GM Case Competition

Overview Problem Identification Assumptions Recommendation SWOT Analysis Explanation Pull Ahead Decision Tires Seats Conclusion

Assumptions We are using a 40 ft. high ocean cube ZP12 is shipped on order date Every 2014 Malibu eco is sold off the manufacturing line Volt/Ampera contribution margin comparable to 2013 Malibu ECO Cost of building ahead of shortage is negligible as stated in case Tires are available immediately and ship same day

Problem Identification Should the MY14 Malibu Eco launch be expedited after considering potential impacts and cost. Taking into consideration: Supply Chain Impact to JIT Supply Chain Structure Impact to Suppliers & Dealer Network Overall Pull Ahead Risk Potential Profit

Recommendations 1. Start DHam production on February 4 th DHam changeover will take place over December 2012 holiday shut down. 3. Lear will source seats from Brownfield. 4. Z914 polymer is used if validated. 5. The pull ahead will yield million incremental gross profits.

Market Factors Geography and Distribution Structure National and World Economies Competitive Forces Political/Legislative Uncertainties Distribution Channels Product LocationPrice Uncontrollable Factors Controllable Factors

ZP14ZP12 AmericanBrownfieldBay City+Greenfield Strengths Increase in the incremental gross profit of Million from SOP Early SOP of February 4th, 2013 First to market 100% tire validation Less risky in terms of – lead times, overseas shipping Locally operated Less ambiguous launch date Within 12 miles of DHam facility Able to support SOP of February 4 th, 2013 Trucks released at FTL JIT – lean manufacturing In perfect operating condition Allows continued construction at Greenfield Weaknesses Extended transit time Additional $5/kg tire compound cost Late SOP of April 4 th, 2013 Loss of potential net profit increase of $38.1 million Sunk cost of $2 million to scrap Greenfield Increase Lear’s manufacturing cost by $100 per seat set 108 miles to DHam Late SOP of March 4 th, 2013 – with a SOP at Greenfield of July 29 th, 2013 Additional logistics managers needed at $45 and hour $3 million to cover equipment at Greenfield Trucks need to be released at LTL – 45% Opportunities Global trade Supporting international economies Extended global relationships Supports American economy Internal production pride Supports American economy Internal production pride Supports American economy Internal production pride Threats Validation outside of company’s control Potential risk for political or economic instability Risk of product theft Increase risk of early market competition Rental location Increased risk related to extended facility distance from DHam – potential transit issues

December 2012 Holiday Changeover ProsCons Avoid 2 nd Plant Shutdown Supply Chain Continuity Consistent Volt & Ampera Supply $3 Million in Cost Savings Potential Loss of 2013 ECO Sales Requires Inventory Stock

Why Changeover During Holiday Malibu Production Lost PreBuilt MalibusLost Malibu SalesLost Malibu Revenue $ (9,720,750.00) Volt/Ampera Production Saved Revenue from Volt/Ampera Saved Cost Savings ChangeoverTotal Revenue 2540 $ 4,953, $ 3,000, $ 7,953, Potential loss represents the loss if validation fails. (20% probability) Total Revenue is independent of validation, and guaranteed. Difference between two is $1,767,750 Bottom Line: You are spending $1,767,750 to guarantee supply base continuity, avoid second shutdown, and secure an 80% chance of making $7,953,000 through this decision.

Incremental Gross Profit by Launch Date Million 85.5 Million Difference = 38.1 Million

Flow Chart Tire Validation Yes No Ramp Up Production Retool Dham Begin Ordering ZP14 1/1 Begin Production 2/4 Begin Production on 4/1 Inform Lear: Brownfield $85,556, $123,678, Switch to ZP12 4/1 Incremental Gross Profit before 7/29/12 (SOP)

The Chain of Supply + Detroit-Hamtramck Assembly

Conclusion

RAM Consulting RAM: Risk Avoidance Management ?

Appendix A

Japan to Bridgestone – Transit Time Service TypeTransit Time Ocean: Full-Container Load (FCL)34 Days Ocean: Less than Container Load (LCL)49 Days Air Freight (Normal/Planned, non-premium)6 Days Expedite Air Freight112 Hours 1

Container Load Plan Pallet20 ft. Ocean Container 40 ft. Ocean Container 40 ft. High Ocean Container Height Supported weight 2,500 lbs.44,000 lbs. Pallets per container (size) N/A 4918 Pallets per container (weight) N/A17.6 Overall pallets by container N/A4917 Tire sets per container N/A

Week Tire Sheet – Ocean FCL Potential Launch Dates ZP12 Tire Option True Cost Per Car ZP14 Ocean FCL ZP14 Ocean FCL Order Date 2/4/2013Not Possible$100.32$1,701, /1/2013 2/11/2013Not Possible$104.53$1,551, /12/2013 2/18/2013Not Possible$110.15$1,401, /15/2013 2/25/2013Not Possible$118.01$1,250, /22/2013 3/4/2013Not Possible$129.80$1,100, /29/2013 3/11/2013Not Possible$149.46$950, /5/2013 3/18/2013Not Possible$188.76$800, /12/2013 3/25/2013Not Possible$306.69$650, /19/2013 4/1/2013Launch 3

Week Tire Sheet – Ocean LCL Potential Launch Dates ZP12 Tire Option True Cost Per Car ZP14 Ocean LCL ZP14 Ocean LCL Order Date 2/4/2013Not Possible 12/17/2012 2/11/2013Not Possible 12/28/2012 2/18/2013Not Possible 12/31/2012 2/25/2013Not Possible$122.20$1,295, /7/2013 3/4/2013Not Possible$133.99$1,136, /14/2013 3/11/2013Not Possible$153.65$977, /21/2013 3/18/2013Not Possible$192.95$818, /28/2013 3/25/2013Not Possible$310.88$659, /4/2013 4/1/2012Launch 4

Week Tire Sheet – Standard Air Potential Launch Dates ZP12 Tire Option True Cost Per Car ZP14 Standard Air ZP14 Standard Air Order Date 2/4/2013Not Possible$168.33$2,854, /29/2013 2/11/2013Not Possible$172.54$2,560, /9/2013 2/18/2013Not Possible$178.15$2,266, /12/2013 2/25/2013Not Possible$186.02$1,971, /19/2013 3/4/2013 Not Possible$197.81$1,677, /26/2013 3/11/2013Not Possible$217.46$1,383, /5/2013 3/18/2013Not Possible$256.77$1,088, /12/2013 3/25/2013Not Possible$374.70$794, /19/2013 4/1/2012Launch 5

Week Tire Sheet – Expedite Air Potential Launch Dates ZP12 Tire Option True Cost Per Car ZP14 Expedite Air ZP14 Expedite Air Order Date 2/4/2013Not Possible$189.40$3,212, /30/2013 2/11/2013Not Possible$193.61$2,873, /10/2013 2/18/2013Not Possible$199.23$2,534, /13/2013 2/25/2013Not Possible$207.09$2,195, /20/2013 3/4/2013 Not Possible$218.88$1,856, /27/2013 3/11/2013Not Possible$238.54$1,517, /6/2013 3/18/2013Not Possible$277.85$1,178, /13/2013 3/25/2013Not Possible$395.77$839, /20/2013 4/1/2012Launch 6

Incremental Gross Profit By Launch Date Launch Date: Cars Sold Before Current SOPProfit From Car Sales Incremental Gross Profit Brownfield/ZP14 Incremental Gross Profit Bay City/ZP14 Incremental Gross Profit Brownfield/ZP12 Incremental Gross Profit Bay City/ZP12 2/4/ $139,997, $123,678, /11/ $134,803,000.00$118,484, /18/ $129,609,000.00$113,290, /25/ $124,415,000.00$108,096, /4/ $119,221,000.00$102,902,825.60$101,894, /11/ $114,027,000.00$97,708,825.60$97,090, /18/ $108,833,000.00$92,514,825.60$92,286, /25/ $103,639,000.00$87,320,825.60$87,481, /1/ $98,445,000.00$82,126,825.60$83,177, $85,556, $83,177, /8/ $93,251,000.00$76,932,825.60$78,222, $78,222, /15/ $88,057,000.00$71,738,825.60$73,268, $73,268, /22/ $82,863,000.00$66,544,825.60$68,313, $68,313, /29/ $77,669,000.00$61,350,825.60$63,359, $63,359, /6/ $72,475,000.00$56,156,825.60$58,404, $58,404, /13/ $67,281,000.00$50,962,825.60$53,450, $53,450, /20/ $62,087,000.00$45,768,825.60$48,495, $48,495, /27/ $56,893,000.00$40,574,825.60$43,540, $43,540, /3/ $51,699,000.00$35,380,825.60$38,586, $38,586, /10/ $46,505,000.00$30,186,825.60$33,631, $33,631, /17/ $41,311,000.00$24,992,825.60$28,677, $28,677, /24/ $36,117,000.00$19,798,825.60$23,722, $23,722, /1/ $30,923,000.00$14,604,825.60$18,768, $18,768, /8/ $25,729,000.00$9,410,825.60$13,813, $13,813, /15/ $20,535,000.00$4,216,825.60$8,858, $8,858, /22/ $15,341, $977,174.40$3,904, $3,904, (SOP)7/29/ $10,147, $6,171, $1,050, $1,050,

Production Schedule—Validation Unsuccessful ECO capacity10/29/201211/5/201211/12/201211/19/201211/26/201212/3/201212/10/201212/17/201212/24/201212/31/2012 Dham Max Dham Planned FF Max FF Planned Total ECO capacity1/7/20131/14/20131/21/20131/28/20132/4/20132/11/20132/18/20132/25/20133/4/20133/11/20133/18/2013 Dham Max Dham Planned FF Max FF Planned1000 Total1000 ECO capacity3/25/20134/1/20134/8/20134/15/20134/22/20134/29/20135/6/20135/13/20135/20/20135/27/20136/3/2013 Dham Max Dham Planned02120 FF Max FF Planned Total

Production Schedule—Validation Successful ECO capacity10/29/201211/5/201211/12/201211/19/201211/26/201212/3/201212/10/201212/17/201212/24/201212/31/2012 Dham Max Dham Planned FF Max FF Planned Total Planned ECO capacity1/7/20131/14/20131/21/20131/28/20132/4/20132/11/20132/18/20132/25/20133/4/20133/11/20133/18/2013 Dham Max Dham Planned FF Max FF Planned Total Planned ECO capacity3/25/20134/1/20134/8/20134/15/20134/22/20134/29/20135/6/20135/13/20135/20/20135/27/20136/3/2013 Dham Max Dham Planned2120 FF Max FF Planned Total Planned2120 9

Appendix B Formulas

Z914 Tire Formulas Polymer weight per tire: Tire Weight (11kg) x percent of weight polymer (.28) = 3.08 Increased cost per car to use Z914 polymer: Polymer weight per tire (3.08) x Incremental cost per kg ($5.00) x Tires per car (4) = $61.60 Polymer’s per pallet: Max. pallet weight (1134 KG) = Polymer weight per tire (3.08KG) 10

Z914 Tire Formulas Cars per pallet: Polymers per pallet = (polymers per car) Pallets needed to produce 2120 cars: 2120 = Cars per pallet (92.04) 11

Lear Seats Formulas Incremental Annual Inbound Transport Cost (AITC) for Bay City: Standard AITC($4,049,000)*excess charge (1.35) = $1,417,150 Weekly Inbound Transportation Cost: AITC 52 weeks 12

Lear Seats Formulas Shipping cost per seat: Shuttle Rate per trip Car sets per trailer Accumulated costs per seat set: ((((Incremental Shipping cost + Excess fee per set)*2120)+Weekly ITC)*# of weeks operating) + Additional cost to option Total cost per seat: ((((Incremental Shipping cost + Excess fee per set)*2120)+Weekly ITC)*# of weeks operating) + Additional cost to option Total # of cars produced 13

Profitability Formulas Gross Profit: Total cars produced*Cont. Margin Net Profit: Gross Profit – (Cost of tires + Cost of seats) 14

Greenfield break-even point Incremental Net Profit from Brownfield: Net Profit from 2/4 – Net Profit from 4/1 (Date to save Greenfield) 100 (Incremental cost per seat set at Brownfield) Time to break even (in weeks): Net Profit from 2/4 – Net Profit from 4/1 (Date to save Greenfield) 100 (Incremental cost per seat set at Brownfield) ______________________________________________________ 2500 (Weekly Production) = weeks 15

Greenfield break-even point Number of years to break even: weeks 52 weeks= 2.78 years 16