Michigan Business School Summer Projects

8/16/2019 Michigan Business School Summer Projects

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Table of Contents

Alcoa Howmet Dover Castings…………………………………………………………………………………..1 Streamlining Operations to Improve Business Performance

AMETEKOptimizing Supply Chain Configuration for Critical Assemblies ……………………………………………….2

Aramex ……………………………………………………………………………………………………………....3 Strategic Insight into Customer Satisfaction and Operational Efficiency through Development of KeyPerformance Indicators

Bayer Corporation ………………………………………………………………………………………………...4 Methodology for Promotional Product Evaluation

The Boeing Company …………………………………………………………………………………………….5 Strategies for Embedding Design for Environment into the Boeing Design Process

The Boeing Company …………………………………………………………………………………………….6 Supply Management for Boeing’s 777 Assembly System

The Boeing Company …………………………………………………………………………………………….7Optimizing Operations in Travel and Expense

BorgWarner, Inc. …………………………………………………………………………………………………..8 Contamination Control

BorgWarner TorqTransfer Systems …………………………………………………………………………...9 Development of an Assembly Line by Applying Lean Principles

Dell ………………………………………………………………………………………………………………….10 Image Deployment Strategy

Exide Technologies Inc. ………………………………………………………………………………………...11 Sustainability Initiatives at Exide Technologies

Ford Motor Company ……………………………………………………………………………………………12 Applying Lean Strategies to Virtual Manufacturing

General Electric Aviation ……………………………………………………………………………………….13 Advanced Composite Manufacturing and Supply Chain Strategy



General Motors ……………………………………………………………………………………………….......14 Optimization of GM Electric Vehicle Battery Refurbishment Value Chain

W.W. Grainger, Inc. ………………………………………………………………………………………………16 Re-Engineering the Grainger Global Sourcing Supply Chain

Hallmark Cards ……………………………………………………………………………………………………18 Strategies to Achieve a Lean Supply Chain for Hallmark Everyday Cards

Intel Corporat ion ………………………………………………………………………………………………….19 Quantifying the Value of Supply Chain Agility

Lockheed Martin Space Systems Company …………………………………………………………………20 Chemical Management Project

Pfizer ………………………………………………………………………………………………………………..21 Lean Outsourced Operations: Improving “Right First Time”

Pt. Sepatu Mas Idaman ………………………………………………………………………………………….22 Operations Optimization at an International Shoe Manufacturer

Raytheon – Space and Airborne Systems Manufacturing Operations …………………………………23 SAS Manufacturing Workforce Communication Improvement

Ryder Systems, Inc. ……………………………………………………………………………………………...24 Inventory Analysis Service Design

SRG Global ………………………………………………………………………………………………………...25 Renewable Energy Market Entry Strategy

Steelcase, Inc. ……………………………………………………………………………………………….........26

Optimization of the Steelcase Regional Distribution Network

Universi ty of Michigan Medical School …………………………………………………………………........28 Strategic Best Use of a Good Manufacturing Practices (GMP) Facility



ALCOA HOWMET DOVER CASTINGS

STREAMLINING OPERATIONS TO IMPROVE BUSINESS PREFORMANCE

Student Team:

Caroline Habbert – Master of Business Administration

Eric Sterling – SGUS (BSE Material Science & MSE Industrial and Operations Engineering)

Project

Liaisons/Supervisors:

Joanna Chiarolanzio – Alcoa Operations Management Consultant

Patrick Putorti – Alcoa Business System Center or Excellence Manager

Jeff Schoenhaut – Alcoa Business System Center of Excellence Coordinator

Project Champion:

Bill Rossi – Alcoa Howmet Dover Castings Plant Manager

Faculty Advisors:

Petar Momcilovic – College of Engineering

Ted O’Leary – Ross School of Business

Supporting the Alcoa‐wide initiative to free up cash, the Tauber team’s goal was to reduce the value of

work in process (WIP) inventory at Dover Howmet Castings by 6% from its December 2008 value of

$10.2M. The team’s improvement efforts expanded upon the success of previous endeavors to coordinate

departments and institute dedicated flow paths. While Dover will realize immediate financial benefits from

the team’s actions, the changes will continue to facilitate improved operations even once the need to free

up cash has abated.

To decrease WIP value, the team focused on reducing lead time in Heat Treat. This is a critical area for

improving flow because it is the first department that requires work to be batched instead of processed as

single molds. To involve Alcoans in these efforts, the team led two Kaizen sessions. The first Kaizen

focused on internally reorganizing Heat Treat and establishing visual controls to minimize time wasted

locating and handling parts. The second Kaizen created a dedicated flow path through a single Heat Treat

furnace for high‐volume jobs. The team coordinated production planning so that weekly production

volumes corresponded to Heat Treat batch sizes. This scheduling change optimized processing in Heat

Treat and eliminated overproduction and handling waste in prior processes.

When adjusting for equipment reliability, the team reduced lead time by 1.4 days for processes

surrounding and including Heat Treat, decreasing the average inventory in Heat Treat by 31%. Although

not all attributable to the improvements in Heat Treat, overall WIP value fell 40% over seven months, to

$6.1M in July. Once the flow paths are fully implemented, the team expects a 20% reduction in the number

of furnace hours required, saving Dover over $700,000 annually from furnace runs alone.

1



AMETEK

OPTIMIZING SUPPLY CHAIN CONFIGURATION FOR CRITICAL ASSEMBLIES

Student Team:

Jialing Li – Master of Supply Chain Management

Claudia Uehara – Master of Business Administration

Project


José Muñoz‐González – Director of Supply Chain and Operational Excellence

Brent Bolton – Global Sourcing Commodity Manager

Project Champion:

Timothy F. Croal – VP/GM AMETEK Programmable Power Division

Faculty Advisors:

Hyun‐Soo Ahn – Ross School of Business

Shorya Awtar – College of Engineering

AMETEK, a $2.5B

company,

is

a leading

global

manufacturer

of

precision

electronic

instruments

and

electromechanical devices. The Programmable Power Division (PPD) produces programmable power

supplies for testing and measurement equipment used on commercial, industrial, government, military,

aerospace and energy applications. PPD is eager to streamline its sourcing and manufacturing to improve

post‐acquisition synergy and accelerate revenue growth.

One of the critical elements of PPD products are Printed Circuit Board Assemblies (PCBAs), which are

currently manufactured in AMETEK’s San Diego facility. PCBAs are used in every PPD product and are

highly customized (high mix), yet have infrequent demand (low volume). The manufacturing of PCBAs is

challenging because of long component lead times, strict quality requirements, and a high variety of

sourced components (over 10,000 SKUs). The expected growth of PPD creates a significant cost savings

opportunity by optimizing the supply chain for PCBAs.

To address this opportunity, the Tauber team performed a comprehensive make vs. buy analysis and

compared different sourcing options. First, the team built a cost model and identified the true cost for

sourcing and manufacturing PCBAs. Next, the team narrowed down suppliers based on quality,

technology, supplier responsiveness, cost, and supply chain risk. Based on this work, the team

recommended and initiated AMETEKʹs transition to a new supply chain configuration which utilizes both

in‐sourcing and outsourcing. Finally, to ensure a smooth transfer and realize expected cost savings, the

Tauber team developed a risk mitigation and implementation plan.

After implementing the new supply chain strategy, AMETEK’s expected annual near term cost savings is

about $700K, coupled with an inventory reduction of 37%. The potential cost savings for the Programmable

Power Division in the long‐term will be $1.7M per year. In addition, the make versus buy model built by

the team can be utilized by other AMETEK divisions.

2



ARAMEX

STRATEGIC INSIGHT INTO CUSTOMER SATISFACTION AND OPERATIONAL EFFICIENCY

THROUGH DEVELOPMENT OF KEY PERFORMANCE INDICATORS

Student Team:

Kumar Saurabh Singh – Master of Supply Chain Management

Martin Suchy – Master of Business Administration

Abhishek Vyas – Master of Supply Chain Management

Project Liaison/Supervisor:

Niveen Sukar – Business Improvement & Efficiency Team Leader

Project Champion:

Osama Fattaleh – Chief Operating Officer

Faculty Advisors:

Len Middleton – Ross School of Business

Lawrence M. Seiford – College of Engineering

In terms of network coverage, Aramex is one of the world’s top five courier service providers. The

company offers international and domestic express delivery, freight forwarding, logistics and warehousing

solutions, and specialized shopping services. Due to its aggressive growth strategy, in 2008 Aramex

achieved a 17% revenue growth with an associated profit growth of 21%. However, many opportunities for

improved customer satisfaction and operational efficiency remain in their core processes.

To better service its customers, Aramex measures nearly 200 Key Performance Indicators (KPIs) and

conducts regular audits resulting in many operational metrics. However, there is neither a structured

approach nor a selection process for the existing KPI reporting, which results in information overload and

diffused focus for most managers. Furthermore, currently there are no organization‐wide KPI reporting

tools or aggregation of KPIs into a structure appropriate for management reviews. Some KPIs are reported

directly by operations, whereas other KPIs are an outcome of Business Efficiency team audits. In addition

to multiple KPI sources, there are multiple reporting methods, e.g., emails and Excel worksheets.

Moreover, many of the existing KPIs are reactive, meaning KPIs are reported after the fact, sometime with

a significant delay, which further minimizes the KPIsʹ relevance to management decisions.

A concise and effective set of KPIs in a robust reporting mechanism providing instant, easy and simple

visibility into the current state of the operational processes is essential. The Tauber team proposed a new

set of KPIs for most operational processes and customer relationship management, performed a gap

analysis against existing KPIs and industry benchmarks, and finally recommended criteria for a dashboard

implementation. Additionally, using Value Stream Mapping, the team presented an implementation plan

for a 14% potential efficiency improvement in ground operations. The team also presented Aramex with

tools like Data Envelopment Analysis which could be used for accurately predicting courier efficiency.

In order to find the most appropriate KPIs, the Tauber team developed process flow charts and value

stream maps, interviewed process owners and operational managers at different levels across the

organization, and summarized organizational priorities and competitive strategies. Working closely with

the team, Aramex gained visibility into the KPI development process and plans to update processes for

express and freight service delivery and for customer relationship management, and even to adjust audit

policies and service quality standards.

3



BAYER CORPORATION

METHODOLOGY FOR PROMOTIONAL PRODUCT EVALUATION

Student Team:

Michael McGrath – Master of Business Administration

Daniel Smodic – EGL (BSE/MSE Industrial and Operations Engineering)

Project

Liaison/Supervisor:

Pat Goldsmith ‐Manager, Strategic Supply Chain Projects

Project Champion:

Wayne Krampel – VP Global Product Supply

Faculty Advisors:

Izak Duenyas – Ross School of Business

Brian Love – College of Engineering

Bayer Diabetes Care, a subsidiary of Bayer AG, helps diabetics in over 100 countries manage their disease

with portable

blood

glucose

monitoring

systems

such

as

the

Contour™

and

Breeze2™.

The

market

for

blood glucose meters is characterized by aggressive competition and relative parity across meters in terms

of features, capa bilities, and price points. With an evolving market and diabetes becoming more prevalent

throughout the world, it is necessary for Bayer to develop product offerings with an increasing focus on

consumer oriented features and services. However, these initiatives have introduced significant

complexity and cost into Bayer’s global supply chain; therefore, Bayer must only pursue those

opportunities which will generate sufficient financial return.

The Tauber team was tasked with developing a new analytical framework and process for evaluating

promotional product opportunities. The team created a cost and revenue model for promotional products

after analyzing relevant supply chain costs, the resources and processes required to execute a promotion,

the organization’s cost structure, and key market assumptions. These elements were integrated into an

evaluation tool utilizing Monte Carlo simulation to analyze the expected financial return and risk of a

promotional product opportunity. Key metrics for evaluation and acceptance criteria were also defined. A

user guide authored by the Tauber team will instruct future users on how to complete this analysis and

how to interpret the results.

The Tauber team also recommended the approval process for Packaging Change Requests (PCR), which

includes promotional requests, be segmented into three sub‐processes based on the complexity and

organizational impact of the proposed change. The team defined these approval processes in terms of the

data and analysis required, key acceptance criteria, and the cross‐functional team members necessary to

make a decision. For promotional product requests, the previously mentioned evaluation tool was

incorporated into the evaluation and approval process. Finally, the Tauber team supplied Bayer with a

method to

prioritize

promotional

opportunities

and

other

PCRs

to

increase

the

effectiveness

of

key

constrained organizational resources.

The analytical tool and improved evaluation processes developed by the Tauber team are expected to

increase Bayer’s speed to market, drive increased profitability through additional promotional activity, and

prevent unfavorable projects from being pursued. While many of these benefits are intangible, the team’s

recommendations are conservatively expected to provide an annual value of more than $1.4 million to the

organization.

4



THE BOEING COMPANY

STRATEGIES FOR EMBEDDING DESIGN FOR ENVIRONMENT INTO THE

BOEING DESIGN PROCESS

Student Team:

Alex Pechette – EGL (BSE/MSE Mechanical Engineering)

Brian Tursi – Master of Business Administration

Project Liaisons/Supervisors:

Peter Anast – Technical Fellow, Manufacturing ‐ Airplane Product Development

Pete Thompson – Manager, Environmental Strategy ‐ Airplane Environmental Performance

Project Champion:

Chister Hellstrand – Manager, Capabilities and Processes ‐ Environment, Health and Safety

Faculty Advisors:

Steven Skerlos – College of Engineering

Owen Wu – Ross School of Business

The Boeing Company is a leading manufacturer of commercial airplanes. Boeing strives to continuously

improve the environmental performance of commercial aircraft throughout the product lifecycle. As

global environmental awareness increases, Boeing views reducing its environmental footprint as an

opportunity to mange future risks and, more importantly, as a way to differentiate its products for

competitive advantage. Because much of an airplane’s environmental footprint is established while it is

still in the product development process, Boeing sought to embed capabilities to affect the product within

the design process. The resulting Design for Environment (DfE) program enables engineers and designers

to systematically quantify and reduce the lifecycle impacts of an airplane while it is still in development.

The Tauber team created a DfE strategy with the primary objective of identifying points in the design

processes where DfE tools could be used with the greatest leverage.

The team

studied

the

various

forms

of

environmental

influence

throughout

an

airplane’s

lifecycle

and

determined when in the design process they are established. The finding was that designers have varying

levels of influence over environmental attributes throughout the process, so the team recommended that, at

each stage, the DfE program focus on the attributes over which designers have the most influence. Further,

the team found that the design process could be simplified into four main chapters – each with a specific

set of environmental attributes to be addressed and tools for quantifying the footprint improvements.

Within the chapters, design decisions were made in one of two manners: formal trade studies and detailed

design decisions. The team recommended that these decision‐making processes be modified to embed DfE

capabilities through the implementation of certain key components: education and training for design

engineers and trade‐study personnel, identification of focals and champions to perform the DfE processes,

and the various assessment tools for quantifying the environmental impact of design alternatives. Each

component, the

assessment

tools

in

particular,

varied

by

chapter

based

on

the

level

of

aircraft

definition,

ability to quantify footprint, and personnel or functional groups involved at that point in the design

process. To ensure successful implementation and execution of DfE processes, the team recommended

establishing environmental goals to educate designers on the environmental performance of products and

to set minimum values for environmental performance.

Today’s companies can experience large direct costs from environmental issues that are not addressed in

the design phase. This value does not capture the cost of environmental issues incurred by suppliers and

customers, nor does it include costs that cannot accurately be quantified in dollars. However, the

recommended DfE strategies can significantly reduce costs while also improving environmental

performance, increasing marketing value, driving revenues, and mitigating operating risks.

5



THE BOEING COMPANY

SUPPLY MANAGEMENT FOR BOEING’S 777 ASSEMBLY SYSTEM

Student Team:

Elizabeth Gillis – Master of Business Administration

Andrew McArthur – EGL (BSE Aerospace & MSE Industrial and Operations Engineering)

Jonathan Wang – EGP (MSE Industrial and Operations Engineering)


Scot Horton – Senior Manager, 777 Manufacturing Services

Project Champion:

Jerry Dierickx – 777 Manufacturing Services Leader

Faculty Advisors:

Wallace Hopp – Ross School of Business

Xiuli Chao – College of Engineering

The Boeing Company is a major diversified aerospace company with sales of over $60 billion from both

defense

and

commercial

aircraft

divisions.

In

light

of

the

current

economy

and

market

pressures,

Boeing

wants to lean out the operations of its commercial aircraft business in order to strengthen its competitive

edge. Through the Boeing Production System, the company identified key tactics for lean implementation.

This project supported these tactics by focusing on efficient delivery of parts to the assembly line making

use of kit configuration management, container maintenance and replacement, part tracking, and just‐in‐

time (JIT) delivery to optimize parts scheduling.

Container Configuration Management: Part kitting containers are configured to a bill‐of‐material for a

particular build‐plan. There was no reliable process for Materials Management to track build‐plan

configuration changes to facilitate container updates and redesign. Our project developed both a data and

process‐ based configuration management solution.

Container Maintenance:

There

was

no

process

for

maintaining/replacing

kits

to

support

sustainable

functioning of the kitting system. We developed a maintenance strategy with a web‐ based support system.

This system allows both emergent and preventative maintenance management. In conjunction with

configuration management, container maintenance enables the $1M in annual kitting savings associated

with reduced installation time of build‐plans.

Part Tracking: Boeing has no comprehensive system for tracking parts through their logistics value stream.

The team conducted a Smartphone proof‐of‐concept and compiled a detailed business case to support a

multi‐technology solution. Rollout of a full system is estimated to save $12 million annually in part search

labor across the Everett site.

Just‐in‐Time: Internal processing and manufacturing buffers currently result in unnecessary costs. We

created a tool

to

compute

inventory

reductions

possible

with

just

‐in

‐time

deliveries

that

achieve

desired

service levels and to estimate the savings from them. A summer pilot realized $1.8 million in one‐time cash

flow savings, 2010 savings will be $9.2 million, with further savings estimated at $69.8 million. In terms of

annual inventory holding cost, savings are estimated at $188K for 2009, $1.1 million for 2010, and $8.5

million for 2011 and beyond.

Based on the team’s conservative estimates and assuming a 20% discount rate, combined savings over a 12‐

year horizon yield a net present value of $104.8 million. The team also recommended an integrated Kit

Single Operating System (KSOS) to provide single‐source access to the configuration management,

maintenance, and tracking modules. As Boeing moves from discrete parts to kits, KSOS will help leverage

the JIT tools to further Boeing’s lean journey.

6



THE BOEING COMPANY

OPTIMIZING OPERATIONS IN TRAVEL & EXPENSE SERVICES

Student Team:

Tyler Hooper – Master of Business Administration

Sanjay Jaiswal – Master of Supply Chain Management

Project

Liaison/Supervisor:

Nathan Seibel – Sr. Manager, Travel & Expenses Services

Project Champion:

Eric Kittleson – Director, Travel & Expenses Services

Faculty Advisors:

Gunter Dufey – Ross School of Business

Atul Prakash – College of Engineering

The Boeing Company, a leading commercial airplane manufacturer and key government defense

contractor, spent

hundreds

of

millions

in

travel

and

other

credit

card

purchases

in

2008.

The

Travel

and

Expense Services (T&ES) organization is responsible for providing a seamless business travel experience to

Boeing employees and streamlining the travel system to reduce cost. The Tauber team’s objectives were to

evaluate ongoing Lean initiatives, improve current operations, and provide an improvement model for a

sustainable Lean operations environment.

Applying the Tailored Business Streams (TBS) model in commercial airplane production has successfully

reduced product and process variability at Boeing. The TBS model helps identify non‐standardized, highly‐

variable activities and attempts to standardize them to help drive down costs. The Tauber team adapted

this TBS model, which has traditionally been applied to manufacturing, to services at T&ES. To make the

TBS model more effective in the T&ES environment, the team introduced and integrated TBS with current

Lean methodologies and helped identify the root causes for costly process variability. The team also

developed and implemented a cost estimating tool by creating an “Iceberg” model to categorize both direct

cost (visible, or ‘above the water’) and indirect cost (less visible, or ‘beneath the water’). Using these

frameworks, the team identified three key improvement opportunities based on risk exposure and cost

impact: expense report receipt auditing, merchant and airline credit reclaims, and credit card closures. The

team developed value stream maps, identified bottlenecks, and created improvement plans for each area.

The process improvement recommendations include: upfront validation of receipts to increase first time

pass rate and reduce cycle time, automation of credit and debit matching resulting in higher throughput,

and establishing communication between HR and a credit card user’s manager thereby reducing write‐offs

from charges not expensed. Implementation is underway for each of the process recommendations. In

addition, based on system user interviews and analysis of survey data, the Tauber team recommended the

submission of

expense

reports

be

completed

by

a select

group

of

trained

Office

Administrators

instead

of

nearly 100K individual credit card holders. This strategy, if implemented, would greatly reduce the time

employees spend submitting expense reports.

Combining the results from implementing TBS, process improvements, and the expense report submission

strategy, The Boeing Company stands to save more than $10 million annually. The Tauber team has also

provided a valuable framework for improving processes that uses TBS in conjunction with Lean

methodologies. This will allow T&ES to effectively manage its service level and reduce process variation,

leading to additional cost savings and increased customer service.

7



BORGWARNER TORQTRANSFER SYSTEMS

DEVELOPMENT OF AN ASSEMBLY LINE BY APPLYING LEAN PRINCIPLES

Student Team:

Kiran Dasari – Master of Supply Chain Management

Javier Huerta – EGP (MSE Industrial and Operations Engineering)

Project

Liaison/Supervisor:

Dan Robbins – Central Services & Lean Mfg. Manager

Project Champion:

Todd Bennington – Vice President Operations, Seneca TorqTransfer Systems

Faculty Advisors:

Monroe Keyserling – College of Engineering

Eric Svaan – Ross School of Business

BorgWarner TorqTransfer Systems (TTS) commissioned the Tauber project team to implement lean

manufacturing principles on a transfer case assembly line. This line recently moved from BorgWarnerʹs

Muncie,

Indiana

facility

to

the

Seneca,

South

Carolina

facility,

which

is

the

largest

in

terms

of

sales

in

the

TTS division. The line is expected to be the divisionʹs benchmark for flexible and agile production, enabling

BorgWarner to adapt quickly to changing market conditions and to maintain profitability under a variety

of demand scenarios.

BorgWarner desired to improve its ability to manage the capacity of its transfer case assembly line and to

improve overall process efficiency of the line. To achieve these objectives, the Tauber team performed a

detailed analysis of the current line efficiencies, including material sourcing from both internal and

external suppliers, and the on‐time delivery of the product to the customer. The team then developed a

future state value stream map and identified lean tools from the BorgWarner Production System (BWPS),

which is based on the Toyota Production System (TPS), to solve the problems posed in the above areas. By

prioritizing and implementing the improvements, a stepwise approach was taken to build a roadmap that

BorgWarner can follow in the future.

Based on anticipated demand levels and customer guidelines, the Seneca plant management determined

the index requirement of the assembly line as 31 seconds. To create a continuous flow and to achieve this

required time, the team implemented the following improvements:

• Eliminated waste from work stations and reduced cycle times

• Transferred work elements and changed the layout of the work stations

• Created standard work procedures to improve job performance

• Documented procedures to reduce changeover times and improve process flexibility

• Implemented 5S and retrained workers in lean principles

Applying root cause analysis techniques, the team identified opportunities for improvement in areas other

than the assembly line and implemented the following: • A pilot Kanban replenishment system for pulling internally manufactured components to the

assembly line

• A system to measure inventory cycles and cross check with values in the ERP system (SAP) to

maintain appropriate safety stocks

• Work instructions for inbound and outbound material movements in the ERP system resulting in

error free processing and increased customer delivery ratings

The team’s recommendations increased the throughput on the line by 67%, improved the line balance

efficiency by approximately 50%, reduced changeover time by half and resulted in an additional savings of

nearly $800K without any significant expenditure.

8



BORGWARNER TRANSMISSION SYSTEMS

CONTAMINATION CONTROL

Student Team:

Ravi Kakaraparthi – Dual MBA & Master of Engineering in Manufacturing

Rahul Tiwari – Master of Supply Chain Management

Project

Liaison/Supervisor:

Jason Stallings – Production Manager

Project Champion:

Kent Tobin – Plant Manager

Faculty Advisors:

Robert Haessler – Ross School of Business

Gary Herrin – College of Engineering

BorgWarner Transmission Systems (BW‐TS) supplies components and systems that enhance the

performance of

automatic

transmission

equipped

vehicles.

Newer

generation

transmission

components

such as solenoids are considered to be highly sensitive to particle contamination. The BW‐TS plant in Water

Valley, MS spends more than $350,000 per year (in addition to an initial investment of $250,000) to control

and monitor the level of contamination in incoming and in‐process components. However, the exact level

of contamination that can cause product failures is not known, nor is the effectiveness of the current

contamination control process.

The Tauber team studied the washing and contamination testing processes at the facility and analyzed the

correlation between contamination and product quality. The team determined that, contrary to popular

belief, particle contamination at currently monitored levels was not a significant cause of product failures

on the assembly line or on the field. Furthermore, quality alerts were being raised based on contamination

levels that were quite arbitrary. Finally, the team confirmed that a majority of the components were being

washed to address other process issues not related to contamination. Based on its findings, the team

recommended the following process changes to keep contamination under control using the least amount

of resources.

• Monitor only one key contamination metric, e.g., weight, on a regular basis. Measure other

contamination data (e.g. particle counts) only if required for special analyses.

• Trigger contamination alerts based on process control limits instead of arbitrary thresholds, and

react to these alerts using the reaction plan developed by the team.

• Reduce the frequency of testing for parts that show very low process variation.

By eliminating unnecessary steps in the contamination control processes, the plant would be able to reduce

testing time by more than 50%. The new contamination failure trigger levels have brought down the

number of

alerts

by

more

than

95%,

while

ensuring

that

genuine

problems

are

promptly

addressed

by

the

Quality Engineer. Product engineers are currently using the Tauber team’s findings to specify

contamination requirements to their suppliers. With these specifications, BorgWarner will be able to hold

suppliers accountable for excessive contamination without incurring additional costs. Other process

changes that have been initiated based on the team’s recommendations are expected to eliminate the need

to wash some parts, yielding an annual savings of more than $100,000.

Additionally, the Tauber team worked on revamping the MRP system used at the facility. Key issues

addressed were system accuracy for inventory and scrap reporting, lead time estimation and automation of

release generation. The team’s contributions are expected to yield cost savings of $300,000 due to reduced

inventory and other process improvements. 9



DELL, INC.

IMAGE DEPLOYMENT STRATEGY

Student Team:

Jim Holland – Master of Business Administration

Vignesh Karumbaya – Master of Business Administration

Bharat Moorthy – MSE Industrial and Operations Engineering

Ye Qiu

– Master

of

Supply

Chain

Management


Charles Revelle – Sr. Technologist

Project Champion:

Dave Brown – Vice President, Global Logistics & Fulfillment

Faculty Advisors:

Kang Shin – College of Engineering

Ozge Sahin – Ross School of Business

Dell’s augmentation

of

its

traditional

direct

sales

strategy

(to

include

indirect

channel

sales),

is

occurring

during an equally important shift in its manufacturing strategy. The company has increasingly moved

production away from Dell‐owned plants to Original Design Manufacturers (ODMs) across the globe.

Dell’s traditional business model incorporated imaging of hard drives as part of the manufacturing process

in Dell‐owned plants. Imaging capabilities were therefore limited to factories or production facilities. The

new production model has given rise to an increasing number of sites that need unique imaging

capabilities to fulfill customer requirements, such as the Americas Merge Center (AMC), third‐party

contractors, service centers and potentially even hard drive suppliers. Emerging as a result of the increased

number of sites is the need for a secure and customized image management and deployment system.

The Tauber team proposed a centralized image repository that can deploy images to any Dell or third‐

party imaging

location,

based

on

its

specific

requirements.

This

image

database,

available

via

a secure

website interface, overcomes the limitations of Dell’s current image deployment process with regard to

data redundancy, functionality, portability and security. This cloud‐ based initiative offers greater

flexibility, eliminating the need for physical deployment of images by customers and the Dell IT team. The

implementation of this strategy over Dell’s global network of manufacturers, suppliers and service

locations would mark a paradigm shift away from industry norms, taking advantage of both evolving

manufacturing strategies and the benefits of cloud computing.

10



EXIDE TECHNOLOGIES INC.

SUSTAINABILITY INITIATIVES AT EXIDE TECHNOLOGIES

Student Team:

Daniel Dimoski – EGL (BSE/MSE Mechanical Engineering)

Rushabh Gandhi – EGL (MSE Industrial and Operations Engineering)

Chris Lobo - Master of Business Adminsitration


Richard Kaestner – Maintenance Manager

Project Champion:

Joe Preuth – Vice President Operations, Industrial Energy Americas

Faculty Advisors:

Brian Talbot – Ross School of Business

Fred Terry – College of Engineering

Exide Technologies

Inc.

is

the

largest

manufacturer

of

lead

‐acid

batteries

in

the

world

for

applications

ranging from lawnmowers to submarines. Exide operates in a highly competitive environment within a

largely commoditized industry and is subject to stringent environmental and health regulations. Extensive

ventilation and filtration required to satisfy these regulations place additional demands on an already

energy intensive process. The economic downturn has increased pressure to reduce operating costs, of

which a significant portion are energy related. Furthermore, recent environmental movements provide the

impetus to reduce dependence on non‐renewable energy sources. Exide is aware that to maintain its

industry leading position it must develop sustainable initiatives to reduce its energy consumption and

carbon footprint.

With over $2.3 million in annual energy costs, Exide’s Kansas City facility is an excellent candidate to

implement such sustainable initiatives. This 140,000 square foot facility employs 200 people and is capable

of producing 4,100 cells of various sizes per day for assembly into fully charged batteries for forklifts,

locomotive diesel engines, and mining equipment. This project aimed to identify, evaluate, propose, and

implement sustainable initiatives to reduce annual energy costs at the Kansas City facility by $90K. The

team initially performed an in‐depth energy consumption audit to identify major energy consumers and

then identified and prioritized sustainable initiatives. The team then gathered data, performed controlled

experiments, and developed engineering and financial models to thoroughly evaluate initiatives.

The analysis generated a comprehensive set of recommendations that exceed the $90K target and reduce

the facility’s natural gas consumption and carbon emissions by up to 24% and 900 metric tons respectively.

Each recommendation has a payback of less than three years and includes:

- casting process improvements to reduce scrap and energy usage

- recuperation

of

wasted

heat

energy

through

installation

of

recuperative

burners

and

heat

exchangers

- filtration and recirculation of ventilated air during the winter

The implementation of these initiatives is already underway and has yielded encouraging results. The

value of each initiative could be further increased through the transfer of knowledge to Exide’s 14 other

battery facilities, resulting in potential savings of up to $6.4 million. Additionally, the team designed an

energy efficient melting machine, which also decreases startup time and reduces molten lead inventory.

Finally, the team developed an in‐house power generation decision model, as a strategic analysis tool to

evaluate the impact of energy costs.

11



FORD MOTOR COMPANY

APPLYING LEAN STRATEGIES TO VIRTUAL MANUFACTURING

Student Team:

Brian English – Master of Supply Chain Management

Jerry Jimenez – Master of Business Administration

Srinivasan Mohan – Master of Supply Chain Management


Janice Goral – Virtual Factory Engineering Manager

Kevin Mills – Virtual Process/Data Management Supervisor

Project Champions:

Bruce Hettle – Executive Director, Global Vehicle Operations Manufacturing Engineering

Dan Hettel – Core Engineering Chief Engineer

Faculty Advisors:

Mark Jones – Ross School of Business

Dawn Tilbury

– College

of

Engineering

Lean thinking requires that workers examine the current state of a process, identify waste within that

process, and recommend ways to reduce or eliminate that waste. As a leader in the automotive industry,

the Ford Motor Company is constantly applying Lean strategies to its manufacturing processes in order to

decrease costs, improve quality, and reduce time to market. As the industry suffers through the worst

worldwide financial crisis in decades, Ford has had to accelerate cost reductions in order to offset the

effects of the global economy.

As part of this effort, Ford is rolling out a new technology platform based on the concept of the V̋irtual

Factoryʺwhich allows it to design and assemble vehicles in a virtual environment. Doing so enables Ford

to optimize the eventual physical manufacturing process of a product. While this new platform has created

efficiencies by allowing all members within Fordʹs product development system to share common tools, it

has also led to inefficiencies.

Ford tasked the Tauber student team to use value stream mapping to analyze its virtual factory workflows

and identify and resolve inefficiencies by implementing Lean strategies. Through comprehensive analysis,

a number of opportunities to eliminate process waste were identified including workload imbalance,

overproduction of virtual simulations, and the interaction of data between designers and engineers. The

team recommended that Ford engage manufacturing engineers to manage a portion of the workflow that is

currently outsourced, change the production of simulations from a push process to a pull (request) process,

and manage the flow of information between groups by establishing timeframes in which data is created

and assessed. The impact of these recommendations will reduce cycle time within the targeted process by

as much as 22% and reduce costs in excess of $2.75 million annually.

12



GENERAL ELECTRIC AVIATION

ADVANCED COMPOSITE MANUFACTURING AND SUPPLY CHAIN STRATEGY

Student Team:

Andrew Danielsky ‐ EGL (BSE/MSE Industrial and Operations Engineering)

Kevin Hannegan – Dual MBA and MSE Mechanical Engineering

Aaron Jones – Dual MBA and MS Environmental Policy

Alberto Morales

– Masters

of

Science

in

Industrial

and

Operations

Engineering


Brian Dix – Operations Leader, Ceramic Composite Products LLC

Roger Doughty – Manager, CMC Design and Technology

Project Champions:

Jeanne Rosario – Vice President, Aviation Engineering

Courtney Hill – General Manager, M&QTD

Faculty Advisors:

Eric Svaan

– Ross

School

of

Business

Peter Washabaugh – College of Engineering

GE Aviation, a division of General Electric Company, is the world‐leading supplier of aircraft engines and

engine services. Since 1942, when it produced America’s first jet engine , GE has consistently developed

new technologies to drive innovations in the design of turbine engines. One of the latest innovations is

Ceramic Matrix Composite (CMC) technology. Benefits of CMC technology include high‐temperature

stability, durability, and reduced weight. Thus, CMCs represent a leap forward in performance and

capability compared to advanced metallic alloys. Additionally, CMC technology paves the way for simpler

and more fuel‐efficient turbine engines.

The Tauber team focused on operations at Ceramic Composite Products, LLC, a GE affiliate in Newark,

Delaware that currently produces CMC components. The team developed business, supply chain and

manufacturing strategies for CMC products to meet future volumes and cost goals. While developing the

business plan for the future of CMC components, the team engaged key stakeholders inside GE Aviation

responsible for the continuation of CMC scale‐up in order to build organization‐wide support.

The plan the Tauber team developed provides GE with a comprehensive way to move forward with CMC

production and detailed steps leading to the implementation of a high‐volume facility.

13



GENERAL MOTORS

OPTIMIZATION OF GM ELECTRIC VEHICLE BATTERY REFURBISHMENT VALUE CHAIN

Student Team:

Russell Clayton III – Master of Business Administration

Timothy Thoppil – Master of Engineering in Manufacturing

Project

Liaison/Supervisor:

Grace Overlander – Integration Engineer

Project Champion:

Ray Koopman – Director, Global Manufacturing‐Engineering

Faculty Advisors:

Marina Epelman – College of Engineering

William Lovejoy – Ross School of Business

General Motors (GM) is in a period of “re‐invention”; the company’s strategic positioning, operations and

organizational structure

are

undergoing

revolutionary

changes.

The

company

has

begun

a new

era

focused

on producing exciting, fuel efficient and environment friendly vehicles, and the Lithium‐ion battery

powered Chevrolet Volt is representative of a new breed of GM vehicles. Both the new battery technology

and the need for leaner cost‐effective operations present unique challenges to GM’s dealers, suppliers,

refurbishment facilities, and distribution systems. The Volt battery will be the largest and the most

expensive component handled by the GM Parts supply system, a significant portion of the cost being

shipping, warehousing, and refurbishing the battery. The Tauber team’s objective was to define an

efficient, innovative supply chain system and prudent decision making processes to make the new

technology affordable and accessible.

With limited field data on the new Lithium‐ion batteries, performance, shelf life and repair are undefined.

Low volumes during initial launch years do not justify a dedicated, specialized supply chain system, but it

is essential to customize the existing distribution network for the battery and still maintain world class

efficiency and responsiveness. The supply chain model must be flexible to accommodate future volume

fluctuations, new markets, design changes, and additional testing and storage requirements. Additionally,

at later stages in the battery lifecycle, refurbishment can be very expensive and the net value recoverable

from the battery through alternative non‐automotive applications could be more profitable. Final

disposition is also a very complicated decision and factors like the age and degradation of the battery,

logistics costs and re‐engineering costs for the secondary use must be considered.

The Tauber team worked with product engineering, logistics and brand quality to develop end‐to‐end

integrated solutions for the refurbishment of the Chevy Volt battery. First, a spreadsheet‐ based scenario

analysis tool was developed to analyze the multi‐echelon, closed loop supply chain system from the

refurbishment plant

to

warehouses,

to

dealerships

and

back.

The

tool

evaluates

different

volume

scenarios, facility locations, repair activities, modes of transportation and provides comparisons and

recommendations. This tool was used to develop a new refurbishment model that allows basic repairs to be

performed by dealers, resulting in a 50% reduction in refurbished battery volume. This leads to a drastic

reduction in transportation, warehousing and inventory holding costs. The logistics model proposed for

battery distribution controls the inventory maintained at each echelon and warehouse. The

recommendations would save GM $1.6 million on average per year and result in an impressive customer

service lead time of one day.

The Tauber team also provided GM with a tool to facilitate the refurbish versus reuse versus recycle

decision. The tool determines the net value of a battery after refurbishment based on the maximum

14



potential residual life of the battery in a vehicle and compares this to the net “profit” from reselling the

reengineered battery for use in a non‐automotive application. This tool is built into the standard

refurbishment process and will be used by GM engineers to determine when a battery should be

refurbished for automotive use or reengineered for reuse in secondary green energy applications.

15



W.W. GRAINGER, INC.

RE‐ENGINEERING THE GRAINGER GLOBAL SOURCING SUPPLY CHAIN

Student Team:

Sung Hwan Cho – Master of Business Administration

Lisa VanLanduyt – Master of Business Administration

Aditya Vedantam – MSE Industrial Operations and Engineering


Jeff Buxton – Director GGS Supply Chain

Gary Scalzitti – Director Strategic Planning and Project Management

Steve Forsyth – VP Global Supply Chain Architecture and Planning

Project Champion:

D.G. Macpherson – Senior VP Global Supply Chain

Faculty Advisors:

Amy Cohn – College of Engineering

Amitabh Sinha

– Ross

School

of

Business

Grainger, with 2008 sales of $6.9 billion, is the leading broad line supplier of facilities maintenance and

related products in North America, with international divisions in Canada, Mexico, China, and Panama.

Grainger’s focus is on customer service: having the right product, in the right place, at the right

time…every time. Grainger US (GUS) offers 230,000 items in its catalog all with same‐ or next‐day service

to 98% of its customers. Thirty‐four percent of these catalog items are private label products contract‐

manufactured exclusively for Grainger. Nearly half of these private label items are sourced internationally

by the Grainger Global Sourcing (GGS) division. Established as an internal supplier to GUS, GGS

purchases products from global manufacturers and sells them to GUS for inclusion in the catalog.

Because GGS‐sourced private label products earn a higher margin than nationally branded products,

Grainger’s growth strategy includes expansion of the private label program. Growth will occur through

two initiatives: 1) increasing the proportion of private‐label items in the GUS catalog, and 2) introducing

private‐label items into Grainger’s international business divisions. The current GGS supply chain was

designed to serve as a supplier of private label products to GUS, however global distribution of GGS

products was neither efficient, nor cost‐effective. To support Grainger’s growth objectives, the GGS supply

chain had to be re‐engineered.

Although GGS sources product from 18 countries, 83% of its purchases are made in China and Taiwan.

Today, 11% of this cargo flows through consolidation centers in those countries while the remainder flows

factory‐loaded directly from the supplier to GGS. To satisfy Grainger’s globalization goal, the Tauber team

first recommended that 100% of China/Taiwan cargo be consolidated at centers rather than shipped

independently from

each

supplier.

Consolidation allows GGS to direct containers not only to international locations, but to any location. The

team also took advantage of the proposed consolidation to make distribution of GGS product within the US

more efficient. The team recommended that GGS reallocate its product in the US so that it is closer to the

GUS customer by storing inventory in three existing Grainger facilities: Kansas City, MO, Greenville, NC,

and Patterson, CA.

The new network design resulted in projected annualized operating expense savings of $24 million

(cumulative) over the first five years, primarily the result of improving freight efficiency and reducing (by

half) the average distance GUS orders travel. These savings were achieved with no change in inventory, 16



despite increasing the number of inventory stocking locations (safety stock increases balance cycle stock

reductions). Most importantly, however, Grainger is now positioned to meet its growth goals through

global distribution of its private label products.

17



HALLMARK CARDS

STRATEGIES TO ACHIEVE A LEAN SUPPLY CHAIN FOR HALLMARK EVERYDAY CARDS

Student Team:

Li Shuang Chong – Master of Supply Chain Management

Ariel Domingo – Master of Supply Chain Management

Bruce Edwards – Master of Business Administration


Rob Ludwig – Director, Operations Engineering

Project Champion:

Tong Brown – Director, Global Supply Chain

Faculty Advisors:

Walt Hancock – College of Engineering

Ravi Anupindi – Ross School of Business

Hallmark Cards

has

been

the

social

expressions

industry

leader

for

nearly

a century.

The

brand

is

well

known across the United States, with cards found in over 43,000 retail locations. Inventory levels have

grown in recent years and are now a large concern.

The Tauber Institute team developed strategies to achieve a lean supply chain to reduce lead time,

inventory levels, discards, and total cost, while increasing revenue potential and inventory turns. These

strategies are:

1. Ordering for demand during lead time. Smaller orders reduce finished goods inventory levels,

reduce reliance on long‐term forecasts, and reduce discards. With reduced inventory, the supply

chain is more flexible and has increased revenue potential. The finished goods inventory turn rate

will increase from 2.4 to 8.8.

2.

Reduce make‐ready costs. Make‐ready costs must be reduced by 39% in order to keep total costs

constant when ordering for demand during lead time. The team identified opportunities to save

16.3% of the make‐ready cost.

3. Create cells in pre‐production. These cells will reduce WIP and lead time.

4.

Develop standard mated sets of SKUs. This will eliminate 46% of the lead time for affected SKUs

and provide $485,000 of annual savings by reusing die cut dies and eliminating pre‐production

steps.

5. Reduce estimated spoilage quantity. From June 2008 to May 2009, 11 million cards were produced

by overestimation of spoilage, resulting in $314,000 of carrying costs.

6.

Reduce the mating variance. From June 2008 to May 2009, 59 million excess cards were produced

as a result of the positive mating variance. This resulted in an additional $1.6 million in carrying

costs.

7. New metrics of supply chain cycle time, total supply chain cost, order variance, and stock‐outs.

Immediate implementation of these items is recommended, with the exception of the order quantity.

Ordering for demand during lead time will increase total supply chain cost if make‐ready costs are not

reduced. An intermediate inventory management policy was provided while make‐ready costs are

reduced.

18



INTEL CORPORATION

QUANTIFYING THE VALUE OF SUPPLY CHAIN AGILITY

Student Team:

Douglas Backinger – Master of Engineering in Manufacturing

James Baran – Master of Business Administration

Ravi Siddappa – Master of Supply Chain Management


Jim Kellso – Senior Supply Chain Master

Project Champions:

Alyson Molesworth – Director, Supply Chain Strategy

Dan Mckeon – Director, Supply Chain Enterprise Solutions

Faculty Advisors:

Damian Beil – Ross School of Business

A. John Hart – College of Engineering

As the

world’s

largest

semiconductor

chip

manufacturer,

Intel

offers

innovative

products

and

platforms

that span the computing and communication continuum. With its AtomTM processor, Intel is expanding

from its core business of personal computers and servers into adjacent markets of netbooks, embedded

devices and consumer electronics, which are expected to reach $40 billion in total available market revenue

by 2011. These new markets have extremely variable demand and require higher service levels at lower

costs than the core business. Intel anticipates that it will need to significantly reduce its current supply

chain cost structure to meet them.

To serve the AtomTM market, Intel developed a low‐cost supply chain model that eliminates unnecessary

inventory and administrative processing costs. In addition to reducing cost, the low‐cost supply chain must

also be able to recognize, adapt and quickly respond to changes in customer needs. In whole, it must be

agile. While Intel recognizes the importance of an agile supply chain, it is unsure of what precisely defines

supply chain

agility

and

how

to

measure

it.

Intel

is

not

alone

in

this

regard,

as

there

is

neither

an

industry

‐

standard definition of supply chain agility, nor an agreed‐upon measurement. Defining and measuring

agility will be a key enabler to help Intel monitor and guide its progress toward meeting its low‐cost

supply chain goals and the performance of its overall supply chain.

The Tauber team identified the key value‐drivers of agility and created a common definition of supply

chain agility. The team incorporated Intel’s existing, industry standard metrics for responsiveness,

reliability and cost into an agility measurement that is capable of operating down to the product level. The

model provides Intel with a holistic assessment of past supply chain performance as well as an interpretive

tool to evaluate future scenarios. Intel will use the tool to evaluate the tradeoffs among cycle time

reductions, strategic inventory positioning and customer service levels to improve not only the low‐cost

supply chain for the AtomTM processor, but also the supply chains of other Intel products. Using the

agility framework to extend the low‐cost supply chain model to all CPU products, the team identified an

opportunity to reduce inventory holding costs by $82 million. In addition, the Tauber team’s use of

industry standard metrics in its agility measurement provides Intel with the a bility to benchmark its own

supply chain agility against those of its peers and the opportunity to create an industry standard

measurement for agility.

19



LOCKHEED MARTIN SPACE SYSTEMS COMPANY

CHEMICAL MANAGEMENT PROJECT

Student Team:

Roger Chen – Master of Business Administration

Eric Rudy – EGL (BSE Chemical Engineering & MSE Industrial and Operations and Engineering)

Project

Liaison/Supervisor:

Robin Milewski – Subcontract Management & Procurement

Project Champion:

Gary Bartmann – VP Procurement

Faculty Advisors:

Erdogan Gulari – College of Engineering

Jerry Peterson – Ross School of Business

Each year, Lockheed Martin Space Systems Company (LMSSC) purchases millions of dollars in hazardous

chemicals

and

materials

that

are

used

for

flight

application.

These

items

are

procured

in

accordance

with the United States Government Federal Acquisition Requirements, State Environmental Safety and Health

regulations, and LMSSC processes and procedures.

In 2008, roughly half of the chemicals purchased were for use on flight hardware that mandate stringent

quality requirements and certification. Sixty percent of the chemicals were used, 11% were scrapped due to

shelf life expiration, and the remaining material contributed to an 85% increase in inventory between 2007

and 2008.

In today’s economic climate, the U.S. Government is taking a closer look at the funding for all spending

programs, and the Weapon Systems Acquisition Reform Act of 2009 has been enacted to regulate Defense

spending

by

enforcing

a

movement

toward

fixed

price

contracts.

In

order

for

LMSSC

to

maintain its

competitive

advantage

now

and

in

the

future,

continuous

efficiency

improvements

are

necessary

in

its

operational processes in order to control and reduce cost.

The Tauber Institute team analyzed whether the current chemical management process at Lockheed’s

Sunnyvale

facility

could

be

made

more

efficient

given

the

requirements

for

manufacturing

guided missiles

and space vehicles. Through cooperation with subject matter experts across the site, the team identified

areas for improvement and

focused

on

implementing

reorder

point

optimization

derived

from

a

detailed,

data driven understanding of the chemical usage at this site.

These

improvements

resulted

in

a

44%

estimated

annual

savings

in

reduced chemical waste and disposal

costs, as well as a 33% “Go Green” reduction in chemical waste sent from the central stockroom to waste

management.

The

net

present

value

of

the

savings

achieved

was

$2.6

million.

Furthermore,

this

optimization can be utilized to reduce millions of dollars in plant stock inventory. Building upon work

already

in

progress,

this

effort

drove

a

more

efficient

chemical

management

strategy

for

the

Sunnyvale

site

and could serve as a model for evaluating other sites across LMSSC.

20



PFIZER

LEAN OUTSOURCED OPERATIONS: IMPROVING “RIGHT FIRST TIME”

Student Team:

Andrea Caie – MSE Industrial and Operations Engineering

Seachol Oak – Master of Business Administration

Project


Kurt Speckhals – Director, Supply Chain, Strategic Sourcing and Planning

Veronica Callender – Associate Research Fellow, Pharmaceutical Sciences Quality Assurance

Project Champions:

Paul Stuart – VP, Pharmaceutical Sciences, Supply Chain

Mark Carruthers – Senior Director, Pharmaceutical Sciences Quality Assurance

Faculty Advisors:

Laurie Morgan – Ross School of Business

Henry Wang – College of Engineering

Pfizer, Inc. is the largest research‐ based pharmaceutical company in the world, recording revenues of $48.3

billion in 2008. With the anticipated expiry of patent protection on blockbuster drugs such as Lipitor in the

next few years, Pfizer has been focusing on cost reduction through lean strategies such as reducing the time

to deliver new drugs to the market.

To explore lean opportunities, the Tauber project focused on the manufacture of clinical supply dosage

forms. Currently, roughly 280 of the clinical supply dosage forms from Pfizer are outsourced annually to

22 vendors in 7 countries. Historically, 20‐30% of the outsourcing process time has been spent on Good

Manufacturing Practice (GMP) documentation. Creation and review of GMP documentation requires

interaction between Strategic Sourcing & Planning (SS&P), Quality Assurance (QA), and various

designated manufacturing vendors. Documentation rework can increase time and resource use as well as

delay clinical supply delivery and Pfizer’s related decision.

The purpose of the Tauber project was to improve SS&P, QA, and vendor interactions. The main goals

were to identify key sources of inefficiency, streamline information flows and handoffs, and implement

process improvements to increase the percentage of approvals that can be completed on the first pass, or

“Right First Time” principle. The project focused on three GMP documentation processes: Material Master,

Pre‐Executed Batch Record, and Executed Batch Record.

To analyze these processes, the team used lean manufacturing principles and the Six Sigma DMAIC

methodology. Analysis of current SS&P, QA, and vendor performance revealed that, on average, 37% of

the batch records required rework which increased document review time by 72%. The team next

analyzed the

root

causes

of

rework

and

conducted

Kaizen

events

with

the

SS&P

and

QA

staff

to

brainstorm

solutions. The team recommended improvements to reduce document review time by up to 20% for SS&P

and QA. These recommendations addressed issues such as unclear communication of expectations to

vendors, inconsistency of approach and decisions among SS&P and QA and gaps in internal procedures. A

detailed implementation plan with action items and due dates was created. In addition, key performance

indicators and metric tracking system improvements were implemented to ensure accurate measurement

of future performance and support continuous improvement. Several recommendations were

implemented prior to the completion of the project and the remaining recommendations are scheduled for

implementation in the near future.

21



PT. SEPATU MAS IDAMAN

OPERATIONS OPTIMIZATION AT AN INTERNATIONAL SHOE MANUFACTURER

Student Team:

Sebastien Gauche – Master of Business Administration

Brian Rumao – EGL(BSE/MSE Industrial Operations and Engineering)

Project

Liaison/Supervisor:

Ms. Yuliasari – Continuous Improvement Manager

Project Champions:

Tjandra Suwarto – President Director

Richard Hakim – Operations Director

Faculty Advisors:

Izak Duenyas – Ross School of Business

Albert Shih – College of Engineering

Gunung Sewu

Group

is

a private

equity

firm

based

in

Indonesia

that

leverages

low

labor

costs

to

deliver

quality and affordable products to its consumers. One of their holdings is Pt. Sepatu Mas Idaman

(SEMASI), a shoe manufacturer serving European and American brands. SEMASI has found success in

working with a variety of shoe brands while utilizing an efficient cost structure and high quality standards

to meet specifications. The recent economic downturn has shifted the company’s focus to improving the

operational effectiveness of the factory, which translates to improving productivity, quality, and lead‐time,

while simultaneously driving down costs.

The Tauber Institute team learned that SEMASI’s high direct labor costs, large inventories, and airfreight

costs due to shipping delays were mainly responsible for lowering profitability. Upon examining both the

drivers for these costs and the behavior of key performance indicators in the past year, the team developed

three programs to improve SEMASI’s results: Inventory Improvement Program (IIP), Quality Improvement

Program (QIP), and Production Preparedness Improvement Program (PPIP).

The IIP focused on the warehouse, where the team implemented 5S and FIFO to standardize the receiving

process, which allowed SEMASI to focus on improving the effectiveness of its material requisition planning

software. The team identified that deficiencies in the MRP software caused 18.7% of extra material

purchases. The QIP helped the manufacturing team monitor and improve its quality performance by 18.4%

through lean manufacturing tools such as visual management, root cause analysis, and standard operating

procedures. The team also created a method to bill suppliers for the defective materials which were

constantly hurting SEMASI’s performance. In the PPIP, the team developed a specific business timeline for

all major activities and inputs for production. The team organized a daily meeting structure to review

activity status and to assign root cause analyses when targets are missed. SEMASI may expect to avoid

missing its

production

targets

for

production

preparedness

issues

by

40%

through

this

program.

The Tauber Institute team’s three programs will help SEMASI realize a 6‐year net present value of $6.05

million, assuming a 5% annual company growth rate. The annual cost savings reflect a 5% increase to the

firm’s net margin. In addition, throughout the project, the Tauber Institute team trained its team members,

supervisors, staff members, and managers, to ensure the changing of mind‐sets and the sustainability of

the improvements. The implementation of the lean tools was always followed by persistent training and

push from the team, which was absorbed by all key stakeholders. This mind‐set improvement, coupled

with the technical and operational changes installed, will help SEMASI thrive through the volatile

economy and become even more competitive in the shoe manufacturing industry.

22



RAYTHEON – SPACE AND AIRBORNE SYSTEMS MANUFACTURING OPERATIONS

SAS MANUFACTURING WORKFORCE COMMUNICATION IMPROVEMENT

Student Team:

Rebecca Britten – SGUS (BSE/MSE Industrial Operations and Engineering)

Adam Hundt – Master of Business Administration

Jerome Ware – Master of Business Administration


Benjamin Gapasin – Manager, SAS CA Consolidated Manufacturing Center (CMC) Infrastructure Support

Eileen Abril – Manager, CA Consolidated Manufacturing Center (CMC) Business Information Systems

Sara Balandran – Manager, CA Consolidated Manufacturing Center (CMC) Center Compliance

Project Champion:

Dawn Garrett – Director, SAS Operations CA Consolidated Manufacturing Center (CMC)

Faculty Advisors:

Tassos Perakis – College of Engineering

Joe Walls – Ross School of Business

The Raytheon Space and Airborne Systems (SAS) division recognized a potential for cost avoidance by

tapping into their most valuable resource – employees. SAS needed a plan for resolving production related

issues, fostering continuous improvement by implementing employee ideas, and creating an organization

of engaged workers.

To complete this project, the Tauber team conducted assessments of several SAS Manufacturing Centers (El

Segundo, CA; Forest, MS; Dallas, TX; and McKinney, TX) and followed the Raytheon Six Sigma (R6σ)

approach for problem solving. Assessments included visual inspections, interviews, electronic surveys, and

evaluations of software tools. The assessments included the identification of the best practices, critical

issues, and a characterization of the current business processes at each SAS site.

The team learned from Integrated Defense Systems (IDS) in Andover, MA that fostering employee

engagement can create an environment of continuous improvement. An employee communication model

was developed to enable SAS to more effectively resolve production issues, capitalize on the continuous

improvement ideas of employees, and foster employee empowerment.

The Tauber team developed three primary recommendations. First, the communication methods utilized

between management and the operators need to be more diverse, frequent, and personal. Next, the current

production issue resolution process should be redefined to focus on and support the operator by resolving

issues quickly and effectively. Finally, SAS needs to embed continuous improvement into everyday

activities by providing employees a method to make suggestions for improving their workplace and be

empowered to implement them. To support the implementation of these recommendations, the team

created an employee engagement program consisting of business process, education, and technology

components.

In the short term, these recommendations will improve SAS Manufacturing Operations’ return on invested

capital (ROIC) by better surfacing production issues, shortening resolution time, and increasing the

percentage of issues resolved. In the long term, worker engagement strategies will create an organization of

continuous improvement that will drive innovation and growth at Raytheon.

23



RYDER SYSTEMS, INC.

INVENTORY ANALYSIS SERVICE DESIGN

Student Team:

Amy Betke – Master of Supply Chain Management

Samar Sarma – Master of Supply Chain Management

Project

Liaison/Supervisor:

Tom Kroswek – Director of Supply Chain Excellence

Project Champion:

Tom Jones – Senior VP of Global Supply Chain Solutions

Faculty Advisors:

Amitabh Sinha – Ross School of Business

Mark Van Oyen – College of Engineering

Ryder’s

Supply

Chain

Excellence

division

is

an

industry

leader

in

providing

customized

logistics

services. Customers come to Ryder for their expertise in enhancing supply chains through logistics improvements.

However, inventory and the tradeoff against transportation is becoming a major component in logistic

management. Therefore, Ryder wants to complement existing offerings by launching an inventory analysis

service. Expansion into inventory management is a strategic product extension for Ryder and will provide

additional value for existing and future customers.

The Tauber team studied the current inventory analysis capabilities at Ryder, met with internal experts to

understand their vision of the new service, and interviewed existing Ryder clients to understand their

needs. Based on these studies, the team designed an inventory analysis tool for inbound components at a

warehouse or plant. The tool was built using a Microsoft Access database and standard data collection

templates defined in Microsoft Excel. The team’s analysis revealed that approximately 20% of customers’

components

contribute

towards

roughly

80%

of

total

inventory

cost,

so

ABC

classification

was

used

to

categorize components. The tool then performs a diagnostic analysis of the current inventory policy to

determine problem areas contributing to inventory buildup.

The results of the analysis are displayed in a high level dashboard based on the ABC classification.

Considering lead time variability and forecast inaccuracy, the tool computes the necessary inventory

parameters, including safety stock and maximum order quantity. The tool provides the option to view side

by side comparison of policies at both a component and aggregate level. Finally, a comparative current

state vs. future state cost benefit dashboard is generated to display the financial benefits of implementing

Ryder’s service.

The

team

also

worked

with

the

Ryder

sales

and

marketing

teams

to

develop

a

market

entry

strategy

for

the

service, identify target customers, and define the value proposition. Ryder expects to generate additional

revenue from current client accounts in FY 2010 by extending their service offerings to include inventory

analysis. With functional enhancements, the inventory tool and service can easily be expanded for other

Ryder clients to yield millions in additional revenue.

24



SRG GLOBAL

RENEWABLE ENERGY MARKET ENTRY STRATEGY

Student Team:

Bikram Chatterjee – MSE Industrial Operations and Engineering

Domingo Lucca – Master of Supply Chain Management

Evan Quasney – MSE Energy Systems Engineering

Alanya Schofield

– Dual

MBA

and

MS

Natural

Resources

and

Environment


Tom Schneider – Director of Marketing

Project Champion:

Jon B. DeGaynor – Vice President of Strategy and Marketing

Faculty Advisors:

Elijah Kannatey Asibu – College of Engineering

John Branch – Ross School of Business

SRG Global, an automotive trim manufacturer, engaged the Tauber team to identify products within the

renewable energy industry that are a strategic fit for the company’s engineering and manufacturing

capabilities. This project provided both a framework for approaching new, non‐automotive markets and

identified specific components within the renewable energy industry that are a good fit for the company.

The project was divided into four phases: Renewable Energy Market Mapping, SRG Global Internal

Assessment, Compatibility Filtering, and Strategic Roadmap. In the Market Mapping Phase, the team

performed extensive research to understand the current state and developing trends of the seven

renewable energy markets. The Internal Assessment was based upon plant tours and internal interviews

and identified the company’s key strengths, weaknesses, competitive advantages, and core competencies.

The Compatibility Filtering Phase impressed the Internal Assessment against the Market Mapping, by

using a series of filters to narrow the thousands of components in the renewable energy industry down to a

list of 25 components that are a good fit to SRG Global’s capabilities and market entry requirements. A

Strategic Products & Capabilities Pipeline was developed and used to create a Strategic Roadmap and two

Preliminary Pilot documents to guide SRG Global’s entry into the renewable energy industry.

The Tauber team identified a strategic pipeline of 25 renewable energy products that SRG Global could

pursue within the next five to ten years. The team recommended that SRG Global focus on growing its

structural engineering design and analysis capabilities. This recommended path minimizes the firm’s risk

by:

• Avoiding the need to pick technology “winners” in the highly complex and rapidly changing

renewable energy industry and allowing the company to pursue products in multiple technology

categories.

• Building most closely upon existing internal engineering capabilities.

• Providing the largest potential market opportunity within the renewable energy industry.

• Strengthening SRG Global’s automotive offerings and its ability to enter other non‐automotive

markets by developing innovative structural solutions.

In addition, the Tauber team identified 11 immediate tactical opportunities with a total annual market size

of $50 Million and a Core Development Path, based on five products. This core path could provide SRG

Global with new annual revenues of $66 to $292 million within five to seven years.

25



STEELCASE, INC.

OPTIMIZATION OF THE STEELCASE REGIONAL DISTRIBUTION NETWORK

Student Team:

Utkur Babamuradov – Master of Supply Chain Management

C. Jason Clark – Master of Business Administration

Patricia Stansbury – Master of Business Administration


Chris Fuller – Manager, NA Distribution/Logistics Continuous Improvement

Project Champion:

Joe Verbraska – Director, NA Distribution/Logistics

Faculty Advisors:

Semyon Meerkov – College of Engineering

Lisa Pawlik – Ross School of Business

Steelcase, the world’s leading designer, marketer and manufacturer of furniture for office, higher

education, and

healthcare

environments,

ships

over

13

million

customized,

made

‐to

‐order

products

through its six regional distribution centers (RDCs). Over the past seven years Steelcase has aggressively

pursued adoption of lean principles throughout its manufacturing operations. During this time of

manufacturing modernization, distribution operations were regionalized to the existing six facilities. The

adoption of lean principles, while highly successful at improving manufacturing operations, has not kept

pace in the distribution operations. Steelcase is in the process of driving lean through the extended value

stream while continuing to pursue its business strategy of providing great customer experiences any place

work is done. The Tauber team was brought in to evaluate options for improving flow and driving waste

out of the extended value stream. The team focused on three main areas:

1) Production Schedule Leveling: Manufacturing had historically optimized its resources by making

products

days,

or

even

weeks,

in

advance

regardless

of

downstream

distribution

network

costs.

The team investigated assigning each product line a maximum leveling window depending on that

product’s variability rather than assigning each product line a one leveling window. Analysis

proved it is most cost effective to allow manufacturing a three day window to produce products

whose coefficient of variation is above one. All other products should be restricted to a two‐day

production window.

2) Shipping Products Knocked‐Down: Shipping fully assembled products, as Steelcase does today,

reduces the number of products that can fit on a trailer. If products could be shipped partially

assembled then Steelcase could maximize trailer utilization and introduce light assembly at the

distribution centers. The team created a decision tool for determining which products would be

good candidates for partially assembled shipment to minimize the amount of shipped air.

Applying this

framework

to

one

representative

product

line

showed

a net

present

value

of

$175,000 over the life of the product.

3) Layout of the RDC: The team researched and recommended changes to Steelcase’s distribution

facilities focusing on cross‐dock shape, dock door designation, and aisle configuration. The team

confirmed that Steelcase currently has the optimal cross‐dock shape and aisle configuration, but

recommended that Steelcase intersperse inbound and outbound doors to save approximately $1

million dollars annually.

26



The above recommendations improve the flow of goods in the three phases of Steelcase’s distribution

system. The first phase looks at the handoff of products from production lines to the factory distribution

centers. Improving the way production is scheduled improves the flow of goods through this first phase

by balancing manufacturing savings against distribution costs. The second phase looks at distribution

between factory distribution centers and regional distribution centers. Shipping more products knocked‐

down minimizes transportation costs by more efficiently utilizing trailer space in this second phase. The

final distribution phase is between the regional distribution centers and the customer. Reducing the

amount of

non

‐value

‐added

handling

by

rearranging

inbound

and

outbound

doors

allows

for

more.

27



UNIVERSITY OF MICHIGAN MEDICAL SCHOOL

STRATEGIC BEST USE OF A GOOD MANUFACTURING PRACTICES (GMP) FACILITY

Student Team:

Rosa Abani – MSE Mechanical Engineering

Nicolas Abstoss – Dual MBA and MS Natural Resources and Environment

Andrea Thomas – Master of Business Administration


Matthew Comstock – Director of Strategic & Enterprise Analysis, Health System Finance

Joan Scheske – Strategic & Enterprise Analysis, Health System Finance

Project Champion:

James Woolliscroft, MD – Dean of Medical School

Faculty Advisors:

Judy Jin – College of Engineering

James Price – Ross School of Business

The University

of

Michigan

Health

System

is

a premier

academic

medical

center

and

a leader

in

education,

research, and patient care. It is comprised of integrated hospitals and health centers, as well as the

University of Michigan Medical School, and had revenues of $2.8 billion in 2008. In June 2009, the

University of Michigan Medical School purchased the Pfizer complex adjacent to North Campus, which

had been vacant since 2007. The Medical School, looking for innovative ways to promote its mission to

provide high‐quality education, research, and patient care to the community, engaged the Tauber team to

complete a financial and functional assessment of a clinical manufacturing facility that is part of what is

now known as the North Campus Research Complex (NCRC). Facing rising costs and increased

competition for research dollars and academic personnel, the University of Michigan sought to use the

facility to create new revenue streams for its health system, while maintaining its position as one of the top

research medical schools in the country.

The Tauber

project

focused

on

the

234,000

sq.

ft.

Good

Manufacturing

Practices

(GMP)

facility

purchased

as part of the larger NCRC acquisition. This facility site was previously used exclusively for small molecule

therapeutics clinical manufacturing, and had pilot to Phase III+ clinical trial capabilities. The Tauber team

investigated potential uses for the space, which could leverage the facility’s original purpose, benefit from

the research strengths of the university, and/or involve partnerships with the private sector or start‐up

companies.

The University of Michigan Health System and Medical School was benchmarked against the other top 25

research medical schools to determine the size, focus, and capabilities of other university GMP facilities.

Initially, the team expected to find a comparable system among UMHS’ peer institutions or other medical

schools; however, the assessment revealed the University is in a truly unique position to possess this space.

Analyses revealed challenges and limitations imposed by this GMP facility, so the team’s focus shifted

from simply identifying best use to developing a robust framework to evaluate potential use proposals.

Efforts were focused on uses of the building that made the most sense based upon UMHS’ finances,

competencies, and mission, as well as the building’s size and original design. Potential activities were

organized into two main categories, uses that required GMP facilities and those that did not. Activities that

passed the initial screen were pharmaceuticals production, biologics production, medical device

manufacturing, and production as a contract research/manufacturing organization. Next, the team

developed business models that would enable the University to extract the most financial and strategic

value from the selected activities.

28



The results of the financial analysis revealed that the carrying cost for the building would be significant,

and as a result, any course of action taken by the University should have the criteria that the operating cost

of the facility be covered. The Tauber team recommended that the University issue a Request for Proposal

(RFP) for 18‐24 months with the lead criteria that respondents be capable of fully supporting the operating

and/or conversion costs for the facility. The University in turn should disclose the operating costs and other

limitations of the building in its RFPs. In the event that no acceptable RFPs are submitted, the team

recommends that the University fully divest from the GMP facility by deconstructing the building and

finding a suitable

home

for

the

salvageable

equipment.

Any

of

these

options

will

allow

the

University

to

avoid the bulk of these losses.

Documents

Michigan Business School Summer Projects