Spotlight! 2008 Results

The Spotlight! 2008 event was held on Friday, September 12 at the Four Points by Sheraton in Ann Arbor, MI. Twenty teams of Tauber students presented the results of their summer projects and competed for a total of $38,000 in scholarship awards.

The audience of over 300 people consisted of corporate representatives, students, alumni and U-M faculty. Nine judges, invited from various industries, evaluated the projects on the basis of scope, implementation, impact, overall presentation skills and other criteria to determine the winners.

The Tauber Institute congratulates all of the student teams and sponsors for their support and participation in the 2008 summer projects and the Spotlight! event. We look forward to working with our sponsors on summer 2009 Team Projects!

Spotlight! 2008 Winners

First Place:   UPS - Thomas Evans, Bruna Ferro and David Heiser gave the winning presentation of their 14-week summer project titled "Landfill Gas Utilization as a Sustainable Energy Source." Each team member was awarded a $5,000 scholarship.

Second Place:   Cummins Inc. - Joshua Johnson and Juan Lopez came in second place for their project titled "North American B-series Engine Remanufacturing Operations Value Stream Assessment." The students were each awarded a $4,000 scholarship.

Third Place Tie:   BorgWarner Transmission Systems/Germany - Robert Mersereau and Punit Shah took third place with their project titled "Process Improvement for Global Product Launch." Each Tauber team member received a $3,000 scholarship award.

Third Place Tie:   Intel Corporation - Andrew Lesko, Dan Nathan-Roberts and Jaime Olaiz took third place with their project titled "Effective Hub Networks and Maximized Customer Satisfaction: A Low-Cost Solution." Each Tauber team member received a $3,000 scholarship award.

2008 Project Teams

Click on the company name below to view the team project picture.

View the project descriptions of all twenty teams: Spotlight! 2008 Project Book (PDF).

First Place:   UPS

"Landfill Gas Utilization as a Sustainable Energy Source "

Student Team:
Thomas Evans - Master of Science, Chemical Engineering
Bruna Ferro - EGL (BSE Civil & Environmental Engineering & MSE Civil Engineering)
David Heiser - EGL (BSE/MSE Materials Science & Engineering)

Project Liaison/Supervisor:
Bill Eidenire - Energy Program Manager

Project Champion:
Mike Owens - Environmental Affairs Manager

Faculty Advisors:
Steven Skerlos - College of Engineering
Owen Wu - Ross School of Business

As a leader in the logistics industry, UPS is constantly implementing strategies to maintain its competitive advantage. The utilization of landfill gas as a sustainable energy source is unique in its ability to provide value to the company’s bottom line. Using landfill gas can reduce UPS's operational costs by providing a volatility hedge against the rising price of non-renewable fossil fuels. The company also stands to gain a competitive advantage in marketing to its environmentally-conscious customers and in future environmental regulations that favor adaptability towards renewable energy sources.

Worldport, the centerpiece of the company’s global distribution network, has the capacity to sort over 400,000 packages per hour. Located within the UPS airpark in Louisville, KY, it draws over 30 MW of electricity during peak operation. On a global scale UPS’s sorting and distribution facilities, such as Worldport, consume less energy than its ground and air fleets. However, the concentrated demand for electricity and natural gas at Worldport represents a unique opportunity to impact a substantial fraction of the company’s energy consumption.

The proximity of Worldport to the Outer Loop Recycling and Disposal Facility makes it an excellent candidate for leveraging the renewable source of methane gas, a natural by-product of waste decomposition. The Tauber team performed in-depth analyses of UPS’s energy consumption profile in Louisville, the local energy and renewable energy markets, the billing structures for different energy types, and the costs and benefits associated with various end uses of the gas. The team recommended that UPS install a 10 MW combustion turbine to generate electricity from landfill gas. An implementation plan authored by the Tauber team will assist UPS in continuing the project development after the team’s departure. The UPS Business Information and Analysis model predicts a 5.86 year payback period and a 20-year net present value of over $7.26 million. This result is contingent on the renewal of the federal Production Tax Credit. The expected environmental benefit is equivalent to reducing the carbon dioxide emissions of 3,125 UPS delivery trucks annually.

The Tauber team also provided UPS with a decision-making strategy for future landfill gas projects throughout the United States. This general implementation plan identifies the end uses of landfill gas that will provide the highest economic, social, and environmental value, and the plan will guide UPS in the regional selection of landfills. Incorporating landfill gas utilization into the greater UPS sustainability strategy as a cost-efficient energy source will yield increased market share with environmen+tally-conscious customers and a reduction of greenhouse gas emissions for several years to come.

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Second Place:   Cummins Inc.

"North American B-series Engine Remanufacturing Operations Value Stream Assessment"

Student Team:
Joshua Johnson - Master of Science Industrial & Operations Engineering
Juan Lopez - MBA

Project Liaison/Supervisor:
Brent Lollar - Director of International Operations and Strategy, Parts and Service Manufacturing

Project Champion:
Allen Pierce - General Manager, Powercare Manufacturing

Faculty Advisors:
Xiuli Chao - College of Engineering
Brian Talbot - Ross School of Business

The Parts and Service division of Cummins Inc. operates multiple global remanufacturing centers which produce factory-remanufactured Cummins components and engines. This division, as part of the Engine Strategic Business Unit, is responsible for ensuring service parts and service information availability to a global network of distributors, dealers, and OEM partners. The Tauber team analyzed the North American 4 and 6 cylinder B-series engine remanufacturing value streams to identify specific opportunities for improving inventory turns and customer responsiveness. The analysis encompassed plant operations, links to internal and external suppliers, and information flows between all stakeholders.

The team identified four critical areas of opportunity for analysis:

• Plant performance metrics and the impact on inter-plant order management, supply chain WIP and production scheduling.
• Replenishment lead time variability for remanufactured “make to stock” engines and the influence on finished goods and raw materials inventory levels.
• Proliferation of make to stock engine models and the influence of such proliferation on forecast accuracy.
• Execution of general inventory management policies for both raw materials and finished goods.

The team began by delivering a current state map of the entire value stream from order receipt to finished product shipment to customers. Subsequently the analysis transitioned to the identification and prioritization of improvements across the extended value stream. This led to an exhaustive review of the current make-to-stock engine model and the development of a new business model proposal. This recommendation will ultimately reduce complexity in the make-to-stock engine portfolio, will improve the forecast accuracy of the new B-Series make-to-stock portfolio, and will reduce finished goods inventory levels required to maintain Cummins’ desired service levels.

The team’s recommendations are expected to yield an increase of customer service levels by 19 percentage points and a lead time reduction of up to 15% for the selected make-to-stock engines while maintaining the same finished goods inventory investment. These improvements are expected to be implemented across Cummins’ several engine families and improve the overall remanufacturing business and ultimately the parts and service division’s competitive position.

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Third Place Tie:   BorgWarner Transmission Systems/Germany

"Process Improvement for Global Product Launch"

Student Team:
Robert Mersereau - EGL (BSE/MSE Industrial & Operations Engineering)
Punit Shah - Master of Science Industrial & Operations Engineering

Project Supervisor:
Christian Gebhardt - Manufacturing Engineer, Heidelberg Facility
Michael Wagner - Manager of Manufacturing Engineering, Heidelberg Facility

Project Champion:
Walt Becker - Director, Manufacturing Engineering, Transmission Systems
Dan Paterra - VP, Manufacturing and Quality, Transmission Systems

Faculty Advisors:
Gunter Dufey - Ross School of Business
Elijah Kannatey-Asibu - College of Engineering

BorgWarner Inc. is a global supplier of engineered systems and components for automotive powertrain applications. The company’s focus on technology leadership, coupled with customer and geographic diversity, has resulted in profitable growth significantly outpacing the global automotive industry. The DualTronic transmission developed by BorgWarner reduces emissions and fuel consumption while improving shifting performance and comfort of vehicles. Multi-Segmented Friction Plates were developed as integral parts of this product line, and are the key enabler of its high performance. The Tauber team addressed issues with throughput constraints on the Multi-Segment production process using Lean Manufacturing and Six Sigma Principles.

Multi-Segmented Friction Plate production has been piloted at BorgWarner’s plant in Heidelberg, Germany. Growth in customer demand has outpaced production launch improvement efforts. As a result, attention has been focused on expanding capacity. The complex features of this product and unfamiliarity with the new equipment used to produce it have caused sporadic and high scrap rates and low capacity utilization, which are significant constraints to throughput.  As Multi-Segmented Friction Plate production will soon begin at BorgWarner facilities in North America and Asia, it was essential that these issues be resolved before the global production launch.

In collaboration with Manufacturing Engineering in Heidelberg and at future production sites, the Tauber team developed process improvements using Lean Manufacturing principles and Six Sigma DMAIC methodology.   In addition, the Tauber team developed a comprehensive set of recommendations for changes in production and management methods, which identified savings of $940K in scrap costs. Furthermore, a 24% projected increase in throughput will save $1.1M in capital investment, creating an opportunity to increase revenue by over $5M. Initial implementation has yielded encouraging results at Heidelberg; transfer of technology to future production sites will further leverage the value of these improvements.  All of these solutions involved a change in management and production philosophy; a significant paradigm shift from a traditional to a Lean approach.

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Third Place Tie:   Intel Corporation

"Effective Hub Networks and Maximized Customer Satisfaction: A Low-Cost Solution"

Student Team:
Andrew Lesko – EGL BSE/MSE Industrial and Operations Engineering
Dan Nathan-Roberts – PhD Pre-Candidate Industrial and Operations Engineering
Jaime Olaiz – MBA

Project Supervisor:
Jonathan Beyer – Supply Chain Strategy and Development Program Manager

Project Champion:
Jim Kellso – Senior Supply Chain Master

Faculty Advisors:
Judy Jin – College of Engineering
Ted O’Leary – Ross School of Business

Intel Corporation is the market leader in semiconductor chip manufacturing, developing advanced integrated digital technology that is incorporated into an extensive set of computing, communication, and imaging products for individual, corporate, governmental, and medical purposes.  Founded in 1968, Intel grew from small start-up company to a $125 billion dollar corporation in part by following Moore’s Law:  “the speed of a processor doubles every 18-24 months”.  With this precedence set, Intel must continually alter business models and revamp supply networks to remain on the leading edge.

Due to product commoditization, a market shift to leaner business models pushed Intel to improve its relationships with customers and revise its fulfillment network.  Intel adopted a new fulfillment strategy that shifted inventory towards forward-positioned hubs to make it more accessible to customers and reduce leadtime.  The company implemented this new approach for the $5 billion server segment, requiring customers to order a minimum of 315 processors (one full box) to help minimize costs and complexity.  Intel’s customers pushed back, saying such a large quantity was unacceptable due to the high selling price (up to $4,500 per chip) and low volume compared to the mobile and desktop segments. 

The Tauber team’s objective was to develop and recommend a strategy to better meet customer needs while maintaining a cost effective hub network.  To address this problem, the team built a comprehensive logistics and financial model based on real customer orders to develop and test a solution for the server segment.  This model, which sought to minimize freight, handling, inventory, and customer holding costs, was adapted to include the desktop and mobile segments.  Intel is currently in the process of executing the team’s exact-order strategy which is expected to reduce customer holding costs by $24.5 million per year worldwide.

Analysis and further improvements to the recommendation were accomplished by a pilot test.  Through lean analysis, the team identified significant excess cycle inventory caused by Intel’s current hub replenishment cycle.  The team designed and tested a continuous review inventory management scheme.  A detailed implementation roadmap was created by the team taking in to account current scalability issues within each component of the supply chain.   From this lean implementation, it is expected a further reduction of $2.3 million in inventory holding cost will be realized within Intel’s North American fulfillment network alone.

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