2014 GSCMI Case Competition

Optimizing CMSC Supply Chain

Team Kunat

Sandeep RepakaKasey Carter

Kunat ChongcharoenpaisarnCurt Isenbarger

2014 GSCMI Case Competition 2

Agenda (Sandeep)

The CMSC network Issues Options Recommendation Strategy & Implementation Conclusion Questions

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The CMSC Network (Sandeep)

• Customized products for Eaton’s Electrical Sector

• 16 CMSCs across the USA to serve local and regional customers

• Source major portion of materials from Eaton’s plants at Sumter, SC and Fayetteville, NC

• Enhance both the brand image and customer relationships

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Issues (Sandeep)

Short Term• Reduce the frequency of

premium freight shipping• Lower days of inventory on

hand of west coast sites

Long Term• Maintain a supply chain network

that sustains the growth of two of Eaton’s business sectors – Electrical and Power Distribution Systems

Optimizing Supply Chain Network

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Options (Sandeep)

Option 1 - Build one or more CMSCs

Option 2 - Build a major warehouse

Option 3 - Extend storage of CMSCs

Costs of setting up new CMSCs could be high, talent acquisition can be a barrier

Supports long term goals, reduces regional logistics costs, increases demand responsiveness and improves inventory turnover

+ -

Supports short term goals, alleviates pressure on existing warehouses

May not necessarily address long term goal since new warehouse only stock for the Electrical Sector

+ -

Requires less investment, improves performance of local CMSCs

May not fully support short term and long term goals+ -

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Recommendation (Kasey)

Short Term Expand Dallas DBN warehouse to the size of W34

(Largest volume CMSC site)85% of total PO $

sourced from P.R. & W34!

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Recommendation (Kasey)

Inefficient frontier

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Recommendation (Kasey)

Long Term

Build new CMSC near Salt Lake City and/or Las Vegas

• Provides help to where it is most needed• Supports new West Coast tech companies• Enables further expansion for Eaton

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Strategy & Implementation (Kunat)

Implementation period - EOY 2014 Pay Back Period - Y 2021

Financial impact

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Strategy & Implementation (Kunat)

Inventory pooling

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Strategy & Implementation (Kunat)

Inventory pooling

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Strategy & Implementation (Kunat)

Inventory pooling

6 major locations in West Coast can order from new warehouse, without building a Factory or relying on Premium Shipping

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Conclusion (Curt) More targeted distribution network

Transportation waste can be decreased Less reliance on premium shipping

Expand Dallas DBN to full-size warehouse Immediately reduce premium shipping to

Dallas – the largest market

New CMSC in the West Response to increasing West Coast demand Shorter lead time for demanding tech

companies

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Questions?

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Appendix

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Cost Analysis

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Cost Analysis

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Pooling Inventory Analysis

Impact on DIO (DOH) : Inventory / COGS