GSCMI 2013 Case Competition 1 Sustainable Growth through Network Optimization Team Name: Consolidated Consulting Carson Corporon Xinlei Fan Petra Ghicu Ellie Lin

GSCMI 2013 Case Competition 2 Introduction Petra Ghicu Ellie Lin Junior MGMT & Finance Xinlei Fan Senior MGMT & Acct Petra Ghicu Junior MGMT & Acct Carson Corporon Junior Industrial MGMT

GSCMI 2013 Case Competition 3 Assumptions Petra Ghicu Plants have enough capacity to support CMSCs needsWarehouses are not storing parts from external suppliers W87 is limited on space and crowded by uncommon SAT parts Customer orders will grow in West Coast

GSCMI 2013 Case Competition 4 Assumptions Petra Ghicu Plants have enough capacity to support CMSCs needsWarehouses are not storing parts from external suppliers W87 is limited on space and crowded by uncommon SAT parts Customer orders will grow in West Coast

GSCMI 2013 Case Competition 5 Assumptions Petra Ghicu Plants have enough capacity to support CMSCs needsWarehouses are not storing parts from external suppliers W87 is limited on space and crowded by uncommon SAT parts Customer orders will grow in West Coast

GSCMI 2013 Case Competition 6 Assumptions Petra Ghicu Plants have enough capacity to support CMSCs needsWarehouses are not storing parts from external suppliers W87 is limited on space and crowded by uncommon SAT parts Customer orders will grow in West Coast

GSCMI 2013 Case Competition 7 Assumptions Petra Ghicu Plants have enough capacity to support CMSCs needsWarehouses are not storing parts from external suppliers W87 is limited on space and crowded by uncommon SAT parts Customer orders will grow in West Coast

GSCMI 2013 Case Competition 8 Problem Statement Petra Ghicu Currently, Eaton is facing high premium freight and high overall inventory levels which increases costs and limits sustainable growth.

GSCMI 2013 Case Competition 9 Recommendations Carson Corporon  Texas  Increase lean by adding additional capacity in warehouses in order to reduce highly utilized DBN and reduce premium shipping costs  West Coast  CDC the CDC to a more optimal location as to reduce external order lead times.

GSCMI 2013 Case Competition 10 Recommendations Carson Corporon  Texas  Increase lean by adding additional capacity in warehouses in order to reduce highly utilized DBN and reduce premium shipping costs  West Coast  Increase lean by removing inefficiencies and adding additional capacity in warehouses in order to reduce stock-outs and accommodate future orders  CDC e the CDC to a more optimal location as to reduce external order lead times.

GSCMI 2013 Case Competition 11 Recommendations Carson Corporon  Texas  Increase lean by adding additional capacity in warehouses in order to reduce highly utilized DBN and reduce premium shipping costs  West Coast  Increase lean by removing inefficiencies and adding additional capacity in warehouses in order to reduce stock-outs and accommodate future orders  CDC  Move the CDC to a more optimal location as to reduce external order lead times

GSCMI 2013 Case Competition 12 Analysis Carson Corporon Large number of lbs. shipped via premium freight to California and Texas locations High monthly ending inventory in Texas and California locations W87 is highly underutilized compared to W34 Large number of lbs shipped long distances directly to Western locations

GSCMI 2013 Case Competition 13 Large number of lbs. shipped premium to CA and TX

GSCMI 2013 Case Competition 14 High monthly ending inventory in CA and TX

GSCMI 2013 Case Competition 15 W87 is highly under-utilized compared to W34

GSCMI 2013 Case Competition 16 Large number of lbs. shipped long distances to Western locations

GSCMI 2013 Case Competition 17 Options Ellie Lin Upgrade Dallas DBN to Warehouse Increase Lean in Texas Specialize W87 to Electronics only Add DBN for motors to West Coast Long term: transform DBN to General Warehouse* Increase lean in California Move CDC to Mid-West Decrease lead time of external orders * Could be a specialized warehouse if necessary

GSCMI 2013 Case Competition 18 Options Ellie Lin Upgrade Dallas DBN to Warehouse Increase Lean in Texas Specialize W87 to Electronics only Add DBN for motors to West Coast Long term: transform DBN to General Warehouse* Increase lean in California Move CDC to Mid-West Decrease lead time of external orders * Could be a specialized warehouse if necessary

GSCMI 2013 Case Competition 19 Options Ellie Lin Upgrade Dallas DBN to Warehouse Increase Lean in Texas Specialize W87 to Electronics only Add DBN for motors to West Coast Long term: transform DBN to General Warehouse* Increase Lean in California Move CDC to Mid-West Decrease lead time of external orders * Could be a specialized warehouse if necessary

GSCMI 2013 Case Competition 20 Options Ellie Lin Upgrade Dallas DBN to Warehouse Increase Lean in Texas Specialize W87 to Electronics only Add DBN for motors to West Coast Long term: transform DBN to General Warehouse* Increase Lean in California Move CDC to Mid-West Decrease lead time of external orders * Could be a specialized warehouse if necessary

GSCMI 2013 Case Competition 21 Option 1: Upgrade Dallas DBN to Warehouse Xinlei Fan Current Situations Created as an intermediate solution Highly utilized at about 90% Inefficient management

GSCMI 2013 Case Competition 22 Option 1: Upgrade Dallas DBN to Warehouse Xinlei Fan Current Issues Large number of lbs. shipped via premium freight High monthly ending inventory Large number of long distance shipments

GSCMI 2013 Case Competition 23 Option 1: Upgrade Dallas DBN to Warehouse Xinlei Fan  Pros  Upgrades temporary solution to permanent  Increase warehouse usage by other CMSC’s by having larger stock  Strong backup for W34 and W87 in case of any stock-out  Lower premium shipping cost for Dallas CMSCsinvestment

GSCMI 2013 Case Competition 24 Option 1: Upgrade Dallas DBN to Warehouse Xinlei Fan  Pros  Upgrades temporary solution to permanent  Increase warehouse usage by other CMSC’s by having larger stock  Strong backup for W34 and W87 in case of any stock-out  Lower premium shipping cost for Dallas CMSCs  Cons  Restructures Dallas operation  Requires capital investment

GSCMI 2013 Case Competition 25 Option 2 - Lean in California Ellie Lin Current Situations W87 is frequently stocked-out LA has strong growth in SATs

GSCMI 2013 Case Competition 26 Option 2 - Lean in California Ellie Lin

GSCMI 2013 Case Competition 27 Option 2 - Lean in California Ellie Lin  Recommendations :  Remove uncommon parts from W87 to allow future expansion of the tech sector and prevent stock out  Add a small DBN to accommodate the less used SVC parts  Long Term: transform DBN to a general warehouse like W34  Take into account W87 and DBN usage when determining warehouse specialization

GSCMI 2013 Case Competition 28 Option 2 - Lean in California Ellie Lin  Pros  Prevent stock-out for common parts  Decreases lead time  Reduces premium shipping cost  Reduces ending inventory  Cons  Restructures California operation  Requires capital investment  Potential to overestimate future need

GSCMI 2013 Case Competition 29 Option 3: Move CDC to Mid West Petra Ghicu

GSCMI 2013 Case Competition 30 Option 3: Move CDC to Mid West Petra Ghicu  Pros  Less transit time to West Coast  Existing east coast plants are able to supply CMSCs  Political-- central corridor states are wealthier than nearby states  Cons  Short-term capital investment  Restructuring order process for external sites  Building a new relationship with another company

GSCMI 2013 Case Competition 31 Final Recommendation Xinlei Fan Top priorities when analyzing the data: Remove the current problems as quickly as possible Prepare for future growth Decisions were made assuming profitability as there was no building cost data given. With that in mind, we recommend implementing all three options using the following timeline.

GSCMI 2013 Case Competition 32 Implementation Carson Corporon Upgrade DBN to warehouse Dallas Specialize W87 for SATs in CA Open New DBN in CA Move CDC to Indy Upgrade CA. DBN based on future speculations

GSCMI 2013 Case Competition 33 Risks Petra Ghicu Capital investment risk: overestimating the demand of the area Assume strong growth in the west coast Extraordinary weather conditions (tornado)

GSCMI 2013 Case Competition 34 Risks Petra Ghicu Capital investment risk: overestimating the demand of the area Assume strong growth in the west coast Extraordinary weather conditions (tornado)

GSCMI 2013 Case Competition 35 Risks Petra Ghicu Capital investment risk: overestimating the demand of the area Assume strong growth in the West Coast Extraordinary weather conditions (tornado)

GSCMI 2013 Case Competition 36 Risks Petra Ghicu Capital investment risk: overestimating the demand of the area Assume strong growth in the West Coast Extraordinary weather conditions (tornado)

GSCMI 2013 Case Competition 37 Conclusion Carson Corporon  Texas  Increase lean by adding additional capacity in warehouses in order to reduce highly utilized DBN and reduce premium shipping costs within the next two years  West Coast  Increase lean by removing inefficiencies and adding additional capacity in warehouses in order to reduce stock-outs and accommodate future orders within the next 2-6 years  CDC  Move the CDC to a more optimal location as to reduce external order lead times in 4 years

GSCMI 2013 Case Competition 38 Q&A? Thank you!

GSCMI 2013 Case Competition 39 Option 1: Upgrade Dallas DBN to Warehouse Xinlei Fan

GSCMI 2013 Case Competition 40 Large number of lbs. shipped premium to CA and TX

GSCMI 2013 Case Competition 41 High monthly ending inventory in CA and TX

GSCMI 2013 Case Competition 42 W87 is highly under-utilized compared to W34

GSCMI 2013 Case Competition 43 Large number of lbs. shipped long distances to Western locations

GSCMI 2013 Case Competition 44 Lbs. Shipped Premium CMSC siteJanFebMarAprMayJunJulAugSepOctNovDecTotal SVC$11/lblbs being shippied in premium Atlanta-SVC1, ,023751,3021,7487,696 Chicago-SVC1,9811,2433,4987,5202,0536,8803,3829,7568,18413,1887,8764,67570,237 Dallas-SVC12,6649,8457,3874,8817,0227,47826,14519,85623,65412,6947,4054,690143,719 Denver-SVC3,3921,0705, ,3682,4641,0411, ,5311,7321,09723,045 Hartford-SVC1,6481,7052,5411,4673,8242,0261,9111,3133,1905,0943,7301,48629,936 Houston-SVC2,6771,0145,0273,7813,7126,9566,0055,2616,0624,3973,8702,60751,371 Los Angeles- SVC2,6915,0446,8964,3054,7595,3974,2957,6394,4184,8227,9343,93462,132 Portland-SVC1,4553,4445,4861,2828,0531,8102,1103,6961,8543,4252,4471,02036,082 SAT$9/lb Atlanta-SAT1, ,8632,4571,4026,5091,3296,4973,2303,7651,4901,78935,923 Baltimore-SAT2,8721, ,5515, , ,667 Chicago-SAT2,4213,1161,0441,7911,9142,8934,8306,9426,2975,1944,9644,71446,118 Cleveland-SAT2,9752,6462,7202,1361,4163,5902,4422,8543,4752,4443,3831,45731,539 Dallas-SAT1, ,2821,6962,8013,5592,1792,1714,3853,2421,5743,11328,817 Denver-SAT4,2454,7395,3773,2994,3042,0852,8603,57617,0584,5553,9426,47962,519 Hartford-SAT4,0802,3371,4701,8892,1291,4301,4121,1354,8012,2142,0032,00526,904 Houston-SAT7622,0801,6971,8762, ,3877,0446,2503,6523,8227,31441,172 Los Angeles- SAT13,2379,5588,0474,3839,7704,5327,44421,7555,3806,6116,1867,872104,775 New Jersey- SAT4,0885,7072,2652,2371,9272,8565,2522,6522,7821,7263,3181,71536,525 Orlando-SAT3,6461,3551, ,1361,0032,9002,0737,8945,9443,4253,05539,022 Phoenix-SAT3,2471,1342, ,01710,2401,6452,0661,4791,46229,714 Raleigh-SAT6,7386,2142,5431,6194,0996,1162,8291,9162,2698,6942,8552,42548,317 San francisco- SAT3,5324,7183,9447,8073,54216,6638,24621,39627,24211,89610,84914,416134,250 Seattle-SAT1,6292,1042,8201,3452,3279,1693,7462,7222,3976,0952,7035,10642,164 St Louis-SAT9091, ,1941,0263,2461,4991,3321,5152,6832, ,758

GSCMI 2013 Case Competition 45 Miles * Lbs. Shipped CMSC site Fayetteville, NCSumter, SCW34W87Arden, NCBeaver, PAEl Paso, TXRaleigh, NCPuerto Rico NCTotal Atlanta-SAT 22,731, ,395, ,720, , ,363, ,239, ,219, ,066, ,443, ,117, Atlanta-SVC 146,617, ,741, , ,708, , ,836, ,265, Baltimore-SAT 7,983, ,248, ,329, ,560, ,770, ,591, ,804, ,927, ,451, ,667, Chicago-SAT 33,311, ,078, ,225, ,368, ,325, ,650, ,178, ,738, ,367, ,244, Chicago-SVC 274,920, , ,826, ,510, ,531, , ,105, ,082, ,001, Cleveland-SAT 19,874, ,145, ,535, ,570, ,757, ,169, ,032, ,431, ,900, ,398, ,816, Dallas-SAT 46,728, ,044, ,483, ,175, ,320, ,974, ,297, ,044, ,678, ,748, Dallas-SVC 6,345, , ,530, , ,391, ,216,496, Denver-SAT 76,516, ,536, ,539, ,360, ,787, ,436, ,068, ,849, ,907, ,003, Denver-SVC 298,843, ,885, ,665, ,505, ,124, ,449, ,475, Hartford-SAT 24,018, ,141, ,550, ,610, ,045, ,595, ,784, ,863, , ,317, ,587, Hartford-SVC 187,847, , ,282, ,242, ,373, , , ,418, ,805, Houston-SAT 36,015, ,085, ,243, ,127, ,984, ,520, ,789, ,840, ,607, Houston-SVC 461,458, , ,065, ,344, ,716, ,949, , ,143, , ,075, ,471, Los Angeles-SAT 154,825, ,152, ,997, ,996, ,115, ,965, ,286, ,275, ,262,615, Los Angeles-SVC 781,404, ,592, ,399, ,975, ,341, ,056,713, New Jersey-SAT 18,783, ,832, ,253, ,898, ,873, ,773, ,953, ,693, , ,863, Orlando-SAT 23,294, ,262, ,942, ,786, ,133, ,802, ,136, ,934, ,754, ,047, Phoenix-SAT 85,785, ,756, ,475, ,758, ,750, ,159, ,905, ,715, ,474, ,782, Portland-SVC 685,030, ,835, ,609, ,503, , , ,511, ,215, Raleigh-SAT 2,312, ,602, ,218, ,879, , ,698, ,825, , ,103, San francisco- SAT 77,560, ,893, ,418, ,972, ,026, ,646, ,404, ,163, ,031, ,116, Seattle-SAT 65,919, ,073, ,622, ,043, ,394, ,023, ,248, ,493, ,817, St Louis-SAT 42,138, ,396, ,933, ,696, ,441, ,524, ,117, ,299, ,548,733.60

GSCMI 2013 Case Competition 46 Miles Between Locations CMSC site Fayetteville, NCSumter, SCW34W87Arden, NCBeaver, PAEl Paso, TXRaleigh, NCPuerto Rico NC Atlanta-SAT Atlanta-SVC Baltimore-SAT Chicago-SAT Chicago-SVC Cleveland-SAT , Dallas-SAT ,141 1,066 Dallas-SVC ,141 1,066 Denver-SAT ,460 Denver-SVC ,460 Hartford-SAT , Hartford-SVC Houston-SAT ,071 Houston-SVC ,999 1,071 Los Angeles-SAT ,253 Los Angeles-SVC ,253 New Jersey-SAT Orlando-SAT Phoenix-SAT ,909 Portland-SVC ,375 Raleigh-SAT San francisco-SAT ,627 2,415 Seattle-SAT ,365 St Louis-SAT