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Chabot Wallpaper AnalysisCavanaugh, Dunn, Powell

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Agenda

Introduction

Manufacturing

Transportation/Service

Inventory

Summary

Introduction Manufacturing

Transportation/

ServiceInventory Summary

3

Major Problems

Long production runs

Poor service from contracted

carrier

High inventory levels

Introduction Manufacturing

Transportation/

ServiceInventory Summary

4

Manufacturing

Introduction Manufacturing

Transportation/

ServiceInventory Summary

5

Streamline Manufacturing ProcessPostponement at the Tennessee

manufacturing plant

Hold inventory earlier in the supply chain

◦Work in Process vs. Finished Goods

Helps to create a more responsive supply

chain

Introduction Manufacturing

Transportation/

ServiceInventory Summary

6

Current Manufacturing Process

Receive Order

Prepare Substrate

(21-28 days)

Apply Paste(1 day)

Change Over Line(12 hours)

Printing Pattern/Desi

gn(2 days)

Packaging(1 day)

Introduction Manufacturing

Transportation/

ServiceInventory Summary

7

Proposed Manufacturing Process

Prepare Substrate

(21-28 days)

Apply Paste(1 day)

Receive Order

Changing Over Line(12 hours)

Print Pattern/Desi

gn(2 days)

Packaging(1 day)

Introduction Manufacturing

Transportation/

ServiceInventory Summary

8

How To Improve Lead Time

Proposed Process

Current Process

0 5 10 15 20 25 30 35

Manufacturing Process Lead Time

Lead TimeVariation in Lead Time

Time (Days)

3.5 days

Introduction Manufacturing

Transportation/

ServiceInventory Summary

25.5 days

7 days

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Introduction Manufacturing

Transportation/

ServiceInventory Summary

Transportation/

Service

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How To Improve Transportation

FOB Destination/Freight Prepaid

◦Change freight terms to FOB Origin/Freight

Collect if customer’s transportation is

cheaper

Build relationships with more than one

carrier

◦Contingency planningIntroduction Manufacturin

g

Transportation/

ServiceInventory Summary

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Introduction Manufacturing

Transportation/

ServiceInventory Summary

Inventory

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Inventory Solutions

ABC Analysis on item turnover

rates

◦Reduce case sizes for B and C items

◦More responsive supply chain

enables us to ship more A items to

keep up with demandIntroduction Manufacturin

g

Transportation/

ServiceInventory Summary

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ABC Analysis

Top 20% Next 30% Bottom 50%

01234567

Turnover Rates of Items

Maximum TurnoverMinimum Turnover

Items

Tu

rns P

er

Year

5-6

Tur

ns

1-2

Tur

ns<.5 Turns

Introduction Manufacturing

Transportation/

ServiceInventory Summary

14

Tradeoffs

Introduction Manufacturing

Transportation/

ServiceInventory Summary

As case sizes decrease…

◦Packaging and handling costs

increase

◦Customer service levels increase

◦Obsolescence costs decrease

◦Inventory costs increase for Chabot,

but decrease for retailers

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Introduction Manufacturing

Transportation/

ServiceInventory Summary

Summary

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SummaryPostponement is key to increasing customer

service

◦ Lead times will decrease

Improve carrier strategy to be more responsive to

customer needs

Reduced inventory levels lead to better customer

service

Customer service is at the heart of everything you

doIntroduction Manufacturin

g

Transportation/

ServiceInventory Summary

17

Questions