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

2. Implement DefineMeasureAnalyzeControl Implement Six Sigma DMAIC Methodology (E.R)

3. 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 DefineMeasureAnalyzeImplementControl

4. DefineMeasureAnalyzeImplementControl 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)

5. CMSCs must improve their supply chain network by: – Reducing premium freight frequency – Managing overall inventory CMSCs must increase their future growth sustainability DefineMeasureAnalyzeImplementControl Problem Definition(E.R)

6. DefineMeasureAnalyzeImplementControl Measurement(E.R)

7. DefineMeasureAnalyzeImplementControl Measurement(E.R)

8. 6/9 9/13 WEST USA: High inventory levels and high premium shipped orders WEST USA: High inventory levels and high premium shipped orders Measurement(E.R) DefineMeasureAnalyzeImplementControl

9. Analysis Part I: Transportation Cost (J.G) DefineMeasureAnalyzeImplementControl Sources CMSC

10. DefineMeasureAnalyzeImplementControl 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 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 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)

11. DefineMeasureAnalyzeImplementControl Analysis Part I: Transportation Cost Short term J.G

12. DefineMeasureAnalyzeImplementControlDefineMeasureAnalyzeImplementControl Analysis Part I: Transportation Cost Long term J.G

13. DefineMeasureAnalyzeImplementControlDefineMeasureAnalyzeImplementControl 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?)

14. Analysis Part II: Inventory Control (T.A) DefineMeasureAnalyzeImplementControl

15. DefineMeasureAnalyzeImplementControl Analysis Part II: Inventory Control (T.A)

16. DefineMeasureAnalyzeImplementControl Kanban System Analysis Part II: Inventory Control (T.A)

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

18. DefineMeasureAnalyzeImplementControl Improper Forecasting of demand  Stock outs in CMSCs.  Higher orders leading to increased lead times CausesEffects 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)

19. 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 CMSCs 2.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 time Production Plants Consolidation & Transportation W87 Distribution Center New Distribution Centre Analysis Part II: Facing the Challenge T.A DefineMeasureAnalyzeImplementControl

20. Implementation: Options DefineMeasureAnalyzeImplementControl

21. 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) DefineMeasureAnalyzeImplementControl

22. Option 2: Review Demand Forecast N.H DefineMeasureAnalyzeImplementControl

23. 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 DefineMeasureAnalyzeImplementControl

24. 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) DefineMeasureAnalyzeImplementControl

25. Control: Overcoming Potential Risk N.H DefineMeasureAnalyzeImplementControl

26. Road to Success (N.H)

27. END

28. Additional Slides

29. Optimization Model