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Pratik YadavMark Brown
Analytical Model: Evaluating Incoterm ConversionStudent: Mark Brown, SCM 2019
Student: Pratik Yadav, SCM 2019Advisor: Bruce ArntzenSponsor: Large Industrial Conglomorate
Lack of active inbound material management at RMDR production sites in Europe & Asia has resulted in:
- Limited visibility of material coming into production
- Higher inventory stocks -> increased net working capital
- Higher transport costs due to limited consolidation opportunities
- Limited flexibility to manage unexpected scenarios
- Increased risk to the JIT production setup Problem & The Methodology
Background
Key Question
Relevant Literature
Initial Results
Expected Contribution
January 2019 Poster Session
BACK TO KIOSK MENU
ü Work with the business unit to identify productionsite as pilot
ü Shortlist 3-5 suppliers to run the pilot
ü Identify 5-7 products per supplier for analysis
- Should an organization try to manage inbound actively?
- If yes, then what products should be managed actively?
- What are the best in class solutions to manage the inbound operations?
- Kumar et al. (2010) Migrating to F type incoterm purchases for greater control of goods
- Schneider (2010) Wal Mart case study / benefit of lead time predictability on cash flow
ü Mathematical model looking at total cost per product under different incoterm scenarios including variability
ü Framework to quantify risk associated with each step
ü Incoterm selection per product – C&D vs E&F
ü Easy to visualize risk and total cost overview per product
ü Pilot for selected categories to validate results
DATA ANALYSIS
SCOPE DEFINITION
RESULTS
0
5
10
15
20
25
30
35
40
45
50
Carrier 1 Carrier 2 Carrier 3 Carrier 4 Carrier 5
Min-Max Lead Time - CN-DE
Min Max
30%
59%
11%
0% 10% 20% 30% 40% 50% 60% 70%
C/D Incoterms
E/F Incoterms
Missing Incoterms
Direct Material Spend Per Incoterm Category
- Template for material buyers to understand inbound savings opportunities with select suppliers and products
- Best practices on how to actively manage the inbound operations