2015 SPOTLIGHT! - c919297.r97.cf2.rackcdn.comc919297.r97.cf2.rackcdn.com/7m0h7hd6xmmpsllefmiyxalexqmnvl... · Brazil BorgWarner Germany BorgWarner ... Market Entry Strategy for High

2015 SPOTLIGHT!

ROSS SCHOOL OF BUSINESS // COLLEGE OF ENGINEERING

Front cover photo:This dramatic pool, located on the southwest side of the Robert H. Lurie Engineering Center,

was the emeritus gift of the Class of 1947 E. It includes ‘Fred’s Fountain,’ a gift of Fred Matthaei (BSE IM ‘47).

1TAUBER.UMICH.EDU

TAUBER INSTITUTE FOR GLOBAL OPERATIONS

WELCOME

Dear Honored Guest, September 18, 2015

Welcome!

We are pleased you are joining us at Spotlight! 2015. This is the Tauber Institute’s 22nd Spotlight! event and

it promises to be our best. Thirty-five team projects, staffed by 89 students with 54 faculty advisors, at 23

sponsoring companies from various global organizations in many sectors, including manufacturing and supply

chain, health care, energy, technology, and logistics will be presented today; you will experience the stimulating

results of their 3½ month summer efforts.

Your day will begin with opening remarks by Dean Alison Davis-Blake of the Ross School of Business followed by

seven sessions where you will be able to choose from several project presentations each. Later in the afternoon,

our Closing Ceremony will include remarks from Joel Tauber and Dean David Munson of the College of

Engineering, sponsor longevity awards, the alumni scholarship award, and conclude by announcing the judges’

choices for top teams and making scholarship check presentations.

Thank you for joining us on this extraordinary day. We sincerely hope you enjoy your Spotlight! experience.

Best Regards,

Amitabh Sinha

Ford Motor Company

Co-Director and Professor of

Technology & Operations

Ross School of Business

Larry Seiford

Goff Smith Co-Director and

Professor of Industrial &

Operations Engineering

College of Engineering

Alan Woodliff

Industry Co-Director

and Adjunct Professor

College of Engineering &

Ross School of Business

2 MICHIGAN ROSS // COLLEGE OF ENGINEERING

SPOTLIGHT! 2015

SCHEDULE & EVENT MAP

Guardian Fabrication

GuardianSupply Chain

Amazon Ops

Precision CastParts

Cardinal Health

Verizon Wireless

AIP Serva Group

AIP Aqua Flow

Cisco

Youth For Understanding

Pepsi

Boeing 777X

BorgWarner Brazil

BorgWarner Germany

BorgWarner Morse Systems

Amazon FBA

DTE

Kostal

Raytheon

ConAgra

Whirlpool

BorgWarner Transmissions

BorgWarner Thermal

Boeing BCA

Boeing CAS

Microsoft Cloud

Microsoft Surface

Boeing BDS

3M

BorgWarner Turbo

PG&E

Pfizer

Ford

GM GPSC

GE Aviation

Michigan III Petit I Grande III Grande II Grande I 7:15-8:00 Continental Breakfast – Sheraton

8:00-8:20 Opening Ceremony – Sheraton 8:20-8:35 Transition Period

8:35-9:05

9:15-9:45

9:55-10:25

10:25-10:45 Transition Period

10:45-11:15

11:25-11:55


12:05-1:00 Lunch – Sheraton


1:10-1:40

1:50-2:20

2:20-2:40 Afternoon Break – Sheraton

2:40-3:45 Closing Ceremony – Sheraton

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TABLE OF CONTENTSWelcome Letter .......................................................................... 1

Team Project Photo Roster ........................................................ 4

Degree Programs Associated with the Tauber Institute ........ 16

Tips for Recruiting Students .................................................... 17

Project Descriptions

3M Product Portfolio and Supply Chain Optimization ................ 18

AMERICAN INDUSTRIAL PARTNERS – SERVA GROUP Market Entry Strategy for High Pressure Hydraulic Fracturing Fluid Ends ............................................................... 19

AMERICAN INDUSTRIAL PARTNERS – AQUAFLOW Scaling AquaFlow and Growing the Market for Ultra-High Pressure Waterjets .................................................................... 20

AMAZON – FBA Identifying Opportunities for the Seller Experience .............. 21

AMAZON – OPERATIONS Amazon Robotics Stow Error Reduction ................................. 22

THE BOEING COMPANY – 777X Optimizing Information Flow in a Composite Smart Factory ............................................................................ 23

THE BOEING COMPANY – BCA PD Carbon Fiber Recycling Strategy to Achieve Zero Waste-To-Landfill ..................................................................... 24

THE BOEING COMPANY – BDS 777x Paint Process Optimization ............................................ 25

THE BOEING COMPANY – CAS Enabling a Low Cost & Scalable Component Repair Supply Chain ............................................................................ 26

BORGWARNER EMISSIONS – BRAZIL Strategic Evaluation of the Piracicaba Foundry .................... 27

BORGWARNER EMISSIONS – GERMANY Strategies for Dramatic Inventory Turn Improvement at a Newly Acquired Plant ....................................................... 28

BORGWARNER MORSE SYSTEMS Global Inventory Management .............................................. 29

BORGWARNER THERMAL SYSTEMS Reducing Time to Commercialize Existing Products on New Applications ............................................................... 30

BORGWARNER TRANSMISSION SYSTEMS Strategic Insourcing of Maintenance, Repair, and Operations Inventory ............................................................... 31

BORGWARNER TURBO SYSTEMS Preventing the Mixing of Small Parts ..................................... 32

CARDINAL HEALTH Expanding Service Offerings at Optifreight® Logistics ........ 33

CISCO Exploring Innovation in the Factory through 3D Printing ..... 34

CONAGRA FOODS Reduce Rework and Increase Efficiency in End-To-End Commercialization Process ...................................................... 35

DTE ENERGY Reducing Energy Costs for Residents of Michigan ............... 36

FORD MOTOR COMPANY Simulation of Material Handling Operations for Labor Requirements Calculation ....................................................... 37

GE AVIATION Corporate Disruption through Utilization of Additive Manufacturing in the NPI Cycle and the Resulting Impact on GE Aviation’s Business Model ........................................... 38

GENERAL MOTORS – GPSC The Final Countdown: Aligning Supply And Demand for a Better Build Out ............................................................... 39

GUARDIAN INDUSTRIES – FABRICATION Restructuring the Value Chain for North America Commercial Markets ................................................................ 40

GUARDIAN INDUSTRIES – SUPPLY CHAIN Internal Logistics Optimization for Guardian Glass .............. 41

KOSTAL OF AMERICA Creating Capacity Visibility to Say Yes to New Business ....... 42

MICROSOFT CLOUD Pricing Strategies for an Infrastructure-As-A-Service Cloud Market ............................................................................ 43

MICROSOFT SURFACE Increasing Sales Promotion Efficacy for Worldwide Markets ...................................................................................... 44

PEPSICO Infrastructure Capacity Analysis and Optimization ................ 45

PFIZER INC. Next-Gen Clinical Supply Forecasting Solution ..................... 46

PACIFIC GAS & ELECTRIC COMPANY Corrosion Integration into SGO .............................................. 47

PRECISION CASTPARTS CORPORATION Development of Separables Fitting Quoting System ........... 48

RAYTHEON Optimization through Process-Focused Manufacturing ....... 49

VERIZON WIRELESS Stepping Outside the Box with Big Data ............................... 50

WHIRLPOOL Refrigeration Cabinet Foam Process Modeling ..................... 51

YOUTH FOR UNDERSTANDING (YFU) USA Increasing Profits through Diversifying Revenue Streams ..... 52


SPOTLIGHT! 2015

TAUBER STUDENTS

Daniel Adsit Boeing BDS

Eleanore An 3M

Christian Abney Boeing BDS

Kaushik Acharya BorgWarner Brazil

Ali Ali Verizon Wireless

Neeraj Anand Guardian Supply Chain

Archis Awate Pfizer

Jose Azuela Kostal

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TAUBER STUDENTSAkul Bali Boeing BCA PD

Kelsea Ballantyne Boeing BCA PD

Amanda Bayagich Microsoft Cloud

Daniel Bellomo GE Aviation

Ryan Bouchard Microsoft Cloud

Eric Buchsbaum BorgWarner Transmission

Joseph Burzynski BorgWarner Brazil

Dominic Calabrese Cisco


SPOTLIGHT! 2015

TAUBER STUDENTS

Ken Chin Raytheon

Yu-Mei Chang ConAgra Foods

Ramesh Chavan Kostal

Luyi Chen PG&E

Shrikant Chothave AIP AquaFlow

Lucius Clay ConAgra Foods

Jeffrey Dillaman Boeing 777X

Divi Lavanya Pepsi

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TAUBER STUDENTSEmily Drescher Microsoft Surface

Jingyang Du Ford

Zachary Duncan PG&E

Samuel Edandison Raytheon

Taabish Faraz Amazon OPS

Fan Fan BorgWarner Turbo

Lauren Fitzpatrick Amazon FBA

Niha Ghose, CA BorgWarner Germany


SPOTLIGHT! 2015

Louise Ho 3M

TAUBER STUDENTS

Ray Gonzalez AIP AquaFlow

Anil Godavarthy DTE Energy

Christina Greaves BorgWarner Morse Systems

Aniket Gur GM GPSC

Brent Hasenkamp Guardian Fabrication

Christopher Hildner Microsoft Surface

Ashlyn Gurley Verizon Wireless

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Allison Holmgren Boeing CAS

TAUBER STUDENTS

Caroline Johnston Boeing CAS

Prajwal Bhaskar Joshi BorgWarner Brazil

Nabeel Kasim BorgWarner Thermal

Alp Kiremitci Youth for Understanding

Sarah Klemsz BorgWarner Turbo

John Klocke Whirlpool

Justin Koehler Youth for Understanding


SPOTLIGHT! 2015

TAUBER STUDENTS

Laura Leonard BorgWarner Germany

L. Yancey May AIP ServaGroup

Dave Mazur Boeing BDS

Shobhit Kumar Guardian Fabrication

Hyun Chu Kong BorgWarner Transmission

Joseph Letner Cardinal Health

Angelita Liu Guardian Supply Chain

Zach Mandell AIP AquaFlow

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Mitchell McKinstry Boeing 777X

TAUBER STUDENTS

Jonathan Morof GM GPSC

Kendall Moyer BorgWarner Turbo

Varun Mudegowdra Basavaraj AIP ServaGroup

Martha Neubauer Boeing BCA PD

Kelly Ogiesoba Microsoft Cloud

Jason Park GM GPSC

Kamala Pisipati Guardian Fabrication


SPOTLIGHT! 2015

TAUBER STUDENTS

Michael Quan Boeing 777X

James Power GE Aviation

Davin Rautiola Pfizer

Miguel Saez Ford

Dinesh Saini Guardian Supply Chain

Jamie Sanderson GE Aviation

Joe Scherping Cisco

Phillip Scavulli Precision Castparts

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TAUBER STUDENTSTrevor Sultana Precision Castparts

Melissa Sweeney Microsoft Surface

Aditya Seshnath Amazon FBA

Tanu Sharma Pepsi

Mukul Shekhar Cardinal Health

Aaron Silver Amazon OPS

Edgaras Varnelis AIP ServaGroup

Sneha Venkatachalam PG&E


SPOTLIGHT! 2015

TAUBER STUDENTS

Jacob Villarreal DTE Energy

Nicholas Walker Whirlpool

Jay Zhang BorgWarner Transmission

James Wang Verizon Wireless

George Wu BorgWarner Morse Systems

Gururajan Vijayan BorgWarner Thermal

Ruoxin Wang BorgWarner Germany

Qian Wu ConAgra Foods

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Rico (Yuepan) Zhang Pfizer


SPOTLIGHT! 2015

DEGREE PROGRAMS

DEGREE PROGRAMS ASSOCIATED WITH THE TAUBER INSTITUTE FOR GLOBAL OPERATIONS

Tauber students, who represent the top talent in the world, are admitted by the College of Engineering and/or the Stephen M. Ross School of Business. The majority bring with them significant experience in fields such as product engineering, manufacturing or consulting. Most Tauber students have undergraduate training in engineering or other technical fields. They have made a substantial commitment to careers in operations or manufacturing and pursue an education specifically designed to meet the needs of today’s firms. Tauber students are enrolled in one of the following degree programs:

Master of Business Administration (MBA) A two-year program administered by the Ross School of Business that prepares students to assume general management leadership positions. With the Tauber Institute overlay in global operations management, the focus is on a business curriculum combined with a sequence of operations, supply chain and manufacturing-related engineering courses.

Master of Supply Chain Management (MSCM)This one-year program administered by the Ross School of Business encompasses every function of global commerce: marketing, sourcing, manufacturing, logistics, inventory management, information technology, and customer relations.

Engineering Global Leadership Honors (EGL) A five-year honors program administered by the College of Engineering that prepares undergraduate students to enter a variety of firms as engineers, while giving them the necessary management skills to assume business leadership roles quickly. A highly valued element of this program is a cultural concentration in a global region of choice. The EGL program leads to both a BSE and a MSE degree, in various engineering disciplines.

Engineering Graduate Programs (EGP) Students in any of Michigan’s many graduate engineering disciplines (i.e., Industrial and Operations Engineering, Mechanical Engineering, Electrical Engineering, Manufacturing, etc.) are eligible to be part of Tauber’s “Engineering Graduate Program.” A graduate engineering degree coupled with the Tauber Institute’s program prepares students for leadership positions by combining intensive course work in operations and manufacturing technologies with business electives courses. EGP students are pursuing MEng, MSE, Ph.D. or Doctor of Engineering degrees.

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TIPS FOR RECRUITING STUDENTS

The Tauber Institute offers many other ways for partner companies to improve their recruiting capabilities. Some opportunities are listed below.

• Team Project Sponsorship

o Tauber Institute Team Project Résumé Book (December) – provides early access to résumés of Tauber students available for Team Projects the following summer.

o Project Presentations (January) – Sponsors present project challenges allowing students to gain information about their company and project; students and corporate sponsors meet in an informal setting.

o Project Interviews (February) – Students and companies increase their knowledge of one another.

o Spotlight! Reception (September 17, 2015) – Students and companies participate in an informal networking opportunity.

o Spotlight! Competition (September 18, 2015) – Corporate executives view various aspects of student’s skills through presentations. The Spotlight! Book containing project descriptions and student résumés is also provided.

• Online Job Postings – Companies can provide the Tauber Institute with specific job descriptions to be posted for Tauber students. Contact Jon Grice, Associate Director, at [email protected].

• Alumni Job Postings – Can be provided/posted to over 1100 Tauber Institute alumni via our website: www.tauber.umich.edu: Home > Recruiting & Jobs.

• Tauber Institute Exclusive Interviews – Tauber partners can request exclusive interviews with only Tauber Institute students. Contact Michaele Reeves, Team Project Manager, at [email protected].

• The University of Michigan College of Engineering’s Career Resource Center (ECRC) http://career.engin.umich.edu/ and Ross School of Business’ Career Services (RCS) http://www.bus.umich.edu/RecruiterInformation/ offer additional recruiting opportunities. Jobs can be posted in RCS’s iMpact system specifically for Operations Management/Tauber students

• The Student Advisory Board (SAB) – This organization can help with arranging various events such as football tailgates, happy hours, receptions, special workshops & presentations and/or advice on networking with the Tauber Institute. Contact them at: [email protected].

Remember to begin networking with students early. Many Tauber Institute students receive an offer from their project sponsor at the end of the summer, and some will accept the offer based on their experience during their internship. A good summer project can give a student insight into a company and its leadership track.

TIPS


SPOTLIGHT! 20153M

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3MPRODUCT PORTFOLIO AND SUPPLY CHAIN OPTIMIZATION

Student Team:Eleanore (Jingwei) An – EGL (BSE Chemical Engineering/MSE Industrial and Operations Engineering)Louise Ho – Master of Business Administration

Project Sponsors:Ashley Kees – Director of Manufacturing, Construction and Home Improvement MarketsScott Snavely – Manufacturing Manager, Construction and Home Improvement Markets

Faculty Advisors:Debra Levantrosser – College of EngineeringOwen Wu – Ross School of Business

3M is an industry leading manufacturer, producing thousands of innovative products across industries. In 2014, 3M generated a global revenue of $31.8 billion. 3M’s Construction & Home Improvement Markets (CHIM) Division is part of the $4.5 billion Consumer Business Group. Safety Eyewear is one of the product lines within. CHIM’s objectives include improving fill rate to meet key account requirements, improving inventory turnover, reducing dead and excess inventory, and improving supply chain response to demand volatility. For the 14 week project, the Tauber team evaluated the root causes of low margin and low service levels, and developed recommendations on cost-effective supply chain and product mix.

The Tauber team conducted risk and benefit analysis, developed business strategy recommendations, and created tools to assist stakeholders implementing the recommended strategies. The team identified three key root causes: high number of SKUs with mixed performance, large number of suppliers, and rigid, transactional supplier relationship. The team developed a supply chain simulation program in MATLAB to quantify inventory investment and cost difference between the current business model and future state scenarios. The team also mapped the current state value stream and utilized it to control key parameters based on the current model and made reasonable assumptions to use with the simulation program.

Based on the analysis and simulation results, the Tauber team recommended CHIM to consolidate product SKUs, consolidate the number of suppliers, establish 3M-supplier collaboration, and follow the team’s short term supply chain strategy guideline. The team identified reductions of 42% of current portfolio and 50% of current vendors to demonstrate consolidation potential. To improve supply chain flexibility, the team recommended building a more collaborative relationship with suppliers. The Tauber team also developed guidelines to assist stakeholders in selecting the optimal supply chain for each product segment to achieve cost savings while meeting key account customers’ fill rate requirements.

The recommendations can reduce cost by 2%, lower inventory by 3%, and improve service level to meet key account requirement. In addition, the recommendations enable CHIM to align their product portfolio and business strategy, improve portfolio and supplier management, reduce variability, and increases supply chain flexibility. Multiple tools, including a future state portfolio strategy, a supplier summary, and supply chain cost estimations were developed to guide the product selection process, assist communication with suppliers, and justify supply chain options. The 3M leadership team will be using these tools to negotiate with suppliers in late September supplier meetings.

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AMERICAN INDUSTRIAL PARTNERS – SERVA GROUPMARKET ENTRY STRATEGY FOR HIGH PRESSURE

HYDRAULIC FRACTURING FLUID ENDS

Student Team:L. Yancey May – Dual (MBA/Master of Science in Natural Resources & Environment)Varun Mudegowdra – Master of Supply Chain ManagementEdgaras Varnelis – Master of Business Administration

Project Sponsors:Tom Hull – Pump Program ManagerDerek Leck – AIP Partner/Serva Co-CTOJim Pace – Marketing Manager (Hydraulic Fracturing Equipment Subject Matter Expert)

Faculty Advisors:David Chesney – College of EngineeringBrian Wu – Ross School of Business

Serva is an oil field equipment supplier that assembles specialized well stimulation equipment for oil field service companies. Acquired by American Industrial Partners (AIP) in May 2014, Serva seeks to expand their product portfolio to include high pressure fluid ends, a business in which Serva was previously involved before being forced to exit due to product quality issues. High pressure hydraulic fracturing uses plunger pumps comprised of two main parts: the power end, which drives the plungers, and the fluid end, which moves the fracturing fluid. The current duty cycles in the oil field result in fluid ends failing frequently, and fracturing companies require constant spares replacement.

Serva hopes to capitalize on the fracturing activity lull caused by the drop in oil prices by increasing its product and service offering while other competitors and firms are struggling due to low business volume. The current business environment provides a chance for significant market penetration through successful product development and supply chain management. The ultimate goal of the company is to be well positioned for rapid growth when oil prices rebound and new well stimulation increases.

The purpose of the AIP Serva Tauber project was to develop a business plan that will enable Serva to re-enter the high pressure fluid end market and grow that product line to $100 million in annual revenue. This entailed analyzing the market and customer base, developing an overall marketing and sales plan, optimizing the supply chain and distribution networks, and valuating the business’s future potential.

The Tauber team developed a market entry strategy for Serva fluid end product line, a business start-up, to build basic product line, validate the performance of the products, and successfully bring the product to market. The implementation timeline generally followed three overlapping product development phases: R&D, Piloting, and Commercialization. The Tauber team recommended that Serva first develop a three pronged product line that would satisfy the majority of the existing fluid end customer base. The Product validation will be carried out via rigorous in-field monitoring. Additionally, the Tauber team suggested reorganizing Serva’s existing sales organization, optimizing their supply chain and relationship with their Chinese joint venture manufacturing partner SJS, and adding additional personnel. Initial product commercialization is expected to occur in the near future and, barring unfavorable market conditions, the $100 million revenue target should be attainable by 2020.

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SPOTLIGHT! 2015

AMERICAN INDUSTRIAL PARTNERS – AQUAFLOWSCALING AQUAFLOW AND GROWING THE MARKET

FOR ULTRA-HIGH PRESSURE WATERJETS

Student Team:Shrikant Chothave – Master of Supply Chain ManagementRay Gonzalez – Master of Business AdministrationZach Mandell – EGL (BSE/MSE Industrial & Operations Engineering)

Project Sponsors:Sparsh Bhargava – Partner, American Industrial Partners & Managing Director, AquaFlowDaniel Davis –Partner, American Industrial PartnersDr. Mohamed Hashish – Senior Technology Fellow, Flow InternationalRick Schmid – Global Market Manager, Flow International

Faculty Advisors: Albert Shih – College of EngineeringBrian Wu – Ross School of Business

Created in 2014, AquaFlow is a merger of formerly competing waterjet manufacturers Flow International and KMT Aqua-Dyne, following their acquisition by private equity firm American Industrial Partners. AquaFlow is the leading developer of Ultra-High Pressure (55K PSI) waterjet technology and the market leader in water-based surface preparation. Despite being the leader, AquaFlow only captures a small fraction of the multi-billion dollar global surface preparation industry, which is dominated by abrasive blasting despite the numerous benefits of water in performance, impact to environment, safety, speed, and cost.

AquaFlow’s goal is to grow from $35MM to $70MM over the next 2-3 years through organic growth and acquisitions. In order to do so, AquaFlow’s leadership group challenged the Tauber team to create a detailed path for the company to better attack and expand the addressable market for water-based surface preparation. As part of their project, the team delved into market research and interviewed customers to more clearly articulate AF’s value proposition and to tie this to key segments within its addressable markets. The team also reassessed product design and supply chain strategy and worked with AquaFlow staff to develop the product road map for automation over the next 2-3 years – an area that had been historically neglected by the company and plagued by significant reliability issues, poor user friendliness, and high capital costs despite being a key driver for the future. The team identified changes that could reduce downtime by 50% and COGS by 25% with a plan to execute within 12 months and also helped guide the 3 year road map which would bring the product to an order of magnitude difference in performance and efficacy.

Overall, the team’s work has directly impacted both the short term and long term plans for AquaFlow and American Industrial Partners in investing and executing in this key market.

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AMAZON – FBAIDENTIFYING OPPORTUNITIES FOR THE SELLER EXPERIENCE

Student Team:Lauren Fitzpatrick – EGL (BSE/MSE Industrial and Operations Engineering) Aditya Seshnath – Master of Supply Chain Management

Project Sponsors:Eddie Iglesias – Sr. Product Manager FBAJeffery Moore – Sr. Manager, Product Management FBA Akira Wada – Sr. Manager, Product Management FBA

Faculty Advisors:Judy Jin – UM College of EngineeringNed Smith – Kellogg School of Business

Amazon is the largest internet-based retailer in the United States. The company has offices in over 15 countries across the world, and ships items to even more. The mission statement of “striving to be Earth’s most customer-centric company where people can find and discover anything they want to buy online” speaks to the fact that Amazon is truly a leader in the electronic commerce business. In 2006, the company launched Fulfillment by Amazon (FBA), a program for Sellers that would allow them to store inventory in Amazon’s fulfillment center (FC) warehouses. The platform caters to individuals as well as large companies, allowing them to sell products to Customers by leveraging Amazon’s well-known marketplace and world-class fulfillment network. With Amazon responsible for picking, packing, shipping and even providing customer service for Sellers’ inventory, Sellers can focus on the most important part - growing their business.

FBA’s value proposition and ensuing growth helps expand the marketplace and bring new Sellers onto the platform. Through this feature, Amazon aims to provide all Sellers, large or small, with the opportunity and excellent level of service. While these services add a unique convenience factor for the Seller, it also has the potential to open Amazon up to opportunities for losses and defects. For example, inventory may be lost or has its availability delayed during transit, at arrival to the warehouse, or through the storage process until the item has arrived at the end Customer. If Amazon cannot find missing inventory quickly, it may be required to compensate the Seller for the product.

The Tauber team performed an in-depth study of the complex supply chain to identify opportunities for internal improvements we can apply to the Seller reimbursement policies. First, the team analyzed the reimbursement space and identified the area that could be the largest area for improvement. Next, the team studied industry practices and related customer service standards of FBA both externally and internally. Furthermore, to align our research to the Amazon core leadership principle of Customer Obsession, the team sought out Seller sensitivity to faults and fluctuations in the policies through feedback forums and a Seller survey. Finally, the team developed a financial model to quantify the impact and risks for an improved reimbursement policy for the Sellers and the company.

After further evaluation, Amazon could generate tens of millions of dollars in annualized savings with this initiative, coupled with an enhanced Seller experience. The potential for greater savings lies in the ability to increase Seller satisfaction and retention in the event they experience a delay. Amazon can gain in terms of reputation and retention, while continuing to align with the company goal.

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SPOTLIGHT! 2015

AMAZON– OPERATIONSAMAZON ROBOTICS STOW ERROR REDUCTION

Student Team: Taabish Faraz – Master of Supply Chain ManagementAaron Silver – Dual (MBA/Master of Science in Natural Resources & Environment)

Project Sponsors: Mike Fisher – Senior ACES Master Black Belt, North AmericaDave Graybeal – Director, Quality, North American Fulfillment Centers Govind Singh – Senior ACES Quality Program Manager

Faculty Advisors: David Kaufman – College of EngineeringAmitabh Sinha – Ross School of Business

Amazon is a $100 billion company that has established itself as the world leader in online retail. It has a complex logistics network that acquires, stores, packages, and sells its own products as well as those of third-party sellers. The Amazon Tauber project took place at the Ruskin, Florida Fulfillment Center; commonly referred to as TPA1. TPA1 opened in September 2014, coinciding with the early 2014 roll out of Amazon’s proprietary Amazon Robotics fulfillment technology. TPA1 is a 1.2 million square foot Amazon Robotics fulfillment center that employs over 1600 Amazonian associates, processes 1.9 million inbound units weekly, has 11 million units in inventory, and processes 1.7 million outbound units weekly.

Amazon Robotics uses game-changing automation technology for its fulfillment centers that help simplify operations and reduce costs while increasing strategic flexibility. Using hundreds of autonomous mobile robots and sophisticated control software, the Amazon Robotics mobile-robotic fulfillment system enables extremely fast cycle times with reduced labor requirements and improved capacity. With the development of this new fulfillment application, best practices for human to robotic interface are still in their infancy and are a few iterations away from full optimization. Specifically, the stow department process of replenishing Amazon Robotics pods is subject to high levels of error injection. Currently, stow errors account for 43% of errors at TPA1 and 33% of errors within the Amazon Robotics Sortable network.

The Amazon Operations Tauber team partnered with the ACES (Amazon Customer Excellence System) quality team and was incorporated into their strategic Lend Forward initiative to solve the company’s most complex problems. Using in-depth six sigma DMAIC methodology, the Tauber team determined that the top drivers of stow errors are items being stowed under wrong bar code, wrong quantity, and wrong location. All of these result in a physical-virtual mismatch that produce cascading cost impact to pick department productivity, problem solve maintenance, expedited delivery, and potentially, to customer experience and seller reimbursement.

Using statistical hypothesis testing, the team was able to identify the significant inputs to stow error introduction. The team focused on isolating all manual inputs that were contributing to the occurrence of stow errors and replaced them with mechanisms that preclude root cause error injection. The team then conducted a pilot with the improved mechanisms. The process improvement pilot netted a total reduction of wrong bar code, wrong quantity, and wrong location errors. With the changes, a 29% error reduction at TPA1 is expected. Additionally, the process improvement netted a 42% productivity improvement. The expected annual stow error reduction improvement cost savings is projected at $1.6M at TPA1 alone and $14.4M across the Amazon Robotics Sortable Network. If the productivity improvement proves scalable the cost savings are projected at an additional $14.5M in annual savings across the Amazon Robotics Sortable Network.

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THE BOEING COMPANY – 777XOPTIMIZING INFORMATION FLOW IN A COMPOSITE SMART FACTORY

Student Team: Jeffrey Dillaman – Master of Business AdministrationMitchell McKinstry – EGL (BSE/MSE Industrial & Operations Engineering)Michael Quan – Dual (MBA/MSE Industrial & Operations Engineering)

Project Sponsors: Kevin Bartelson – 777X Director, Composite Wing CenterKatie Leikhim – Senior Manager, Operations Integration, Composite Wing Center

Faculty Advisors:Richard Hughes – University of Michigan College of EngineeringNed Smith – Northwestern University Kellogg School of Business

The Boeing Company, a $99B multinational corporation, is the world’s largest aerospace company and leading manufacturer of commercial jetliners and defense, space, and security systems. Boeing’s newest commercial product offering is the 777X, a derivative of the 777 that will be the largest and most efficient twin-engine jet in the world. The 777X will have carbon fiber reinforced polymer wings that will be fabricated in the Composite Wing Center (CWC), a brand new 1.3 million square-foot facility in Everett, Washington.

Scheduled to be completed in mid-2016, this facility will fabricate the largest composite material structures Boeing has ever produced and incorporate state-of-the-art technologies in composite material manufacturing. CWC leadership needed a plan to identify, collect, and display information needed to manage the factory’s high level of complexity. They tasked the Tauber team with identifying what Key Performance Indicators (KPIs) will guide good decision making and predict problems before they occur, how these KPIs should be collected, and how they should be accessed and displayed by key CWC stakeholders. Boeing has an opportunity to build a smart factory from the ground up by integrating modern information and manufacturing technologies and practices.

To address this opportunity, the Tauber team first conducted over 40 interviews, toured 8 manufacturing facilities, surveyed 30 people, analyzed several market-leading business intelligence systems,and benchmarked production information systems currently used by other composite fabrication facilities within Boeing. The team then identified, categorized, and prioritized 73 KPIs that will need to be accessible to decision makers. Lastly, the 73 KPIs were integrated into two data reporting systems – one for real-time production monitoring, and one for reviewing historical data.

After implementing the Tauber team’s recommendations, Boeing is expected to reduce cycle time at key bottleneck processes by 20%, thus eliminating the need to purchase additional manufacturing capacity. Additionally, the project will save over a half million dollars per year in recurring engineering labor costs and create an additional capacity of 10,000 engineering hours for value-added projects. Finally, by creating an error-proof RFID monitoring system, the recommendations will eliminate human errors that could result in millions of dollars in scrapped parts.

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SPOTLIGHT! 2015

THE BOEING COMPANY – BCA PDCARBON FIBER RECYCLING STRATEGY TO ACHIEVE ZERO WASTE-TO-LANDFILL

Student Team:Akul Bali – EGL (BSE Electrical Engineering/MSE Industrial and Operations Engineering)Kelsea Ballantyne – Dual (MBA & Master of Science in Natural Resources & Environment)Martha Neubauer –EGL (BSE Chemical Engineering/MSE Industrial and Operations Engineering)

Project Sponsors: Tia H Benson Tolle – Director, Advanced Materials, BCA Product Development Hardik Dalal – Project Manager, Carbon Fiber Recycling, Advanced Materials, BCA Product DevelopmentNicholas Room – Manager, Structural Composites, Advanced Materials, BCA Product Development

Faculty Advisors:Erdogan Gulari – College of Engineering Peter Lenk – Ross School of Business

Boeing is one of the major consumers of carbon fiber reinforced plastic (CFRP) in the United States. It is also a major producer of CFRP waste. Boeing currently creates 1.1M pounds of CFRP waste annually and sends, at great expense, more than 95% of this waste to specialized landfills because the recycling industry is nascent and material handling processes do not exist. Boeing is currently building the 777X Composite Wing Center (CWC) which will increase total CFRP waste to 1.8M pounds annually. Boeing, recognizing the importance of developing the CFRP recycling and reuse industry, has launched a zero waste-to-landfill (ZW2L) initiative. Boeing engaged the Tauber team to explore ways to make the CWC a CFRP ZW2L facility.

In addition to achieving ZW2L, the team defined decreasing costs, increasing revenues and closing the loop to put recycled CFRP back on the airplane as key solution drivers. Using a systems thinking approach, the team developed a plan to match operational waste outputs to market demand. The team first conducted a market analysis by visiting and interviewing the only viable CFRP recyclers and reusers. From this, the team developed a market material preferences table and a business case analysis on closing the loop. Next, the team created the Tauber Waste Discovery Method™ to estimate volumes and types of CFRP waste that will be generated; this allowed the team to simulate Boeing’s proposed baseline material handling process. This simulation highlighted key shortfalls in the process, resulting in missed opportunities to sell to reusers and recyclers. To address these shortfalls, the team piloted point-of-use waste segregation and prototyped a material handling Bolt Tool™ with operators. These innovations cost less in time and money than the baseline process and created waste material in a form that reusers and recyclers would purchase. Based on these findings, the team created a model that integrated engineering, operational and market variables to test 14 scenarios that incorporated these crucial variables. The team then tested each scenario against its ability to fulfill the key solution drivers.

In order to implement the best scenario, the team recommended a comprehensive market-building and operations approach that included ensuring Boeing had the incentives and tools to create and supply CFRP waste materials to the market as well as effectively develop the market through technologies. These recommendations prevented Boeing from implementing the baseline scenario, which would have cost ($1.4M) NPV over ten years and sent CFRP waste to the landfill. Instead, the team created a scenario that will achieve revenues of $5.4M NPV over ten years and will achieve the ZW2L objective. Furthermore, the team tailored its recommendations to roll out to Boeing’s ten other CFRP waste producing sites, providing Boeing with the ability to become CFRP ZW2L network-wide.

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25TAUBER.UMICH.EDU


THE BOEING COMPANY – BDSBDS 777X PAINT PROCESS OPTIMIZATION

Student Team: Christian Abney – Dual (MBA & MSE Industrial & Operations Engineering)Daniel Adsit – EGL (BSE/MSE Industrial & Operations Engineering)David Mazur – Master of Business Administration

Project Sponsors:Kevin Greenaway – Industrial EngineeringAndrew Mallow – Director, Technology Strategy Integration: BDS Operations Joshua McGinnis – Industrial EngineeringRobert Mir – Manufacturing Manager

Faculty Advisors:Brian Talbot – Ross School of Business Peter Washabaugh – College of Engineering

Boeing is a $90B aerospace company and is among the nation’s top exporters, providing aerospace products and support services to consumers in 150 countries. The organization is comprised of two business units: Boeing Commercial Airplanes (BCA) and Boeing Defense, Space, and Security (BDS). Together, these business units design and manufacture worldwide commercial and military aircraft, satellites, missile defense systems, and space systems.

Boeing’s most recent innovation, the 777X jetliner, is the largest and most efficient twin-engine jet on the market. To succeed in the launch of the 777X, Boeing embarked on the greatest cross-enterprise design-and-build project in the company’s history. This BDS and BCA partnership enabled Boeing to leverage its renowned aviation resources, capabilities, and expertise to manufacture previously outsourced composite wing parts. To succeed in this endeavor, BDS began expanding its St. Louis footprint. This expansion incorporated a new 40,000 square-foot paint facility to abrade and prime composite wing parts prior to receiving final top-coat paint. Forecasting large paint shop throughput requirements, BDS recognized an opportunity to develop a business case for implementing robotics into the abrasion and priming process.

To optimize the facility through automation, the Tauber team conducted in-depth business-case analysis. First, the team benchmarked paint facilities that conducted manual and automated painting. Next, the team analyzed composite part throughput and process requirements, researched robotic system equipment costs, and calculated potential savings from reducing safety incidents, standard hour completion rates, and material use. Analysis results led the team to recommend procuring $7.4M in robotic sanding and painting equipment. Additionally, the team provided layout design solutions to increase flexibility and reduce assets within the paint facility, and identified further partnership and research opportunities to mitigate risk throughout Boeing’s automation implementation.

The team projected that introducing sanding and painting robots would save Boeing $22.4M over the first five years of implementation. Moreover, robotics would reduce ergonomic incidents by 74% and rework issues by 67%. Ultimately, these significant effects provided a compelling business case to support the team’s recommendation to implement automation in Boeing’s 777X paint facility.

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SPOTLIGHT! 2015

THE BOEING COMPANY – CASENABLING A LOW COST & SCALABLE COMPONENT REPAIR SUPPLY CHAIN

Student Team: Allison Holmgren – Master of Business Administration Caroline Johnston – Master of Business Administration

Project Sponsors:Jody Franich - Director, Supplier Management, Commercial Aviation Services (CAS)Jessica Kolta – Director Fleet Services, Flight Services & Digital Aviation, Supplier Management, CASKris White –Supplier Management, CAS

Faculty Advisors: Prakash Sathe - College of Engineering Eric Svaan - Ross School of Business

Opportunity. The commercial aviation services market is expected to total $2.5 Trillion over the next 20 years, approximately one third of commercial aviation market spend. Boeing’s Gold Care program offers its customers a full lifecycle management service solution for the 787 aircraft. Through its component repair service, also known as the rotable exchange program (REP), Boeing manages 787 spare parts inventory and repair events,freeing the airline to focus its resources on serving its passengers. Air crafts in the program have a four-year, no repair cost, warranty period during which repairs are done at OEM supplier expense. As aircrafts age out of this warranty, Gold Care’s REP business faces a large increase in repair costs for which Boeing is responsible.

Goal. The Team set out to design a low-cost, scalable 787 component repair and overhaul (R&O) supply chain.

Findings. The team documented the existing repair management process and explored improvement opportunities. They interviewed over 65 people across 15 Boeing organizational teams and visited three suppliers. The key learning that emerged from this research was the importance of bringing repair cost knowledge in-house in order to enable effective cost management across the supply chain.

Recommendations. The team designed and piloted a new systematic R&O approach focusing on a single Gold Care 787 part. The pilot confirmed the value of the initial findings and led to the creation of a Repair Cost Management Core Team to:

1. Adopt a team-designed, standard process using one information system2. Align contractual incentives to drive desired supplier behavior3. Manage the repair services supply base strategically4. Leverage Boeing’s resources within all organizations

Impact. The piloted results revealed the potential to extract significant cost savings over the nine year forecast horizon. This low-cost, scalable system will enable Boeing to compete effectively and capture market share in aviation services.

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27TAUBER.UMICH.EDU

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BORGWARNER EMISSIONS – BRAZILSTRATEGIC EVALUATION OF THE PIRACICABA FOUNDRY

Student Team:Kaushik Acharya – Master of Supply Chain ManagementJoey Burzynski – EGL (BSE/MSE BioMedical Engineering)Prajwal Bhaskar Joshi – Master of Supply Chain Management

Project Sponsors:Brett Gilman – VP Supply Chain, Emissions Business Unit, BorgWarnerThomas Gropp – Global Commodity Manager

Faculty Advisors:Brad Killaly – Ross School of BusinessWilliam Schultz – College of Engineering

BorgWarner Emissions Systems is a rapidly growing business unit within BorgWarner Inc. ($8.3B 2014 revenue) dedicated to the design and manufacturing of industry-leading air management and emissions control systems for automotive and truck manufacturers around the globe. A significant proportion of the components used in the manufacture of these systems are high-pressure aluminum die-cast (HPDC) parts. Historically BorgWarner purchased these components from third parties, however through its acquisition of the Wahler Company (2014) it acquired its first HPDC plant which operates in Piracicaba, Brazil. BorgWarner was eager to assess the overall strategic and operating viability of the plant in the context of its overall global strategy, with particular attention being paid to the causes of the plant’s low capacity utilization.

The Tauber team began the project by visiting key outside suppliers of HPDC parts to understand best practices in operations. The team then started its onsite work by analyzing Piracicaba’s current value stream, cost structure, product portfolio, and manufacturing and business processes. As a result of the analysis and the benchmarking to best practices, the team identified the following seven causes of substandard performance: 1) fragmented demand profile, 2) irregular production planning, 3) disruptions in process flow, 4) unnecessary outsourcing of machine finishing, 5) higher proportion of manual labor, 6) inefficient mold changeover and 7) slow and inconsistent bidding processes. These deficiencies contributed to lower utilization, as well as lower inventory turns, quality, and plant margins, as well as frequently lost bids from prospective customers.

The team’s recommendations, backed by detailed operations and financial analysis, included: 1) Expanding in-house machine finishing which improves quality, leading to dramatic cost savings, 2) Implementing preventive maintenance and automation procedures in deburring of cast parts to economize on labor leading to $200,000 savings annually, 3) Rationalizing the type of parts produced in combination with enhanced production planning to improve inventory turns by 50%, 4) Revised mold management protocols resulting in 50% faster change-over and yielding an additional 200,000 parts/year, 5) Executing a new First-in-first-Out (FIFO) process flow, validated by a real-time pilot study implementation, that will result in 50% reduction in manufacturing lead time.

Taken together these recommendations will yield significant improvements in utilization, efficiency and revenue.


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BORGWARNER EMISSIONS – GERMANYSTRATEGIES FOR DRAMATIC INVENTORY TURN IMPROVEMENT

AT A NEWLY ACQUIRED PLANT

Student Team: Niha Ghose – Master of Business Administration Laura Leonard – Master of Business Administration Ruoxin Wang – Master of Supply Chain Management

Project Sponsors: Juergen Freund – Supply Chain Logistics ManagerHolger Kiebel – Director Sales, Europe

Faculty Advisors:Prakash Sathe - College of EngineeringEric Svaan - Ross School of Business

BorgWarner is a global automotive parts supplier with $8.3B of sales in 2014. The Emissions business unit, which manufactures highly engineered emissions-reducing components for original equipment manufacturers and aftermarket customers worldwide, added four plants to its portfolio in 2014 including the Oberboihingen, Germany plant. Oberboihingen had been plagued with inefficiencies and its inventory turn metric of 7 was less than half that of other Emissions plants in Europe. This signaled major opportunities for improvement. The Tauber team was engaged to develop actionable recommendations to improve plant logistics, evaluate the need for an expensive off-site warehouse, and ultimately improve inventory turns.

With a project scope encompassing purchasing, inventory management, material movement, and production, the Tauber team approached the project by analyzing plant operations at three levels of increasing detail: Plant-level, batch-level, and part-level. At the plant level, the team improved the accuracy of inventory reports so resources could be appropriately allocated to solve problems. The team also demonstrated that the materials necessary for production could be held on-site, eliminating the need for a costly off-site warehouse. At the batch level, the team employed scientific inventory ordering policies to reduce raw material inventory. At the part level, the team applied economics to the decision of whether to rework or scrap parts that failed initial inspections. The team also developed a strategy, pilot, and action plan for a signal-authorizing raw material replenishment system (kanban) including internal transport by train and quantified its financial potential.

The Tauber team was able to successfully deliver a broad and dynamic logistics strategy to the Oberboihingen plant. Implementing this strategy is projected to yield a 51% increase in inventory turns (from 7 to 11). Its financial impact includes future avoidance of current costs (such as rent paid for the off-site warehouse), potential profit (by clearing space on the production floor to be used for additional production), and freed working capital (by releasing cash tied up in unnecessary inventory to be invested elsewhere). The combined financial impact, after all actions have been implemented, sums to a net present value of $20,595k (€18,485k) annualized for the first year. This translates to a $12,784k (€11,475k) reduction in inventory in the first year (savings in the first year are going to be sustained in over the five year horizon) and a favorable impact to the profit and loss of $28,963k (€25,998k) over the next five years.

All currency conversions are based on the Aug 12, 2015 exchange rate of €1.00000 = $1.11406 per www.xe.com.

29TAUBER.UMICH.EDU


BORGWARNER MORSE SYSTEMSGLOBAL INVENTORY MANAGEMENT

Student Team:Christina Greaves – Master of Supply Chain ManagementGeorge Wu – Master of Business Administration

Project Sponsors:Stella Bi – Global Commodity ManagerMarco Caputo – VP of Global Supply ChainRobert Strimpel – Director of Global Commodity Management

Faculty Advisors:Luis Garcia-Guzman – College of EngineeringLen Middleton – Ross School of Business

BorgWarner is one of the leading suppliers in the transmission and power train segment, valued close to $10.5 Billion. Morse Systems is a division specializing in engine timing systems, drivetrain chain, and variable cam timing systems for engine, transmission and transfer case applications. For Morse Systems to keep its competitive advantage, they need to manage costs effectively while maintaining high service levels to their customers. As a result, inventory management practices have become a key element for management attention.

To help Morse Systems increase inventory turns, the Tauber team traveled to corporate headquarters and manufacturing plants in the United States, Mexico, India, Poland, and China, including two plants that are currently reporting the lowest inventory turns and another nascent plant in Morse Systems. Initial expectations were to increase inventory turns within five years by 25% in Plant A and 20% in Plant B. For the nascent Plant C, the initial expectation was to propose a supply chain model that would allow them to hit a minimum of 15 inventory turns by 2016.

The team studied their supply chain models and conducted root cause analysis and benchmarking to identify areas of opportunity, followed by deep dive analysis and simulation to support a set of recommendations that would improve their inventory management performance. The team’s findings did not only target supply chain operation processes but also other opportunities related to the company’s reporting system and plant’s utilization of ERP technologies. For all these opportunities, the team documented some of the principles and best practices applicable in a ~30-page living document called Global Guidelines, which will be used in the future to rollout and deploy continuous improvement initiatives across plants.

After carefully prioritizing areas of opportunity, the team developed a set of recommendations mostly focused on the management of raw materials, which included developing a template to determine policies by using optimized inventory models. Through these recommendations, the plants would be able to achieve inventory turns improvements of 66% in Plant A and 25% in Plant B within five years. For Plant C, projection shows it can achieve over 15 turns by 2016 and 28.83 inventory turns by 2019, overall exceeding initial expectations.

After implementation of the recommendations, the team estimated $2.1 Million savings over the next five years.

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SPOTLIGHT! 2015

BORGWARNER THERMAL SYSTEMSREDUCING TIME TO COMMERCIALIZE EXISTING PRODUCTS

ON NEW APPLICATIONS

Student Team: Nabeel Kasim – EGL (BSE/MSE Industrial and Operations Engineering)Gururajan Vijayan – Master of Supply Chain Management

Project Sponsors: Daniel Paterra – President, BorgWarner ThermalChris Suhocki – Chief EngineerKarl Wagner – VP of Sales and Engineering

Faculty Advisors:Robert Haessler – Ross School of Business Vijay Nair– College of Engineering

BorgWarner, an $8.3B company, is a product leader in highly engineered components and systems for vehicle powertrains worldwide. The company is divided into two groups, Engine and Drivetrain. BorgWarner Thermal falls under the Engine group, producing parts such as fans, fan drives, and coolant pumps for improved engine cooling and reduced fuel consumption. The Thermal Division caters to the light, medium, and heavy duty vehicle markets in addition to off-highway markets. The division has a strong global presence with 12 locations in 9 countries and more than 1,300 employees.

BorgWarner’s growth objective is to double the size of its business by 2020. This project was unique as it was aimed at streamlining an engineering process rather than the more common manufacturing improvement project. The goal of the Tauber project was to facilitate BWT’s growth objective by i) creating a global standardized application process, ii) identifying opportunities to reduce the process time by 20%, and iii) improving the visibility of resource constraints. With increased speed and efficiency in the process, the business hopes to grow sales by increasing their engineering capacity.

The team started with a blank slate when defining the current state process. Bridging the gap between functions through conversations with key stakeholders revealed unnecessary documents, excessive approvals, long queue times, and avoidable reworks. The process also suffered from a lack of historical data to be leveraged for future projects. From request to start of production, the application of a simple fan and fan drive assembly was taking many months to complete.

Major improvement opportunities were identified by mapping the current state, holding kaizen events, and baselining the process. The team developed a future state map and set of recommendations aimed at reducing the total process time. These included eliminating excessive approvals and disjoint documentation, improving resource bottlenecks, and including formal reviews to avoid disruptive changes to product requirements. A key result of the Tauber project was a global standard process for application engineering that will facilitate better project management.

It is estimated that these recommendations will lead to an average reduction in process time of 36%. Financially, the improved process will help BW Thermal achieve potential cost savings of $1.45M per year following a 3 year implementation and rollout plan. In addition, $300K per year of potential soft savings from increased efficiency may be realized immediately. The Tauber project has had the full support of top management from the beginning, and it has resulted in considerable emphasis on improving the engineering process within BW Thermal. The company has already begun implementation of the recommendations and is poised to achieve its objective of doubling the size of its business and increasing market share.BO

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31TAUBER.UMICH.EDU


BORGWARNER TRANSMISSION SYSTEMSSTRATEGIC INSOURCING OF MAINTENANCE, REPAIR,

AND OPERATIONS INVENTORY

Student Team:Eric Buchsbaum – EGL (BSE/MSE Industrial and Operations Engineering)Hyun Chu Kong – Master of Supply Chain ManagementJay Zhang – EGL (BSE Electrical Engineering/MSE Electrical Engineering: Systems)

Project Sponsors:Ron Kambach - North American Capital Contracting Agent, BorgWarner TransmissionsDonald Lewis - Director of Supply Chain, BorgWarner TransmissionsMike Lynch - Plant Controller, BorgWarner Transmissions

Faculty Advisors:Luis Garcia Guzman - College of EngineeringJoseph Walls - Ross School of Business

BorgWarner is a global leader in powertrain solutions, with an international presence of over 20,000 employees in 19 countries. BorgWarner Transmission Systems is a division of BorgWarner, specializing in OEM transmission components including friction plates, friction clutches, and transmission bands. At the Bellwood and Frankfort, IL and Juarez, Mexico plants, all maintenance, repair, and operations (MRO) materials were managed by a third-party who charged BorgWarner a markup on all purchases and a fee for labor. The combined inventory of the three plants is valued at between $4-5 million. Because the third-party offered little reporting or analysis that could be used to drive down spending, BorgWarner decided to start insourcing and manage MRO inventory internally. Management believed that by eliminating the mark-ups and increasing visibility, up to $350,000 of near-term annual savings was possible. However, for insourcing to occur, all MRO data and processes first had to be integrated into BorgWarner’s SAP system, including procurement, stocking, receiving, requesting, and issuing. In addition, any current processes unable to be replicated in SAP had to be resolved. The Tauber team was enlisted to ensure that Bellwood, Frankfort, and Juarez were prepared to go live from an IT and procedural perspective by mid-August.

After initial investigation, the Tauber team discovered ineffective search features in SAP that could cause significant increases in MRO request processing time. In addition, the team discovered an ad-hoc approach to deciding minimum/maximum inventory levels, as well as poor visibility regarding maintenance costs of specific machines. Therefore, the team implemented an Excel VBA search tool to mitigate the SAP limitations, designed an Excel Min/Max inventory model to reduce MRO inventory costs, and created the business case for SAP development allowing visibility of machine-specific MRO spending. All of these deliverables were in addition to the necessary data cleansing, mapping, validation, and testing required to convert the MRO data into SAP. Lastly, a detailed usage analysis was provided to help the incoming sourcing specialist realize the expected mark-up savings.

The Tauber team left BorgWarner go-live ready in August and with the tools necessary to achieve procurement and inventory savings of about $275,000 and $265,000 per year, respectively. In addition, the search tool has the potential to save between 475-1430 hours per year of processing time for MRO requests. With the future development of machine-specific visibility included, the overall procurement, inventory, and visibility-related savings are expected to exceed initial expectations and reach over $600,000 per year.

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SPOTLIGHT! 2015

BORGWARNER TURBO SYSTEMSPREVENTING THE MIXING OF SMALL PARTS

Student Team:Fan Fan – Master of Supply Chain ManagementSarah Klemsz – Master of Supply Chain ManagementKendall Moyer – EGL (BSE/MSE Chemical Engineering)

Project Sponsors:Stephan Altmeyer – Manager, Global Advanced Quality Wolfgang Schneider – Vice President, Global Manufacturing and Quality

Faculty Advisors:Lisa Pawlik – Ross School of BusinessFred Terry – College of Engineering

BorgWarner Turbo Systems is part of the BorgWarner portfolio of engine and drivetrain manufacturing companies. Turbo Systems is a global manufacturer of turbochargers and boosting systems, selling components to manufacturers of passenger cars and commercial vehicles. In 2014, the division’s ten manufacturing facilities produced nine million turbochargers and generated 28 percent of all BorgWarner’s sales.

Turbo Systems currently lacks systematic control and traceability of small components. This creates opportunities for similar small parts to be assembled incorrectly and for the errors to be undetected by operators or quality inspectors. These errors increase BorgWarner’s cost of quality and negatively impact its reputation. To solve this problem, the Tauber team was tasked with designing a global solution to prevent the mixing of small parts without increasing production and material costs.

The Tauber team evaluated four manufacturing facilities and completed 44 interviews to understand Turbo Systems’ current practices. By pairing these findings with external benchmarking and industry requirements for traceability, the team designed new processes for material and information control of small parts. To ensure end-to-end traceability, the team introduced updated auto-ID technologies for material control and a concept for a new part numbering system for information control. The team published global standards for traceability, simulated the effect of the new processes on small parts, and designed a dynamic model for evaluating auto-ID technologies.

The recommendations were shared with global and local leaders –teams within each of the global functions and local facilities are beginning to implement the proposed changes. The team’s recommendations will reduce labor and material identification costs, recall expenses, and the opportunity for small parts to become mixed. By using these ideas for material and information control for all components across the division, Turbo Systems will have 100 percent control and traceability of components and save up to $10.61 million annually.

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33TAUBER.UMICH.EDU


CARDINAL HEALTHEXPANDING SERVICE OFFERINGS AT OPTIFREIGHT® LOGISTICS

Student Team: Joseph Letner– EGL (BSE/MSE BioMedical Engineering) Mukul Shekhar – Master of Business Administration

Project Sponsors: Christopher Mathew – Director, Logistics Solutions and Service DevelopmentChandrashekar Shastry – Senior Consultant, Service Development

Faculty Advisors: Amy Cohn – College of EngineeringJames Price – Ross School of Business

Cardinal Health, a $102B company, is a leading provider of supply chain services in the healthcare industry allowing their customers to focus on providing better healthcare to their patients. More than 34,000 employees work at Cardinal Health with the goal of increasing the cost effectiveness of healthcare products and services. OptiFreight® Logistics, a division of Cardinal Health, is a leader in healthcare freight management because of its ability to provide competitive volume discounts and significant cost savings to customers. Like Cardinal Health as a whole, OptiFreight’s current overarching business strategy is to expand operations to a variety of new divisions across the healthcare industry.

OptiFreight® Logistics recently acquired FDSI Logistics, the next largest service provider in healthcare freight management, and has nearly saturated the hospital market and aspires to grow business in other channels. The structure and service offerings at OptiFreight® Logistics focus on hospitals, and while this focus drove success in this channel, OptiFreight’s® services and resources are unprepared and inadequate to target and service customers in other channels. Additionally, pressures from competitors drive prices downwards while increasing costs from carriers who transport the parcels OptiFreight® manages, drive OptiFreight’s® costs up, squeezing their gross margins ever tighter. OptiFreight® must offer value-added services and not compete on prices.

In order to determine how OptiFreight® Logistics could best approach and achieve success in a new channel, the Tauber team identified the current market opportunity for this channel and recommended a comprehensive service model based upon identified customer needs. First, the Tauber team characterized the market and relevant segmentation that resulted in accurately quantifying the transportation spend opportunity. Then the team identified gaps internally to OptiFreight® and compared these to competitors’ service offerings. These gaps verified that in addition to providing volume discounts, OptiFreight® Logistics should offer value-added services enabled by technology and should expand its reach to couriers and international shipping in order to offer a comprehensive solution for customers. The team ultimately recommended that OptiFreight® Logistics partner with two technology providers or build internally via an agile, independent, autonomous IT team to offer a powerful and customized interface for this new market, as well as offer component level tracking and inventory management solutions. The team also recommended that sales and marketing align and dedicate their attention on this opportunity and for OptiFreight® Logistics to become the single point of contact for Cardinal Health and carriers/couriers. FO

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SPOTLIGHT! 2015

CISCOEXPLORING INNOVATION IN THE FACTORY THROUGH 3D PRINTING

Student Team: Dominic Calabrese – EGL (BSE Electrical Engineering/MSE Electrical Engineering: Systems)Joseph Scherping – EGL (BSE Computer Engineering/MSE Industrial Operations Engineering)

Project Sponsors:Brice Achkir – Distinguished Manufacturing Engineer David Ashley – Vice President, Supply Chain Technology and Quality Paul Lee – Program Manager of Additive Manufacturing Jie Xu – Senior Director of Component Quality and Technology

Faculty Advisors:Hyun-Soo Ahn – Ross School of BusinessSugih Jamin – College of Engineering

Cisco, a company with $50B in annual revenues, is a worldwide leader in networking with 85% of Internet traffic running through Cisco hardware. The company’s supply chain is consistently recognized by Gartner as one of the top 10 supply chains in the world, and Cisco is building on this success by investing in programs that drive innovation and breakthrough improvements. One such project focuses on 3D printing which has yet to be adopted in manufacturing for the high tech electronics industry.

The Tauber team identified tools and fixtures as the key opportunity for 3D printing in the factory today. The team designed and 3D printed tools and fixtures and implemented them on the factory floor with the following results:

• 70-80% cost reduction for tools and fixtures• 50-90% faster tool and fixture procurement• Improved manufacturing process yields for end products

To get to these results, the Tauber team compared the capabilities of 3D printing to the requirements for tools and fixtures to establish which items could be printed. The team engaged with contract manufacturing partners and Cisco engineers to identify optimal candidates for pilot projects. The team designed, printed, and deployed multiple pilot projects to the factory floor. By comparing 3D printed parts to quotes received from traditional vendors and measuring the parts’ impact on quality and cycle time, the team captured the aforementioned benefits of cost reduction, speed, and quality improvement.

When applied across Cisco, these benefits are projected to save $4M in capital expenses annually, improve time to market for new product introductions, and improve manufacturing processes. For example, Cisco’s expected savings from just one of the projects was at least $300K annually from cycle time reduction and quality improvements. Cisco’s executive leadership was doubtful of the immediate benefit of 3DP, but the results from the Tauber team’s project convinced them to accelerate implementation and investment for the program.

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CONAGRA FOODSREDUCE REWORK AND INCREASE EFFICIENCY IN

END-TO-END COMMERCIALIZATION PROCESS

Student Team:Yu-Mei Chang – Master of Supply Chain Management Lucius Clay – Master of Business AdministrationQian Wu – Master of Supply Chain Management

Project Sponsors: Keith Goerl – Director, Research & Innovation Jeff Korengel – VP of Research & InnovationMike Parker – Manager, Research & InnovationCraig Weiss – VP of Supply Chain

Faculty Advisors:Stephen Leider – Ross School of BusinessDebra Levantrosser – College of Engineering

ConAgra Foods is one of North America’s largest food companies headquartered in Omaha, Nebraska, whose food can be found in almost every aisle of the grocery store, covering more categories than any other packaged food company in the United States. The company also has a strong food service business that supplies frozen potato and sweet potato products as well as other vegetable, spice, and bakery products to commercial and food service customers.

ConAgra Foods remains in a competitive position due to a broad product portfolio. However, across the business, opportunity existed to reduce rework after formula and packaging lock, potentially unlocking accelerated or new business.

The Tauber Team used lean concepts and problem solving to determine that three major issues are the root causes of their rework and inaccuracies—namely, training, communication and evaluation.

The team proposed two major recommendations to solve the issues, with a focus on Private Brands. The first was an Excel-based file which the Transportation & Warehousing (T&W) team would input to the Brand Finance team. The file brought critical thinking and simplicity into the process. The new template is expected to double the first time pass yield rate and increase T&W quote accuracy. The second recommendation was a dashboard that used visual management to bring clarity to ConAgra Foods’ bid request system. The dashboard with three metrics–sales performance, pipeline inventory and leader board performance is expected to create a continuous improvement down to individuals and reduce pipeline inventory in the bid request system.

These changes are expected to improve the efficiency and effectiveness by reducing rework and improving the accuracy in ConAgra’s Private Brands bid and commercialization process.

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SPOTLIGHT! 2015

DTE ENERGYREDUCING ENERGY COSTS FOR RESIDENTS OF MICHIGAN

Student Team:Anil Godavarthy – Master of Supply Chain ManagementJacob Villarreal Pollenz – EGL (BSE Chemical Engineering/MSE Industrial and Operations Engineering)

Project Sponsors:Inderpal Deol – Plant Manager, Monroe Power Plant, DTE EnergyAndrew Dobrzanski – Performance Manager, Monroe Power Plant, DTE EnergyBrian Rice – Director of Monroe power plant, DTE EnergyJason Wong – Senior Engineer, ESO, DTE Energy

Faculty Advisors:Oleg Gusikhin – UM College of EngineeringOwen Wu – Kelley School of Business

DTE Energy Co. is a fortune 300 diversified energy company involved in the development and management of energy-related businesses and services nationwide. The Monroe power plant was built in the 1970s and is DTE’s largest power generation facility. Monroe has 4 generating units each capable of producing 850 megawatts of electricity, enough to light a city of 625,000 homes. When all 4 units are operating, Monroe is the third largest coal fired plant in North America.

Monroe power plant has one of the most advanced coal blending technologies in the United States and has been experimenting with new fuel blends to reduce energy costs for the residents of Michigan, comply with environmental regulations and to adapt to changes in resource availability. DTE Energy tasked the Tauber team with designing a methodology to analyze operational and financial costs, and calculating estimated savings for customers resulting from different fuel portfolios. The Tauber team then put the methodology to work to find the optimal petroleum coke blending that would maximize customer savings in the long term. The team also evaluated the feasibility of using natural gas at the Monroe power plant.

In the first phase, the Tauber team worked with Engineering, Capital projects, Controllers and Corporate strategy groups in DTE to identify and quantify in great detail the cost components that make up total power generation costs. The team reviewed the operating budgets from 2011-2014 and defined base operating costs and escalation rates until 2030. In the second phase, the team developed methodology and a tool chain that enabled rapid scenario analysis under varied settings and volatilities. The team also worked with the fuel supply group to define strategies for supplier relations and intermodal transportation options for future fuel supplies. And worked with environmental groups to understand permits regulating fuel combustion, reviewed DTE contracts, and incorporated these in to financial risk analysis.

In the final phase, the team ran market simulations for more than 35 key business scenarios using PROMOD™ and provided a detailed comparison of the customer’s savings across these scenarios. The scenarios encompassed current business contracts, regulations, and volatilities to reflect present and future uncertainties. The Tauber team also calculated the rate savings of using natural gas over fuel oil by using energy futures and simulating the market with PROMOD™.

Using the results from the models created, the team proposed a petroleum coke consumption strategy in the short term and long term that would yield customer savings and also proposed future work in the addition of natural gas to Monroe.

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FORD MOTOR COMPANYSIMULATION OF MATERIAL HANDLING OPERATIONS FOR

LABOR REQUIREMENTS CALCULATION

Student Team:Jingyang Du – Masters of Supply Chain ManagementMiguel Saez – EGP (MEng in Global Automotive and Manufacturing)

Project Sponsors:Bob Garnham – Supervisor, Vehicle Operations – Industrial EngineeringDoug Rickert – Manager, Vehicle Operations – Industrial Engineering

Faculty Advisors:Henry Lam – College of EngineeringJames Price – Ross School of Business

Ford Motor Company is the second-largest U.S.-based automaker and the fifth largest in the world. Ford’s Vehicle Operations Industrial Engineering (VOIE) team is responsible for calculating labor requirements to support production and material handling. These calculations are based on time standards applied to different operations. For material handling operations, labor requirements are estimated using packaging, usage information, travel distance and motion studies. However, some aspects of the material distribution strategy (such as travel of Powered Material Handling Vehicles (PMHV) inside the plant, and floor shop dynamics) affect calculation accuracy in three different ways. First, VOIE has difficulty capturing true causes and effects of delays over vehicles that move across the plant. Second, the PMHVs follow fixed routes, and vehicles can carry multiple parts at each delivery route (thus the material flow and replenishment based on a pull system for different production mixes is not captured in conventional time studies). Third, shop floor dynamics affect the calculation of labor requirements, given congestion in the aisles and bottlenecks in the plant, which are typically overlooked. Due to these challenges, Ford Motor Company sought to implement a simulation to improve the head count calculations of material handling for the vehicle assembly operation.

The 2015 Tauber-Ford project team developed a simulation to analyze complicated plans and capture plant floor dynamics in order to accurately calculate labor requirements. The Kansas City Assembly Plant (KCAP) was chosen as the pilot plant for this project due to the complexity of its operation. The current product, Ford Transit, has a wide range of body styles and trim level options that make KCAP one of the most challenging manufacturing and material distribution systems among Ford’s 66 manufacturing plants worldwide. The developed simulation includes both static and dynamic models of the KCAP system, which capture different aspects of material flow. The static model generates an overview of the KCAP operation and calculates the use of the different resources. This model is based on a probabilistic analysis of the routes and material demands. On the other hand, the dynamic model uses discrete event simulation (DES) to capture the effect of different equipment interaction on material flow, such as congestions and bottlenecks. With the simulation tool, Ford can gain insight on the material flow throughout the facility. This insight can help increase the use of each resource and reduce head count by balancing distribution operations. Moreover, heuristic improvement opportunities in layout and organization can be assessed to reduce the distribution cycle time inside the plant. This simulation supports data-based decision-making for a more efficient material handling operation. The team studied different scenarios and set a road map of feasible improvement that could lead to $1.6 million in potential savings per year at the Kansas City Assembly Plant. Moreover, the team established the groundwork and trained personnel in VOIE so that the simulation methodology could be implemented enterprise-wide. Implementing this approach in the North American operations could result in a savings of $20 million a year for the company.

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SPOTLIGHT! 2015

GE AVIATIONCORPORATE DISRUPTION THROUGH UTILIZATION OF ADDITIVE MANUFACTURING IN THE NPI CYCLE AND

THE RESULTING IMPACT ON GE AVIATION’S BUSINESS MODEL

Student Team:Daniel Bellomo – Master of Business AdministrationJames Power – EGL (BSE/MSE Aerospace Engineering)Jamie Sanderson – EGL (BSE/MSE Industrial and Operations Engineering)

Project Sponsors: Jared Garza – Additive Engineering LeaderMark Shaw – Additive Growth Playbook Leader

Faculty Advisors: Ravi Anupindi – Ross School of BusinessKira Barton – College of Engineering

GE Aviation, a subsidiary of General Electric, is a worldwide leader in the manufacture of aviation gas turbine engines. The company’s position as the forerunner in the use of additive manufacturing (commonly known as 3D printing) continues its strong innovation-driven tradition. GE Aviation views additive manufacturing (AM) as key to maintaining its leadership in the extremely competitive aviation gas turbine market. Although to date GE Aviation has utilized AM for the production of two flight-ready components, it has not formally investigated possible benefits of AM over the engine design process from conception to production. In particular, GE Aviation is interested in how AM could impact the new product introduction (NPI) cycle for a new production gas turbine engine. Therefore, the Tauber team was brought in to identify and quantify the potential benefits of incorporating AM into this process.

To identify the strategic importance of AM to both the NPI cycle and GE Aviation’s larger business model, the team met with experts in many areas of the business including engineering, manufacturing, finance, and sales and conducted interviews with 100 individuals in over 75 meetings. To quantify the time and cost savings that could result from utilizing AM, the team focused on its application to reduce or eliminate bottlenecks in the NPI process. The Tauber team found that GE Aviation has the potential to shorten the overall NPI cycle, currently on the order of five years, by 27 weeks or 10.4%. This also results in cost savings of 10.4% over a typical turbofan NPI cycle. The team then proposed a technology development road map that would allow these benefits to be realized through the development of three increasingly capable AM machines over the next eight years. Furthermore, in order to demonstrate additional benefits of implementing AM, the team investigated the increased profits that could be realized due to performance improvements resulting from AM. The team discovered that the incorporation of AM can conservatively yield up to 130% in yearly profit for a next generation helicopter engine. Next, the team identified ways in which GE Aviation could restructure both its design teams and the greater organization to further realize the benefits of AM. Finally, the team qualitatively examined the process by which parts are additively manufactured, finding that GE Aviation can realize time savings, and therefore cost savings, by immediately categorizing parts for prototype or production. This would streamline the AM process and eliminate the inefficient CAD rework that occurs today.

The Tauber team recommended that GE Aviation continue to actively pursue AM technology, showing that its implementation could save GE Aviation 10.4% of the total time and cost for a typical new turbofan NPI cycle and result in an increased profit of up to 130% per year for a small turboshaft engine.

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GENERAL MOTORS – GPSCTHE FINAL COUNTDOWN: ALIGNING SUPPLY

AND DEMAND FOR A BETTER BUILD OUT

Student Team:Aniket Gur – Master of Supply Chain ManagementJonathan Morof – EGL (BSE/MSE Industrial & Operations Engineering)Jae Young Park – Master of Business Administration

Project Sponsors:Robert F. Harris – Sr. Manager of Supply Operations Processes and SystemsDiego M. Operti – Manager of Specifications/Business Processes and SystemsAnne M. Schneider – Director of Supply, Global Purchasing and Supply ChainDave M. Vanstone – Manager of Cadillac Operations and Channel Management

Faculty Advisors:Yan Huang – Ross School of BusinessMariel Lavieri – College of Engineering

General Motors, a $150 billion automotive company, aims to design, build, and sell the world’s best vehicles. The Order Fulfillment and Global Purchasing and Supply Chain (GPSC) organizations are working collaboratively to focus on the customer while reducing cost.

GM challenged the Tauber Team to develop a collaborative strategy for the last weeks of production for a vehicle, otherwise known as the build out, through development of a pilot strategy using the Cadillac SRX build out. The team interviewed experts across GM, including visits to Cadillac of Novi and the GM Ramos Arizpe assembly plant in Mexico, and thoroughly analyzed consumer and supply chain data for the SRX. The team’s new strategy reduces obsolete material cost while focusing GM’s final product offer on customer preferences. A four point plan details the new build out process: simplify vehicle, stabilize schedule, freeze engineering changes, and improve forecast. The table below shows this plan.

Focus Area Improvements Savings

Simplify Vehicle $9.2 M/yr

Stabilize Schedule $3.0 M/yr Freeze Engineering Changes $2.4 M/yr Improve Forecast $0.8 M/yr

The key to implementing this project lies in communication between departments. GM shares one vision, but departments speak different languages with many acronyms. The Tauber Team developed a tool which can integrate the data necessary to bridge this language gap. Furthermore, the team created a project management plan to be used by a cross functional team which will implement recommendations for each subsequent build out. Implementation of all recommendations is projected to save GM $15.4M annually across its supply chain for North American Assembly.

Removed customer options based on consumer and supply chain data. Improved sales rate for final vehicles in advance of a new model launch. Reduced obsolescence risk on low volume parts.Extended frozen schedule window from 4 to 8 weeks, removing variability in supply chain and minimizing obsolescence risk.Suggested freezing non-safety engineering changes preceding build out. Saved labor cost of executing unnecessary changes.Recommended update of long term forecast to remove large errors. This prevents excessive safety stock which creates obsolescence.

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SPOTLIGHT! 2015

GUARDIAN INDUSTRIES – FABRICATIONRESTRUCTURING THE VALUE CHAIN FOR

NORTH AMERICA COMMERCIAL MARKETS

Student Team:Brent Hasenkamp – Master of Business AdministrationShobhit Kumar – Master of Supply Chain ManagementKamala Purnima Pisipati – Master of Supply Chain Management

Project Sponsors:AJ Berres – Director of Strategy, Guardian FabricationChuck Mowrey – Director, Guardian Fabrication

Faculty Advisors:Damian Beil – Ross School of BusinessChristian Lastoskie – College of Engineering

Guardian Industries is a one of the world’s largest manufacturers of float and coated glass for commercial, residential and automotive applications. The float and coat glass products are sold to fabricators, who fabricate insulating glass units (IGUs) and sell IGUs downstream to glaziers. The glaziers frame the IGUs and install them on buildings. Guardian’s focus for the project was to eliminate waste in the downstream segment of North American commercial value chain. The objectives of the project were to determine the most efficient value chain, recommend how far downstream Guardian should participate, and identify the recommended execution path in order to maximize value while also minimizing downside risk.

To evaluate this opportunity, the Tauber team met with key stakeholders at every segment of the value chain to understand the business model and to determine their key value drivers when making procurement decisions. Once the team understood the value chain, it used a business case framework to size and segment the market, document the key value drivers, and determine the total cost of ownership for both current and optimal state scenarios. After the team determined that Guardian could leverage their economies of scale as a float glass manufacturer and recent process innovations to serve a segment of the market at a lower total cost than their competition, it developed a set of execution scenarios.

The key drivers of the execution decision centered on the downstream opportunity relative to channel conflict and incremental capital. After a holistic evaluation of each scenario, the team recommended a contract manufacturing approach for a market segment where the customers value high quality and lowest total cost while continuing its position as a float glass manufacturer in segments where customers value short lead times. Additionally, the team developed a set of risks and mitigation steps to be considered throughout the execution phase.

After implementing the contract manufacturing strategy, Guardian’s North America commercial business net present value (NPV) would be expected to increase by $349MM. In addition, the value stream evaluation model built by the team will be used by Guardian for other market segments and geographies across the globe.

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GUARDIAN INDUSTRIES – SUPPLY CHAININTERNAL LOGISTICS OPTIMIZATION FOR GUARDIAN GLASS

Student team:Neeraj Anand – Master of Supply Chain ManagementAngelita Liu – Master of Supply Chain ManagementDinesh Saini – Master of Supply Chain Management

Project Sponsors:Merritt Gaunt – Vice President, Glass Operations, Guardian IndustriesNicholas McGowan – Corporate Development, Guardian Industries Andrew Seidel – Director of Asset Strategy, Guardian Industries

Faculty Advisors:Dennis Blumenfeld – College of EngineeringStefanus Jasin – Ross School of Business

Guardian Industries is one of the largest global manufacturers of float glass and fabricated glass products. The float glass division, the largest in Guardian, has a global network of 27 production plants supported by warehouses and logistics. The plants and warehouses have historically worked in silos and enjoyed great autonomy. There is a significant opportunity for identifying and replicating the best practices across plants. Specifically, warehouse operations were identified by Guardian as a focus area because of high value potential and low risk from change management perspective.

The Tauber team spent the first 4 weeks on data gathering and prioritizing the opportunities within warehouse operations. The major opportunities identified were inventory control, reusable packaging assets management, warehouse layout and delayed differentiation of cut sizes. The total net present value (NPV) of these opportunities was estimated to be $250M ($100M working capital release, $32M recurring fixed cost ($190M NPV) based on internal and external benchmarking).

To address these opportunities, Tauber team developed a model to aid the plants in decision making of what to stock and how much to stock. These inventory policies were integrated with a warehouse location configuration model to improve the product slotting leading to increased labor and machine productivity. Further, to reduce execution time of loading/unloading operations, the team proposed a tablet based solution integrated with warehouse management system. A detailed analysis of customer accounts was carried out to identify reasons for loss of reusable packaging assets. Following this, policies were framed and evaluated for their financial implications to Guardian Industries.

Going forward, Tauber team’s recommendations and models will be presented in Global Plant Manager’s meeting to be held in September this year to prepare 2016 Operations Excellence Road map. 27 float plant managers will be expected to review the work and set priorities/targets for 2016 and 2017. As part of the transition, three American plants have started the process of developing layout models to determine improvement opportunities, and current inventory levels are being reviewed in coordination with sales team to identify inventory that can be discarded.

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SPOTLIGHT! 2015

KOSTAL OF AMERICACREATING CAPACITY VISIBILITY TO SAY YES TO NEW BUSINESS

Student Team:Jose E Azuela – EGP (Master of Engineering in Manufacturing)Ramesh Chavan – Master of Supply Chain Management

Project Sponsors:Harry Asher – Vice President: Product and Innovation Management, KOSTALRodrigo Galvez – Production Engineering & Eng. Planning Sr. Manager, KOSTALCatherine Ludwig – Product Line Manager: Switches, KOSTAL

Faculty Advisors:Brian Love – College of EngineeringEric Svaan – Ross School of Business

The KOSTAL Group, an independent, family-managed company headquartered in Germany, develops and manufactures technologically demanding electrical, electronic and mechatronic products. KOSTAL North America, KONA, is a subsidiary of KOSTAL, with manufacturing plants in Mexico, KOMEX. KOMEX utilizes equipment and the production lines with a limited capacity, and for new business requests used a manual capacity analysis process, which was both cumbersome and lengthy often taking weeks to months to deliver a complete answer, thus diminishing KOSTAL’s customer credibility. Current estimates are that 15% of the new business was primarily lost due to the delays in the decision making process and due to the inability to demonstrate the business preparedness.

To address these issues, firstly, the team developed a capacity visibility solution suite, New Horizon, which helps both the sales and the production teams to get visibility of machine and tooling capacity across all the major process areas for all the plants over a time horizon of seven years, including short term and long term forecasts. With five new features, including a critical what-if analysis feature in the solution, the time to generate factual information was reduced from five weeks to one. With 80% faster decision making process, sales team expects top line impact of 10% year on year, a significant multi-million growth.

Secondly, the team used New Horizon suite to identify a new opportunity in the injection molding process and drove a continuous improvement project, project Kaizen, using Single-Minute Exchange of Die (SMED) - a Lean tool - to improve the operational effectiveness. Without significant investment the change over time was reduced by 50% and the man hours by 64%. The overall savings in the injection molding process area in KOMEX 1 plant was estimated at 58% from reduced inventory, 22-25% from reduced raw material, and 3-5% from reduced scrap material, a considerable multi-million savings each year.

Finally, to realize further strategic and operational benefits the team proposed recommendations and developed a 17 month future plan for both the projects.

In conclusion, the team is confident that the projects New Horizon and Kaizen will give KOSTAL advantages in strategic positioning and operational effectiveness to create more with less for the customers.

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MICROSOFT CLOUDPRICING STRATEGIES FOR AN INFRASTRUCTURE-AS-A-SERVICE CLOUD MARKET

Student Team: Amanda Bayagich – EGL (BSE/MSE Industrial and Operations Engineering)Ryan Bouchard – Master of Business Administration Kelly Ogiesoba – EGL (BSE Electrical Engineering/MSE Industrial and Operations Engineering)

Project Sponsors: Jeff Pratt – General Manager, Enterprise Risk ManagementMatt Schnugg – Group Program Manager, Cloud + Enterprise Data Analysis & OperationsRon Sielenski – Director of Analytics and Insights, Cloud + Enterprise Data Analysis & Operations

Faculty Advisors:Mohamed Mostagir – Ross School of Business Quentin Stout – College of Engineering

Microsoft started in 1975 with the initial goal of putting “a computer on every desktop in every home” and grew into a global company providing software products and services to businesses and consumers through offices in over 100 countries. With the initial task largely accomplished, Microsoft now aims to “empower every person and every organization on the planet to achieve more.” Central to this new mission is the growth of cloud-based solutions that can bring services and content over the Internet to users throughout the world. In addition to Microsoft Azure, examples of cloud-based services include Bing, Microsoft Dynamics CRM Online, Microsoft Office 365, OneDrive, Skype, Xbox Live, and Yammer. The cloud industry overall is experiencing explosive annual growth of 45% as more businesses and organizations decide to migrate from locally managed solutions to cloud providers, and the industry is expected to reach revenues of $127B by 2018. This growth has also made cloud computing an increasingly competitive industry, with the rewards going to the providers that experiment, learn, and improve their products faster and better than the competition.

One facet of this industry is the Infrastructure-as-a-Service (IaaS) category, where customers rent virtual machines to run applications and databases. The top three cloud providers (Amazon Web Services, Microsoft Azure, and Google) offer six different payment structures for these IaaS solutions, and the Tauber team was tasked with evaluating the impacts of expanding Microsoft’s payment options to include different structures. The group used a DMAIC (Define, Measure, Analyze, Improve, Control) framework to approach the client history data set and created a new methodology to measure customer usage behavior to more easily identify patterns and differentiate customer segments. The subsequent analysis quantified expected customer attraction to different pricing models and identified the opportunity to decrease the time to create a new offer by 46%. Additionally, the team constructed a pricing experiment that will allow the Business Intelligence team to learn from and improve on the new concept. The experiment will test the underlying economic psychology of consumer purchasing behavior and provide senior managers within the Cloud + Enterprise division with clear feedback to support a data-driven decision on a new pricing offer.

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SPOTLIGHT! 2015

MICROSOFT SURFACEINCREASING SALES PROMOTION EFFICACY FOR WORLDWIDE MARKETS

Student Team:Emily Drescher – Master of Business AdministrationChris Hildner – Master of Business AdministrationMelissa Sweeney – EGL (BSE Material Science/MSE Industrial and Operations Engineering)

Project Sponsors:Andy Miller – Director of Finance, SMS&PKulroop Takhar – Senior Finance Manager, SMS&P

Faculty Advisors:John Branch – Ross School of BusinessDavid Kaufman – College of Engineering

Microsoft Corporation is a global technology leader that develops, manufactures, licenses, and sells computer products and consumer electronics. Founded in 1975, its legacy lies in software licensing, which today comprises over 80% of its $93.6B annual revenue. This software legacy greatly influenced how Microsoft went to market with its hardware products. In 2013, Microsoft made its first foray into the Commercial hardware market with the creation of the Commercial Surface channel. Like enterprise software, Microsoft believed that this channel would be defined by high volume sales, and therefore primarily focused on larger enterprise deals. However, given the long sales cycle of enterprise customers, Microsoft learned the importance of Small-Medium Businesses (SMB).To entice this segment, Microsoft began endorsing sales promotions to drive incremental volume. Sales promotions have since become a central part of the channel’s pricing strategy and a key lever for revenue generation.

At the onset of this 13-week project, the Tauber team was tasked with assessing whether these sales promotions were successful at generating uplift and return on investment. By analyzing incremental sales over baseline run rates, the team confirmed that sales promotions are largely effective at achieving these goals; however, the team observed a significant lag time between the promotion effective date and the first promotion sales. To diagnose this lag time, the team met with over 60 internal and external stakeholders and identified an opportunity to streamline the process for promotion creation and implementation, helping subsidiaries to better plan, create, implement, and evaluate promotions in their market.

Creating a formalized process would ultimately improve promotion efficacy by reducing the initial lag time and allowing new sales during the life of the promotion. To accomplish this objective, the Tauber team assigned owners to critical activities, established implementation deadlines, and created cadences for continuous improvement. This formalized process takes the form of an overarching governance framework with tactical tools that include a planning calendar, work-back schedule, and performance scorecard. These tools will allow subsidiaries to successfully execute the framework and increase promotion efficacy by reducing inefficiencies. By implementing our recommendations, Microsoft’s expected incremental revenue for the Surface Commercial channel, in the US alone, is approximately $18.3M per year.

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Student Team:Divi Lavanya – Master of Supply Chain ManagementTanu Sharma – Master of Supply Chain Management

Project Sponsors:Greg Genser – Senior Analyst Supply ChainErika Lewis – Senior Director Supply Chain Strategy

Faculty Advisors:Marina A. Epelman – College of EngineeringAmitabh Sinha – Ross School of Business

A global $67B food and beverages conglomerate, PepsiCo operates a complex multi-echelon distribution network to distribute its wide array of food and beverage products in the US. To drive cost and customer service related improvements, PepsiCo North America Beverages purchased its largest Franchise Bottlers (PBG & PAS) in 2009. The US distribution system is a network of 360 warehouses largely acquired through consolidations and acquisitions. Most of these warehouses were not designed to handle the current sales volume and have led to numerous storage-related cost inefficiencies. While the existing infrastructure capacity analysis and modeling process at PepsiCo has the visibility into past storage-space related constraints, it could not predict future infrastructure capacity requirements. By the time space-related constraints were identified, it was too late to take necessary steps to alleviate storage capacity issues. The inefficient infrastructure capacity planning has resulted in an increased cost of fulfillment, increased number of out-of-stocks, and decreased productivity. The Tauber team was enlisted to improve existing capacity modeling process to predict infrastructure capacity requirements.

Following an opportunity cost analysis, the Tauber team built a model to calculate costs related to insufficient storage space. The team also performed comprehensive analysis of existing infrastructure capacity modeling process that enabled the team to identify gaps in existing capacity modeling. Opportunities to optimize space utilization within warehouses by reorganizing warehouse layouts were also identified. The project team also developed capability to determine future infrastructure capacity requirements by utilizing demand forecasting data. Using newly developed space capacity planning functionality, PepsiCo will be able to identify current capacity bottlenecks in its US distribution network, and determine future infrastructure capacity requirements. The inventory projection model and cost analysis model developed by the Tauber team will optimize warehouse operations by allowing PepsiCo to make informed decisions about expansion and consolidation of warehousing sites after performing cost benefit analysis. Collectively, the cost model and improved infrastructure capacity planning process can reduce PepsiCo operational costs by $18.4 million.


SPOTLIGHT! 2015

PFIZER INC.NEXT-GEN CLINICAL SUPPLY FORECASTING SOLUTION

Student Team: Archis A Awate – Master of Supply Chain ManagementDavin Rautiola – EGP (MSE Pharmaceutical Engineering)Rico Zhang – Master of Supply Chain Management

Project Sponsors: Linda Burk – Director, Global Clinical SupplyScott Lennon – Supply Chain Lead, Global Clinical Supply, Daily POC Jason McKinley – Director, Global Clinical Supply, Project Supervisor

Faculty Advisors: Jun Li – Ross School of Business Henry Wang – College of Engineering

Pfizer Inc. is the world’s largest research-based biopharmaceutical company with $49.6 billion revenue in 2014. The company develops and markets a variety of biologic and small molecule drug products, as well as over-the-counter health care products. To demonstrate the safety and efficacy of their products, Pfizer dedicates substantial resources to screening potential drug products in clinical trials. Pfizer’s clinical supply chain currently serves approximately 500 clinical trials with 200,000 subjects at 20,000 investigator sites spread around the world.

Ensuring an uninterrupted supply of drugs to patients in clinical trials is critical for the care of the patients and the success of the trials. However, over-supplying drugs to reduce risk of stock-outs can be costly. Forecasting drug demand in the Global Clinical Supply (GCS) department at Pfizer has traditionally been done through Excel models customized for each study. This non-standardized process involves a wide range of forecasting methodologies and output formats. Furthermore, Excel models deliver sub-optimal outputs without considering best and worst case scenarios resulting in potential financial losses due to over-supplies and maldistribution across the supply chain.

To solve these issues, the Tauber team benchmarked the current state and a competitor’s forecasting process. Then, a detailed comparative analysis of different vendor forecasting tools was performed. Simulations were run on relevant case studies to demonstrate how supply risks can be identified and costs reduced by using a stochastic forecasting tool. To address real needs and usability of the potential process, the team used mechanisms such as department-wide surveys, focus group feedback, and forecasting tool demonstrations.

The team proposed implementing a tool-based process that could be integrated with an ERP system and suggested a high-level systems integration architecture. The team also completed a risk assessment which identified process implementation risks and mitigation strategies. This would help avoid drug shortages that could impact patients with treatments as critical as breast cancer. GCS’s cost savings for 2 clinical trials evaluated as case studies were estimated to be approximately $2.4M and $5.8M respectively. In one case study, the savings were approximately $9.6M if the options were capable of being implemented from the start of the study. Adoption of a tool-based approach to forecasting at a portfolio level could provide additional future savings of several million dollars per year. The recommendation sensured an end-to-end integration vision with a standardized process and improved communications which would benefit many stakeholders including supply chain, systems, finance and senior management.

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PACIFIC GAS & ELECTRIC COMPANYCORROSION INTEGRATION INTO SGO

Student Team:Luyi Chen – EGP (MSE Industrial and Operation Engineering)Zach Duncan – Master of Business AdministrationSneha Venkatachalam – Master of Business Administration

Project Champions:Mallik Angalakudati – Vice President, Financial & Resource ManagementBikram Chatterjee – Senior Operations Analyst, Process & Quality ExcellenceDaniel Jarmel – Director, Process & Quality ExcellenceNick Raad – Senior Manager, Gas CI & Analytics

Faculty Advisors:Len Middleton – Ross School of BusinessSiqian Shen – College of Engineering

Pacific Gas & Electric Company (PG&E) is a $21 billion investor-owned utility company that provides electricity and natural gas to 15 million Californians across 70,000 square miles. 27% of PG&E electricity is from natural gas and serves 4.3 million customers. PG&E’s Gas Operations division owns and operates 3 gas storage facilities, including approximately 42,000 miles of distribution pipelines and 6000 miles of backbone and local transmission pipelines. As part of its commitment to safety and reliability, particularly following the San Bruno gas pipeline explosion incident, PG&E has made major advancements in revamping its gas pipeline maintenance and operations. As part of this initiative, an advanced process management framework called Super Gas Operations (SGO) was developed with the plan of being deployed to multiple work streams across all the divisions of PG&E.

PG&E engaged the Tauber team to integrate the Corrosion work stream into SGO over a period of 14 weeks. The Corrosion team is responsible for protecting the distribution and transmission gas pipelines from atmospheric corrosion by cathodically protecting the enclosed area and performing regular maintenance as per the compliance standards committed to the California Public Utilities Commission (CPUC).

Over the first 4 weeks, the Tauber team constructed the current state process map by visiting various corrosion divisions and engaging actively with the corrosion supervisor and mechanics to understand the major pain points and shortcomings in the As-Is process. The team also conducted multiple analyses on the operational and financial data available and identified 3 major issues: lack of work visibility, inadequate documentation quality and unclear organizational structure. During the next several weeks, the team proposed and piloted three recommendations: corrosion work plan, tiered huddles and metrics and kickback process. The goal of the pilot was to evaluate and refine future state To-Be process, track and validate the projected improvements, define new roles and responsibilities clearly, and identify the long-term resourcing needs for this project. The pilot lasted for four weeks and was successful with regard to alleviating the major pain points of the current state and ensuring that the proposed recommendations functioned as hypothesized. After pilot, the team set up workshops and trainings for concerned parties and recommended continuous resourcing and roll-out plan and timeline for other 17 corrosion divisions in PG&E to ensure corrosion integration into SGO.

The potential impact of the Tauber Team’s time and cost-saving recommendations is significant. The team anticipates an $1M annual reduction in costs of non-conformance, an annual reduction of cost of non-conformance penalties from incidences of $500K, annual reduction in costs of underutilization of $600K, and a reduction in overtime costs of $500K, resulting in a cost savings total of $2.7M per year, making up 0.05% of PG&E’s operating costs.

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SPOTLIGHT! 2015

PRECISION CASTPARTS CORPORATIONDEVELOPMENT OF SEPARABLES FITTING QUOTING SYSTEM

Student Team:Phillip Scavulli – Master of Supply Chain ManagementTrevor Sultana – EGL (BSE/MSE Mechanical Engineering)

Project Sponsor:Ryan Kinslow – Vice President, Fluid Fittings and Bushings Division

Faculty Advisors:Hyun-Soo Ahn – Ross School of BusinessRobert Inman – College of Engineering

Precision Castparts Corporation (PCC) is the world’s largest producer of metal aerospace components with annual revenue of $10B. The Fluid Fittings Division produces threaded and permanent connectors for the hydraulic and pneumatic lines in aircraft, a critical application requiring precision tolerance and extreme durability. In 2013, PCC began acquiring and consolidating four fluid fittings manufacturers in the Los Angeles area. The threaded or “separable” fittings segment is the most operationally and strategically challenged but offers the most potential for revenue growth. The company sought to both increase revenue and reduce costs by standardizing its pricing and sourcing strategies across the brands. To do so, the company needed to develop a cohesive and universal pricing protocol and with it a systematic understanding of the costs. This was a complex undertaking because the sales people or customer service representatives (CSRs) had historically formed the decision-making core of the separable fittings business, using judgement, intuition, and tribal knowledge to make pricing, operations, and inventory judgments.

The Tauber team set out to standardize and automate the price quoting process by integrating the operational, financial, and marketing data required for pricing into one quoting system through which pricing policies could be established, refined, and implemented based on changing costs, market forces, and available production capacity. The team built a universal part classification system that categorized all parts based on the often inconsistent product codification standards. With the foundational classification system designed, the team then developed a pricing engine that automated and improved upon the existing “black art of quoting” currently practiced by seasoned CSRs. After six weeks of testing and iterative development, the final product is a VBA-powered quoting system used by all CSRs that programmatically generates prices for the top-selling separable fittings based on raw material cost, cycle and setup times, quantity, inventory availability, manufacturing site, production lot size, market segmentation, price elasticity of demand, ordering minimums, and long-term agreements. An administrator module allows management to tailor the parameters of the quoting system and the prices it generates to best fit the market environment, while also providing an eagle-eye view into quoting throughput by all CSRs. On project completion the quoting system was fully implemented.

The holistic nature of quoting and the demands of automating this process required developing and implementing several valuable building blocks. The prior lack of a systematic approach introduced wide variation into both the cost structure and the quoting process. While building the quoting system, the Tauber team also provided Permaswage with its first thorough cost analysis and sourcing framework for separable fittings. The team also developed an “Availability to Promise” (ATP) system that allowed the different sites to combine and transfer their inventories between sites without the concern of undercutting their own backlogs.

After implementing the quoting system, immediate annualized savings were $1 million, owing to reduced reliance on manual quoting, minimization of pricing error, and improved insight into sourcing. Another instant benefit from the quoting system was an estimated 10% reduction in static inventory as a result of the new system’s ATP functionality. The system generates competitive prices roughly ten times faster than previous methods and provides PCC with visibility into, and thus the opportunity for refinement of,its revenue model. Long-term savings and profit gains from full implementation of this quick, accurate, and consistent quoting system and its revenue optimization framework are estimated at $5 million per year. Once structurally unscalable due to a lack of repeatable pricing, the separable fittings business is now positioned for substantial growth, which could yield gains that dwarf our current projections.

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RAYTHEONOPTIMIZATION THROUGH PROCESS-FOCUSED MANUFACTURING

Student Team:Kenneth Chin – EGP (MSE Industrial and Operations Engineering)Samuel Edandison – Dual (MBA/JD)

Project Sponsors:Paul Allen – Factory Operations ManagerShashank Dubey – Continuous Improvement Manager

Faculty Advisors:Achyuta Adhvaryu – Ross School of BusinessW. Monroe Keyserling – College of Engineering

Raytheon wanted to move its manufacturing facility (in Andover, Massachusetts) from a product-focused manufacturing operation to a process-focused manufacturing operation. The Tauber team was tasked with coming up with a framework to transform Andover’s product-focused factory into a process-focused factory, in which space would be organized based on process flow.

At the Andover factory, production lines were focused at the product level, meaning that each product’s operations were self-contained within a specific area. Unique processes were independently developed for each product and were generally not shared between programs. A product usually had hundreds of part numbers. The manufacturing operations and process times for part numbers in a product varied.

After evaluating the work instructions of over 2000 part numbers across many products, the Tauber team recommended that Raytheon move from product-focused manufacturing to process-focused manufacturing. The Tauber team created a framework that called for Raytheon to transform its product-focused manufacturing to four new manufacturing areas focused on common manufacturing operations. In these four new areas, operators will be doing similar work content with similar labor hours.

The framework developed by the Tauber team was projected to save Raytheon roughly $6.5 million annually in labor and support cost. Moreover, the framework reduced the internal variability of demand for part numbers by 26% compared to the Raytheon’s current product-focused manufacturing. The new framework also reduced the variability of labor hours by 27%, which will ease the load balancing efforts for the new manufacturing areas. Because demand in the Tauber team’s future framework is aggregated across different products, it is more likely that high demand from one product will be offset by low demand from another product. The lower variability of demand for part numbers will decrease operator downtime and increase the utilization of operators through pooling. Because demand for part numbers in the framework will be more stable, there will be less fluctuation in head count on average from quarter to quarter. Less fluctuation in head count will reduce the inefficiencies of losing knowledge from layoffs and training for new employees.

Moving from programmatic manufacturing to process-focused manufacturing will allow Raytheon to increase both capacity and efficiency at the Andover facility. By being more efficient, Raytheon will be more cost competitive with its peers, and by moving to process-focused manufacturing, Raytheon will be more flexible when new programs are contracted.


SPOTLIGHT! 2015

VERIZON WIRELESSSTEPPING OUTSIDE THE BOX WITH BIG DATA

Student Team:Ali Ali – Master of Business AdministrationAshlyn Gurley – Dual (MSCM/MS Natural Res & Environment)James Wang – Dual (MBA/MSE Industrial and Operations Engineering)

Project Sponsors:Anne Robinson – Director, Data AnalyticsJulian Sassoon – Director, Supply Chain LogisticsKevin Wooster – Senior Consultant, Supply Chain Sustainability

Faculty Advisors:Steven Skerlos – College of EngineeringJoline Uichanco – Ross School of Business

Verizon Wireless is the largest wireless communications services provider in North America with more than 108 million retail connections, over 1,700 retail locations and revenues of $87 Billion. To service these customers, Verizon’s forward supply chain ships roughly 20 million cartons per year.

Cartonization, the process for determining the number and size of shipping cartons per order, has significant financial and environmental impacts. However Verizon’s partners in the forward supply chain have not been evaluated on cartonization efficiency. The Tauber team was challenged to measure and assist Verizon’s partners in improving cartonization in the distribution centers (DC).

The team built a Python model to quickly assess carton fill rates and simulate the effect of business rules on cartonization. A cluster analysis was performed to determine if additional carton sizes would improve carton fill rates. The team also analyzed the DCs’ operations to identify potential process improvements. Through this analysis, the team identified opportunities to reduce void space, which drives shipping costs and corrugate use.

In conclusion, the team identified several recommendations, including:

• Metrics for benchmarking and cartonization throughout the forward distribution network• Standardization of DC processes to reduce shipping costs• A business case for shared value by renegotiating DIM shipping rates

Implementing these recommendations are projected to save more than 5% in shipping costs and result in a reduction in the use of more than 300K boxes annually, which translates to 2,200 trees, building an environmental and financial business case for more efficient operations.

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WHIRLPOOLREFRIGERATION CABINET FOAM PROCESS MODELING

Student Team:John Klocke – Master of Business AdministrationNick Walker – EGL (BSE/MSE Chemical Engineering)

Project Sponsors:Mike Anthony – Engineering Director, Refrigeration and Dish Mike Hile – Engineer Lead, Polyurethane FoamMae Zyjewski – Senior Director, Advanced Manufacturing

Faculty Advisors:Brian Love – College of Engineering Brian Talbot – Ross School of Business

Whirlpool Corporation, a $20 billion company, is the largest appliance manufacturing company in North America, Latin America, and Europe and the largest Western appliance manufacturing company in Asia. The Advanced Manufacturing (AM) organization provides research, technical guidance, and new technology guidance to Whirlpool’s businesses around the world.

The AM organization has perceived latent capacity in the cabinet foaming area of the refrigerator assembly process. After determining there was in fact latent capacity within the cabinet foam areas of several refrigerator assembly lines, the Tauber team developed recommendations to improve cabinet throughput in foaming areas. The team used ProModel computer simulation software to develop current state models of two cabinet foamlines in Amana, Iowa, and one cabinet foamline in Joinville, Brazil. After the current state models were verified, the team made several future state computer models of the cabinet foaming areas in order to improve capacity, and as a result, overall throughput.

By analyzing timing data, changeover data, and production scheduling data at each line, as well as receiving input from plant employees, engineers, and facility computer programmers, the team created several future state models for each area. Based on the future state models, the team initiated an implementation effort in Amana, Iowa. The team has shown that, by adding two additional sensors to each fixture and changing the timing logic, capacity will increase by 2 3% (6,000 -10,000 units annually). Additionally, the team’s future state models will serve as the baseline for Whirlpool’s efforts to standardize the cabinet foaming areas of fifty lines worldwide. The team’s summer implementation efforts in Amana, Iowa are currently in progress. Once completed, they will create a 5 year net present value for Whirlpool Corporation ranging from $3.3 to $8.2 million with 90% confidence. The team’s future state models across all three lines present a 5 year net present value opportunity ranging from $21 to $30 million with 90% confidence.

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SPOTLIGHT! 2015

YOUTH FOR UNDERSTANDING (YFU) USAINCREASING PROFITS THROUGH DIVERSIFYING REVENUE STREAMS

Student Team:Alp Kiremitci – EGL (BSE/MSE Industrial & Operations Engineering)Justin Koehler – EGL (BSE/MSE Industrial & Operations Engineering)

Project Sponsors:Ann Durheim – Executive CoordinatorMichael Hill – President & Chief Executive Officer

Faculty Advisors:Amy Cohn – College of EngineeringAnne Harrington – Stephen M. Ross School of Business

Youth for Understanding (YFU) USA is a nonprofit intercultural exchange organization based in Washington, D.C. Since 1951, YFU has grown into a global network of 60-plus YFU partner organizations and has placed more than 250,000 exchange students, relying on an international community of dedicated volunteers for outreach, host family recruitment, and student support.

YFU USA has underperformed in the volatile and competitive student exchange industry, recording annual net losses up to $2.00 million in fiscal years 2011-2014. In August 2015, the organization operated with $4.4 million in cash reserves, less than three months’ worth of working capital needed to run the organization. Reliance on the inbound program for 80 percent of total revenue, shifting market dynamics away from long-term high school exchange, and cash volatility in the annual placement cycle put financial pressure on YFU USA’s operations and limit its ability to grow. Therefore, YFU USA management recommended the Tauber team focus on increasing profits and diversifying revenue sources.

To achieve this goal, the team performed a competitive analysis to benchmark YFU USA against more than 50 intercultural exchange competitors. The team classified and allocated fixed and variable expenses to accurately determine the profitability of inbound, outbound, and Community College programs and discovered a $748,867 annual structural operating deficit in the Travel Department. To determine student program preferences, the Tauber team surveyed more than 200 students and conducted 70 phone interviews with YFU students, non-YFU students, parents, Field Directors, and school staff.

The Tauber team made recommendations in five key areas: 1) implement new Travel Department policies in Q3 of 2015; 2) grow a nascent F-1 visa inbound exchange program; 3) focus on short-term and impact-based programs; 4) cultivate school relationships by establishing a student-driven “Campus Ambassador Program”; and 5) develop English and foreign language courses as a cross-selling opportunity. Taken together, these recommendations have the potential to generate $2.29-$2.80 million in additional profit over the next two years. By implementing these recommendations, YFU USA can recover 114.5%-140.0% of its $2.00 million loss in 2014. Upon project completion, the Tauber team’s deliverables include a two-year implementation plan for future initiatives, a financial modeling tool to project costs and revenue for future program implementations, and a framework for potential strategic partnerships.

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Regents of the University of Michigan: Michael J. Behm, Mark J. Bernstein, Laurence B. Deitch, Shauna Ryder Diggs, Denise Ilitch, Andrea Fischer Newman, Andrew C. Richner, Katherine E. White, Mark S. Schlissel (ex officio)

© 2015 by the Regents of the University of Michigan

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