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Spotlight! 2009 Results
The Tauber Institute for Global Operations is pleased to announce the results of the annual Spotlight! competition held on September 18, 2009.
Twenty-five student teams, made up of MBA, Master of Supply Chain Management and graduate Engineering students, presented the results of their 14-week summer projects and competed for over $40,000 in scholarship awards. This year the judges had a very difficult time choosing among the best projects and in addition to a First Place Award, decided on a three-way tie for Second Place, and awarded two Honorable Mention prizes!
Please join us in congratulating the winners of the Spotlight! 2009 competition and their faculty advisors.
Spotlight! 2009 Winners
First Place: AMETEK -
Jialing Li and Claudia Uehara gave the winning presentation of their
14-week summer project titled "Optimizing Supply Chain Configuration for Critical Assemblies." Each team member was
awarded a $5,000 scholarship.
Second Place (3-Way Tie): BorgWarner TorqTransfer Systems - Kiran Dasari and Javier Huerta came in second place for their project titled "Development of an Assembly Line by Applying Lean Principles." The students were each awarded a $3,500
scholarship.
Exide Technologies Inc.- Daniel Dimoski, Rushabh Gandhi, and Chis Lobo came in second place for their project titled "Sustainability Initiatives at Exide Technologies." The students were each awarded a $3,500 scholarship.
Lockheed Martin Space Systems Company- Roger Chen and Eric Rudy came in second place for their project titled "Chemical Management Project." The students were each awarded a $3,500
scholarship.
Honorable Mentions: The Boeing Company - Tyler Hooper and Sanjay Jaiswal earned honorable mention with their project titled
"Optimizing Operations in Travel & Expense Services." Each Tauber team member received a
$1,500 scholarship award.
Pt. Sepatu Mas Idaman- Sebastien Gauche and Brian Rumao earned honorable mention with their project titled "Operations Optimization at an International Shoe Manufacturer." Each Tauber team member received a $1,500 scholarship award.
2009 Project Teams
Click on the company name below to view the team project picture.
View the project descriptions of all twenty-five teams: Spotlight! 2009 Project Book (PDF).
AMETEK: "Optimizing Supply Chain Configuration for Critical Assemblies"
Student Team (each member awarded $5,000 in scholarships):
Jialing Li - Master of Supply Chain Management
Claudia Uehara - Master of Business Administration
Faculty Advisors:
Hyun-Soo Ahn - Ross School of Business
Shorya Awtar - College of Engineering
AMETEK, a $2.5B company, is a leading global manufacturer of precision electronic instruments and electromechanical devices. The Programmable Power Division (PPD) produces programmable power supplies for testing and measurement equipment used on commercial, industrial, government, military, aerospace and energy applications. PPD is eager to streamline its sourcing and manufacturing to improve post‐acquisition synergy and accelerate revenue growth.
One of the critical elements of PPD products are Printed Circuit Board Assemblies (PCBAs), which are currently manufactured in AMETEK’s San Diego facility. PCBAs are used in every PPD product and are highly customized (high mix), yet have infrequent demand (low volume). The manufacturing of PCBAs is challenging because of long component lead times, strict quality requirements, and a high variety of sourced components (over 10,000 SKUs). The expected growth of PPD creates a significant cost savings opportunity by optimizing the supply chain for PCBAs.
To address this opportunity, the Tauber team performed a comprehensive make vs. buy analysis and compared different sourcing options. First, the team built a cost model and identified the true cost for sourcing and manufacturing PCBAs. Next, the team narrowed down suppliers based on quality, technology, supplier responsiveness, cost, and supply chain risk. Based on this work, the team recommended and initiated AMETEKʹs transition to a new supply chain configuration which utilizes both in‐sourcing and outsourcing. Finally, to ensure a smooth transfer and realize expected cost savings, the Tauber team developed a risk mitigation and implementation plan.
After implementing the new supply chain strategy, AMETEK’s expected annual near term cost savings is about $700K, coupled with an inventory reduction of 37%. The potential cost savings for the Programmable Power Division in the long‐term will be $1.7M per year. In addition, the make versus buy model built by the team can be utilized by other AMETEK divisions.
BorgWarner TorqTransfer Systems: "Development of an Assembly Line by Applying Lean Principles"
Student Team (each member awarded $3,500 in scholarships):
Kiran Dasari - Master of Supply Chain Management
Javier Huerta - Master of Science in Industrial and Operations Engineering
Faculty Advisors:
Monroe Keyserling - College of Engineering
Eric Svaan - Ross School of Business
BorgWarner TorqTransfer Systems (TTS) commissioned the Tauber project team to implement lean manufacturing principles on a transfer case assembly line. This line recently moved from BorgWarnerʹs Muncie, Indiana facility to the Seneca, South Carolina facility, which is the largest in terms of sales in the TTS division. The line is expected to be the divisionʹs benchmark for flexible and agile production, enabling BorgWarner to adapt quickly to changing market conditions and to maintain profitability under a variety of demand scenarios.
BorgWarner desired to improve its ability to manage the capacity of its transfer case assembly line and to improve overall process efficiency of the line. To achieve these objectives, the Tauber team performed a detailed analysis of the current line efficiencies, including material sourcing from both internal and external suppliers, and the on‐time delivery of the product to the customer. The team then developed a future state value stream map and identified lean tools from the BorgWarner Production System (BWPS), which is based on the Toyota Production System (TPS), to solve the problems posed in the above areas. By prioritizing and implementing the improvements, a stepwise approach was taken to build a roadmap that BorgWarner can follow in the future.
Based on anticipated demand levels and customer guidelines, the Seneca plant management determined the index requirement of the assembly line as 31 seconds. To create a continuous flow and to achieve this required time, the team implemented the following improvements:
- Eliminated waste from work stations and reduced cycle times
- Transferred work elements and changed the layout of the work stations
- Created standard work procedures to improve job performance
- Documented procedures to reduce changeover times and improve process flexibility
- Implemented 5S and retrained workers in lean principles
Applying root cause analysis techniques, the team identified opportunities for improvement in areas other than the assembly line and implemented the following:
- A pilot Kanban replenishment system for pulling internally manufactured components to the assembly line
- A system to measure inventory cycles and cross check with values in the ERP system (SAP) to maintain appropriate safety stocks
- Work instructions for inbound and outbound material movements in the ERP system resulting in error free processing and increased customer delivery ratings
The team’s recommendations increased the throughput on the line by 67%, improved the line balance efficiency by approximately 50%, reduced changeover time by half and resulted in an additional savings of nearly $800K without any significant expenditure.
Exide Technologies Inc.: "Sustainability Initiatives at Exide Technologies"
Student Team (each member awarded $3,500 in scholarships):
Daniel Dimoski - EGL Honors (BSE/MSE Mechanical Engineering)
Rushabh Gandhi - EGL Honors (BSE Mechanical Engineering/MSE Industrial & Operations Engineering)
Chris Lobo - Master of Business Administration
Faculty Advisors:
Brian Talbot - Ross School of Business
Fred Terry - College of Engineering
Exide Technologies Inc. is the largest manufacturer of lead‐acid batteries in the world for applications ranging from lawnmowers to submarines. Exide operates in a highly competitive environment within a largely commoditized industry and is subject to stringent environmental and health regulations. Extensive ventilation and filtration required to satisfy these regulations place additional demands on an already energy intensive process. The economic downturn has increased pressure to reduce operating costs, of which a significant portion are energy related. Furthermore, recent environmental movements provide the impetus to reduce dependence on non‐renewable energy sources. Exide is aware that to maintain its industry leading position it must develop sustainable initiatives to reduce its energy consumption and carbon footprint.
With over $2.3 million in annual energy costs, Exide’s Kansas City facility is an excellent candidate to implement such sustainable initiatives. This 140,000 square foot facility employs 200 people and is capable of producing 4,100 cells of various sizes per day for assembly into fully charged batteries for forklifts, locomotive diesel engines, and mining equipment. This project aimed to identify, evaluate, propose, and implement sustainable initiatives to reduce annual energy costs at the Kansas City facility by $90K. The team initially performed an in‐depth energy consumption audit to identify major energy consumers and then identified and prioritized sustainable initiatives. The team then gathered data, performed controlled experiments, and developed engineering and financial models to thoroughly evaluate initiatives. The analysis generated a comprehensive set of recommendations that exceed the $90K target and reduce the facility’s natural gas consumption and carbon emissions by up to 24% and 900 metric tons respectively. Each recommendation has a payback of less than three years and includes:
- casting process improvements to reduce scrap and energy usage
- recuperation of wasted heat energy through installation of recuperative burners and heat exchangers
- filtration and recirculation of ventilated air during the winter
The implementation of these initiatives is already underway and has yielded encouraging results. The value of each initiative could be further increased through the transfer of knowledge to Exide’s 14 other battery facilities, resulting in potential savings of up to $6.4 million. Additionally, the team designed an energy efficient melting machine, which also decreases startup time and reduces molten lead inventory. Finally, the team developed an in‐house power generation decision model, as a strategic analysis tool to evaluate the impact of energy costs.
Lockheed Martin Space Systems Company: "Chemical Management Project"
Student Team (each member awarded $3,500 in scholarships):
Roger Chen - Master of Business Administration
Eric Rudy - EGL Honors (BSE Chemical Engineering/MSE Industrial & Operations Engineering)
Faculty Advisors:
Erdogan Gulari – College of Engineering
Jerry Peterson – Ross School of Business
Each year, Lockheed Martin Space Systems Company (LMSSC) purchases millions of dollars in hazardous chemicals and materials that are used for flight application. These items are procured in accordance with the United States Government Federal Acquisition Requirements, State Environmental Safety and Health regulations, and LMSSC processes and procedures.
In 2008, roughly half of the chemicals purchased were for use on flight hardware that mandate stringent quality requirements and certification. Sixty percent of the chemicals were used, 11% were scrapped due to shelf life expiration, and the remaining material contributed to an 85% increase in inventory between 2007 and 2008.
In today’s economic climate, the U.S. Government is taking a closer look at the funding for all spending programs, and the Weapon Systems Acquisition Reform Act of 2009 has been enacted to regulate Defense spending by enforcing a movement toward fixed price contracts. In order for LMSSC to maintain its competitive advantage now and in the future, continuous efficiency improvements are necessary in its operational processes in order to control and reduce cost.
The Tauber Institute team analyzed whether the current chemical management process at Lockheed’s Sunnyvale facility could be made more efficient given the requirements for manufacturing guided missiles and space vehicles. Through cooperation with subject matter experts across the site, the team identified areas for improvement and focused on implementing reorder point optimization derived from a detailed, data driven understanding of the chemical usage at this site.
These improvements resulted in a 44% estimated annual savings in reduced chemical waste and disposal
costs, as well as a 33% “Go Green” reduction in chemical waste sent from the central stockroom to waste
management. The net present value of the savings achieved was $2.6 million. Furthermore, this
optimization can be utilized to reduce millions of dollars in plant stock inventory. Building upon work
already in progress, this effort drove a more efficient chemical management strategy for the Sunnyvale site
and could serve as a model for evaluating other sites across LMSSC.
The Boeing Company: "Optimizing Operations in Travel & Expense Services"
Student Team (each member awarded $1,500 in scholarships):
Tyler Hooper - Master of Business Administration
Sanjay Jaiswal - Master of Supply Chain Management
Faculty Advisors:
Gunter Dufey – Ross School of Business
Atul Prakash – College of Engineering
The Boeing Company is a major diversified aerospace company with sales of over $60 billion from both defense and commercial aircraft divisions. In light of the current economy and market pressures, Boeing wants to lean out the operations of its commercial aircraft business in order to strengthen its competitive edge. Through the Boeing Production System, the company identified key tactics for lean implementation. This project supported these tactics by focusing on efficient delivery of parts to the assembly line making use of kit configuration management, container maintenance and replacement, part tracking, and just‐intime (JIT) delivery to optimize parts scheduling.
Container Configuration Management: Part kitting containers are configured to a bill‐of‐material for a particular build‐plan. There was no reliable process for Materials Management to track build‐plan configuration changes to facilitate container updates and redesign. Our project developed both a data and process‐based configuration management solution.
Container Maintenance: There was no process for maintaining/replacing kits to support sustainable functioning of the kitting system. We developed a maintenance strategy with a web‐based support system. This system allows both emergent and preventative maintenance management. In conjunction with configuration management, container maintenance enables the $1M in annual kitting savings associated with reduced installation time of build‐plans.
Part Tracking: Boeing has no comprehensive system for tracking parts through their logistics value stream. The team conducted a Smartphone proof‐of‐concept and compiled a detailed business case to support a multi‐technology solution. Rollout of a full system is estimated to save $12 million annually in part search labor across the Everett site.
Just‐in‐Time: Internal processing and manufacturing buffers currently result in unnecessary costs. We created a tool to compute inventory reductions possible with just‐in‐time deliveries that achieve desired service levels and to estimate the savings from them. A summer pilot realized $1.8 million in one‐time cash flow savings, 2010 savings will be $9.2 million, with further savings estimated at $69.8 million. In terms of annual inventory holding cost, savings are estimated at $188K for 2009, $1.1 million for 2010, and $8.5 million for 2011 and beyond.
Based on the team’s conservative estimates and assuming a 20% discount rate, combined savings over a 12‐ year horizon yield a net present value of $104.8 million. The team also recommended an integrated Kit Single Operating System (KSOS) to provide single‐source access to the configuration management, maintenance, and tracking modules. As Boeing moves from discrete parts to kits, KSOS will help leverage the JIT tools to further Boeing’s lean journey.
Pt. Sepatu Mas Idaman: "Operations Optimization at an International Shoe Manufacturer"
Student Team (each member awarded $1,500 in scholarships):
Sebastien Gauche - Master of Business Administration
Brian Rumao - EGL Honors (BSE/MSE Industrial & Operations Engineering)
Faculty Advisors:
Izak Duenyas – Ross School of Business
Albert Shih – College of Engineering
Gunung Sewu Group is a private equity firm based in Indonesia that leverages low labor costs to deliver quality and affordable products to its consumers. One of their holdings is Pt. Sepatu Mas Idaman (SEMASI), a shoe manufacturer serving European and American brands. SEMASI has found success in working with a variety of shoe brands while utilizing an efficient cost structure and high quality standards to meet specifications. The recent economic downturn has shifted the company’s focus to improving the operational effectiveness of the factory, which translates to improving productivity, quality, and lead‐time, while simultaneously driving down costs.
The Tauber Institute team learned that SEMASI’s high direct labor costs, large inventories, and airfreight costs due to shipping delays were mainly responsible for lowering profitability. Upon examining both the drivers for these costs and the behavior of key performance indicators in the past year, the team developed three programs to improve SEMASI’s results: Inventory Improvement Program (IIP), Quality Improvement Program (QIP), and Production Preparedness Improvement Program (PPIP).
The IIP focused on the warehouse, where the team implemented 5S and FIFO to standardize the receiving process, which allowed SEMASI to focus on improving the effectiveness of its material requisition planning software. The team identified that deficiencies in the MRP software caused 18.7% of extra material purchases. The QIP helped the manufacturing team monitor and improve its quality performance by 18.4% through lean manufacturing tools such as visual management, root cause analysis, and standard operating procedures. The team also created a method to bill suppliers for the defective materials which were constantly hurting SEMASI’s performance. In the PPIP, the team developed a specific business timeline for all major activities and inputs for production. The team organized a daily meeting structure to review activity status and to assign root cause analyses when targets are missed. SEMASI may expect to avoid missing its production targets for production preparedness issues by 40% through this program.
The Tauber Institute team’s three programs will help SEMASI realize a 6‐year net present value of $6.05 million, assuming a 5% annual company growth rate. The annual cost savings reflect a 5% increase to the firm’s net margin. In addition, throughout the project, the Tauber Institute team trained its team members, supervisors, staff members, and managers, to ensure the changing of mind‐sets and the sustainability of the improvements. The implementation of the lean tools was always followed by persistent training and push from the team, which was absorbed by all key stakeholders. This mind‐set improvement, coupled with the technical and operational changes installed, will help SEMASI thrive through the volatile economy and become even more competitive in the shoe manufacturing industry.
Download the 2009 Spotlight! book with all project summaries.
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