GSCMI Purdue Case Competition 1 Team Rohit Dubey Faizan Khan Sarthak - PowerPoint PPT Presentation

GSCMI Purdue Case Competition 1

Team Rohit Dubey Faizan Khan Sarthak Arora Anthony Perry Shubham Kishore MBA Strategy and MBA Finance MBA Operations MBA Operations MS Supply Chain Operations and Information Systems 2 2

Executive Summary Bill, VP Supply • • $4 M/yr Current shipping routes and 100% demand filled New logistic plan Carly, CFO Objective • • Close Turkey plant Close or reduce plant capacity $2 M/yr • • Exit market to maximize profits Do not exit market Arun, VP Strategy • • Exchange rate fluctuations Turkey currency risk loss $2 M/yr • • Flexible supply chain Increase supply chain resiliency Recommendation • Operate all the existing plants with new logistic plan to meet 100% demands • Implement Coronavirus response plan for China location • Use our Strategic Sourcing Model (SSM) to add flexibility and responsiveness to the supply chain • Look to alternate European countries like Portugal or Austria to replace Turkey as long-term plan 3

Agenda Introduction Introduction Solution Solution Our Strategic Sourcing Model (SSM) Our Strategic Sourcing Model (SSM) Implementation Plan Implementation Plan Risk and Mitigation Risk and Mitigation Conclusion Conclusion 4

Current Supply Chain Overview • Biggest Market for GIDGET • Accessibility to the European market • Local production capacity less than • Lowest profit margin • 15 Day lead time to USA domestic demand US TURKEY • Highest profit margin • Coronavirus (COVID-19) • United States – Mexico – Canada • Lowest COGS • Highest unutilized capacity Agreement MEXICO • 7 Day lead time to USA CHINA • 30 Day lead time to USA Implementation Risk and 5 Introduction Solution SSM Conclusion Plan Mitigation

Optimization Model • Customer Fulfillment rate 100% • All plants open Current Position Optimization Plan Coronavirus Response Plan Legends Loss Profit Legends Loss Profit Legends Loss Profit Implementation Risk and 6 Introduction Solution SSM Conclusion Plan Mitigation

Working Capital PRODUCTION SUPPLIERS RETAILER CONSUMER PLANT Cash Inventory Period Account Receivable Period Conversion Account Payable Period Cash Cycle Cycle Use retained earnings to meet account Seamless return to production due to payable requirements continued vendor relations. Implementation Risk and 7 Introduction Solution SSM Conclusion Plan Mitigation

Monte Carlo (MC) Simulation • 80% likelihood of making approximately $2 Million more if we stop production plant in Turkey Implementation Risk and Introduction Solution SSM Conclusion 8 Plan Mitigation

Strategic Sourcing Model Environment Geo-political Economic Financial Sustainability Sustainability Sustainability Sustainability r 30% 30% 20% 20% 20% 20% 30% 20% Implementation Risk and 9 Introduction Solution SSM Conclusion Plan Mitigation

Strategic Sourcing Model- Europe • 6 locations analyzed in Europe. Portugal and Austria were selected by SSM model • Further site survey to be completed as per implementation plan TURKEY PORTUGAL AUSTRIA 8.9 8.7 7.0 Implementation Risk and Introduction 10 Solution SSM Conclusion Plan Mitigation

Strategic Sourcing Model- Asia • 6 locations analyzed in Asia. Taiwan and Malaysia are selected by SSM model • If Coronavirus persists in Chinese market site survey to be conducted MALAYSIA CHINA TAIWAN 7.7 8.3 8.5 Implementation Risk and Introduction Solution SSM Conclusion 11 Plan Mitigation

Implementation Plan Commercialize system through 3PL Site survey collaboration Setúbal, Portugal (brownfield) Braga, Portugal (greenfield) Q1 2022 Roll RFQ to the Suppliers, Southern Vienna, Austria (brownfield) PO, Leasing Workers Linz, Austria (greenfield) Q3-Q4 2021 Procurement/Leasing of PP&E Turkey Scenario • Feb 2021: Align worker contracts with projected Q1-Q2 2021 closure 2022 Conduct Site Survey • Feb 2022: Initiate termination notices based on Finalize LP/SSM TLA 4857, Article 25 timelines • March 2022: Turkey plant shutdown Q2-Q4 2020 Implementation Risk and 12 Introduction Solution SSM Conclusion Plan Mitigation

Risk Mitigation Risk Mitigation • China Coronavirus – Indefinite production, market, • Utilize other market profits to offset increased and supply channel curtailment accounts payable/receivable risks High • Capacity Limits – USA operating at 100% to meet • Build safety stock system to service the USA market local demands is not a sustainable solution Inventory initial setup cost: $2.6 M(7488 units) • Political Conflict – Diminished cross-relationship • Maintain relationship with Turkey during European ium between Turkey and USA production transition plan Med • Quality control risk – Quality might suffer because • Extensive training to the workforce and experience of the nascent phase QC managers. Implementation Risk and 13 Introduction Solution SSM Conclusion Plan Mitigation

Conclusion • Maintain positive China vendor relations • Start transition European Union supplier using profits to finance accounts payable based on implementation plan GIDGET Strategy Supply • Apply our Strategic Sourcing • Demonstrate ‘Customer Model (SSM) to add First’ stance by meeting flexibility to the supply chain 100% demand without increasing price Finance • Utilize Optimization Model to maximize profits in short-term Implementation Risk and 14 Introduction Solution SSM Conclusion Plan Mitigation

THANK YOU 15

Appendix • 6 Key Factors • LP Model • Short-term / Long-term Planning • Demand Actual / Scenario SPOT • Demand Actual / Scenario Future • Monte Carlo Simulations • Demand High / Scenario SPOT • Currency Trends • Demand High / Scenario Future • SSM: Overall • Demand Low / Scenario SPOT • SSM: Geopolitical • Demand Low / Scenario Future • Safety Stock • Quantity • Cost • Sourcing (China) • Sourcing (Mexico) • EOQ Variable Demand • Collaborative Planning • Cash to Cash Cycle 16