17/14GSCMI 2014 Case Competition22CMSC siteTypeTotalNWN*WW*WDallas-SATSAT 259,353 32.775896.79678500509.325104536Dallas-SVCSVC 1,580,908 32.775896.796751815512153026641Denver-SATSAT 562,668 39.7392104.98472235997159071518Denver-SVCSVC 253,499 39.7392104.98471007385126613526Houston-SATSAT 370,551 29.762895.38311102863635344306Houston-SVCSVC 565,078 29.762895.38311681831253898918Los Angeles-SATSAT 942,978 34.05118.2532108417111507203Los Angeles-SVCSVC 683,453 34.05118.252327159180818374Phoenix-SATSAT 267,428 33.45112.06678945483.229969829Portland-SVCSVC 396,898 45.52122.68191806678148692159San francisco-SATSAT 1,208,252 37.7083122.280345561144147745467Seattle-SATSAT 379,474 47.6097122.33311806665746422267 7,470,542 266616866818214744N 35.69 W 109.53 Site analysis - Albuquerque4/17/14GSCMI 2014 Case Competition23RouteCityDistance (M)ETT (Hrs)BDallas6439.3ADenver4456.25BHouston84112.6CLos Angeles78911.1CPhoenix4206.3APortland136020.6CSan Francisco108515.5ASeattle143421.75RouteTotal Premium CostDistanceETTA1592538.91988212.8B2775890.161193228C3102112.844117317.2Average19.33333Economic Analysis of new warehouse4/17/14GSCMI 2014 Case Competition24Annual Operational Cost1400000Annual Savings4980361.282($13,572,386.18)Rate10%3.436509004Life time5Future Value0Estimated Cost# of Employees1550000750000Electricity2000012240000Insurance2500012300000Maintenance50001260000MISC500001400000