GSCMI-EatonCase Competition

JESSICA MILLERNICK BAFUNNO

RAJIV SAMAGOND

Team Eight

CURRENT PROBLEMS

• High premium shipping costs equaling $11,382,074 in 2013

• $4,694,652 of premium shipping goes to the West coast (36%)

• Long lead times – up to 2-3 days to ship to the West coast

• Frequent stock outs in W87 (CA)

*All data are yearly figures

MARKET ANALYSISElectrical Equipment Manufacturing industry

• Revenue is expected to rise by 4.4% for the next 5 years

• Domestic demand is forecasted in increase

• California has largest share of establishments in the industry (10%)• Proximity to top-tier engineering schools and large supply of high-skill workers

• Iron and steel manufacturing and metal wholesalers also have 10% located in CA

• Competitors like ABB Ltd. have been expanding to CA

Source: IBISWorld Research Services

SOLUTIONS

SHORT TERM

• Build warehouse

LONG TERM

• Build major plant

WAREHOUSE

• Carries common and uncommon parts

• Consolidate supplier orders

• Reduce inventory levels of CMSCs

• Shorten distance of supply to CMSCs

• Capable of supporting Eaton Power Distribution Systems in the future

Phoenix

San Francisco

Portland & Seattle

Denver

Los Angeles

0 5 10 15 20 25 30 35 40

10%

11%

21%

22%

36%

Breakdown of Western Orders (%)

MARKETANALYSISBakersfield, CA

• Population: 358,597*

• Market size: $33.4 million

• Growing economy

• New construction is on the rise:

• Caterpillar warehouse

• Toyota

• Cognito Motor Sports

• Location, location, location!!!

*United States Census Bureau (2012)

WAREHOUSE

• Eliminate premium shipping costs, saving $643,915 per year• 11% decrease in shipping costs• Frees up space in W87 (current

utilization over 90%)Reduce stock outs in W87

• Reduce lead time • Give CMSCs priority• Reduce ordering from other CMCSs

(reducing COGS)• Consolidate supplier orders

88%

12%

Cross-country Shipping

Regular

Premium

(pounds)

78%

22%

Cross-country Shipping

Regular

Premium

(cost)

PLANTBUILDS STANDARD AND SPECIALIZED UNITS

• Reduce cross-country transportation costs by $1,945,138 per year

• 66% decrease in shipping costs

• Economies of scales in the west

• Reduce overall inventory level of CMSCs

• Capable of satisfying increase in high-tech companies Shorter lead time

Current Warehouse(Short-term)

Plant(Long-term)

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000 $2,955,034 $2,632,942

$1,009,895

Shipping Cost with Proposed So-lutions

Regular Shipping Premium Shipping

*All data are yearly figures

• Year 1: Plan• Year 2: Build• Year 3:

Integration

Warehouse

• Years 2-3: Plan

• Years 4-5: Build

• Year 6: Integration

Plant • Sustainable supply chain

• Incorporate Eaton Power Distribution System

Growth

IMPLEMENTATION

Thank You!QUESTIONS

JESSICA MILLERNICK BAFUNNO

RAJIV SAMAGOND