2006-2007 Projects

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2006-2007 Projects

  1. 1. W. P. Carey School of Business MBA Supply Chain Management Specialization 2006-2007 Corporate Projects 1. Avnet Logistics: Avnet Logistics Transportation Business Improvement and Market Opportunities 2. Black & Decker: Inventory Management Strategy Model 3. Diageo: Wine Grape Supply Analysis 4. The Hartford Financial Services Group: Variable Staffing Strategy 5. Honeywell Aerospace – Global Strategic Sourcing: Supply Chain Services Tool-kit Development 6. Jazz Semiconductor: Freight Cost Reduction Program 7. Motorola, Inc.: Direct To Retail Strategy 8. Pulte Homes Inc., and Pulte Building Systems, LLC: Supplier Measurement Strategy 9. Raytheon Space & Airborne Systems: SAS Logistics Outsourcing Strategy 10. Temple-Inland: Should-Cost Model Analysis 11. VF Corporation: Free Trade Zone Analysis 1
  2. 2. Company/Division Avnet Logistics Project Title Avnet Logistics Transportation Business Improvement and Market Opportunities Project Problem or Avnet, Inc., a Fortune 500 company (NYSE: AVT), is one of the world's largest B2B Opportunity distributors of semiconductors, interconnect, passive and electromechanical components, (Describe the “value enterprise network and computer equipment, and embedded subsystems from leading proposition” for this manufacturers. Serving customers in 70 countries, Avnet markets, inventories, and adds project. That is, explain value to these products and provides supply chain management and engineering services. why it is worth doing.) NOTE: See Avnet_First.pdf and Avnet-Vertical_Markets.pdf for additional information. Avnet Logistics has a large transportation spend ($100M) across an established group of transportation providers, customer clearance brokerages, trade compliance and freight audit activities. Avnet needs ideas to drive substantial savings in the internal transportation spend and would like to also develop a line of revenue from managing transportation services for others. Project Objectives • Identify main areas of potential to reduce transportation related costs (for example, financial • Evaluate the potential of turning freight spend into a proactive market offering improvements, quality • Identify transportation service customer requirements and gap analysis versus Avnet improvements, supply capabilities to deliver those services. chain innovations, improvements in customer service). Primary Project We are looking for your recommendations for how to reduce transportation related costs Activities/Tasks and develop transportation services management as a line of revenue. Therefore, you have flexibility in exactly what aspects of this you will focus on depending on what appears to have the best prospects based on your initial analysis. We anticipate that you will need to conduct the following activities: 1. Gather, analyze and characterize our current transportation spend in North America. This will be done based on analyzing currently available Avnet data and interviewing our people and possibly also some of our transportation providers. We will facilitate access to our transportation providers. 2. Evaluate and make recommendations on including a standard freight offering free with all Avnet shipments to customers. 3. Survey Avnet transportation vendors to characterize the services available, how those services are delivered and any customer expectations that are typical for the industry. We will facilitate access to our vendors for this survey. 4. Review available literature, web resources, and experts to identify potential opportunities for transportation cost savings and transportation management services that we could provide 5. Based on Tasks 1 through 3, assess in detail Avnet capabilities to deliver transportation management services. This will include identification of potential opportunities for transportation management services, metrics for assessing our competitiveness with respect to providing these services, and an assessment with respect to these metrics of our potential competitiveness in providing these services. 6. Based on Tasks 1 through 4, provide recommendations for transportation cost reduction and management services that we could provide. Prepare a high-level implementation plan for your recommendations. Anticipated • Report on Avnet transportation spending, areas for potential expense reduction and Deliverables recommendations regarding incorporating freight into our standard market offerings. • Report on transportation services available from Avnet vendors, anticipated customer requirements or differentiation points, Avnet capability strengths and gaps, and specific recommendation for Avnet market entry as a transportation management service provider. Special Requirements • Non-disclosure agreement for Student Team 2
  3. 3. Company/Division Black & Decker Hardware and Home Improvement Group Project Title Inventory Management Strategy Model Project Problem or Black & Decker is a global manufacturer and marketer of quality power tools and Opportunity accessories, hardware and home improvement products, and technology-based fastening (Describe the “value systems. Our products and services are marketed in more than 100 countries, and we have proposition” for this manufacturing operations in eleven countries. The Black & Decker Hardware and Home project. That is, explain Improvement Group (BDHHI) is a $1.2B Division of Black & Decker comprised of why it is worth doing.) Kwikset, Price Pfister, Baldwin Hardware and Weiser Lock. BDHHI currently uses sku segmentation according to the APICS recommended model: A 80%, B 15%, C 5%. Current model dictates sku’s safety stock required levels to avoid stock outs resulting in either fill rate or lead time customer issues. Given that BDHHI is a high sku business with variables as finished goods sourced from Asia v. made in North America resulting in lead times differences, low seasonality, volatility in demand volume and mix and frequent new product introduction (NPI) scenarios; this project requires development of an inventory management / safety stock model (powerful analytical skills) strategy that will lead to 20% inventory reduction opportunities and Distribution Centers (DC’s) space freed up while maintaining fill rate flat at 98% across the business. Project Objectives This project addresses an inventory/safety stock strategy analysis for Kwikset, Price (For example, financial Pfister and Weiser with benefit analysis of the current inventory strategy versus improvements, quality alternatives resulting in inventory safety stock reduction. improvements, supply Results are expected to improve level of inventory/safety stock while maintaining fill rate chain innovations, flat a 98%. improvements in Areas to be considered include: sku segmentation, forecast volatility (volume and mix), customer service). different lead time for sourced finished goods (SFG) v. make items. Primary Project 1. Review the BDHHI current inventory/safety stock strategy. This will be based on Activities/Tasks interviewing appropriate BDHHI personnel and reviewing any written policies. 2. Collect, analyze, and summarize representative sales, customer requirements by channel, ordering pattern, lead time, fill rate, inventory financial reports, safety stock reduction impact on total inventory hypothesis. This will be done by interviewing BDHHI personnel, and reviewing internal reports and other documentation. We anticipate that this will result in maps of our overall sales, sku mix, sku segmentation, lead times and fulfillment process. 3. Review literature, web resources, and experts to identify best practices/tools that are relevant to inventory optimization strategies. 4. Based on Tasks 1 through 3, identify sku segmentation opportunities that would impact inventory levels positively. 5. Develop inventory recommendation model showing alternatives or improvements to the sku segmentation currently used. This will be done by comparing practices identified in Task 4 in terms of their impacts to inventory metrics, as well as implementation issues and feasibility a. Estimate the approximate value propositions (impact and effort) for each improvement opportunity, b. Prioritize the opportunities based on potential impact relative to the effort to implement, c. Perform a more detailed analysis of the impact and implementation effort for the highest priority opportunities identified in Tasks 5a and 5b. 6. Prepare recommendations for those opportunities identified in Task 5, including a recommended implementation order and high level implementation plans. 7. As time permits, implement attractive “quick hits” or perform pilots where feasible. 3
  4. 4. Anticipated • Summary and map of the current state of BDHHI’s inventory management process, Deliverables including a summary of safety stock, fill rate, lead time and any other metric anticipated to change as a result of this project • Inventory management model that can be run based on the sku family characteristics described above and that is capable of being refreshed as volume, mix, order variability and lead times change. • Overall list of inventory reduction and process improvement ideas • Prioritized list of opportunities with supporting analysis • Recommendations with implementation plans • Preliminary results of quick hits and pilots where implemented Special Requirements • Possible non-disclosure agreement for Student Team • Approximately two trips will be made to Lake Forest, CA (Orange County/Los Angeles area. 4
  5. 5. Company/Division Diageo, Chateau & Estate Wines, Napa, CA Project Title Wine Grape Supply Analysis Project Problem or Diageo is the world's leading premium drinks business with an outstanding collection of Opportunity alcohol beverage brands across spirits, wine and beer categories. These brands include: (Describe the “value Smirnoff, Johnnie Walker, Guinness, Baileys, J&B, Captain Morgan, Cuervo, Tanqueray, proposition” for this Crown Royal and Beaulieu Vineyard and Sterling Vineyards wines. Diageo is a global project. That is, explain company, trading in over 180 markets around the world. The company is listed on both why it is worth doing.) the London Stock Exchange (DGE) and the New York Stock Exchange (DEO). We employ over 20,000 people worldwide with offices in around 80 countries. If you would like to find out more about Diageo please check out the following links: www.diageo.com www.diageowines.com Year-to-year grape crop fluctuations often create an oversupply of wine across the industry. Long-term grape supply contracts place the wine companies in an oversupply position after large harvest years. The losses associated with the excess wine have a significant impact on financial performance. The challenge is to take a potential liability in oversupply and convert it to a business advantage, as well as build a strategic plan to hedge against future oversupply risk. Project Objectives 1. Recommend the most cost effective sourcing strategy that allows Diageo to meet our (for example, financial sales forecast requirements while hedging against oversupply risk. improvements, quality 2. Recommend the most cost effective strategy to deplete current oversupply. improvements, supply chain innovations, improvements in customer service). Primary Project 1. Analyze current bulk wine and grape market for key grape varietals. This will be Activities/Tasks done by analyzing data and forecasts available from public sources or that we provide, supplemented by interviewing our internal experts 2. Review existing grape supply agreements and current wine inventory. We will provide the necessary reports to do this, or will provide you access to our records and systems so that you can develop the necessary information 3. Review available literature, web resources, and experts to develop potential alternative approaches to meeting our forecast requirements while hedging against oversupply. As part of this task, develop appropriate metrics for assessing how good the different approaches are. 4. Based on Tasks 1 through 3, develop a recommended approach to balance our future requirements vs. current supply. Ideally, we want an approach that will deplete our current oversupply while ensuring that we will meet future requirements and not have a significant oversupply or undersupply. Your recommendation should include an analysis of the expected NPV and risks associated with your approach. 5. Develop a high-level implementation plan for the recommended approach. Anticipated - Analysis of the current bulk wine and grape market for key grape varietals. Deliverables - Review of our existing grape supply agreements and current wine inventory. - Recommended strategic options for sourcing grapes and bulk wine to meet market demand, including a NPV and risk analysis of each option that is considered. - High-level implementation plan for your recommendations Special Requirements Non-disclosure agreement; one or two trips to Napa, California for Student Team 5
  6. 6. Company/Division Company The Hartford Financial Services Group Founded in 1810, The Hartford Financial Services Group, Inc. (NYSE: HIG) is one of the largest investment and insurance companies based in the United States, with offices in Japan, Brazil, Ireland, England, and the United States. With nearly 30,000 employees and $2.3 billion in income in 2005, The Hartford was ranked 78th on the 2006 Fortune 100 list. The Hartford is a leading provider of investment products – annuities, mutual funds, college savings plans – as well as life insurance, group and employee benefits, automobile and homeowners' insurance, and business insurance. Department Enterprise Commodity Management Enterprise Commodity Management (ECM) is a centralized department that manages various Indirect Spend commodities that The Hartford purchases to support the on-going business. The ECM group is engaged in leveraging the organization’s buying power to obtain goods and services at better terms and conditions over the life cycle of those goods and services. ECM currently has about $220 million in annual spend including the major categories as follows: Staff Augmentation ($75 million), Postage ($75 million), Print Procurement ($35 million), Office Services ($35 million) Project Title “Variable Staffing Strategy” Project Problem or Opportunity Opportunity Develop an effective Variable Staffing model for The Hartford (Describe the “value proposition” for this Description project. That is, explain The Hartford spends more than $200MM annually on Staffing category. Staffing refers to why it is worth doing.) hiring people to supplement the manpower needs of the organization. The Hartford would like to conduct an in-depth review of the Staffing spend and its related practices to allow for flexible or variable staffing strategy whereby The Hartford can quickly add manpower to implement projects and reduce staffing when project is completed. The Hartford has four channels through which staffing happens – In-house consultancy services, Contract agency staffing, Offshore and Full-time hire. The Hartford would like to develop an effective variable staffing strategy to determine which type of labor to use among the four channels. Variable Staffing shall be limited to the IT space and shall not include staff augmentation (clerical, admin jobs etc). Project Objectives The Hartford would like to explore and develop Variable Staffing strategies to: (for example, financial improvements, quality 1. Create cost savings by streamlining the staffing operations to affect at least 10% of improvements, supply the overall spend chain innovations, 2. Create an environment for Staffing managers to pick resources from the four improvements in channels based on TCO analysis customer service). 3. Reduce the overall cycle time and total cost associated with staffing from the Contract agencies 4. Develop a decision model for choosing manpower from the four channels Primary Project 1. Identify and understand the four channels of spend. This will be done by Activities/Tasks interviewing personnel from The Hartford, and possibly also staffing contractors. We anticipate that the result will be process maps that describe how staffing is done through the four channels. 2. Collect and analyze data on the four channels. We will provide the data, and the analysis will be used along with the results from Task 1 to identify gaps in our current variable staffing processes, and potential improvements. 3. Based on Tasks 1 and 2, review and standardize job templates and descriptions to be used as a basis for improving our variable staffing processes. As part of this task, 6
  7. 7. review literature, web resources, and experts to identify best practices for this type of process. 4. Using your results from Tasks 1 through 3, develop and prototype a Total Cost of Ownership model to allow decision making for variable staffing. We anticipate that this will include a recommended process flow and a prototype spreadsheet analysis tool 5. Develop a high-level implementation plan for your Task 4 process and tool. Anticipated 1. Description of our current process flow for variable staffing. Deliverables 2. Analysis of industry best practices 3. Prototype Total Cost of Ownership model 4. Decision process to support improved variable staffing 5. Recommendations for how to put the recommended variable staffing process into practice Special Requirements 1. Non-Disclosure Agreement for Student Team 2. Students do need to travel approximately 2-3 times to The Hartford based in Hartford, Connecticut to do interviews, collect data, understand the process flow, and make presentations. Students have the flexibility to start the project early and finish early so that the travel requirement does not affect the school work. For example, students can visit the company during the winter break and spring break. 7
  8. 8. Company/Division Honeywell Aerospace – Global Strategic Sourcing Project Title Develop a Supply Chain Services tool-kit that will enable sites Honeywell-wide to implement best-in-class supplier service models Project Problem or Honeywell International is a diversified technology and manufacturing leader, serving Opportunity customers worldwide with aerospace products and services; control technologies for (Describe the “value buildings, homes and industry; automotive products; turbochargers; and specialty proposition” for this materials. Honeywell (NYSE: HON) is one of the 30 stocks that make up the Dow Jones project. That is, explain Industrial Average and is also a component of the Standard & Poor’s 500 Index. why it is worth doing.) Honeywell Aerospace delivers a diverse range of commercial and defense and space products, systems and services across the aerospace industry. Of Honeywell’s over 200 site locations, less that 10% are taking advantage of no or low- cost supply chain services offered by our strategic suppliers. Specifically, Electronics Distributors such as Arrow and Avnet offer consignment programs, bonded inventory, electronic data interchange systems (EDI), in-plant stores, etc., at no or minimal cost to us. We do not take advantage of these services partly due to the lack of understanding at the site level as to what services are available and what dollar value, part mix, site support, etc. are required for a given supply chain service. With limited site level resources to manage material, using suppliers to drive the supply chain becomes increasingly important. Better supply chain management will lead to significant cost reductions and improvements in cash flow. Project Objectives Implementing a Supply Chain Services tool-kit will enable our sites to use supply chain (for example, financial services offered by our strategic suppliers at little or no cost leading to: improvements, quality 1. Significant cost reductions by minimizing broker buy and expedite fees improvements, supply 2. Significant Cash Improvements due to less material held in Honeywell inventory and chain innovations, more material held on consignment by our suppliers improvements in customer service). Primary Project 1. Work with our 5 strategic electronics distributors to understand what supply chain Activities/Tasks services are available, and to identify the business/site attributes required for each service type. Honeywell will facilitate the necessary access to these distributors, and it is anticipated that this activity will requiring interviewing and/or surveying representatives of the distributors. 2. Review available literature, web resources, and experts to help assess the advantage and disadvantage of utilizing the various no or low-cost services. 3. Assess the needs of Honeywell sites for the various available no or low-cost services, and the types of process changes that would be necessary to take advantage of these services. It is anticipated that this will require interviewing and/or surveying appropriate people at selected Honeywell sites. 4. Based on Activities 1 through 3, make develop a tool-kit for Honeywell sites that will guide them to the best supply chain service for their business. It is anticipated that this tool-kit will consist of process descriptions, checklists, and/or spreadsheet tools that can be used at a site to assess the available services, determine which ones should be used, and guide users through the process of obtaining the services. 5. As time permits, launch the tool-kit in webinars and through documentation on our internal website. Anticipated 1. Assessment of available no or low-cost supply chain services, and their potential Deliverables value to Honeywell sites. 2. Stand-alone, documented tool-kit that will enable any site across Global Honeywell to efficiently and effectively choose the best supply chain service for their business. 3. As time permits, webinars and website documentation to launch the use of the tool- kit. Special Requirements non-disclosure agreement for Student Team 8
  9. 9. Company/Division Jazz Semiconductor / Supply Chain Management Project Title Shipping/Transportation Cost Reduction Project Problem or Jazz Semiconductor is a pure-play semiconductor wafer foundry that serves customers Opportunity targeting wireless, optical networking, power management, storage, aerospace/defense (Describe the “value and other high-performance applications. Headquartered in Newport Beach, California, proposition” for this Jazz is a privately held company with over 800 employees and is located at the center of a project. That is, explain thriving high-tech region in Newport Beach, California, that includes Conexant Systems, why it is worth doing.) Mindspeed Technologies, and Skyworks Solutions with the University of Southern California, Irvine and the John Wayne Airport nearby. Jazz is merging with Acquicor Technology Inc., and further information about the merger and other aspects of Jazz is at www.jazzsemi.com/news_events/press_releases.shtml. With more than fifteen years of expertise operating a world-class certified wafer fabrication facility (ISO9001, ISO14001, ISO 27001), Jazz is well-positioned as a top player in the high-performance foundry marketplace. Our expansive facility occupies 100,000 square feet and supports state-of-the-art Class 1 and Class 10 cleanrooms. The foundry is capable of producing more than twenty thousand 8-inch wafers per month and supports the manufacturing of process technologies down to 0.13-micron geometries, while focusing on high performance technologies for mixed-signal and RF applications, such as silicon germanium (SiGe), BiCMOS and RFCMOS, which accompany its industry-standard CMOS offerings. Jazz maintains low-cost manufacturing partnerships in Shanghai, China, with Advanced Semiconductor Manufacturing Corporation (ASMC) and Hua Hong NEC Electronics Co., Ltd (HHNEC), expanding its capacity as well as its process offerings, providing outstanding dual-sourcing. The opportunity for this project relates to material arriving and shipping off to Jazz Semiconductor. The company is currently spending over $1.3 Million a year on shipping costs alone (domestic and international). There is need of a freight cost reduction program that could save the company at least 10%, and we believe this is realistically achievable. Project Objectives Project Objectives with Respect to our Supply Chain: (for example, financial - Compare company's costs, operations, and services against industry benchmarks to improvements, quality find the segments of our logistics services that should be improved improvements, supply - Reduce shipping costs chain innovations, - Identify hidden costs of transportation improvements in - Improve vendor compliance routing guide customer service). - Improve shipment visibility, freight tracing, and freight tracking - Monitor carrier performance with respect to time in transit, service failure, and billing Primary Project 1. Analyze our shipment activities including: traffic lanes and shipment volumes, Activities/Tasks transportation characteristics of the materials and products that are shipped and received, and freight terms The information used for this analysis will be from our internal systems, from interviewing company personnel, or from other publicly available information (for example, from carriers). This analysis will include: a. Measure transportation costs, which provide the basis for ongoing rate analysis and better results in negotiation with carriers. b. Analyze commodity flows between domestic origins and destinations, exports between domestic origins and foreign destinations and imports between foreign origins and domestic destinations. c. Conduct research on commodity flows and related freight transportation activities for large items including: chemicals, semiconductor wafers and equipment. 2. Clarify appropriate metrics for us to use to assess carrier cost and performance. This will be based on interviewing company personnel, as well as reviewing literature, web resources, and experts. This will include assigning weighted values to service and cost points that are most important to the company to assess service/cost tradeoffs and help assure that the most appropriate and cost-effective carriers and other service providers are identified to handle our business. 9
  10. 10. 3. Using the results from Tasks 1 and 2, utilize Supply Chain Management Tools / Methodologies to analyze and identify the best carriers for us to use based on our needs. Anticipated - From Task 1, provide benchmarking analysis that compares shipping rates, discounts, Deliverables surcharges and other factors to current competitive standards in each transportation mode. - Report results to Senior Management, with carrier rankings that show the amount of projected savings that can be realized with each carrier’s services, and provide recommendations for improvements that will reduce cost while maintaining important performance metrics. - Identify specific areas where rate freight improvements can be made and determine the amount of money the company can potentially save. That is, we are looking for specific recommendations that we can act on. Special Requirements - A non-disclosure agreement must be signed by each student for Student Team - Approximately two trips to Newport Beach, CA, for information collection or presentations. - Students from the following embargoed countries are not eligible to participate on this project: Sudan, Cuba, Iran, North Korea, Syria & Libya. 10
  11. 11. Company/Division Motorola, Inc., Integrated Supply Chain Project Title Best in Class Direct To Retail Strategies Project Problem or With the launch of the RAZR cell phone, Motorola was put on the consumer map as a Opportunity hot, innovative consumer products company. Leveraging this image, Motorola desires to (Describe the “value get a closer, more accurate sense of end-customer demand and trends by developing and proposition” for this using new channels to market. Primary among these “disruptive channels” is direct-to- project. That is, explain retail, which will initially focus on distributing directly to retailers warehouses, but will why it is worth doing.) eventually encompass direct-to-store delivery and even direct-to-end consumer delivery. Since Motorola is a relative new comer to direct-to-retail, we would like to understand best-in-class examples of how companies developed and deployed completely new direct- to-retail distribution channels, and strategies, tactics, and organizational alignments used to get best results out of the new distribution channels. Project Objectives Increase market share, maximize revenue, and better forecast future demand and trends (for example, financial by deploying a successful direct-to-retail distribution channel. For this project, the improvements, quality primary focus should be bricks and mortar distribution. If time permits, we would love improvements, supply your thoughts on e-commerce based distribution to individual or enterprise end- chain innovations, consumers. improvements in customer service). Primary Project We recognize that this is a broad topic area, and that the project scope may need to be Activities/Tasks sharpened to focus on specific project lines or customer classes. We anticipate that such focusing will be done during Activities 1 and 2: 1. Gain an understanding of Motorola’s current distribution channels to retail customers. This will be based on a review of written materials provided by Motorola and selected interviewing of Motorola, and possibly partner, personnel. 2. Paint the landscape for direct to retail – what categories of companies use this model, which companies have businesses models complementary to Motorola, what are Motorola’s competitors doing in this space. This analysis will be based on literature, web, and other publicly available information, plus any additional more proprietary information that Motorola provides. 3. Using your results from Activity 2, define best in class within this space (i.e. is it based on revenue, foot traffic, brand name proliferation…) and identify best in class companies. 4. For these companies, research and present their successes and lessons learned. 5. Based on Activities 1 through 4, determine recommendations to Motorola as to how best to succeed with the direct to retail business model with a high-level description of the activities that will be necessary to implement your recommendations. Anticipated • A set of business case analyses of the direct to retail experiences of other companies. Deliverables • A presentation, with supporting documentation, that includes an overview of the direct to retail landscape, an analysis of what it takes to succeed, and recommendations for Motorola. Special Requirements • Signed non-disclosure agreement (NDA) for Student Team • 1-2 trips to Chicago (one to develop background understanding and meet the Motorola team; and one to present the findings) • Regular (probably once every two week) phone conferences with the Motorola Project Champion for status updates 11
  12. 12. Company/Division Pulte Homes Inc., and Pulte Building Systems, LLC, Purchasing Department Project Title Utilize Manufacturing Resource Planning System (MRP II) Information to Improve Vendor Management at Pulte Building Systems Project Problem or Pulte Homes, Inc., (NYSE: PHM), based in Bloomfield Hills, Mich., is a FORTUNE 200 Opportunity company with operations in 53 markets and 27 states. In 2005, the company delivered (Describe the “value 45,630 homes in the U.S. and generated consolidated revenues of $14.7 billion. During its proposition” for this 56-year history, the company has constructed more than 450,000 homes. Pulte Building project. That is, explain Systems (PBS) is one of the nation's largest wood framing and concrete foundation why it is worth doing.) companies with extensive operations in Arizona and Nevada. This wholly owned subsidiary provides material and labor for concrete foundations, concrete flatwork, framing and trim for all Pulte houses built in Arizona and Nevada We are currently implementing an Oracle MRP II system within PBS, and there is an opportunity to develop a data-based supplier management system based on this system, and analyze information generated by the system to drive supplier performance and cost reduction initiatives. Project Objectives Efficiently utilize new data and capabilities from the MRP II system in PBS to improve (for example, financial vendor management, resulting in a significant cost savings estimated to be approximately improvements, quality $1 million, as well as optimized vendor performance. improvements, supply chain innovations, improvements in customer service). Primary Project There are a variety of ways that our MRP II system could potentially be used to improve Activities/Tasks vendor management. One of the first activities on this project will be to determine potentially high payoff approaches, which will then be analyzed in more detail to provide us with specific actionable recommendations for how we can implement your recommendations. The following set of activities are based on our initial assessment of high payoff approaches, but this is subject to modification as you analyze this opportunities in more detail. 1. Review our MRP II system and our current vendor management processes and contracting approaches based on information provided by PBS. 2. Assess potential options for using the MRP II system to improve vendor management based on your results from Activity 1, as well as review of literature, web resources, and possibly interviewing experts. We anticipate that potential improvements will be possible in a variety of areas because of our improved ability to forecast needs, track performance, and conduct electronic data interchange. Thus, potential sub-activities under this activity include such things as: a. Develop a negotiating strategy to improve vendor terms given that we can provide them a superior forecast b. Create an implementation plan to drive major vendors to build EDI interfaces with PBS c. Design and implement fair, objective supplier performance metrics. 3. There are also potential improvements in manufacturing and transportation that could be implemented using the MRP II system. As time permits, or if your initial analysis indicates the potential for high payoff from these improvements, then you can investigate such operational issues as: a. Analyze shipping of wall panels to mitigate the increase in shipping costs due to going from shipping lumber packages to fully-formed walls b. Generate linear programming model to optimize vehicle loading/routing based on forecast shipping schedule. 4. Based on Activities 1, 2, and 3, develop specific recommendations, including a high- level implementation plan, for ways to utilize our MRP II system to improve vendor management, manufacturing, and transportation, resulting in increased revenues, reduced costs, and improved vendor performance. Anticipated Specific recommendations for ways to utilize our MRP II systems to increase revenues, Deliverables reduce costs and improve vendor performance. If potential improvements in 12
  13. 13. manufacturing and transportation are identified and analyzed, then recommendations regarding these will also be delivered. Special Requirements Non-disclosure agreement, drug testing. International students may be required to for Student Team document that they have a valid student visa. 13
  14. 14. Company/Division Raytheon Space & Airborne Systems, El Segundo Project Title SAS Logistics Outsourcing Strategy Project Problem or Space & Airborne Systems (SAS), the largest business unit within Raytheon with nearly Opportunity $2 billion in revenue for 2005, is currently in the midst of several reorganizations and (Describe the “value transformations. Supply Chain Logistics, specifically, has experienced several big proposition” for this changes, including the consolidation of multiple warehouses into a single, consolidated project. That is, explain distribution center and the outsourcing of the receiving dock to a third party logistics why it is worth doing.) provider. Logistics comprises warehousing, trucking, expediting, receiving, packaging, and shipping at manufacturing sites in California, Texas, and Mississippi. Because these various processes are highly integrated with each other as well as with our other supply chain, manufacturing, and engineering processes, it is crucial that any changes to the organization be understood thoroughly and that any negative impacts to Raytheon’s business be minimized or eliminated. Too often decisions to outsource processes are made without adequately determining the total impact to the greater organization. As the Logistics organization moves forward, it is imperative that the company have a robust and well-articulated process for determining which processes should be outsourced and which should be developed in-house. Project Objectives The primary project objective is to provide a process/tool for evaluating the costs, risks, (for example, financial and opportunities associated with outsourcing various Logistics processes. improvements, quality improvements, supply A successful project will: chain innovations, • Allow Raytheon to make outsourcing decisions that reduce costs while also improvements in maintaining customer service customer service). • Compare Raytheon to benchmarks for the Aerospace and Defense industry and best in class companies Reference recent academic literature as well as industry references Primary Project 1. Understand SAS Supply Chain Logistics at a high level, potentially requiring site Activities/Tasks visits to Texas and California 2. Perform literature reviews regarding outsourcing of similar processes 3. Interview managers at multiple sites 4. Perform benchmarking for Aerospace and Defense Industry and best in class companies. Raytheon will provide access to benchmarking information for the Aerospace and Defense Industry, and the team will supplement this with information available from literature, web resources, and experts. 5. Develop a cost model to quantify TOTAL impact to Raytheon based on different outsourcing decisions 6. Produce a process/tool for evaluating the costs, risks, and opportunities associated with outsourcing various Logistics processes. We anticipate that the team will prototype the tool in Excel and provide a process handbook for how to use the tool. Anticipated - An overview of industry best practices and summary of literature review in related Deliverables industries - A process/tool for evaluating the costs, risks, and opportunities associated with outsourcing various Logistics processes. Special Requirements US citizens, Non-disclosure agreement, 2 trips to CA, possible 1 trip to TX & MS. for Student Team 14
  15. 15. Company/Division Temple-Inland/Corporate Supply Chain Project Title A Should-Cost Model for Direct Materials Project Problem or Company Information: Opportunity (Describe the “value Temple-Inland Inc. (NYSE:TIN) is headquartered in Austin, TX. We are working proposition” for this together as one company to create superior and sustainable value for shareholders, project. That is, explain customers and employees. We have made significant progress implementing major why it is worth doing.) initiatives to lower costs, improve operational efficiency, increase asset utilization and drive return on investment. We are performance-driven, and our goal is to have the highest ROI in our industry. We have four core operations at Temple-Inland - corrugated packaging, forest products, real estate and financial services. Our Corrugated Packaging operation has six containerboard mills and can effectively serve our customers through our integrated - nationwide system of converting facilities. Corrugated Packaging is the largest segment of the paper market. The Forest Products operation manufactures a diverse line of products for new home construction and for repair and remodeling markets. This group manages the company's 2 million acres of forestland. Temple-Inland is the largest private landowner in Texas and the fifth largest corporate forestland owner in the U.S. South. The Company's 2.0 million acres of forestland are certified as managed in compliance with ISO 14001 and in accordance with the Sustainable Forestry Initiative Standard of the Sustainable Forestry Board to ensure forest management is conducted in a scientifically sound and environmentally sensitive manner. Temple-Inland's real estate segment, which operates under the name Forestar Real Estate Group, is focused on real estate investment and development activities which include single-family residential, commercial, mixed-use and multi-family housing projects. The Financial Services operation includes two major operations: Guaranty Bank, with a network of over 149 banking centers in Texas and California; and Guaranty Insurance Services, Inc., ranked nationally in the top one percent of independent insurance agencies. Our business philosophy is focused - we are a company on a journey to be the best by consistently exceeding customer expectations, maximizing assets, lowering operating costs and improving efficiency. Opportunity: Temple-Inland total annual spend is $3.5B, of this, approximately $300MM is spent on very strategic, critical direct materials. However, very little is in place for should-cost models. We have limited information about the underlying cost drivers of each of these major direct material categories. This puts us at a great disadvantage when it comes to negotiations, price increase requests from the suppliers, and forecasting. We are more reactive to the markets versus being pro-active. Project Objectives Effective should-cost models and increased understanding of the cost drivers for these (for example, financial direct materials should drive an additional savings of 1-3% or ~ $3MM-9MM. improvements, quality improvements, supply chain innovations, improvements in customer service). 15
  16. 16. Primary Project 1. Analyze our current spend data for key direct materials (see list below) using our Activities/Tasks data warehouse (spend cube). The team will work with the e-sourcing manager and the commodity manager to obtain the necessary reports and receive training and access to the spend cube so that you can extract the data yourself. 2. Research and identify the cost drivers and related indices for the following direct materials: Urea Formaldehyde Resins, Caustic Soda, Ink, Pearl Starch, Wax, Adhesives, and Specialty Chemicals. Research will consist of consulting internal resources, such as data and subject matter experts, as well as material that we make available to the team via subscriptions and services 3. Based on the results of Tasks 1 and 2, build should-cost models for these specific direct materials. These models will be implemented in an Excel spreadsheet environment. 4. Using the model developed in Task 3, determine the correlation between our spend data and the cost drivers/indices. The primary intent of this task is to identify which direct materials have the highest impact related to cost drivers and volumes and which direct materials have highest potential for possible spend reduction based on the cost drivers/indices. 5. Identify and recommend tools or services that should be used for on-going support of this activity. We will subscribe to trial subscriptions, where relevant, to allow the team to evaluate these service. 6. Interaction of team with key Temple-Inland personnel will include VP of Strategic Sourcing, Director of Sourcing (Direct, Capital, & MRO), e-Sourcing Manager, and Commodity Manager of Direct Material. Anticipated • Cost driver and related indices identification Deliverables • Should-cost models for the strategic direct materials • Recommendation of how to obtain costing information on an on-going basis – what tools or services should we subscribe to or purchase? • Optional if time permits: The executive management reporting that is required for monthly tracking. This would be in the form of charts and graphs using Excel and PowerPoint. • Optional if time permits: The layout of the information, models, or recommended links for this tracking system that can be published on our Strategic Sourcing web site. Special Requirements Non-disclosure agreement. Approximately two trips to Austin, TX, for information for Student Team collection and management presentations. 16
  17. 17. Company/Division VF Corporation (All U.S. Coalitions: VF Imagewear, VF Intimates, VF Jeanswear, VF Outdoor, VF Sportswear) See “NOTE” below for further information, about VF Corporation brands. Project Title Free Trade Zone (FTZ) Benefit and Cost Analysis Project Problem or VF Corporation (NYSE:VFC) is one of the world’s largest apparel companies. Opportunity For over 100 years, we’ve grown by offering consumers high quality, high value branded apparel. Our leading brands in jeanswear, intimate apparel, outdoor and specialty apparel span virtually every channel of distribution. Our brands are segmented into five coalitions: Jeanswear, Intimates, Imagewear, Outdoor, and Sportswear. With the 2006 opening of VF Outdoor’s Visalia, CA distribution center (DC) (where a capability will be established as a free trade zone facility), coupled with the very aggressive growth strategy of VF Corporation and the resulting increasing imports from Asia, there is an opportunity to utilize the free trade zone (FTZ) in Visalia for benefits of entry processing for the VF Outdoor coalition and potentially other VF coalitions. Project Objectives Our objective for this project is to analyze potential benefits and costs of utilizing the new Visalia, CA Distribution Center FTZ for entry processing for the VF Outdoor coalition, and potentially for other VF coalitions. Primary Project Analyze potential benefits and costs of utilizing the new Visalia, CA DC FTZ Activities/Tasks for entry processing: 1. Determine and document U.S. Customs documentation, financial reporting, and process flow requirements for FTZ processing. This will be done by reviewing Customs documentation and interviewing VFC personnel or other experts. 2. Perform a cost-benefit analysis of utilizing the Visalia FTZ for entry processing for the VF Outdoor coalition. This will require developing cost and benefit metrics, understanding our current entry processing, developing possible modifications to this processing based on using the Visalia FTZ, and assessing the costs and benefits of this relative to the current processes and other potential alternatives at Long Beach. 3. Examine the opportunity for FTZ/Bonded Entry processing benefits to other VF Coalitions via Visalia or in close proximity to the LA ports of entry. Anticipated Deliverables 1. Documentation of all requirements for FTZ entry processing. 2. Benefits and costs of utilizing the Visalia, CA FTZ for entry processing for VF Outdoor and potentially other Coalitions, including a comparison with the current processes or other potential alternatives in close proximity to the LA ports. Special Requirements for One site visit to Long Beach, CA, and possibly to our Visalia, CA DC. Student Team Potential on-site meeting with VF Corporate Transportation/Logistics Management at CA location, or they may visit Phoenix. NOTE: VF Corporation brands include the following: Jeanswear (Wrangler, Lee, Riders, Rustler, Brittania, Timber Creek, Chic, Gitano, 20X, Hero, Maverick, H.I.S., Old Axe); Global Intimates (Vanity Fair, Vassarette, Bestform, Lily of France, Tommy Hilfiger, Curvation, Gemma, Lou, Bolero, Intima Cherry, Variance, Belcor); Imagewear (Red Kap, Bulwark, Penn State Textile, Horace Small, Lee Sport, CSA, Chase Authentics, NFL Red, NFL White, VF Solutions, E.Magrath); Outdoor (The North Face, JanSport, Eastpak, Napapijri, Kipling, Vans, Reef); Sportswear (Nautica, John Varvatos) 17

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