Spotlight! 2010 Results
The Tauber Institute for Global Operations is pleased to announce the results of the annual Spotlight! competition held on September 24, 2010.
Over seventy graduate students from the Ross School of Business (MBA and Master of Supply Chain Management) and College of Engineering, presented the results of their 14-week summer projects and competed for over $30,000 in scholarship awards. The event drew high-level corporate executive from P&G, Bosch, Aleris, SPX, Stryker, Dawn foods and PepsiCo who served as judges from the 31 teams of student presenters.
Please join us in congratulating the winners of the Spotlight! 2010 competition and their faculty advisors.
Spotlight! 2010 Winners
Third Place: BORGWARNER INC. – Andrew Burgess, and Ben Don came in third place for their project entitled “Packaging and Corrosion Protection Analysis of Turbo Charger Housings”. Each student was awarded a $3,000 scholarship.
Spotlight Alumni Scholarship Award
Andrew Burgess was the recipient of the 2010 Tauber Alumni Scholarship.
Click on the company name below to view the team project picture.
View the project descriptions of all twenty-five teams: Spotlight! 2010 Project Book (PDF).
General Motors: "Application of Aluminum Alloys to Injection Mold Tooling"
Student Team (each member awarded $5,000 in scholarships):
Based in Detroit, Michigan, General Motors (GM) continues to reinvent itself as one of the world‘s largest automakers, employing more than 200,000 people all over the world. General Motors has experienced an exceptional comeback this year, with 2010 Q1 & Q2 profits totaling $2.2 billion. The GM mission is crystal clear: Design, Build, & Sell the World‘s Best Vehicles.
Currently, 50% of the components in the average midsize vehicle incorporate plastic materials. Product engineering and manufacturing of thermoplastic injection molded parts, including capital tooling, is a significant new and mid-cycle styling investment. Most of the injection molded components are produced using AISI P20 (2738 ISO-BM) tool steel: a pre-hardened mold steel with outstanding properties that has made it the material of choice for injection mold tools over the past 25 years. Recent advancement of higher-strength 7xxx-based aluminum alloys for mold tooling applications offer an alternative for select applications. Aluminum alloys, with their excellent machining and thermal properties, offer a value stream alternative which can reduce construction lead time and significantly reduce production injection cycle time.
The GM Global Manufacturing - Paint and Polymer Center (GPPC) enlisted the Tauber team to evaluate the engineering feasibility of aluminum alloys for mold tooling and to identify an immediate and long-term implementation plan, including critical enablers for Tier I supplier collaboration. The team recognized an opportunity space for aluminum tools for ~30% of the plastic parts found on a typical vehicle based on material type, volume, and Class A appearance requirements. The team determined critical technical barriers, resolved and unresolved, with a stepwise timetable for future application. The team developed current and future state value stream maps, identifying a ~16% tool lead time reduction with aluminum tools and a ~28% reduction in part production cycle time for targeted applications. An extensive cost model was utilized to predict the savings of changing the tool material from steel to aluminum alloy. Immediate implementation of aluminum leads to $6.1 million annual savings per vehicle model.
W.W. Grainger: "Labeling System Redesign"
Student Team (each member awarded $3,500 in scholarships):
Grainger, a distribution leader in the MRO (maintenance, repair, and overhaul) industry, requires suppliers to adhere a custom Grainger label on all products sold to Grainger for inventory management purposes. Unlike the retail industry, the MRO industry does not utilize a standardized barcode label, which drives significant costs and lead time to specially handle Grainger products. The Grainger Label Project team identified key stakeholders, assessed current processes, quantified costs of inefficiencies caused by the custom label requirement, and recommended a solution to positively impact the company and its stakeholders.
The project was grounded on four guiding principles: increase flexibility, reduce costs, add value, and maintain or improve service. The team conducted surveys of suppliers and customers and visited suppliers and benchmarked companies to determine feasible alternatives. Out of five alternatives, ranging from maintaining the status quo to shifting to a completely different labeling symbology, the team integrated two potential systems to provide the most benefits while optimizing the guiding principles. The final solution combines cross referencing and outbound labeling to form the cross reference outbound labeling system.
The cross reference outbound labeling system allows Grainger‘s suppliers to provide products with either a Grainger or UPC label. Because the UPC label is already standard on many products for large suppliers, accepting the UPC label in place of the custom Grainger label allows these suppliers to bypass special handling and avoid excess costs. The cross referencing system increases the inbound flexibility Grainger provides to suppliers by allowing them to utilize label symbologies that fit within their standard operations. This flexibility decreases costs in the supply chain and adds value to both Grainger and suppliers by reducing the amount of manual labeling. For outbound shipments, a custom Grainger label will be printed and adhered to products to maintain service to customers who utilize the label in their operations and for use within Grainger On Site Services, reducing manual labeling at customer locations.
Compared to the current Grainger labeling requirements, implementing the cross reference outbound labeling system yields a savings of $15.6 million annually and a $4.2 million onetime reduction in working capital through labor cost reduction, supply chain optimization, and decreases in inventory. The total cost for implementing the system is $3.3 million annually and $1.2 million up front to purchase hardware and develop a cross referencing system. This results in an annual savings of $15.6 million and a NPV of $86.5 million. Overall, Grainger can expect to see many benefits by adjusting labeling requirements such as easier on-boarding of new suppliers and eventual roll-out of custom labels for customers, helping to attract future business.
BorgWarner Inc.: "Packaging and Corrosion Protection Analysis of Turbo Charger Housings"
BorgWarner is one of the fastest growing and most successful companies in the intensely competitive automotive supply industry. Rather than selling commodity automotive parts, BorgWarner focuses on innovative solutions that maximize value add to its customers. However, the ever present pressure to eliminate waste while delivering the highest value is of utmost importance to BorgWarner. The BorgWarner Turbo Systems Global Supply Chain Management Group is responsible for sourcing quality parts for the Turbo division at the lowest possible total landed costs. To do this, it is often necessary to purchase parts from low cost economies such as India and China. The Tauber Institute team was tasked with analyzing and recommending improvements to the supply chain of cast iron and aluminum turbo housings from three suppliers in India and China to BorgWarner manufacturing sites in Germany, Hungary and Poland.
This truly global project required the Tauber team to visit the BorgWarner plants in Europe and the suppliers in Asia to gain an understanding of the current state, determine constraints within the supply chain and to assess the feasibility of any recommendations that were made. Because each supplier owns their parts until they are received by BorgWarner, the supply chain costs are built into the piece price and looked at as simply a pass-through cost of doing business with Asian suppliers. The Tauber Institute team challenged this assertion and, through detailed analysis, formulated best practice methodologies for optimizing future packaging and shipping.
The recommendations included:
These actions are expected to save BorgWarner Turbo Systems in excess of $1 million annually through piece part price reductions. In addition, the methodologies can be applied to other divisions and business units within BorgWarner to achieve greater savings throughout the corporation.
Dow Chemical Company: "Export Order Optimization: With the Click of a Mouse"
Student Team (each member awarded $1,500 in scholarships):
The Dow Chemical Company is among the world‘s largest chemical producers with products ranging from basic chemicals to advanced environmentally-focused materials. With a strong manufacturing presence in the industrialized United States, export volumes have dramatically increased as demand for Dow‘s products expands into emerging markets. As a result, Dow is now one of the highest volume exporters from North America.
With this heavy dependence on international trade operations, recent volatility in the containerized marine trade arena spurred the commissioning of the Tauber project team. An analysis of the order booking process carried out by Dow‘s third party freight forwarder, BDP International, revealed redundant manual steps and a lack of visibility resulting in suboptimal decisions. To increase the stability and profitability of the Dow supply chain, the Tauber team improved the order booking process to reduce costs and increase information availability and systemized a container prioritization procedure for North American container exports by creating an integrated database that interfaces real-time with information systems.
The database, aptly named the Smooth Sailing Database (SSD), opens the gateway to international trade with the click of a mouse. In a user-friendly interface, the SSD streamlines, optimizes and prioritizes by:
The SSD functionalities yield significant benefits for Dow. Streamlined processing increases order throughput capacity by 25% and reduce data entry error rates. Readily available shipping cost and profit margin information allows Dow to select carriers and container types to minimize costs and prioritize shipments to maximize profits in times of constrained ship availability. The forecasting feature provides sufficient lead-time to reposition containers, proactively avoiding container constraints.
The first order processed using the SSD resulted in $1050 in savings based on the optimized container selection. In the first eight weeks of implementation, the SSD has created in excess of 2000 orders. Given Dow‘s current volumes and trade lane mix, SSD utilization has the potential to generate savings from container and ocean carrier optimization of $7.7 MM to $9.6 MM per year.
Federal-Mogul Corporation: "Driving Savings by Implementing a Cost Modeling Approach Within Purchasing at the Global Aftermarket Division of Federal-Mogul Corporation"
Federal-Mogul (FM) is an automotive industry supplier in both Original Equipment (OE) and Aftermarket
segments, and an industry leader in supplying powertrain, chassis, and safety technologies. The Rotor
and Drum product line within the Braking Systems business unit of the Global Aftermarket division of
Federal-Mogul is currently 100% outsourced and has been affected by a variety of factors that have been
steadily increasing product acquisition costs and subsequently decreasing company profitability. The
purpose of this Tauber project was to devise a supplier‘s cost model that could be used to understand
After conducting extensive data gathering and analysis of the current situation and alternatives, the Tauber team generated a bottom-up cost model that can be used by Federal-Mogul to estimate supplier‘s cost to manufacture for any of the rotor or drum parts. As part of this project, the model was applied to the entire current R&D portfolio, allowing the company to analyze current pricing offered by the suppliers and to identify opportunities for potential savings. Based on the forecasted 2010 purchasing volume for the product line in North America, potential savings identified by this model amounted to over $4M.
The project culminated with a three-week trip to China to visit local existing and potential suppliers and to negotiate cost reductions using the cost model. By the end of the project, the Tauber team identified over $3M in net savings, and developed and started implementing a phased action plan that would lead to total savings of over $4M, including the net annualized savings of $2.2M and cost avoidance savings of $1.8M. In addition, the team compiled a detailed list of recommendations for continuing use of the cost model in the current product category, as well as its implementation in other product groups across the company, which is now well under way. If the cost model was implemented across the Global Aftermarket division of Federal-Mogul, a minimum of 5% savings could be realized (well below savings realized in the R&D product line). Given the division‘s total sourcing spend of over $540M, a 5% savings could result in a net savings of $27M annually.