Post on 30-Dec-2015
GSCMI-EatonCase Competition
JESSICA MILLERNICK BAFUNNO
RAJIV SAMAGOND
Team Eight
CURRENT PROBLEMS
• High premium shipping costs equaling $11,382,074 in 2013
• $4,694,652 of premium shipping goes to the West coast (36%)
• Long lead times – up to 2-3 days to ship to the West coast
• Frequent stock outs in W87 (CA)
*All data are yearly figures
MARKET ANALYSISElectrical Equipment Manufacturing industry
• Revenue is expected to rise by 4.4% for the next 5 years
• Domestic demand is forecasted in increase
• California has largest share of establishments in the industry (10%)• Proximity to top-tier engineering schools and large supply of high-skill workers
• Iron and steel manufacturing and metal wholesalers also have 10% located in CA
• Competitors like ABB Ltd. have been expanding to CA
Source: IBISWorld Research Services
SOLUTIONS
SHORT TERM
• Build warehouse
LONG TERM
• Build major plant
WAREHOUSE
• Carries common and uncommon parts
• Consolidate supplier orders
• Reduce inventory levels of CMSCs
• Shorten distance of supply to CMSCs
• Capable of supporting Eaton Power Distribution Systems in the future
Phoenix
San Francisco
Portland & Seattle
Denver
Los Angeles
0 5 10 15 20 25 30 35 40
10%
11%
21%
22%
36%
Breakdown of Western Orders (%)
MARKETANALYSISBakersfield, CA
• Population: 358,597*
• Market size: $33.4 million
• Growing economy
• New construction is on the rise:
• Caterpillar warehouse
• Toyota
• Cognito Motor Sports
• Location, location, location!!!
*United States Census Bureau (2012)
WAREHOUSE
• Eliminate premium shipping costs, saving $643,915 per year• 11% decrease in shipping costs• Frees up space in W87 (current
utilization over 90%)Reduce stock outs in W87
• Reduce lead time • Give CMSCs priority• Reduce ordering from other CMCSs
(reducing COGS)• Consolidate supplier orders
88%
12%
Cross-country Shipping
Regular
Premium
(pounds)
78%
22%
Cross-country Shipping
Regular
Premium
(cost)
PLANTBUILDS STANDARD AND SPECIALIZED UNITS
• Reduce cross-country transportation costs by $1,945,138 per year
• 66% decrease in shipping costs
• Economies of scales in the west
• Reduce overall inventory level of CMSCs
• Capable of satisfying increase in high-tech companies Shorter lead time
Current Warehouse(Short-term)
Plant(Long-term)
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000 $2,955,034 $2,632,942
$1,009,895
Shipping Cost with Proposed So-lutions
Regular Shipping Premium Shipping
*All data are yearly figures
• Year 1: Plan• Year 2: Build• Year 3:
Integration
Warehouse
• Years 2-3: Plan
• Years 4-5: Build
• Year 6: Integration
Plant • Sustainable supply chain
• Incorporate Eaton Power Distribution System
Growth
IMPLEMENTATION
Thank You!QUESTIONS
JESSICA MILLERNICK BAFUNNO
RAJIV SAMAGOND