Sustainable growth through network optimization
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Sustainable Growth through Network Optimization. Team Name: ARBY’s Bayu Daryanto Ronaldo Rotua Yuji Sakakibara Aurélia de Larrard. Problem statement & Agenda ( Aurélia de Larrard ). Problem statement

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Sustainable growth through network optimization

Sustainable Growth through Network Optimization

Team Name: ARBY’s

BayuDaryanto

RonaldoRotua

Yuji Sakakibara

Aurélia de Larrard


Problem statement agenda aur lia de larrard
Problem statement & Agenda (Aurélia de Larrard)

  • Problem statement

    • On the short term, how can Eaton reduce the premium freight frequency as well as the overall inventory level?

    • On the long term, how can Eaton ensure a sustainable growth?

  • Agenda

    • Problem statement

    • Recommendation

    • Existing SC network

    • Rationale

    • Strategy & Action Plan

    • Timetable


Supply chain network aur lia de larrard
Supply Chain Network (Aurélia de Larrard)

Customer Manufacturing

Solutions Center

(CMSC)

Plants

Distribution Center

Ware Houses


Recommendation aur lia de larrard
Recommendation (Aurélia de Larrard)

  • We recommend building a major warehouse in Los Angeles

  • Building a major warehouse will allow:

    • Reduced use of air shipment on the west coast

    • Lower inventory in regional (west) CMSCs

    • Lower utilization rate of current warehouses W34-W87

    • Reduce the fluctuation of the whole supply chain

    • Increase Service Level


Pros and cons of the other options aur lia
Pros and Cons of the other options (Aurélia)

  • Build a new CMSC (option 1)

    • Pros

    • Increase responsiveness

    • Reduce regional logistics costs

    • Cons

    • increase overall inventory

    • No reduction of air shipment

    • no improvement of warehouse capacity/high utilization rate

  • Extend plant storage of CMSC (option 3)

    • Pros

    • Lower investment cost

    • Improve local performance of close CMSCs

    • Cons

    • Limited capacity to reduce air shipment

    • Limited capacity to improve total inventory level


Rationale to focus on the west yuji sakakibara
Rationale to focus on the west(Yuji Sakakibara)

West

West


Reducing air shipment cost yuji sakakibara
Reducing Air shipment Cost (Yuji Sakakibara)

  • 2 modes of transportation

    • Truck: majority of the shipment

    • Air: emergency shipment

  • If EATON can achieve 100% Service Level, they do not have to use air shipment

  • Service Level (SL)=1 – (Air shipment / Total shipment)


Analyzing current inventory yuji sakakibara
Analyzing Current Inventory(Yuji Sakakibara)

COGS

EX) Los Angeles-SAT

Inventory

Air: 16% of total shipment

SS = Inventory + (COGS/10cycle/2)

Z = NORMSINV(SL(%))

σ=SS/Z(Standard Deviation/Month)

Standard DeviationofDemand in each city


Pooling inventory bayu daryanto
Pooling Inventory (BayuDaryanto)

Current System

Pooling System

Std. dev. demand at W = √N * σ

Std. dev. demand at 1 location =σ

Safety stock at W = z * √N∗ σ

Safety stock at each CMSC = z * σ

Total safety stock at N RDCs = N z σ


Cost s aving benefits bayu daryanto
Cost Saving Benefits(BayuDaryanto)

*) Targeted Service Level based on other regions


Strategy action plan ronaldo rotua
Strategy & Action Plan(RonaldoRotua)

  • Short term

    • Build New Warehouse in Los Angeles

    • Set Up Pooling System

  • Long term

    • Pooling system in other regions

    • Evaluate the CMSC network based on future demand


Timetable ronaldo rotua
Timetable(RonaldoRotua)


Issue with new warehouse ronaldo rotua
Issue with New Warehouse (Ronaldo Rotua)

Mitigation


Q a ronaldo rotua
Q&A(RonaldoRotua)

Any

Questions ?


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