Team RowlandPresenter 1: Elizabeth Rowland (E.R.)Presenter 2: Juan Guerrero (J.G.)Presenter 3: Tarun Aggarwal (T.A.)Presenter 4: Norihiko Hosokawa (N.H.)

Implement

Define

Measure

Analyze

Control

Implement

Six Sigma DMAIC Methodology (E.R)

Eaton Corporation(E.R)

• Power management company• 102,000 employees• $22 billion sales in 2013• Customers in 175+ countries• Four main business sectors– Electrical, Aerospace, Vehicle, and Hydraulics

Define Measure Analyze Implement Control

Define Measure Analyze Implement Control

Eaton Corporation: Sector of Focus(E.R)

• Power management company• 102,000 employees• $22 billion sales in 2013• Customers in 175+ countries• Four main business sectors– Electrical, Aerospace, Vehicle, and Hydraulics• Customer Manufacturing Solutions Centers (CMSCs)

• CMSCs must improve their supply chain network by:– Reducing premium freight frequency – Managing overall inventory

• CMSCs must increase their future growth sustainability

Define Measure Analyze Implement Control

Problem Definition(E.R)

Define Measure Analyze Implement Control

Measurement(E.R)

Define Measure Analyze Implement Control

Measurement(E.R)

6/99/13

WEST USA: High inventory levels and high premium shipped

orders

Measurement(E.R)

Analysis Part I: Transportation Cost (J.G)

Define Measure Analyze Implement Control

Sources

CMSC

Define Measure Analyze Implement Control

CMSC:• SE = Atl-Ral-Orl• NE = Bal-NJ-Cle-Har• MW = Chi-StL• S = Dal-Hou• SW = SF-LA-Pho• NW = Sea-Por• W = Den

Sources:• NC = Fayettville-Arden-

Raleigh• SC = Sumter-W34• LA = W87• Dallas = CDC&DBN* P.Rico & Others not included in analysis

Analysis Part I: Transportation Cost Short term

(J.G)

Define Measure Analyze Implement Control

Analysis Part I: Transportation Cost Short term J.G

Define Measure Analyze Implement ControlDefine Measure Analyze Implement Control

Analysis Part I: Transportation Cost Long term J.G

Define Measure Analyze Implement ControlDefine Measure Analyze Implement Control

Implementation & Control Part I (J.G) Recommendations• SHORT-TERM RECOMMENDATIONS:– Revise sourcing allocation

• Implement optimization models• Identify current & future bottle-necks• Reduce logistic costs due to sourcing changes

• RISKS & CONSIDERATIONS:– Verify Source capacities– Verify distances between Sources and CMSCs– Determine if production streamline can be achieved (1

source to 1 CMSC?)

Analysis Part II: Inventory Control (T.A)

Define Measure Analyze Implement Control

Define Measure Analyze Implement Control

Analysis Part II: Inventory Control (T.A)

Define Measure Analyze Implement Control

Kanban System

Analysis Part II: Inventory Control (T.A)

Define Measure

Analyze

Implement Control

Analysis Part II: Challenge at Hand (T.A)

Define Measure

Analyze

Implement Control

Improper Forecasting of demand Stock outs in CMSCs. Higher orders leading to increased lead times

Causes Effects

Shifting of demand to different facilities

Reduced capability to fix inventory to facilities

Basic reliance on truck and air for transportation

Truck transport results in longer lead time Air transport results in higher transport cost

Product shipment normally of LTL size

Increases number of shipments and adds to overall cost

Low Risk Moderate Risk High Risk

Analysis Part II: Challenge at Hand (T.A)

Supply Chain

1. Employ third party transportation to avoid LTL shipments

2. Consider shipping via rail routes

1. W87 to cater specifically to west coast CMSCs2. Increase buffer stock levels in W87 to reduce inventory

buildup in CMSCs

1. Function in parallel with west coast facilities to meet demand

2. Employ resource pooling to reduce safety stock build up

Process Optimization

1. Maintain the 3-day shipment cycle.2. Prioritize west-coast orders to counter higher lead timeProduction Plants

Consolidation & Transportation

W87 Distribution Center

New Distribution Centre

Analysis Part II: Facing the Challenge T.A

Define Measure

Analyze

Implement Control

Implementation: Options

Define Measure

Analyze

Implement Control

• Not small amount of capital expenditure

• Not easy to redesign supply chain

• Not easy to find the place

• Decrease lead time in Western area

• Decrease inventory levels in Western area

• Decrease frequency of premium freights

• Lower transportation costs

• Give flexibility to major warehouses

Option 1: Build New Warehouse (N.H)

Define Measure

Analyze

Implement Control

Option 2: Review Demand Forecast N.H

Define Measure

Analyze

Implement Control

Option 3: Verify Re-order Point (N.H)

• Decrease excess inventory and shortage

• Easy to implement

• Not necessarily eradicate shortage

• Not necessarily decrease lead time

Define Measure

Analyze

Implement Control

Identify location * Close to a major city* Coverage of CMSCs

Legal formalities* State Govt. regulations* Compliance

Design capabilities * Supply chain networks* Capacity

Construction* Shorter lead time* Better inventory levels at CMSCs

Implementation Plan (N.H)

Define Measure

Analyze

Implement Control

Control: Overcoming Potential Risk N.H

Define Measure

Analyze

Implement Control

Road to Success (N.H)

END

Additional Slides

Optimization Model

Optimization Model

Optimization Model