1. Sustainable Growth of EATON’s Electrical Sector Optimization of the Distribution Network 1 Krannert School of Management Purdue University

2. 2014 Case Competition What Are We Covering? StarTrek Consulting TeamProblem StatementRecommendationAnalysisSummaryQ&A 2 Purdue University

3. 2014 Case Competition Dane Snyder MBA 15 Operations and Finance Tiepoint Consulting Team Nick Grady MBA 15 Operations and Finance Brian Fish MBA 15 Finance and Operations Ayush Goel MBA 15 Operations and Business Strategy 3 Purdue University

4. 2014 Case Competition Current Situation 4 Nick Grady 16 Customer Manufacturing Solution Centers Over 10 Components Manufacturing Sites

5. 2014 Case Competition Problem Statement 5 Nick Grady High inventory level Increased premium freight Questionable sustainability

6. 2014 Case Competition Recommendation 6 Nick Grady Construct new warehouse in Wichita, KA Decreased overall inventory Decreased premium freight Strategic placement for future growth

7. 2014 Case Competition Current Cost Analysis 7 Nick Grady Shipping Modes as a Percentage of Total Orders for Selected Sites $5,189,791 $590,049 Shipping Costs: Standard Trucking Premium Freight

8. 2014 Case Competition Current Cost Analysis 8 Nick Grady Shipping Cost Calculation Order Destination Order OriginDistanceWeight of OrdersAverage Cost/mile/lb Total Transportation Cost Chicago, ILFayetteville, NC828 mi50,290$.000304$12,659 4 Sites Considered: Total Annual Shipping Cost of Selected Sites: $2,385,434

9. 2014 Case Competition Inventory Reduction Analysis Dane Snyder 9 Chicago-SAT Chicago-SVC Dallas-SAT Dallas-SVC Los Angeles-SAT Los Angeles-SVC San Francisco-SAT 50% of Total Premium Orders Location-product combinations to pool

10. 2014 Case Competition Inventory Reduction Analysis Dane Snyder 10

11. 2014 Case Competition Inventory Reduction Analysis Dane Snyder 11

12. 2014 Case Competition Cost Savings Analysis Assumptions: Shipping cost is average of costs provided @ $0.304/1000 miles/Lb After risk pooling LTL can be negotiated to FTL – Sensitivity analysis of the cost assessed by varying between 75% - 100% of the LTL cost 12 Ayush Goel

13. 2014 Case Competition Cost Savings Analysis Ayush Goel 13 Warehouse selection criteria: 300K Population A positive growth rate region Near to CMSCs with 50% premium freight Sensitivity Analysis: Three locations shipping costs were calculated Wichita, KS was lowest costing with highest growth rate in population

14. 2014 Case Competition Cost Savings Analysis Ayush Goel 14 Current Distribution Network Shipping cost are $2.4M Frequent stock outs High Days-On-Hand (DOH) New Warehouse at Wichita, KS Shipping cost just $1.5M, half of older network Low Days-On-Hand (DOH), uncertainty in demand is pooled New growth region, opportunity for new CMSCs in central US

15. 2014 Case Competition Financial Feasibility Analysis Brian Fish 15

16. 2014 Case Competition Summary Brian Fish 16

17. 2014 Case Competition Have Doubts! 17

18. 2014 Case Competition Appendix 18 Shipping Cost Savings Transport Cost PhoenixVegasWitchita Receiving from Warehouse $ 1,293,434.30 $ 1,294,952.20 $ 1,236,312.58 Receiving at Warehouse $ 538,942.33 $ 567,155.76 $ 309,437.73 Net $ 1,832,376.63 $ 1,862,107.96 $ 1,545,750.30