ROSS SCHOOL OF BUSINESS // COLLEGE OF ENGINEERING 2016 ...c919297.r97.cf2.rackcdn.com/zozjplhtvpqm6fhmymuwh7tdzpajvs-op… · an integrated education addressing the challenges of

2016 SPOTLIGHT!

ROSS SCHOOL OF BUSINESS // COLLEGE OF ENGINEERING

2016 SPOTLIG

HT!

TAUBER INSTITUTE FOR GLOBAL OPERATIONS

W W W. TA U B E R . U M I C H . E D U

Large Book Cover.indd 1 9/2/16 11:48 AM

Front cover photo Exterior of the Stephen M. Ross School of Business in the early-morning hours of August 6, 2013,

during a “Day in the Life of the University of Michigan” photo shoot.

Photographer: Scott C. Soderberg

Copyright 2016 Regents of the University of Michigan. ALL RIGHTS RESERVED.

Nondiscrimination Policy Statement The University of Michigan, as an equal opportunity/affirmative action employer, complies with all

applicable federal and state laws regarding nondiscrimination and affirmative action. The University of Michigan is committed to a policy of equal opportunity for all persons and does not discriminate

on the basis of race, color, national origin, age, marital status, sex, sexual orientation, gender identity, gender expression, disability, religion, height, weight, or veteran status in employment, educational

programs and activities, and admissions. Inquiries or complaints may be addressed to the Senior Director for Institutional Equity, and Title IX/Section 504/ADA Coordinator, Office for Institutional

Equity, 2072 Administrative Services Building, Ann Arbor, Michigan 48109-1432, 734-763-0235, TTY 734-647-1388, [email protected]. For other University of Michigan information call

734-764-1817.

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)

© 2016 by the Regents of the University of Michigan


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WELCOME

Dear Honored Guest, September 16, 2016

Welcome!

We are pleased you are joining us at Spotlight! 2016. This is the Tauber Institute’s 23rd Spotlight! event and

it promises to be our best. Thirty-two team projects, staffed by 82 students with 55 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 Alec Gallimore of the College of Engineering and Dean Scott

DeRue 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

as well as 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 and Operations

Ross School of Business

Larry Seiford

Goff Smith Co-Director and

Professor of Industrial &

Operations Engineering

College of Engineering

Ray Muscat

Industry Co-Director,

Tauber Institute for Global

Operations

2 MICHIGAN ROSS // COLLEGE OF ENGINEERING

SPOTLIGHT! 2016

SCHEDULE & EVENT MAP 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 Break

10:45-11:15

11:25-11:55

11:55-12:05 Transition Period

12:05-1:00 Lunch – Sheraton

1:00-1:10 Transition Period

1:10-1:40

1:50-2:20

2:20-2:40 Afternoon Break – Sheraton

2:40-3:45 Closing Ceremony – Sheraton

Gunung Sewu BorgWarner Emissions Dell Microsoft

Azure

Ford BorgWarner Morse Systems Cribmaster Microsoft

Incentives

Boeing 777X BorgWarner Transmission Whirlpool Microsoft MSC

Boeing CAS AIP - SHAPE Amazon FBA Sunset Tesla

Boeing PD Volkswagen Amazon Ops 3M Fresenius

Cardinal Health AIP - Carlstar Pepsi Pfizer General Motors – RFID

PG&E General Mills Dow PrecisionCastparts

General Motors – Supply Chain

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

About Tauber .............................................................................. 4

Project Descriptions

3M COMPANY Manufacturing and Supply Chain Optimization for Scotchblue and Abrasives .................................................... 8

AMERICAN INDUSTRIAL PARTNERS – CARLSTAR GROUP Styled Wheel Business Strategy ................................................ 9

AMERICAN INDUSTRIAL PARTNERS – SHAPE Strategic Assessment of Food Industry Applications to Waterjet Technology ............................................................ 10

AMAZON – FULLFILLMENT BY AMAZON Surface Information to Lower Costs and Increase Satisfaction ......................................................... 11

AMAZON – OPERATIONS Amazon Fulfillment Count Optimization and Defect Reduction .............................................................. 12

THE BOEING COMPANY 777X Traffic Management .................................................................. 13

THE BOEING COMPANY – CAS Optimizing the Software Development Process for Maintenance Performance Toolbox .................................. 14

THE BOEING COMPANY – PD Advanced Material Insertion.................................................... 15

BORGWARNER EMISSIONS SYSTEMS Material Flow and Warehouse Optimization .......................... 16

BORGWARNER MORSE SYSTEMS Development of Environmental Sustainability and Waste Reduction and Reuse Framework for Borgwarner Morse Systems ............................................... 17

BORGWARNER TRANSMISSION SYSTEMS Multi-Stage Inventory Optimization and Machine Learning Analytics ............................................. 18

CARDINAL HEALTH, INC. The Utilization of Customer Point of Use Demand Data ...... 19

DELL INC. FSJ Plant Lean Transformation ................................................ 20

DOW CHEMICAL COMPANY Green Transportation Supply Chain Strategy ........................ 21

FORD MOTOR COMPANY Modeling of Reactive Maintenance Using Discrete Event Simulation ............................................. 22

FRESENIUS MEDICAL CARE Lean Transformation of Hemodialysis Machine Manufacturing ........................................................... 23

GENERAL MILLS, INC. Improving Forecast Accuracy for New Product Launches Using Machine Learning Models ............................ 24

GENERAL MOTORS COMPANY – RFID Manufacturing Asset Management Using RFID ..................... 25

GENERAL MOTORS COMPANY – SUPPLY CHAIN Material Layout And Flow Redesign at Toledo Transmission ............................................................. 26

GUNUNG SEWU GROUP Transforming Integrated Planning for Hypergrowth.............. 27

MICROSOFT CORPORATION – AZURE Streamlining Go To Market Operations .................................. 28

MICROSOFT CORPORATION – INCENTIVES Partner Incentives Month End Accrual Process Improvement ............................................................... 29

MICROSOFT CORPORATION – MSC Optimizing Capital Management to Maximize Growth of Windows Ecosystem ......................... 30

PACIFIC GAS & ELECTRIC COMPANY Process Improvements for Scheduling of Work in Maintenance & Construction ............................................... 31

PEPSICO, INC. Compressing Order Lead Time to Reduce Safety Stock Inventory ........................................... 32

PFIZER INC. Evolving The Pfizer Dps Informatics Strategy: A Case Study to Leverage PCMM and Scientific Data Cloud............ 33

PRECISION CASTPARTS CORP. Production Planning for Manufacturing Velocity ................... 34

STANLEY BLACK & DECKER - CRIBMASTER A Smart Factory Solution ......................................................... 35

SUNSET Continuous Improvement (Kaizen) Project ............................. 36

TESLA Optimizing Inbound Part Flow for Vehicle Components ...... 37

VOLKSWAGEN GROUP OF AMERICA Supply Chain Strategy, Methodology and Implementation ................................................................. 38

WHIRLPOOL CORPORATION Screws Installation with Collaborative Robots and Global Strategy .................................................... 39


SPOTLIGHT! 2016

It all began in 1991, when a gathering of business advisors identified a key category of employees missing from their organizations: broadly trained professionals who understood both the engineering and business aspects of manufacturing. From that discussion, a cross-unit collaboration was formed between the University’s Ross School of Business and College of Engineering. Named for benefactor and U-M alumnus Joel Tauber, the Tauber Institute was born—and immediately began to innovate.

Faculty in the two schools created courses that delivered an integrated education addressing the challenges of modern manufacturing and global operations. Leadership

skills were emphasized and exercised. And every opportunity was made to immerse students in real-world experiences—which led to the development of the Spotlight! competition you are attending today.

For these efforts and more, the Institute has been lauded— most recently receiving the UPS George D. Smith Prize for effective education in the fields of operations research, management science, and analytics. But a truer measure of Tauber’s success is that 99 percent of our graduates have been placed into the workforce, rising quickly to positions of authority and making an immediate impact in their respective companies.

THE HISTORY OF THE TAUBER INSTITUTE FOR GLOBAL OPERATIONS CAN BE SUMMED UP IN A

SINGLE SENTENCE: INDUSTRY IDENTIFIED A NEED AND THE UNIVERSITY OF MICHIGAN RESPONDED.

ABOUT TAUBER

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The Tauber AdvantageTeam projects are just one way that Tauber students distinguish themselves from business and engineering graduates at other institutions. The following experiences also enhance their employability.

• The LeadershipAdvantageSM program of learning modules and workshops emphasizes leading and influencing an organization through collaboration, creativity, communication, and analytics.

• The Integrated Product Development course challenges teams of students representing business, engineering, art and architecture, and information to jointly develop a new product.

• Facility tours expose students to operations and manufacturing processes practiced by organizations ranging from Ann Arbor-based Zingerman’s Community of Businesses to Amazon, UPS, and Walmart.

• The Global Operations Conference affords students the opportunity to join with leaders in industry and academia in strategizing ways to advance the practice of operations worldwide.

• Tauber students are encouraged to think and act locally as well. Each year, on Community Service Day, they use their newfound talents to address operations challenges at southeast Michigan nonprofits.

The Spotlight! CompetitionOver the summer of 2016, 32 teams of Tauber Institute students tackled a variety of operations problems for a wide array of industry partners. At today’s event, these teams will present their solutions in a competitive setting, with the possibility of academic scholarships at stake.

From your perspective, Spotlight! is an excellent opportunity to meet these students and develop relationships with those you think might fit well into your organization. To form a more complete picture of Tauber students’ capabilities, you may want to consider sponsoring your own team project in 2017. Last year’s teams uncovered $500 million in savings for such companies—an average of $14.3 million per project over three years.

››› For more information or help in setting up a sponsorship, contact Jon Grice at (734) 647-2220 or [email protected].


SPOTLIGHT! 2016

Recruiting StudentsThe Spotlight! competition is one way to introduce yourself and your organization to our group of supremely qualified candidates. If you join with us as an industry partner, you may take advantage of these additional services:

• Individual interviews with the student(s) of your choice.

• Permission to post job openings on the Institute’s website, accessible by current students as well as our growing group of 1,200-plus alumni.

• A connection to the career centers of the Business School and College of Engineering and their employment events

• Access to Tauber’s Student Advisory Board, which can assist you in developing networking opportunities such as football tailgates, receptions, and speaking engagements.

››› For help with recruiting current students, contact Michaele Reeves at (734) 647-1333 or [email protected]

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To gain acceptance to the Tauber Institute, students must demonstrate a marked interest in developing a career focused on operations or manufacturing. To that end, they work toward completing one of the following graduate-level degree programs.

ROSS SCHOOL OF BUSINESSMaster of Business Administration (MBA)This two-year program prepares students to accept general management leadership positions. The Tauber overlay includes a sequence of operations management, supply chain, and manufacturing-related engineering courses.

Master of Supply Chain Management (MSCM)This one-year program includes every aspect of global commerce: marketing, sourcing, manufacturing, logistics, inventory management, information technology, and customer relations.

Degree Programs Associated with Tauber

COLLEGE OF ENGINEERINGEngineering Global Leadership Honors (EGL)This five-year honors program prepares students to enter a variety of firms as engineers with the necessary management skills to quickly assume business leadership roles. A valued element of this program is a cultural concentration in a global region of choice. The EGL program leads to both a BSE and an MSE.

Engineering Graduate Program (EGP)A graduate-level engineering degree coupled with Tauber requirements provides intensive coursework in operations and manufacturing technologies paired with business elective courses. EGP students pursue MEng, MSE, PhD, or Doctor of Engineering degrees.

Research AssistanceWith expenditures in excess of $1 billion, research is central to U-M’s mission and permeates all 19 schools and colleges. And the Tauber Institute for Global Operations is no exception. Tauber actively promotes interdisciplinary research initiatives that involve faculty and students from the College of Engineering and the Ross School of Business.

One recent example of this resulted in the publication of a workbook by Dr. Gene Goodson, titled Rate Lean: Fast, which details the process that Tauber students follow to assess the effectiveness of plant operations during their facility tours.

››› To discuss your research needs and how the faculty of the Institute might help, contact Jon Grice at (734) 647-2220 or [email protected].



SPOTLIGHT! 2016

3M COMPANYMANUFACTURING AND SUPPLY CHAIN OPTIMIZATION

FOR SCOTCHBLUE AND ABRASIVES

Student Team: Supriya Agashe – Master of Supply Chain ManagementZhang Chen – Master of Supply Chain ManagementDaniel Higgins – Master of Supply Chain Management

Project Sponsors:Ashley Kees – Director of Manufacturing – Construction & Home Improvement Markets DivisionMark Larison – Manufacturing Development Manager – ScotchBlueScott Snavely – Manufacturing Manager - Abrasives

Faculty Advisors:Robert Inman – College of EngineeringLisa Pawlik – Ross School of Business

3M is a multinational conglomerate based in Maplewood, Minnesota. With $30 billion in annual sales, 3M employs 88,000 people worldwide and produces more than 55,000 products across five major business groups: Consumer, Industrial, Electronics and Energy, Safety, and Graphics and Healthcare.

The project focused on the CHIM (Construction & Home Improvement Markets) division, specifically ScotchBlueTM tapes and Abrasive sandpaper products, which all have a seasonal demand pattern. The CHIM division is very customer centric, required to meet high service expectations, including prompt order fulfillment. The goal of the project was to identify improvement areas within the supply chain that balanced inventory levels while meeting high customer fill rates.

To accomplish this objective, the team interviewed numerous supply chain and manufacturing subject matter experts, and visited key ScotchBlue and Abrasives plants to understand the current state. By mapping the value streams, the team gained insight into the manufacturing planning process and material flow. Factors contributing to excess inventory and sub-optimal operations included uneven capacity utilization, manual adjustments to safety stock levels, lead time inaccuracies and SKU proliferation. Based on these findings, the team refined the safety stock planning process for both products. For ScotchBlue, the team performed production capacity calculations and developed a level loading manufacturing model. For Abrasives, the team developed a SKU rationalization model and recommendations for reducing supply lead time. Recommendations also included more transparency of customer forecast data and closer coordination with customers in future demand planning.

Simulations were used to confirm the validity and impact of recommendations. The team’s research determined that, for ScotchBlue, the implementation of the refined safety stock planning process will result in annual average savings of $1.5M. In addition, once the division implements a level loading strategy, ScotchBlue will significantly decrease both supply and manufacturing variability and enable capital cost avoidance of $1.2M. For Abrasives, the implementation of recommendation for lead time reduction will result in an annual savings of $800K; the implementation of recommendation to increase inventory turn will generate at least $400K in savings every year. Furthermore, the approach the team applied to develop these recommendations provides a ‘playbook’ that can be replicated to yield similar improvements on other product lines.

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AMERICAN INDUSTRIAL PARTNERS – CARLSTAR GROUPSTYLED WHEEL BUSINESS STRATEGY

Student Team:Aditya Jagannathan – Master of Supply Chain ManagementVaibhav Mishra – Master of Supply Chain ManagementJuan Ornelas – EGP (Master of Engineering in Manufacturing)

Project Sponsors:Kent Allen – Marketing DirectorJoel Bjerke – Global Procurement Vice PresidentAshish Goel – Marketing Executive Vice President

Faculty Advisors:Luis Garcia-Guzman – College of EngineeringAriel Shwayder – Ross School of Business

The Carlstar Group is a global manufacturer of original equipment and aftermarket specialty tires and wheels for a number of industries under several leading brands, generating $600M of annual revenue, which includes $30M from the styled wheel division. Carlstar’s 2020 financial goal is to generate $100M of revenue with their styled wheel division, which includes three brands, Cragar®, Black Rock®, and Unique®. Carlstar selected Cragar as the first brand to undergo a sales growth strategy analysis.

Carlstar collaborated with the University of Michigan’s Tauber Institute for Global Operations to develop a Go-To-Market strategy to enter new market segments that would result in an annual sales increase from $7.5M to $25M by 2020 for the Cragar wheel brand. A major objective of this 14-week project was to develop a comprehensive understanding of styled wheel consumers and competitors in order to identify a target market and value proposition. Sales channels were also evaluated to determine the most effective method to reach consumers with products. The investment required to develop new products that would compete in new market segments was also calculated, taking into account potential market share for the Cragar wheel brand.

Research for this project was completed through surveys, interviews, and industry reports. Surveys were developed using the latest surveying techniques to prevent answer bias and survey fatigue. Industry report information was validated with survey data generated from this project. The team attended car shows in order to complete surveys and focus group discussions with consumers. Thorough research was completed in order to generate an accurate hypothesis on the styled wheel market.

In order to increase Cragar sales, the Tauber team recommends the development of unique wheel designs and targeting a specific consumer profile by leveraging the heritage of the Cragar brand. New market share of Modern Muscle and Light Truck vehicles, 5% and 3% respectively, will need to be obtained in order to meet the $25M sales goal. This market share will provide the opportunity to sell approximately 129K wheels per year by 2020. In order to gain new market share of Modern Muscle and Light Truck vehicles, twenty new wheel designs will need to be released over a 4-year period in order to provide a product portfolio that appeals to these new segments and to generate enough sales to reach sales targets.


SPOTLIGHT! 2016

AMERICAN INDUSTRIAL PARTNERS (SHAPE TECHNOLOGIES GROUP)

STRATEGIC ASSESSMENT OF FOOD INDUSTRY APPLICATIONS TO WATERJET TECHNOLOGY

Student Team:Samuel Dion – Master of Science in Engineering Pradeep Kumar Mishra – Master of Supply Chain Management Jordan Shusterman – Master of Business Administration

Project Sponsors: Steve Harris – Group President, SHAPE Technologies; CEO, KMT HoldingsDylan Howes – Sr. Director of Business Development, SHAPE Technologies Tom Tischner – Senior Vice President, Global Sales and Marketing, Flow Corporation

Faculty Advisors: William Schultz - College of EngineeringBrian Wu - Ross School of Business

SHAPE Technologies Group, Inc. (SHAPE), owned by private equity firm American Industrial Partners, is the parent organization for a growing portfolio of companies that provide manufacturing process solutions across a broad spectrum of industries. Although SHAPE’s ultra-high pressure technology has multiple uses in the food and beverage industry — such as high pressure processing (HPP) and waterjet cutting — penetration into the market remains minimal. The Tauber team was tasked with delivering a thorough industry analysis and providing a strategic roadmap to increase SHAPE’s revenue in the food and beverage industry.

High pressure processing, a food safety and preservation technique, is currently in its infancy with less than 1% of all applicable foods utilizing the technology. Consumer trends towards more natural foods, heightened industry awareness around food safety, and decreasing costs of HPP equipment lead to a projected five-year CAGR of 17.5% for the equipment industry. SHAPE currently supplies high pressure pumps and parts to one of the major players in the HPP equipment market. The team recommended two paths for increasing revenue in this space. First, SHAPE should develop pump technologies specific to the HPP process to accelerate the growth of the industry. SHAPE’s expertise in ultra-high pressure combined with a customer partnership could provide 140% growth in annual revenue by 2021. Second, with significant investment, acquisition of one of the two primary HPP equipment companies could lead to 2021 revenues of over $200M and direct influence on the growth of HPP.

Waterjet cutting is most prevalent in two food markets: proteins and produce. For the protein cutting space, the team recommended developing strong partnerships with SHAPE’s biggest portioning customers by optimizing technology currently in development to their needs. The team also recommended selling complete pump solutions and additional engineering services to meat processors and focusing efforts on the relatively untapped fish portioning market. These recommendations could result in a 61% increase in annual revenue from the protein market by 2021. In produce, the team projected fresh cut produce market growth of 10% CAGR from 2016-2021, attributed mainly to consumer preference for healthy, nutritional, and convenient products. Additionally, heightened food standards have created regulatory pressure that has forced retailers to adopt safer processes, such as a waterjet, for fruits and vegetables. This waterjet processing results in longer shelf life, operational cost savings, and reduced risk of food recall. The team recommended maintaining current practices; SHAPE’s annual revenue in the produce segment is projected to rise 120% by 2021. In total, our recommendations could increase SHAPE’s annual revenue in the food and beverage industry 101% by 2021.

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AMAZON – FULLFILLMENT BY AMAZONSURFACE INFORMATION TO LOWER COSTS AND INCREASE SATISFACTION

Student Team:Panpan Huang – Master of Business AdministrationColin Tyrrell – Dual (Master of Business Administration and School of Information) Ruqing Ye – EGL (BSE/MSE Industrial and Operations Engineering)

Project Sponsors: Jiagen Eep – Senior Product ManagerEddie Iglesias – Senior Product ManagerJoop Varophas – Senior Product ManagerAkira Wada – Senior Manager

Faculty Advisors:Jason Habeger – College of EngineeringYan Huang – Ross School of Business

Amazon, a $107B company, strives to be Earth’s most customer-centric organization where people can find and discover anything they want to buy online. Fulfillment By Amazon (FBA) is a service for third-party sellers on Amazon. With FBA, sellers store their products in Amazon’s fulfillment centers, and Amazon picks, packs, ships, and provides customer service for these products. FBA helps sellers scale their business and reach more customers. FBA provides a unique set of services to sellers. At the same time, these services allow room for seller-caused errors along the supply chain that can result in inventory discrepancies. These discrepancies sometimes require that Amazon reimburse sellers for their loss. Sometimes, the existing reimbursement experience has a negative impact on seller satisfaction and results in increased contact costs.

The FBA Reimbursements team challenged the Tauber intern team with two goals: improve sellers’ visibility into the reimbursement process and identify seller defects that lead to inventory discrepancies. The root causes and impact of defects are a complex space involving a diverse group of sellers, Amazon’s physical fulfillment network, and myriad of backend data solutions that were built over many years. Defects have two major impacts: they increase costs and they erode seller trust in Amazon’s operations. Seller trust is impacted because the current reimbursements experience sometimes conveys limited, confusing, or even conflicting information. In addition, it does not provide the information necessary to educate sellers who may share the blame for many of the defects.

The Tauber team focused on three methods for identifying and improving visibility into defects: backend data systems, information management, and information delivery. For backend data systems, the team built process maps to identify gaps in data sources or data flow that was not aligned with business goals. For information management, the team focused on the currently available reports—conducting usability studies and seller interviews, audits on customer service and online seller complaints, and distributing a Reimbursements survey—all to identify major pain points across multiple seller demographics. For information delivery, the team examined major trends in Amazon UI/UX development and third-party software offerings. For each category, the team performed several iterative design processes with product engineers to ensure all design features could be built and delivered to sellers in 2017.

Challenged to improve sellers’ visibility into the reimbursement process and surface seller errors that lead to inventory discrepancies, the Tauber team designed two solutions: a new web portal (and all required backend processes) to convey inventory and reimbursements information, and a project to leverage an underutilized backend data source. The new web portal was designed to provide sellers with visibility into processes that help to lower contact costs and increase seller trust through greater transparency. In addition, the team embedded defect coaching for sellers into newly provided performance management metrics. To leverage the backend data source, they focused on utilizing comparative algorithms and machine learning to identify missing inbound inventory and identify defects that impact costs for FBA. In total, by providing increased visibility into the reimbursements process and identifying defects, the Tauber team’s solutions will save a significant amount of money per year by reducing contact costs, will drive increased FBA growth, and will lower defect costs by a significant amount per year.


SPOTLIGHT! 2016

AMAZON – OPERATIONSAMAZON FULFILLMENT COUNT OPTIMIZATION

AND DEFECT REDUCTION

Student Team:Benjamin Lewis – EGL (BSE Mechanical Engineering/MSE Industrial & Operations Engineering) Vikram Raghavan – Master of Supply Chain ManagementAnand Vasudevan – EGP (MSE in Industrial & Operations Engineering)

Project Sponsors:Dave Graybeal – Director, Quality, North American Customer Fulfillment (NACF)Govind Singh – Principal Program Manager, ACES Quality

Faculty Advisors:Jeff Alden – College of EngineeringMohamed Mostagir – Ross School of Business

Amazon is the largest online-based retailer in the United States. To manage inventory owned by both Amazon and sellers in the Fulfillment by Amazon (FBA) program, Amazon operates 80+ Fulfilment Centers (FCs) across North America. As Amazon continues its steep trajectory of year-on-year growth, its fulfillment network also continues to expand at an exponential rate. Amazon plans to open up over 20 new FCs in the first three quarters of 2016 alone. With such rapid expansion, the cost of maintaining high levels of quality has also increased significantly.

To mitigate these rising costs, the Tauber team focused on two separate opportunities within quality — Count Optimization and Defect Reduction. Count optimization focused on improving productivity levels of Cycle Count, a non-value added, but necessary, process used to resolve inventory inaccuracies (defects) within a fulfillment center. Defect reduction addressed the root cause of these inaccuracies, specifically in the pick and stow processes, which together account for 47% of all defects across North American fulfillment. The facility selected for this project was BFI4, located in Kent, WA. BFI4 is an Amazon Robotics (AR) FC which opened in March 2016. It has a footprint of over 900,000 square feet and has over 18 million units of inventory.

The Amazon Operations Tauber team collaborated with the ACES (Amazon Customer Excellence System) Quality team and also participated in the strategic Lend Forward training program, which helped facilitate the problem- solving process. For count optimization, six sigma methodology helped the team determine that the top drivers for slow counting rates were hand scanner use, distance between bin and working surface, and ladder use. Collectively, these lead to poor productivity and ergonomic constraints at AR stations. For defect reduction, the team focused on identifying leading indicators or risk signatures, which were subsequently used to provide near real-time coaching and feedback to associates. Risk signatures are metrics captured real-time that indicate both a deviation from standard work as well as potential generation of defects. Due to feedback being delivered real-time, problems were identified at their source and resolved immediately before they propagated into large scale defects.

Using statistical hypothesis testing, the team was able to identify significant sources of waste in the counting process. The team then developed solutions to directly address each one of these opportunities. To validate these solutions, the team conducted a pilot which demonstrated a 70% improvement in productivity while showing no difference in quality. Certain aspects of the design also demonstrated potential safety improvements. For defect reduction, the team identified seven statistically significant risk signatures across pick and stow. Using an internally developed quality visualization tool, the team piloted a real-time quality management system for pick, for both BFI4 and the entire fulfillment network. The pilot saw a reduction in overall defects per million opportunities (DPMO) by 68% at BFI4 and 30% at all FCs combined. If implemented network-wide, potential cost savings for count optimization and defect reduction are projected at over $10M.

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BOEING 777XTRAFFIC MANAGEMENT

Student Team:Alberto Arguello – Master of Business AdministrationSusan Biggart – EGL (BSE/MSE in Industrial and Operations Engineering)Travis Parsons – EGP (MSE in Electrical and Computer Engineering)

Project Sponsors:Scott Foreman – Manager, 777X Operations IntegrationKatie Leikhim – Senior Manager, 777X Operations Integration

Faculty Advisors:Richard Hughes – College of Engineering Hyun-Soo Ahn – Ross School of Business

Boeing Commercial Airplanes (BCA), the world’s leading manufacturer of commercial jetliners, has recently launched the 777X, a derivative of Boeing’s flagship 777 aircraft. The 777X will be the largest and most efficient twin-engine jet in the world and will have the longest composite material wings ever produced. These wing components for the 777X will be fabricated in the Composite Wing Center (CWC), a brand-new, state-of-the art factory in Everett, WA.

In order to build a full set of composite wing components at the CWC, nearly a dozen transportation methods will be implemented to conduct over 1700 movements for each airplane, which involves substantial interaction between overhead cranes, automated vehicles, and human operators. This material movement is further complicated due to the large size of the components and the speed limitations of the transportation methods. The Tauber team was brought in for a 14-week project to assess how this traffic could impact production and to provide solutions to mitigate production risks.

The team began by identifying the key stakeholders and conducting interviews with the industrial engineers of each of the wing components in order to develop an extensive process map that captured every movement required for material flow in the building. Due to the facility’s early stage of development, it was also necessary for the team to identify critical assumptions regarding the future state of the CWC and to develop a dynamic tool to assess how the utilization of the transportation aisles matures over time under various conditions.

Analysis of the process map revealed that severe overutilization of the transportation aisles would occur, preventing Boeing from meeting its monthly 777X production targets. In response, the team provided a solution to immediately reroute automated vehicle paths to reduce traffic utilization in the high impact areas. These re-routes will reduce the utilization of the transportation aisles by 12%, allowing the CWC to produce an additional full set of wing components each month. Next, the team conducted five benchmarking trips to other Boeing facilities, and provided recommendations to implement a dynamic system for scheduling production movements and a communication protocol for mitigating cross-product traffic delays. Finally, the team led a cross-functional workshop that established how to prioritize traffic conflicts, which resulted in a defined list of future factory data requirements.

The Tauber team identified significant traffic impacts to production and recommended vehicle reroutes, communication protocols, and traffic scheduling to eliminate production risks. Collectively, implementation of these recommendations will result in millions of dollars in annual cost savings.


SPOTLIGHT! 2016

THE BOEING COMPANY – CASOPTIMIZING THE SOFTWARE DEVELOPMENT PROCESS

FOR MAINTENANCE PERFORMANCE TOOLBOX

Student Team:Cynthia Kreng – EGL (BSE Computer Engineering/MSE Industrial and Operations Engineering)Andrew O’Hara – EGL (BSE Computer Engineering/MSE Industrial and Operations Engineering)E. Kiku Yasukawa – Master of Business Administration

Project Sponsors:Juan Lopez – Manager, Maintenance Performance Toolbox John Maggiore – Director, Digital Aviation Fleet and Maintenance ServicesJeff Schraeder – Manager, Digital Aviation Fleet and Maintenance Services Technology Development

Faculty Advisors:Mariel Lavieri – College of EngineeringJoseph Walls – Ross School of Business

BOEING, a multi-billion dollar company, is the leading manufacturer of commercial airplanes and second-largest defense contractor in the world. The Digital Aviation (DA) division creates software solutions with the goal of being the leading provider of unified and innovative technology that enhances operations for the Aviation industry. Created in 2002, Maintenance Performance Toolbox is an integrated suite of applications providing digital tools to improve the efficiency of airline maintenance employees and engineering personnel.

To leverage the latest technologies, Boeing is currently developing a new software system that will be launched in three phases over the next three years. During these transition years, the existing legacy software platform will deliver business value to current customers while resources are reallocated towards the new investment. The Tauber team was commissioned to map out the entire product development value stream and develop recommendations to increase throughput by improving development efficiency during the reduction of operating budgets for legacy systems.

During the 14-week project, the Tauber team conducted over 50 interviews with business and development staff members to create a value stream map of the current software development process and identify areas of improvement. The team then performed quantitative analysis using data gathered from multiple internal company databases, financial reports, and staff surveys to identify improvement opportunities. Based on this work, the Tauber team developed a set of recommendations to improve product quality and speed to market, including investing in testing and deployment automation, eliminating redundant processes, and streamlining development by implementing Agile practices, a Lean software framework.

In order to facilitate implementation post-internship, presentations were given to senior management, and a plan was constructed to provide a clear timeline for execution. Once the recommendations are implemented, Toolbox is expected to see a 61% increase in development efficiency and an additional 3,000 hours of operations savings, leading to 24% more new features completed and 29% more defects fixed. This translates to an estimated $1.3M cost savings over the next three years.

15TAUBER.UMICH.EDU


THE BOEING COMPANY – PRODUCT DEVELOPMENTADVANCED MATERIAL INSERTION

Student Team:Alexander Lau – Master of Business AdministrationDaniel Manore – Master of Business AdministrationSpenser Pawlik – EGL (BSE/MSE Mechanical Engineering)

Project Sponsors: Jorge Aguiar – Manager, Supplier Management Regulated MaterialTia Benson Tolle – Manager, PD MaterialsHardik Dalal – Advanced Composite Materials, Product DevelopmentDylan Jones – Manager, Product DevelopmentHeather McCullough – Manager, Raw Materials and Standards

Faculty Advisors:Peter Washabaugh – College of EngineeringRavi Anupindi – Ross School of Business

Boeing is the world’s largest aerospace company and a leading manufacturer of commercial jetliners and defense, space, and security systems. Within Boeing Commercial Airplanes (BCA), carbon fiber reinforced polymer (CFRP, or simply “composite materials”) is increasingly being used in the primary structures of airplanes because of its high strength-to-weight ratio. As Boeing increases composite material use, the need to quickly and accurately certify materials from suppliers is critical to delivering high-performing aircraft on schedule and at competitive prices. The multi-year material insertion process costs tens of millions of dollars in capital investments and any delay increases cost.

Boeing engaged the Tauber Institute team in a 14-week project to document the current state of material insertions for structural carbon fiber composites, identify recurring process issues and potential solutions, and provide recommendations to reduce the time and cost required for future material insertions. Using information gathered from more than 50 informational interviews across multiple internal stakeholders and CFRP material suppliers, the team developed a current state process map of new composite material development. This information was used to generate a detailed illustration of the each organizational role and subsequent interactions. To gather specific time and cost data on the material insertion process, the team completed case studies on three relevant CFRP material developments revealing a lengthy multi-year process that costs tens of millions of dollars.

Based on these findings, the team developed three main recommendations to improve the material insertion process including improved internal IT system to automate redundant steps and to collect time and cost data to drive process improvement. The team also evaluated a potentially underutilized automated test cell project, and recommended reinvesting in the cell and establishing improved procedures. Finally, the team investigated participation in the National Center for Advanced Materials Performance (NCAMP), an industry/university/government collaboration database of non-proprietary composite materials. NCAMP data could supplement a material insertion process and reduce the amount of certification testing by up to a third per project. The team also outlined how to strategically engage with NCAMP to derive continued value going forward. In total, the Tauber team’s recommendations will lead to $10 million dollars in cost savings over the next 10 years for the Boeing Company.


SPOTLIGHT! 2016

BORGWARNER EMISSIONS SYSTEMSMATERIAL FLOW AND WAREHOUSE OPTIMIZATION

Student Team:Bevin Mathew – EGP (MSE in Industrial & Operations Engineering) Satwik Pattanayak – Master of Supply Chain ManagementZhi (Rambo) Xie – Master of Supply Chain Management

Project Sponsors:Ron Muskat – Warehouse SupervisorDavid Peek – Supply Chain Manager

Faculty Advisors: Sanjeev Kumar – Ross School of BusinessBrian Love – College of Engineering

BorgWarner (annual sales $8.3B) is a global supplier of automotive parts. BorgWarner Emissions Systems is a business unit that produces a wide variety of products ranging from EGR Systems and Advanced Actuators to Thermostats. The plant in Dixon, IL — Emissions Systems’ sole plant in the United States — currently operates 20 different product lines. The highly diverse product mix offers material flow and warehousing challenges. With recent business expansions and further growth expected, BorgWarner foresees challenges in daily operations due to the lack of floor space and standardization in its material flow and warehousing processes.

BorgWarner Emissions engaged the Tauber Institute in a 14-week project to assess current operations at the Dixon facility and to propose recommendations aimed at standardizing processes to reduce line-side inventory and material handler labor utilization and also to improve warehouse utilization.

The team initially studied the plant’s current state and identified product line-specific constraints that would have to be taken into account during the solution development process. Warehousing efficiency was analyzed and compared with industry benchmarks. However, the lack of a common database with pertinent data for each component part hindered the current state analysis. Because such a database would be quintessential to deliver a robust and sustainable solution, the team began building a Plan for Every Part (PFEP) for over 1000 component parts. The team also built into the PFEP the ability to automate key strategic decisions relating to material flow and warehousing.

In order to optimize material flow and warehousing, a solution concept for an in-plant milk-run system that facilitates consumption-based periodic line-side replenishment was devised. A pilot was implemented on one of the departments to assess its potential impact and any unforeseen challenges. Subsequently, a scaled up solution was developed for the Dixon plant. The warehouse was reconfigured into separate supermarket and reserve storage zones with freshly introduced slotting strategies aimed at enhancing picking efficiency. Structural modifications in the warehouse created additional capacity of over 100 skid spaces leading to higher storage density. The team also proposed visual enhancements to the shop floor to aid in the smooth functioning of the proposed material flow and warehousing systems.

As a result of the Tauber team recommendations, line-side inventory could be reduced by 75%. The team was also able to generate 1800 sq.ft of additional floor space for potential new business and to improve labor utilization by 15% leading to possible financial benefits of $500,000 annually. Further, the creation of standardized work for material handlers provides BorgWarner Emissions the flexibility to easily adapt its material flow and warehousing plan to changes in its existing business.

17TAUBER.UMICH.EDU


BORGWARNER MORSE SYSTEMSDEVELOPMENT OF ENVIRONMENTAL SUSTAINABILITY AND WASTE REDUCTION

AND REUSE FRAMEWORK FOR BORGWARNER MORSE SYSTEMS

Student Team:Sennan Li – Master of Supply Chain Management Makeda Stephenson – Master of Engineering

Project Sponsors: Dennis Bubel – Manufacturing Engineering ManagerMike Kubarek – Senior Staff Engineer - PERobert L Morey Jr. – Senior Staff Engineer - PE

Faculty Advisors: Steven Skerlos – College of EngineeringOwen Wu – Kelley School of Business

BorgWarner is a leading global OEM that specializes in engine and emissions components development and production. Morse Systems is a division specializing in engine and timing chain products.

The Tauber team was tasked with developing a strategy to address rising costs of industrial waste treatment and disposal at the Ithaca Transmission Components plant. The goal of the project was to investigate alternative waste solutions that would be economically and strategically advantageous for the Ithaca plant. These solutions would reduce cost incurred from disposing industrial wastes, anticipate regulatory changes around waste disposal, and extend BorgWarner’s philosophy of creating a “Clean Driving Experience” into its production operations.

We developed a set of recommended KPIs and tactics for developing and implementing strategic targets along a sustainability continuum for BMWS Ithaca. To begin implementation of this strategy, we identified and piloted or modeled several waste management solutions which included reducing the amount of hazardous waste produced, identifying resale opportunities for previously non-saleable waste, competitively sourcing waste handling services, and tweaking internal processes to realize cost savings.

Overall, the planned and implemented changes are estimated to reduce hazardous waste generation by 49% across the Transmission Component plants in Ithaca over the next year. By continuing to implement the developed strategy, we estimate that BWMS Ithaca could realize a total annual cost savings of up to 43.5% for the identified industrial waste streams.


SPOTLIGHT! 2016

BORGWARNER TRANSMISSION SYSTEMSMULTI-STAGE INVENTORY OPTIMIZATION

AND MACHINE LEARNING ANALYTICS

Student Team:Kyle Gilbert – EGL (BSE Electrical Engineering/MSE Industrial and Operations Engineering)Ryan Kennedy – EGL (BSE/MSE Industrial and Operations Engineering)

Project Sponsors:Christian Bauer – Manager of Quality & Manufacturing EngineeringVolker Reiners – Supervisor of Friction Core EngineeringStefan Ueberle – Director Operations – Product Strategy

Faculty Advisors:Prakash Sathe – College of EngineeringJoseph Walls – Ross School of Business

BorgWarner Transmission Systems in Heidelberg, Germany, is a leading manufacturer in friction plates and other clutch components for customers located throughout Europe, with €126MM in sales in 2015. BorgWarner is transferring several friction plate product lines from Heidelberg to a new manufacturing facility in Rzeszów, Poland, and must have standard operating procedures set in place to ensure a smooth transition. On this project, the Tauber team was tasked with two main objectives:

1. Create and define a cross-functional standard operating procedure for the pretest process to minimize inventory levels and optimize saturation batch sizes while maintaining service levels

2. Create a prediction tool to systematically evaluate process parameters for friction plate production in order to maximize first pass yields for pre-production testing

The team created a combination of communication, scheduling, inventory, and Machine Learning tools to improve output and resolve current problems. Combined use of the deliverables will allow the Heidelberg facility to free up capital through inventory reductions and service level improvements by integrating dynamic lead times, scheduling optimization, and streamlined processes.

The Tauber team recommended a 20% decrease in raw inventory levels while maintaining a 99% service level. At saturated paper inventory levels, the team recommended a 60% decrease in saturated paper inventory levels while simultaneously increasing service level from 70% to 98%. Through improved scheduling techniques, utilizing Linear Programming heuristics, the team identified an opportunity to reduce changeover costs by €100k annually at current production rates and limit changeover costs to €50k annually regardless of changeover frequency. Furthermore, using Machine Learning, the Tauber team established the opportunity to realize savings up to €500k annually for pre-production testing. The modified processes were implemented for several part numbers to confirm functionality and savings, and will soon be expanded to all available part numbers.

In addition to the hard savings, the increased robustness of the processes will help reduce the risk of customer delivery interruptions caused by the lack of released material. The improvements have also strengthened the BorgWarner Quality Management System regarding the collaboration with suppliers as well as with internal and external customers.

19TAUBER.UMICH.EDU


CARDINAL HEALTH, INC.THE UTILIZATION OF CUSTOMER POINT OF USE DEMAND DATA

Student Team: Daniel Pasternak – EGL (BSE/MSE Industrial and Operations Engineering)Xinyun Tao – Master of Supply Chain Management

Project Sponsors: Bruce Brinker – Manager, Medical Segment Inventory PlanningPat Brock – Director, Medical Segment Inventory Management Fulfillment Channel

Faculty Advisors: Siqian Shen – College of EngineeringPeter Lenk – Ross School of Business

Cardinal Health, a $120B company, is the world’s largest healthcare supplier and distributor, providing medical and pharmaceutical products to more than 60,000 locations each day. Cardinal is the essential link in the healthcare supply chain, and the company works to improve the cost-effectiveness of healthcare, enhance supply chain efficiencies, and improve the quality of healthcare by allowing pharmacies, hospitals, ambulatory surgery centers, and physician offices to focus on patient care.

In the Medical Segment of the company, there is currently minimal transparency and collaboration between Cardinal’s inventory management team and its customers. Apart from weekly sales orders, Cardinal has no view into hospital consumption and demand patterns on the hospital floor. The inventory management team wanted to obtain hospital point of use consumption data and utilize this data to improve inventory management processes and performance measures.

To address this opportunity, the Tauber team worked closely with Cardinal’s third largest customer, the Cleveland Clinic ($157M medical sales ‘15). The team obtained daily supply room consumption data for six target representative SKUs of Cardinal’s two largest demand classes. These target products represent items of varying price and order volume that were readily available in all hospitals and represent 85% of Cardinal’s SKUs. After obtaining and processing the data, the team assessed its actual consumption accuracy to be 92%.

Using the data, the team developed two solutions. The first solution was a machine-learning predictive model. This model assessed the likelihood that future customer business predictions would actually translate into sales demand based on previous customer usage inputs. This model provided Cardinal and the customer increased transparency and accountability into their market intelligence implementation processes, improving new business usage predictions and reducing Cardinal’s overbuying by 17%. This overbuying reduction could provide an estimated inventory reduction of $7.1M per year scaled across 40 distribution centers.

In addition, the team proposed to improve forecasting accuracy by using the point-of-use consumption data to generate weekly forecasts. Forecasting accuracy improved by 2% for high volume products and 7% for low volume products based on the new data source. These forecasting improvements could result in an estimated cost savings of $170K at one distribution center over a year period. The team concluded that in order to further scale these cost savings across all DCs, point-of-use data from more SKUs would need to be gathered.

Cardinal Health will look to apply these new market intelligence and forecasting strategies based on point of use data with their newest customer, the hospital system Kaiser Permanente in Oakland, CA.


SPOTLIGHT! 2016

DELL INC.FSJ PLANT LEAN TRANSFORMATION

Student Team:Seng-Hsiang (Peter) Lin – EGP (Master of Engineering in Manufacturing)Siddarth Shanker – Master of Supply Chain ManagementMi (Ivan) Yu – Master of Supply Chain Management

Project Sponsors: Vinu Athreya –Director, Dell Worldwide ProcurementKevin Kreiling – Executive Director, Dell DAO Supply Chain OperationsLaura Lujan– Senior Manager, Dell Global OPS EngineeringFabian Rodriguez – Project Manager, Foxconn San JerónimoRalph Yang – Chief of Staff, Foxconn San Jerónimo

Faculty Advisors:Debra Levantrosser – College of EngineeringLen Middleton – Ross School of Business

Dell is one of the largest privately held multinational companies that provide a broad range of technology products. To support its North American business, Dell currently contracts with electronics manufacturer Foxconn in San Jerónimo (FSJ), Mexico, to provide the final (L10) assembly operation of desktops and servers. The business is faced with fierce competition with stringent service level requirements and severe downward margin pressure. To reduce production cycle time, eliminate waste, and mostly important to foster a lean culture in the plant, the Tauber team was asked to work with Dell and Foxconn on strategies, tactics, implementation, and culture changes to help FSJ embark on its lean transformation journey.

The biggest challenge for the project is the variability of products under the Configure to Order (CTO) model. Each unit put into production can have a different configuration and requires a different time to assemble. The variability creates challenges in designing line and staffing models. In addition, the FSJ plant doesn’t have a lean legacy, and the front lines are not used to the continuous improvement mindset.

To deal with these challenges, the Tauber team used a data-driven approach to measure key data such as cycle time, value added time in the end-to-end processes (including receiving – assembly – burn-in – packing – dispatch) and then drew value stream mapping for the Servers and Desktops lines, respectively. The team then deep dived into time study on station level and variability, utilization, and time (VUT) to further identify bottlenecks within the process.

After analysis of the data, the team identified key areas for improvement and held a kaizen town hall with engagement from front line and the management team to brain storm improvement ideas. The team chose six out of the 47 ideas based on an evaluation of the impact and effort required. The pilot implementations were used to role-model how efficiency can be gained through kaizen. To sustain the gains, the team also proposed an organization structure consisting of governance, project, functional, and frontline teams so as to further drive for kaizen and culture change to a lean mindset.

The kaizen projects implemented are projected to have 10% productivity improvement on Servers and 12% improvement for Desktops at FSJ, equaling a productivity gain of $3 million per year.

21TAUBER.UMICH.EDU


DOW CHEMICAL COMPANYGREEN TRANSPORTATION SUPPLY CHAIN STRATEGY

Student Team: Chhavi Chaudhry – EGL (BSE/MSE Industrial and Operations Engineering)Alison Levy – Master of Business Administration

Project Sponsors:Jacqueline Faseler – Global Director of Supply Chain Sustainability, EHS & Public Policy Advocacy

Faculty Advisors:Dennis Blumenfeld – College of EngineeringJill Schloff – Ross School of Business

Beginning in 2006, The Dow Chemical Company initiated development of Sustainability Goals for each upcoming decade, with the most recent iteration taking the form of 2025 Dow Sustainability Goals. This approach has resulted in the company leading the industry globally in sustainability improvements throughout their operations. Given the increasing importance of calculating, monitoring, and reducing greenhouse gas emissions (primarily CO2), Dow would like to evaluate opportunities for further reductions in transportation CO2 within the supply chain. The Tauber team’s role was to develop a green transportation strategy for Dow’s global supply chain.

The Tauber team’s approach was to conduct a comprehensive analysis broken down into three phases: establishing the current state of Dow’s global transportation carbon footprint; benchmarking and defining goals for Dow based on industry trends and leading research; and finally, using that knowledge base to develop a green transportation strategy. Since transportation emissions are outside of Dow’s direct control, the Tauber team had to develop a deep understanding of what actions Dow could take that could influence emissions reductions.

The final deliverable was a three-tiered actionable strategy for Dow, consisting of outward-facing activities to present a united front on transportation emissions to external stakeholders, internal activities to measure and actively manage the emissions footprint, and external activities that Dow could leverage to drive and promote emissions reduction initiatives. All three tiers, each of which Dow has varying degrees of control over, help Dow take actions that ultimately drive improvements in the company’s global CO2 footprint.

By actively implementing the green transportation strategy developed by the Tauber team, Dow can influence fuel economy improvements in the trucking industry, resulting in a reduction of 180,000 tons in Dow’s transportation CO2 emissions, and a fuel cost savings of $27MM shared between Dow and its carriers over the next 10 years.


SPOTLIGHT! 2016

FORD MOTOR COMPANYMODELING OF REACTIVE MAINTENANCE

USING DISCRETE EVENT SIMULATION

Student Team:Anusuya Ramdass – Master’s Degree, Supply Chain ManagementAnthony Sciuto – Master’s Degree, Industrial and Operations Engineering

Project Sponsors: Doug Rickert – Manager, Vehicle OperationsBob Garnham – Engineering Supervisor, Vehicle Operations

Faculty Advisors: Matthew Plumlee – College of EngineeringBrian Talbot – Ross School of Business

Ford Motor Company is a global company that designs, develops, and manufactures automobiles. In 2015, Ford Motor Company sold approximately 6,674,000 vehicles throughout the world across its two brands, Ford and Lincoln.

Within Ford Motor Company’s assembly plants, skilled trade technicians repair machinery reactively in order to maintain production. Currently, the determination of the number of skilled trade personnel placed within a plant is based on budget allocation driven from heuristic approximations. Ford Motor Company did not have a quantitative procedure to determine the actual manpower requirement for such personnel. To reduce ambiguity in Ford Motor Company’s staffing policies, a discrete event simulation modeling methodology was created that can be replicated to quantitatively assess the effects of varying the number, physical positioning, and work assignments of skilled-trade personnel within a plant.

Using this methodology, a discrete event simulation was created that focused on the electricians staffed around two assembly lines within a Ford Motor Company plant where several vehicles are manufactured. The model achieved outputs that were within 3% of historical operating data. Using the validated simulation model, comprehensive scenario testing was performed.

A scenario was discovered that utilizes one fewer electrician per crew and is able to achieve current throughput rates with a minor increase in average electrician utilization. This scenario has the potential to save Ford Motor Company $494,000 annually within the two lines modeled. If this modeling methodology is expanded to include the entirety of the Body Shop within the plant, it is estimated that annual savings of $2,988,000 could be achieved. Furthermore, the created methodology has the potential to be expanded globally to realize even greater savings.

23TAUBER.UMICH.EDU


FRESENIUS MEDICAL CARELEAN TRANSFORMATION OF

HEMODIALYSIS MACHINE MANUFACTURING

Student Team: Katie Redman – Master of Business AdministrationMatt Riley – EGL (BSE Chemical Engineering/MSE Industrial and Operations Engineering)

Project Sponsors:Christy Bangasser – Hemodialysis Production ManagerChris Robinson – Vice President of Global Manufacturing OperationsRyan Webb – Director of Engineering Project Management

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

Fresenius Medical Care North America is a vertically integrated renal care organization whose durable goods division produces over 90% of all dialysis machines purchased in the United States. Fresenius is faced with increasing demand as more patients are diagnosed with end stage renal disease. As demand rises, they need to increase production capacity without using more resources. Because Fresenius dominates the market, it is critical that they maintain availability of the life-sustaining medical devices.

Hemodialysis is a treatment for patients with end stage renal disease that requires several visits each week to a dialysis clinic for 3-5 hour treatment sessions. The high market demand for Fresenius’ hemodialysis machines makes them the most financially significant product at the Concord, CA facility. Any cost savings realized in the production of these machines has substantial impact on the bottom line.

To accommodate increasing demand, the Tauber team developed a plan for the lean transformation of hemodialysis machine assembly. Time studies of assembly processes were used to develop standard work, which was translated into new work instructions for the assembly line. The team trained assemblers and oversaw the success of a multi-day process change validation per FDA cGMP requirements to allow release to production. The team also performed a value stream mapping exercise to identify improvement initiatives and a five-year floor plan strategy to achieve the ideal state.

The team found significant opportunity to rebalance the assembly line and reduce waiting time by 60%. These findings were incorporated in the five year floor plan strategy to create space for increasing demand and new product introduction. The net present value of this plan is $11 million in avoided cost. Of the total benefit, $5 million was realized through changes that the team made while onsite. These savings were a result of reducing inventory, lowering overtime and rework labor costs, and avoiding the cost of additional floor space. Beyond tangible cost savings, benefits include line balance, improved material flow, frequent switching between product types, reduced compliance risk, and flexibility to introduce new products.

The team recommended a high-level implementation plan and took the first step of creating a business model to obtain internal funding. Fresenius will refine this model when additional information becomes available and dedicate the necessary resources to execute the implementation plan.


SPOTLIGHT! 2016

GENERAL MILLS, INC.IIMPROVING FORECAST ACCURACY FOR NEW PRODUCT LAUNCHES

USING MACHINE LEARNING MODELS

Student Team:Tania Martinez Garcia – Master of Supply Chain ManagementErik Knapp – EGL (BSE/MSE Industrial and Operations Engineering)

Project Sponsors:Beth Blaylock – Supply Chain Initiative Leader Gary Donahue – Supply Chain Initiative Leader Christine England – Sr. Manager, Technology & AnalyticsDave Engler – Director, HMM & Supply Chain Strategy Ethem Ucev – Analytics Consultant, Supply Chain

Faculty Advisors:David Kaufman – College of Engineering Joline Uichanco – Ross School of Business

One of the world’s largest food companies, General Mills, Inc. (GMI) manufactures a wide variety of packaged consumer foods, generating revenues of $16.6 billion USD in fiscal year 2016. To differentiate itself, innovation, in the form of 150+ annual new product launches, is critical to the organization’s continued success. As the uniqueness of new products increases, the ability to accurately forecast customer demand decreases, leading to inaccurate forecasts and the erosion of profit margin. Consequently, there is an opportunity to increase margin by improving forecasts for new products.

To address this opportunity, the Tauber team, using business analytics, developed a machine learning solution to better forecast new product demand. First, the team developed an algorithm to select the most appropriate like products based on product characteristics. In addition, prediction algorithms were developed to directly forecast demand without using like product selection. To help ensure the realization of expected cost savings, the Tauber team made recommendations for wide-scale implementation of the new process throughout the company.

The new process was tested as a pilot study on historical launches and reduced forecast error by 80%. This translated to ~50% increase in net margin for the study. The team then implemented the new process for a live launch. Initial results were consistent with expectations derived from the pilot study. Implementation within the operating unit of the historical launches is estimated to produce short term savings of 12% of new product revenue. Long-term savings achieved through implementation across all operating units is estimated at between 10% and 18% of annual new product margin, depending on the product category.

25TAUBER.UMICH.EDU


GENERAL MOTORS COMPANY – RFIDMANUFACTURING ASSET MANAGEMENT USING RFID

Student Team:Adrian Bazbaz – MS Aerospace EngineeringVinayak Modi – Master of Supply Chain Management

Project Sponsors:Christopher M. Barclay – Global Asset ManagerRobert N. Blankenburg – Global Asset Manager - Vendor ToolingRonald P. Mills – Director, Global Business Services - Asset Management

Faculty Advisors:Fred Terry – College of EngineeringJames Price – Ross School of Business

General Motors (GM), a global automotive manufacturer committed to designing, building, and selling the world’s greatest vehicles. The Manufacturing Engineering (ME) Department owns and manages assets located in GM plants.

Tracking critical manufacturing equipment and special tools is a major concern for General Motors. Poor asset manage-ment has led to unnecessary purchases, poor asset planning, difficulties in auditing inventory, unnecessary payment for taxes, warranties and insurance, and lower recoveries from asset disposals. Due to the vast number of equipment and tools, GM faced numerous challenges in integrating a technology that effectively tracks its assets. To address the problem, GM asked the Tauber team to assess the application of an integrate end-to-end strategy for Radio Frequency Identification (RFID), or a similar asset-tracking application, to enable an effective asset management tracking solution.

The team worked cross-functionally with people in Manufacturing Engineering, Manufacturing Operations, and Finance, along with technology suppliers to formulate the strategy to select, integrate, and apply RFID asset tracking. The team delivered the following:

1. A financial analysis that quantifies the incurred costs due to current inefficiencies and the proposed savings generated by implementing the RFID system

2. An analysis of current RFID technology and the best approach and applications for GM’s needs3. A decision-making framework for selecting RFID equipment (tags and antennae)4. A framework for selecting RFID suppliers5. A framework to connect IT systems and prototype applications using text analytics, asset mapping and work

order creation using RFID

The team identified the reasons why assets are lost and the largest categories for losses. The trend of missing assets was negative. More than 12,000 assets were reported lost in 2015 and more than $640M adjusted gross book value was written off over a period of 8 years. While less than 0.05% of the total assets, the physical count is still significant. Considering all the ramifications of lost assets, the potential savings are estimated at $20M+ annually. The team also evaluated possible synergies with the container management and the mobile equipment department for use of RFID. If the synergies are tapped, the total potential savings are estimated at $42M+. Finally, the team evaluated technological solutions for the problem and identified the need for RFID for asset management. In order to determine RFID’s application usefulness for GM’s specific requirements, the team reviewed case studies for similar problems, recent innovations in the technology, and governmental standards for the technology. Three RFID applications were found suitable for asset management — active, passive, and Bluetooth. After conducting a proof of concept at Orion Assembly and the cost benefit analysis for each of the applications, the team concluded that using passive RFID tags with handheld readers is the most suitable solution for GM. The solution requires minimal investment in infrastructure, and GM will be able to conduct inventory 10 times more frequently at 30% of current costs. In addition, data accuracy is expected to rise to 90% from 60%.GM can use these frameworks to conduct a full-fledged pilot for the RFID asset management and they will also help in go-live and scaling up the solution at a global level. The visual tools-- an asset spread map on the CAD plant layout and a demo website app for asset management –will assist in clearly communicating the vision of the RFID strategy going forward to both the vendors and the GM leadership.


SPOTLIGHT! 2016

GENERAL MOTORS COMPANY – SUPPLY CHAINMATERIAL LAYOUT AND FLOW REDESIGN

AT TOLEDO TRANSMISSION

Student Team: Anirudh Ramanathan – Master of Supply Chain Management Michael Schorr – Master of Business Administration

Project Sponsors: Steve Montague – Director, Global Supply Chain Planning and Global Assembly WarehousingJohn Robertson – Shop Director - Supply Chain, Global Assembly WarehousingMary Zahabi – Global Supply Chain Manager, Toledo Transmission Operations

Faculty Advisors:Xiuli Chao – College of EngineeringWallace Hopp – Ross School of Business

General Motors, a $50B automotive company, designs, builds, and sells cars, trucks, crossovers, and automotive parts worldwide. As regulators in the U.S. and abroad continue to demand higher fuel economy standards for new vehicles, transmissions are becoming an important source of increased efficiency. Toledo Transmission Operations (TTO) will produce a new product that will contribute to improving efficiency. Production requires approximately 91,000 square feet of additional floor space that currently serves as material storage for existing products. These materials must be downsized into a smaller square foot allotment elsewhere in the plant.

The Tauber team created an efficient future-state material storage layout for this transition. The team aimed to minimize the total enterprise cost of the adjustment, while maintaining key metrics for production risk and labor utilization and adhering to layout, storage, safety, and material flow constraints. The main deliverables were to set optimal inventory levels, design a future-state plant layout, and create an optimal material flow strategy.

To accomplish the project goals and deliverables, the team used a three-phase methodology. First, the team calculated new minimum and maximum inventory levels for each part based on production volume, supplier schedules, and production risk tolerance. Next, the team designed and arranged material storage lanes within the new space in order to house all material requirements, while avoiding building obstructions, and factoring in potential safety issues. Finally, the team determined where to allocate parts in the layout to minimize the volume-weighted travel distance of daily operations and the corresponding headcount required to execute this material flow.

The team’s recommendations led to a three-person headcount reduction. By converting to this new layout, the team projects a $315K yearly operating cost reduction. Coupled with an estimated opportunity cost for the newly freed floor space, the team estimates the value of this project to be $965K per year with a payback period on the cost of adjustment of under one year.

27TAUBER.UMICH.EDU


GUNUNG SEWU GROUPTRANSFORMING INTEGRATED PLANNING FOR HYPERGROWTH

Student Team:Muthueaswaran Ayemperumal – Master of Supply Chain ManagementGaurav Goyal – Master of Supply Chain Management

Project Sponsors:Wayan Ardana – Production Director, GGF, Gunung SewuMichael Budi – Corporate Planning Manager, GGF, Gunung SewuDenny Budianto – Retail Manager, Semasi, Gunung Sewu Tjandra Soewarto – CEO, Semasi, Gunung Sewu

Faculty Advisors:Luis Garcia Guzman – College of EngineeringEric Svaan – Ross School of Business

Gunung Sewu is a privately held Indonesian conglomerate operating diversified businesses in insurance, food, real estate, consumer goods, and resources (mining). Semasi and Great Giant Pineapple (GGP) are subsidiaries of Gunung Sewu. Semasi is an export-oriented manufacturer having retail channel presence in Indonesia. GGP, established in 1979, operates the largest integrated canned pineapple facility in the world.

The objective of the Tauber project was to support the management hypergrowth ambition by evaluating the current forecasting and inventory management techniques, identifying critical areas of improvement, designing a solution, and implementing it to ensure efficient planning processes in both business units.

In Semasi, the team revolutionized the forecasting methodology by designing a multi-collaborative forecasting process to capture current business realities and developed various simulation models to arrive at the best-fit time series forecasting model for SKU classes. Post classification of Finished Goods SKUs, forecasting horizon was decided using procurement lead time. The Tauber team enabled IT to deploy the design for pan-Indonesia roll out through 14 standard operating procedures. The team also proposed an inventory policy, which could potentially reduce inventory investment by 77.55% and make the planning process more responsive to actual demand. A detailed Sales & Operations planning approach was also proposed as one of the critical pillar of integrated planning. As a proof of concept, five stores along with Distribution center were identified and put onto pull-based replenishment using the tool developed by the Tauber team. The potential savings in Semasi from all the initiatives comes around IDR 18.8 billion annually ($1.45M).

While Semasi was struggling with demand variability, at GGP the major challenge was supply-side variability due to the inherent nature of the agriculture business. The team worked with R&D to identify key factors influencing the harvest and fruit size distribution. The team used linear programming to develop simulations using those factors to predict the harvest and fruit size distribution from a particular plantation. A template was designed to use the forecasted information to calculate the quantity of 300 SKUs with the objective of maximizing GGP’s revenue. The model was up-scaled to allow planning for both annual budgeting and monthly harvest planning. The new model could lead to GGP increasing the current service level from ~65% to 80% whilst also potentially increasing annual revenue by 5.54% ($12M).

Overall, the project enabled Gunung Sewu in aligning business processes to meet business objective of hypergrowth and simultaneously has potential to deliver revenue growth by 5.54%, cost savings of $1.45M annually and improvement in service level by ~15% across Semasi and GGP.


SPOTLIGHT! 2016

MICROSOFT CORPORATION – AZURESTREAMLINING GO TO MARKET OPERATIONS

Student Team:Ishan Khandelwal – Master of Business AdministrationBrian Lettman – Master of Business Administration Bernardo Villarreal Garza – EGL (BSE/MSE Industrial and Operations Engineering)

Project Sponsors:Tom Bartlett – Senior Director, Business PlanningRichard Chin – GM, C+E Business Planning Alex Herz – Group Manager, Business Planning

Faculty Advisors:Edward Smith – Kellogg School of ManagementQuentin Stout – College of Engineering

Microsoft is a technology company whose cloud-first, mobile-first strategy centers on the mobility of experiences that are orchestrated by the cloud. Overall, the cloud industry is experiencing annual growth of 45% as more businesses and organizations decide to migrate from locally managed solutions to cloud providers. The industry is expected to reach revenues of $127B by 2018.

This growth has made cloud computing an increasingly competitive industry, with the rewards going to providers who experiment, learn, and improve their products faster and better than the competition. Mitigating the internal obstacles to launching high-priority services and enhancing customer experience are critical to the success of the business and maintaining competitive advantage.

The Tauber team developed short-term and long-term process improvement initiatives that focus on reducing time-to-market for new services and billing errors. The team conducted over 30 interviews to codify tribal knowledge into business processes and best practices, resulting in the creation of a dynamic launch playbook and guidance for new product owners. The team implemented these resources during the project, reducing the learning curve for product owners and providing new metrics for business operations teams to track process performance. The team also provided a thorough plan on how to leverage this guidance over the coming months, which included milestone dates and suggested roles and responsibilities to ensure its continued utility.

Looking beyond the constraints of the current-state systems, the team also investigated the business feasibility of implementing a more agile pricing system that could significantly reduce time-consuming manual processing. The Tauber team determined the key business requirements to implement the new pricing system and developed a best-fit model. Ultimately, the Tauber team recommended implementation, projecting that the new pricing system would reduce lead time by 75% and eliminate under-billing errors that lead to millions of dollars of lost revenue. As a result, Microsoft will be able to implement new business models quicker without sacrificing pricing accuracy.

29TAUBER.UMICH.EDU


MICROSOFT CORPORATION – INCENTIVESPARTNER INCENTIVES MONTH END ACCRUAL PROCESS IMPROVEMENT

Student Team: Mira Sun – EGL (BSE/MSE Industrial & Operations Engineering)Rob Todd – Master of Business AdministrationEva Xia – Master of Business Administration

Project Sponsors: Steve Dunn – General Manager – Small & Mid-market Service & PartnersAndy Miller – Finance Director – Small & Mid-market Service & PartnersDaniel Rodriguez Diaz – Sr. Finance Manager – Small & Mid-market Service & Partners

Faculty Advisors:Debra Levantrosser – College of EngineeringHyun-Soo Ann – Ross School of Business

Microsoft, with $85B in annual revenue, is a leading technology company whose mission is to empower every person and every organization on the planet to achieve more. Realizing this mission is only possible with help from its partners who deploy products to consumers. To accelerate product usage, Microsoft pays incentives designed to drive certain partner behavior. As Microsoft transitions from on-premises to cloud solutions, thus increasing the incentive landscape complexity, it becomes more challenging to measure behaviors and provide timely and accurate accrual. This challenge potentially leads to large variances between accrual and actual.

To address this challenge, the team focused on the Online Service Usage and Advisor Sell incentive programs while considering other online programs including Azure, Cloud Service Providers, and Syndication for future expansion. The team interviewed over 20 stakeholders in the end-to-end accrual process including team members who execute the calculation, design/manage the process, place journal entries, and perform month end financial reviews. Based on these interviews, the team mapped out the full end-to-end process while identifying several common challenges faced by all team members. Additionally, the team hosted a kaizen event to brainstorm opportunities and prioritize the implementation of a select few solutions. The first challenge was to aggregate the data to generate business insights. The team created a dashboard in Power BI to assist Microsoft in automating several reports which were previously created manually every month. This allowed Microsoft team members to focus their efforts on analyzing reports rather than generating them. The second challenge was to coordinate the communication across six groups including the 12 handoffs at various process steps. To improve this, the team developed a process tracker in SharePoint to better organize the handoffs and make the current process stage more visible to the overall Microsoft team. After implementing these two platforms, we anticipate over $310k per year in labor savings by eliminating manual process steps and rework. Furthermore, the team estimates an additional $35M per year in forecast accuracy improvements. With the efforts from the project team, the timeliness and accuracy of the month end accrual will be significantly improved leading to a more stable process overall.


SPOTLIGHT! 2016

MICROSOFT MSCOPTIMIZING CAPITAL MANAGEMENT TO MAXIMIZE GROWTH

OF WINDOWS ECOSYSTEM

Student Team:Lauren Bilbo – EGL (BSE/MSE Electrical Engineering) Mohammad Jama – EGL (BSE Chemical Engineering/MSE Industrial and Operations Engineering)Bradford Lynch – Master of Business Administration

Project Sponsors: Courtney Everson – Director, Sourcing Operations Eric Liu – Director, Strategic Sourcing Jana Shull – Sr. Director, Capital Sourcing JP Wilson – Finance Manager, Windows and Devices Group Finance

Faculty Sponsors:Ruiwei Jiang – College of Engineering John Branch – Ross School of Business

Microsoft is the leading platform and productivity company for the mobile-first, cloud-first world and operates with the purpose of “empowering every person and every organization on the planet to achieve more.” To realize this purpose, one of Microsoft’s key ambitions is to create more personal computing. Core to creating more personal computing, the Windows and Devices Group (WDG) develops the platform, games, applications, and devices that drive growth of the Windows ecosystem. Within WDG, the Manufacturing and Supply Chain organization (MSC) owns the end-to-end supply chain processes that enable successful deployment of premium hardware and software products.

In the late 2000s Microsoft’s hardware partners were locked in a battle for market share of the low-end consumer market. This created an opportunity for non-Windows devices to rapidly claim market share of the premium segment. In 2012 through 2013, Microsoft launched a series of ultra-premium tablet computers, known as Surface, with the goal of showcasing the Windows experience and pushing its hardware partners to build products of comparable quality to the premium non-Windows devices in the marketplace. Microsoft’s success with Surface has driven a shift in the product mix away from consistent-volume, long-lifecycle products, to more innovative, short-lifecycle products. With this shift, the need for rigorous capital management in order to achieve profitable products has become more important than ever. To aid MSC in effectively supporting this growing first-party product portfolio, the Tauber team was tasked with developing a capital management solution targeted at optimizing investments, extracting as much value from purchased assets, and maximizing the recovery from assets at end of life.

The Tauber team interfaced with over 30 stakeholders internally, conducted external research, and visited multiple suppliers in China to define both the current and best practices in capital asset management. From this, the group structured the capital optimization solution into three modules: investment planning, asset tracking, and asset disposal. The group tackled each module by undergoing an iterative design-build-test-feedback-refine process with key stakeholders. Seamless integration of the modules enables MSC to make timely investment decisions at the optimal manufacturing capacity level, provides greater visibility on asset reuse, and improves the return on retired assets. The business impact of these newfound capabilities amounts to ~$50M in cost avoidance, savings, and realized revenue. Optimization of the capital investment planning and asset management processes will ultimately drive savings that help maximize growth of the Windows ecosystem.

31TAUBER.UMICH.EDU


PACIFIC GAS & ELECTRIC COMPANYPROCESS IMPROVEMENTS FOR SCHEDULING OF WORK

IN MAINTENANCE & CONSTRUCTION

Student Team:Ameya Bongale – EGP (MSE Industrial and Operations Engineering)Nantha Rajendran – Master of Business Administration Allison Sheesley – EGP (MSE Industrial and Operations Engineering)

Project Sponsors:Darrell Feldman – Senior Manager, Work & Resource PlanningVincent Gaeto – Director, Super Gas Ops

Faculty Advisors:W. Monroe Keyserling – College of EngineeringMatthew Brown – Ross School of Business

Pacific Gas and Electric (PG&E) is a California-based utilities company headquartered in San Francisco. The company provides natural gas and electric services to nearly 16 million customers spanning a service territory of over 70,000 miles. The company owns and operates a vast natural gas supply network comprising nearly 50,000 miles of gas distribution and transmission pipelines.

Maintenance & Construction (M&C) is one of the key departments responsible for maintaining the integrity of PG&E’s natural gas distribution assets. Within M&C, scheduling of work is a key component in prioritizing and executing work. The range of work type and volume among the various divisions created challenges in carrying out the scheduling process efficiently. This led to a lack of clarity and broad variability in the M&C scheduling process, resulting in inefficient use of crew capacity, rescheduling of jobs within the schedule, and low on-time completion rates of jobs.

In order to address the problem, the Tauber Team began with an assessment of the current scheduling process through a study of practices across six different divisions. During this phase, the team gained an understanding of the key scheduling challenges and their impact on work in the divisions. The team then created an as-is process flow to identify process improvement opportunities. Based on further analysis, recommendations were developed for the areas of crew capacity, emergency allocation, work coordination, and crew awareness. The recommendations involved accurately quantifying crew capacity, validating emergency allocations, tracking of pre-dependencies, and analyzing the correlation between crew awareness and division performance.

The tools and process changes recommended by the team were implemented and tested through a 6-week pilot at the San Jose division. The pilot test resulted in a 13% increase in the accuracy of capacity planning and a 9% increase in the number of jobs ready for execution. In order to aid stakeholders in rolling out our recommendations to other divisions, the team developed a comprehensive implementation plan. A system-wide implementation of the recommendations is projected to save PG&E $400K-$600K annually. In addition, future recommendations identified to address other process issues that were identified can potentially save the company $1.6M per year.


SPOTLIGHT! 2016

PEPSICO, INC.COMPRESSING ORDER LEAD TIME

TO REDUCE SAFETY STOCK INVENTORY

Student Team:Shantanu Bhattacharyya – Master of Supply Chain ManagementDavid Gordon – Dual (MBA & Master of Science in Natural Resources & Environment)

Project Sponsors:Alex Baxter – Vice President, Supply Chain Planning, PepsiCoErika Lewis – Senior Director, Supply Chain Strategy, PepsiCo

Faculty Advisors:Mark Daskin – College of EngineeringBrad Killaly – Ross School of Business

PepsiCo is a global consumer products company which owns, creates, and delivers many of the most recognizable global beverage and food brands. The largest division of PepsiCo by revenue is North American Beverages (NAB) which coordinates production, bottling, and distribution of Pepsi-owned carbonated soft drinks and many other non-alcoholic beverages throughout North America. The division also produces or purchases and then distributes beverages under contract for brands such as Lipton, Starbucks and Rockstar Energy. With the goal of achieving divisional, as well as corporate, financial objectives, NAB executives sought to improve inventory management leading to a reduction in inventory. The Tauber team made a number of recommendations, many of which were piloted, that resulted in considerable inventory reduction without adversely affecting service levels or increasing transportation costs. Our Tauber team analyzed the distribution network and the long lead times to internally replenish hub and satellite warehouses for direct store delivery, developed a current state process map and order timeline, and identified recommendations to use the down time in the order process. The team determined that lead time and thus safety stocks could be reduced through reducing the load tendering times to PepsiCo’s internal fleet as well as third party carriers. The team worked with the supply planning team to lower lead time settings for contracted products and Gatorade SKUs on three lanes of traffic, piloting this compressed lead time strategy for eight weeks. The team facilitated coordination and responded to input from key stakeholders including the supply planning, transportation, warehouse management, finance, and business intelligence teams. The pilot resulted in an inventory reduction savings of $740K over the eight week pilot. Extrapolating the lead time reduction pilot results nationally, the project would yield savings of $18.4 million. Transportation costs per load remained flat and within tolerance limits. While service levels in the form of out of stocks did increase, they tracked with national and regional trends, as products experienced shortages due to constrained production. Importantly, the pilot also generated no additional expense for PepsiCo. The team recommended the pilot expand in conjunction with PepsiCo’s shift in supply planning to ordering daily, to allow for stronger responsiveness to supply challenges as well as generating maximum inventory reductions. The team also recommended process changes including enhancing inventory visibility for order planners to tender truckloads in parallel with finalizing order quantities, exploring adding headcount to the supply planning group at the NAB home office and hub facilities to enable further lead time compression, and utilizing existing SAP modules to more accurately project safety stocks and order quantities.

33TAUBER.UMICH.EDU


PFIZER INC.EVOLVING THE PFIZER DPS INFORMATICS STRATEGY:

A CASE STUDY TO LEVERAGE PCMM AND SCIENTIFIC DATA CLOUD

Student team:Pradeep Gopalsamy – Master of Supply Chain ManagementKatherine Lobaza – EGL (BSE/MSE Mechanical Engineering)

Project Sponsors:Vijay Bulusu – Director, Informatics and InnovationQing Chang – Senior Manager, External SupplyRobert Noack – Director, Drug Product SupplyJessica Sigurdson – Operations Support Engineer, Drug Product SupplyMatthew St. Louis – Director, Data Science and Analysis

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

The Tauber project at Pfizer is a jointly sponsored initiative between the Drug Product Supply (DPS) and Technology & Innovation (T&I) groups. The intent is to deliver improvements in the informatics space by leveraging recent developments in both the manufacturing and technology fields. DPS has been developing a new manufacturing method with Portable, Continuous, Miniature, and Modular (PCMM), and T&I is in the process of implementing the Scientific Data Cloud (SDC) as a new data management system. These two technologies are well suited to each other, as PCMM is generating huge amounts of data that current systems are unable to handle. Utilizing these two technologies together is the best way to fully take advantage of both, helping to move Pfizer forward, shortening development timelines and getting medicines to those in need faster than ever before.

In order to give a clear and comprehensive view of how these technologies can best be used, the Tauber team first created an informatics strategy specific to DPS. Then, the current state was analyzed in terms of this informatics strategy and gaps were identified. For the purpose of this project, the area of visualization was selected and solutions were implemented to fill this gap. Specifically, visualizations were created for PCMM using SDC as a data source, with the goal of helping scientists focus more on the science and spend less time gathering and analyzing data. The Tauber team identified, mapped, and integrated critical data points and created visualization templates. In addition, the Tauber team also created visualizations using a similar method to create a real-time operations dashboard to provide information to managers to make faster and more effective decisions. Recommendations for expanding the visualizations and making improvements in other areas of the informatics strategy were also provided so Pfizer can continue to advance in informatics after the Tauber project.

Benefits from the PCMM visualizations include a reduction in time spent gathering information and creating visuals from weeks to minutes. In addition, the knowledge gained from PCMM visualizations will lead to increased process understanding, helping to limit development runs. Cutting one development run could save over $800,000 in active pharmaceutical ingredient costs alone, and would free the equipment for other purposes, resulting in better equipment utilization. In the end, however, the real benefit is to the patients who will receive the treatment that Pfizer will be able to develop faster and more effectively.


SPOTLIGHT! 2016

PRECISION CASTPARTS CORP.PRODUCTION PLANNING FOR MANUFACTURING VELOCITY

Student Team: John LaMantia – Master of Business AdministrationAndrew Poterala – EGL (BSE Mechanical Engineering/MSE Industrial Operations Engineering)Alex Santini – EGL (BSE/MSE Aerospace Engineering)

Project Sponsors: Ryan Kinslow – Group VP of Engineered Products Division

Faculty Advisors:John Branch – Ross School of BusinessJudy Jin – College of Engineering

Permaswage (the “Company”) is a subsidiary of Precision Castparts Corporation (“PCC”). It is a global manufacturer of aerospace fluid fittings, and objectively, is the fluid fittings technology and industry leader to aerospace OEMs.

The recent acquisition of PCC by Berkshire Hathaway has refocused the Company to place greater emphasis on strategic, long-term growth and generate more cash. The Company is focused on achieving “best in class” customer satisfaction by improving production performance and on-time shipments. The Tauber Institute was engaged to create operational changes to reach these goals while reducing inventory to better manage working capital.

Using lean manufacturing principles, the Tauber team created an end-to-end value stream map of the Company’s most profitable and complex product family. This exercise uncovered key operational metrics, and allowed the team to gain a comprehensive understanding of the material and information flow while developing strong relationships with stakeholders. Bottleneck calculations confirmed observations from the factory floor, and the Tauber team quickly identified wastes at each process.

Little’s Law provided the team two levers to decrease lead times and increase manufacturing velocity: work in process inventory and throughput. Shorter lead times enable quicker delivery to customers, effectively improving on-time shipments and therefore satisfying customers. The Tauber team aimed to eliminate waste at the bottlenecks to not only increase throughput, but also reduce work in process inventory.

The Tauber team’s solution was to create a scheduling algorithm which batched production to reduce changeovers, prioritized and optimized the assignment of work to best utilize resources, and established a clear manufacturing cadence to communicate throughout the factory floor. Successful implementation of the scheduling algorithm included the development and installation of interactive virtual job boards and a CONWIP system which required many hours on the factory floor educating operators and supervisors to manage the new production planning process.

Post implementation performance will yield a one time savings of $500,000 in reduced inventory levels and capital avoidance, and ongoing, will realize an additional $130,000 of annual gross profit from savings in labor productivity. Continuing on this trajectory, Permaswage will better satisfy customer demands on a timely basis, and potentially unlock an additional $8,000,000 in realizable revenue and $2,000,000 of labor savings annually due to productivity gains driven by the Tauber team’s work.

35TAUBER.UMICH.EDU


STANLEY BLACK & DECKER – CRIBMASTERA SMART FACTORY SOLUTION

Student Team: Tyler Carr – Master of Supply Chain Management Kevin Gallagher – Master of Business AdministrationDavid Sachs – EGP (Master of Engineering in Manufacturing)

Project Sponsors: Larry James -– Director of Operations, CribMaster Kelly Musselwhite – Vice President of Marketing and Strategy, CribMasterJon Safran –- President, CribMaster

Faculty Advisors:W. Monroe Keyserling – College of EngineeringStefanus Jasin – Ross School of Business

CribMaster, a business unit of Stanley Black & Decker, is a global leader in inventory and asset management solutions for industrial environments. For example, CribMaster provides leading aerospace companies with an RFID-enabled positive tool control solution that lets them know when an item is taken, who takes it, and when it is returned. Building on their existing expertise, CribMaster developed a smart factory solution that enables real-time tracking of assets and installed it as a proof of concept within their Marietta, GA, build center.

The Tauber team was brought in to accomplish two distinct goals: 1) utilize the smart factory deployment for lean transformation at CribMaster’s Marietta site, and 2) help define the value proposition and commercialization approach to bring this solution to market.

To accomplish the first goal, the Tauber team conducted a Rapid Plant Assessment to determine the major opportunities to improve operations within CribMaster. The team then designed and conducted three events to address these opportunities, which consisted of a kaizen for the scheduling process, a development focus group for manufacturing execution features and needs within CribMaster, and a full site value stream mapping activity. Based on these events, the Tauber team recommended that CribMaster implement a mixed model line, which will result in a 3% reduction in direct labor spend, a gain of $400K in working capital, and a lead time reduction of 50%. CribMaster plans to complete full implementation of the Tauber recommendations by 2018.

For the second goal, the Tauber team worked with the CribMaster Development and Marketing teams to analyze the technical capabilities of the smart factory solution, understand customer needs, evaluate the market potential, and understand competitive threats. Ultimately, the Tauber team recommended a focused approach for commercialization, initially geared towards maintenance, repair, and overhaul (MRO) assets tracking within the aviation and naval industries. Over the course of the project, CribMaster was awarded a multi-million dollar contract to deploy this solution with a customer in the aviation MRO space, therefore validating the Tauber recommendation. Based on CribMaster’s pre-commercialization success, as well as the Tauber market evaluation, the Tauber team believes that this solution could ultimately deliver over $100M in annual revenue for CribMaster, which will significantly alter their growth trajectory, as well as deliver tens of millions of dollars in savings to their customers.


SPOTLIGHT! 2016

SUNSETCONTINUOUS IMPROVEMENT (KAIZEN) PROJECT

Student Team:Maxwell Boykin – EGL (BSE/MSE Industrial and Operations Engineering)Eun Jung Shin – Master of Supply Chain ManagementVivek Vijayan – Master of Supply Chain Management

Project Sponsors:Carlos Collier – Head of Continuous Improvement TeamButch Demers – Vice President of OperationsTony Woodrow – Director of US Operations

Faculty Advisors:Oleg Gusikhin – College of EngineeringKyle Handley – Ross School of Business

Mastronardi Produce is a private company that produces and distributes greenhouse-grown tomatoes, cucumbers, and peppers. As one of the leading players in the US greenhouse produce industry, company revenues have been showing yearly growth of over 15% in the past five years and are now approximately 1 billion dollars per year.

This Tauber project focused on Mastronardi’s largest distribution center in Livonia, Michigan. Mastronardi Produce is interested in achieving operational excellence through lean methodologies, and the objective of the project was to evaluate and introduce operational improvements through multiple lean kaizen events. The objectives of the events were to reduce waste and establish new standards of work while focusing on safety, customer service, product utilization, and cost. These kaizen events aim not only to make immediate improvements but also to create a lean culture where the employees are empowered to make change.

After acquiring thorough understanding of the overall processes throughout the facility, the Tauber group decided to focus on improving the product inspection process as the overarching theme of the 2016 Tauber project. The Tauber group held three kaizen events in total: the first event focused on inspection in the production area, the second event on inspection at the shipping docks, and the third on establishing a structured, well-rounded training program for new inspectors. After concluding each event, the team delved into finalizing and initiating implementation of the solutions with cooperation and support from relevant teams.

The Tauber group implemented five major changes: moved the inspection process upstream in the production area with heightened quality inspection while eliminating a non-value-added area of the facility, made new SOPs for inspectors in Production and Shipping, painted visual aids in the shipping area to increase safety, increased accessibility to equipment and tools for the inspectors, and established a structure for a well-rounded training program for inspectors. The implementation of these major solutions is either complete or in progress. The expected savings from these improvements amount to approximately $1.7M per year.

37TAUBER.UMICH.EDU


TESLAOPTIMIZING INBOUND PART FLOW FOR VEHICLE COMPONENTS

Student Team:Mukund Varma A.T – Master of Business Administration Osbert Fu – EGP (MSE Industrial and Operations Engineering)Brian McGuiness – Master of Business Administration

Project Sponsors:Adam Plumpton – VP Worldwide LogisticsMike Polich – Director, Worldwide Component LogisticsRavi Vengadam – Sr. Staff Engineer, Material Flow Engineering

Faculty Advisors:Yavuz Bozer – College of EngineeringRoman Kapuscinski – Ross School of Business

Tesla is an American electric car manufacturer and energy company headquartered in Palo Alto, California, whose mission is “to accelerate the world’s transition to sustainable energy.” Its manufacturing operations occur in Fremont, California, where their flagship Model S and Model X vehicles are produced. In late 2017, the company plans to launch the Model 3, produced in the same factory, for which 400,000 pre-orders have been placed. Additionally, with the acquisition of Solar City, Tesla is becoming the world’s only vertically integrated sustainable energy company, providing home and commercial energy products.

The company’s rapid growth will require considerable scaling and streamlining of its supply chain processes over the next few years. To this end, the Tauber Institute team was tasked with exploring opportunities for efficiency with regard to the flow of inbound parts for future production, including Model 3. Specifically, the team was asked to answer three questions: where inbound parts should be stored, how they should be packaged, and how they should be presented at their point of use on the production line.

Though seemingly independent, each of the questions are interrelated, and therefore require simultaneous consideration. As an example, various packaging options can have varying part densities, and therefore differing storage space requirements. Packaging also influences how parts are presented at the line.

The team identified the key gaps which most affect the company’s long-term strategy and ability to scale, and then created a decision support system based on linear programming and other operations research techniques, aimed at optimizing the flow of parts inbound from the supplier to the production line. The team then implemented its recommendations with a two-fold strategy: first, executing short-term recommendations for Model S and X parts with key players to build the systems needed for the proposal, and second, working closely with the teams in charge of the future-state Model 3 logistics to incorporate our insights and modelling into Tesla’s evolving inbound parts strategy. With full implementation for the arrival of Model 3 late next year, the expected annual savings to Tesla is over $10M.


SPOTLIGHT! 2016

VOLKSWAGEN GROUP OF AMERICASUPPLY CHAIN STRATEGY, METHODOLOGY, AND IMPLEMENTATION

Student Team:Shashank (Sonny) Chiranewala – Master of Supply Chain ManagementTomtsa Chishi – Master of Supply Chain Management

Project Sponsors:Ben Finden – General Manager: National Warehouse Ops & StrategyAnu Goel – VP of Parts and Logistics

Faculty Advisors:Mariel Lavieri – College of EngineeringDamian Beil – Ross School of Business

Founded in 1955, Volkswagen Group of America (VWGoA) is a wholly owned subsidiary of Volkswagen AG, one of the largest automakers in the world. Headquartered in Herndon, Virginia, it operates the illustrious and exhilarating brands of Audi, Bentley, Bugatti, Lamborghini, Porsche, Ducati, and Volkswagen within the United States. In addition to its automobiles, the Group manages Volkswagen Credit, providing dealer and customer financing, leasing, and remarketing services. Volkswagen Group of America employs more than 6,000 highly qualified individuals in the United States. Over 1,000 dealers create an expansive and accessible sales and service network offering around 45 different models across its brands. VWGoA also supports the operations of the world’s first and only LEED Platinum Certified Automotive Assembly Plant in Chattanooga, Tennessee.

Accessories are a critical complementary product sold by the company for their vehicle brands. Significant majority of the accessories business is generated on the sales of new cars. Eighty percent of the accessories are installed at the port of receipt for the cars since they are imported from Germany. This business segment is referred to as port installed accessories (PIA). PIA currently reflects a revenue stream of $110M for Audi and VW. The PIA business has been witnessing a growth of 30% annually.

The company maintains an internal fill-rate target of 99.5% since accessories impact the sales of cars (highly visible-tangible impact on customer satisfaction). Forecasting demand patterns and managing inventory for accessories is challenging due to long lead times (6 months), changing customer preferences, and launch of new products. The high fill-rate target in combination with the unique challenges have been causing the company to lose 11.1% ($12.21M) of revenue in form of obsolescence cost, lost sales, air-freight, etc.

The Tauber team developed a custom forecasting methodology for the business, raising forecast accuracy from 51% to 83%. The methodology was created using trend analysis of past sales data on a regional level, in combination with vehicle sales estimates. The team also developed an inventory management policy to guide all inventory related business practices. The new inventory management policy garners value through reducing obsolescence costs, air-freights costs, lost sales, etc. The team worked with a third-party vendor and implemented an integrated technology solution utilizing live data streams from multiple sources to deliver an automated self-correcting system. The portal is expected to reduce obsolescence cost, lost revenue, and air-freight costs to $2.7M (reduction of 76%) rendering savings/additional revenue of $83.1M over the next five years.

39TAUBER.UMICH.EDU


WHIRLPOOL CORPORATIONSCREWS INSTALLATION WITH COLLABORATIVE ROBOTS

AND GLOBAL STRATEGY

Student Team: Misaki Nozawa – EGP (MSE Mechanical Engineering)Sitaram Ravipati – Master of Supply Chain Management

Project Sponsors: Paul Seay – Director of Global Advanced ManufacturingBradford W St. Louis – Lead EngineerMae Zyjewski – Senior Director of Global Advanced Manufacturing

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

Over the years, Whirlpool has established itself as a leading global manufacturer of home appliances. In 2015, the company sold nearly $21 billion worth of product across 170 countries. The company’s most prominent brands include Whirlpool, KitchenAid, Maytag, Consul, Brastemp, Amana, Bauknecht, Jenn-Air, and Indesit. As a leader in this industry, the organization is continuously implementing innovative technologies to enhance its manufacturing capabilities and maintain its competitive advantage. In particular, the Global Advanced Manufacturing (AM) group is responsible for identifying opportunities for emerging technologies in Whirlpool operations and providing standardized workflows for streamlined implementation. Recently, the AM group has developed a focus on collaborative automation in order to improve working conditions for operators, increase productivity, and stay ahead of emerging labor issues. As a result, they challenged the Tauber team to identify and develop a collaborative robot application which can be implemented on a global scale.

After visiting several Whirlpool operations, the Tauber team identified screwdriving as one of the organization’s most common assembly processes which expose operators to ergonomic risks. Today, Whirlpool operators are collectively driving more than 1 billion screws onto panels over the course of a single year. Not only is this task an ergonomic problem but it is also a task which does not require the cognitive skills of Whirlpool’s talent. Thus, the Tauber team has developed a screwdriving collaborative robotic solution to offload this repetitive task to a robot. Specifically, the team has designed a system for Whirlpool’s operation in Marion, Ohio which can shoot three screws in 10 seconds onto a dryer back panel which is assembled on a moving conveyor. If this application is implemented at all assembly lines in the Marion operation, 11 total installations will be required, and it will result in an adjusted net present value of $2.53 million by 2021.

The Tauber team also assessed the global opportunity for this screwdriving application and determined that there are opportunities to install 62 robots at 15 operations worldwide, specifically in North America and Europe. If these robots are installed over the course of the next three years, the net present value will be $12.1 million by 2021. Based on the financial analysis, available resources, and time required for each install, the team developed a global implementation roadmap. This recommended timeline prioritizes the order and locations for the next three years (2017–2019) and the team believes that following this roadmap will maximize the impact of this application for Whirlpool.

Front cover photo Exterior of the Stephen M. Ross School of Business in the early-morning hours of August 6, 2013,

during a “Day in the Life of the University of Michigan” photo shoot.

Photographer: Scott C. Soderberg

Copyright 2016 Regents of the University of Michigan. ALL RIGHTS RESERVED.

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applicable federal and state laws regarding nondiscrimination and affirmative action. The University of Michigan is committed to a policy of equal opportunity for all persons and does not discriminate

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Equity, 2072 Administrative Services Building, Ann Arbor, Michigan 48109-1432, 734-763-0235, TTY 734-647-1388, [email protected]. For other University of Michigan information call

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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)

© 2016 by the Regents of the University of Michigan


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ROSS SCHOOL OF BUSINESS // COLLEGE OF ENGINEERING 2016 ...c919297.r97.cf2.rackcdn.com/zozjplhtvpqm6fhmymuwh7tdzpajvs-op… · an integrated education addressing the challenges of