Inventory Management, Financial Analysis and Facility Detailing, American Axle & Manufacturing
Summer Student Team: Matt Bobrowski, Koji Yamada, Sayan Sinha
Spring Student team: Joey Meisberger, Taylor Haws, Matt Jung, Gisela Condado, Pablo Martinez, Akshit Bajpai
Faculty Advisor: Ananth Iyer & Steven Dunlop
Project Description: In 2014, American Axle & Manufacturing, Inc., purchased what is now AAM’s Rochester Manufacturing Facility (ROMF), which is a 71,000 square foot facility with various machine tools in Rochester, Indiana. This is the first IN-MaC project grant for the center which emphasizes Indiana economic improvement. The project objective is to model, analyze and evaluate various proposals to maximize the Gross Profits, Contribution Margin and Internal Rate of Return (IRR) to support the utilization planning for the open floor space currently available. Through the adoption of these modeling and analysis capabilities, this project will result in the following outcomes:
1. Written proposal and recommendation of various alternatives utilizing a variety of academic methods/tools.
2. Final Project Summary to support the cost justification and project return on investment, implementation plan, etc.
Detailed inventory storage management models and multiple plant layouts were recommended. Also included were financial analysis, material flow and SWOT analysis for different plant configuration and optimization of storage space including holding cost analysis.
Spare Parts Inventory Management
Student team: Ana Romero, Joshua Kwak(MBA 2013), Sutapa Paul(MBA 2013), Roshan Picardo(MBA 2013), Susana Restrepo (MBA 2013)
Faculty Advisor: Qi Annabelle Feng
Project Description: Evonik is one of the largest specialty chemical companies. It is headquartered in Germany and does business globally. It has its presence in more than 100 countries and operates production plants in 24 countries. The employee strength is approximately 33,000. The core business is focused on high-growth megatrends such as health, nutrition, efficiency and globalization. In regards to performance (2011), Evonik generated sales of €14.5 billion and operating result of €2.8 billion.
Evonik acquired the Tippecanoe Laboratory from the previous owner Eli Lilly, as a strategic investment to enlarge their presence in the pharmaceutical industry. This purchase augments Evonik’s exclusive business of synthetics in America and adds capacity for additional market growth. Evonik’s exclusive Synthesis & Amino Acids Business Line - part of the company’s Health & Nutrition Business Unit - focuses on the customized production of pharmaceutical intermediates, active pharmaceutical ingredients, amino acids, and high-quality derivatives. The data analysis part of this experiential learning process entails understanding of diverse machinery and their spare parts in the T2C fermentation unit of the Tippecanoe labs.
Order Consolidation at Ingersoll Rand
Student team: KofoAdafin(MBA 2013), Shikhar Agarwal(MBA 2013), Xiaosi Fu(MBA 2013), Pradeep Nallabelli(MBA 2013), Rohan Vohra(MBA 2013)
Faculty Advisor: Qi Annabelle Feng
Project Description: The Ingersoll Rand order consolidation project was created to determine a solution to improve the order consolidation efforts between the various manufacturing sites for the Security-Technologies division in North America. Customers did not want to receive a single order in multiple shipments all arriving on different days. The focus of the project is to analyze several alternatives that would improve or eliminate the problem.
- Use warehousing to receive goods from different manufacturing sites, and ship completed order
- Use coordination of ERP systems for scheduling of productions so finished goods from different manufacturing sites arrive to the customer on the same day.
- Use cross docking and milk runs to consolidate orders when they are ready for delivery.
Production Planning at Verallia (Phase I)
Student team: Aniesh Aravin (MBA 2013), Ivan Banchs (MBA 2014), , Pedro Gerum (IE Undergraduate 2013) , Stephen Masters(MBA 2013), Vijay Sachdeva(MBA 2013)
Faculty Advisor: J. George Shanthikumar
Project Description: Verallia, a subsidiary of Saint-Gobain Company is number three glass packaging manufacturing company in the world contributing to 9% of Saint-Gobain’s FY 2011 sales. Given that packaging is a very challenging business where growth is qualified by the substitute products; as a result – Verallia is looking to gain competitive advantage by measures such as cost-savings so as to bring more efficiencies at the table.
Demand uncertainty is one of the major operational challenges at Verallia. The focus of this project was to help identify some of the areas which could be improved in such a situation which could better the demand prediction and planning thereby improving the production output rates, cost of production and reduce manual intervention.
Pareto Carries Based on Shipping Times
Student team: Saurabh Arora (MBA 2013), Yipin Lu (MBA 2013), Debdeep Roy (MBA 2013), Jing Zhao (MBA 2013)
Faculty Advisor: Qi Annabelle Feng
Project Description: Caterpillar Inc. also known as "CAT" is an American corporation which designs, manufactures, markets and sells machinery and engines and sells financial products and insurance to customers via a worldwide dealer network. Caterpillar is the world's largest manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. With more than US$70 billion in assets, Caterpillar was ranked number one in its industry and number 44 overall in the 2009 Fortune 500. Caterpillar stock is a component of the Dow Jones Industrial Average. Caterpillar Inc. traces its origins to the 1925 merger of the Holt Manufacturing Company and the C. L. Best Tractor Company, creating a new entity; the California based Caterpillar Tractor Company. In 1986, the company re-organized itself as a Delaware corporation under the current name; Caterpillar Inc. Caterpillar's headquarters are located in Peoria, Illinois, United States.
The objective was also to understand the inefficiencies in the supplier network, and to lay out a plan to optimize supplier-shipping network. Based on the information gathered, the optimized network would give rise to higher efficiency. The team worked together to understand the root causes and possible impacts. They collaborated with multiple departments in Caterpillar Lafayette factory, and acquired significant amount of data on transportation times, and routes. They also quantified various areas of concern along with the impacts. After several iterations and modeling exercises, high impact areas were identified, including (1) segments/carriers that caused production schedule disruption due to deviation from the estimated delivery time and (2) specific legs that has variability, since the uncertainty hindered efficient planning, therefore increased costs in multiple areas.
Inventory Management & Production Planning, CCI
Student team: : Randall Miao (MSGSCM 2013) Shankar Rajagopalan (MSIA 2013), Sunil Merumu (MBA 2014)
Faculty Advisor: Julia Kalish
Project Description: This project with Coleman Cables Inc. (CCI) was about inventory management and production planning. The project provided understanding on how inventory management works in organizations. During the course of the project, it was evident that even advanced planning systems have drawbacks. This project primarily dealt with made to order items, where there is immense pressure due to lead times and hence such planning is of utmost importance. The team, along with company representatives with able guidance from Dr. Julia Kalish and the GSCMI center, came up with an advanced system to estimate process losses and incorporate losses into the planning system. Traditionally, these losses lead to mismatch in inventory management and often lead to shortages. For a cable manufacturer, shortages can be very troublesome as requirements are in terms of length, and shortages in meeting requirements would mean making the entire cable again. The system developed helped CCI address the issue of matching copper lengths with insulation requirements. Having an opportunity to work with a real life problem gave the students great insights into planning systems and the impacts of how it might aff ect business and customer relationships in general.
Rubber Raw Materials, CCI
Student team: : Christine Zhang, Deepika Mokkarala (MSGSCM 2013), Isra Gadri (MSGSCM 2013), Yichen Ding (MSGSCM 2013)
Faculty Advisor: Julia Kalish
Project Description: During the summer semester of the Masters in Global Supply Chain Management program, a team of students worked on a project for Coleman Cable Inc. through the GSCMI center. Coleman Cable, Inc., headquartered in Waukegan, Illinois, is a leading manufacturer and innovator of electrical and electronic wire and cable products for security, sound, tele-communications, electrical construction, retail, commercial, industrial, irrigation, and automotive markets. The team was faced with inventory and supplier issues and acted as student consultants from Purdue for the Coleman Cable Inc. Lafayette, Indiana branch specifi cally in the rubber raw material department. After Coleman Cable Inc. decided to manufacture the rubber component for their products at their own facility, they were faced with new challenges in vendor and inventory management of the raw materials. The project’s main objective was to avoid shortages in inventory of the raw materials and to bring about a consistent ordering pattern. The team analyzed the data available since the production had begun and provided an excel based inventory model which dealt with the purchasing and maintenance of 45 critical parts coupled with the MRP (Material Requirements Planning) system utilization. This solution helped reduce shortages in inventory. Students also worked towards a vendor management system by which the company could bring about an ordering pattern among 22 diff erent suppliers. They documented the changes in processes and made the solution more fl exible for future enhancements. The solution required no investment and slight adjustments were made to the internal processes to accommodate this model which helped the company reduce their production and procurement costs. As students in the Global Supply Chain Management program it was an excellent learning experience for the team to be able to apply classroom lessons to solve industry challenges. The company is currently using this model for purchasing and inventory management and is considering extending this solution to other departments with similar issues.
Supply Chain Strategies, The Chao Center
Student team: : Bin Gao (MSGSCM 2013), Sai Gao (MSGSCM 2013), Angelica Rodriquez, Yanbing Shi (MSGSCM 2013)
Faculty Advisor: Julia Kalish
Project Description: The Chao Center is located in West Lafayette, Indiana, within the Purdue Research Park. It is the only facility approved by the Food and Drug Administration (FDA) to manufacture and market Seromycin®, a lifesaving treatment for Multidrug-Resistant Tuberculosis (MDR-TB). Currently, the Chao Center is facing several challenges regarding the sales of Seromycin®; sales have been dropping during the past several years due to competitors with lower prices and a reduction in the number of TB cases. In order to increase their market share, the Chao Center needs to reduce their selling price to compete with the rest of the market. Team members Bin Gao, Sai Gao, Angelica Rodriguez, and Yanbing Shi from Purdue University’s Global Supply Chain Management program assisted the Chao Center in tackling these issues. The team analyzed several cost components for the Seromycin® capsules along with the Chao Center’s current supply chain strategies to identify opportunities for improvements in those areas. Optimization of the Chao Center’s supply chain, consequently reducing cost, was recommended by the Purdue team. Specifi cally, this included stabilizing the customer demand to minimize the risk due to demand uncertainty; ordering the amount of raw materials required to meet the customer demand; switching to a diff erent transportation method for raw materials; and negotiating with third parties to split the transportation cost. Finally, the plan included optimizing the truck capacity by changing the shipping load units. For the cost analysis, the team used past sales data for Seromycin® to forecast next year sales and to determine diff erent demand scenarios. Afterwards, diff erent alternatives were developed to compare the total cost per capsule for each of the demand scenarios. The analysis showed that total cost per capsule dropped signifi cantly with changes in negotiation contracts, which attests to ordering raw materials according to the demand forecast instead of purchasing the minimum order quantities required from the suppliers. Furthermore, the cost per capsule can be reduced by sharing truck capacity with third parties and in turn splitting transportation costs. This demonstrates the importance of how supply chain strategies can impact the overall cost of the product, and consequently, the customer demand for that product since the Chao Center will be able to have the same price, or even a lower price than its competitors which can potentially improve their sales for Seromycin®.