dcmme fall conference speakers and quotes 2-22
2014 DCMME Fall Conference
Unlocking the Value of Your Supply Chain with Analytics Dear Center Partners and Friends, Our sincere thanks go out to you for your involvement in the 2014 DCMME Fall Operations Conference! We trust that you found the information shared during this conference on “Unlocking the Value of Your Supply Chain with Analytics” to be both interesting and beneficial to you. We were delighted to hear from eight featured speakers: Sean Anderson of IBM, Inc.; Mike Crossk of American Axle & Manufacturing; Cara Curtland of HP, Inc.; Lia Douglas and Sean P. McCreave of FedEx Services; Larry Hanson of Cummins, Inc.; Gary Smith of Caterpillar, Inc.; and Matthew Van Hoosier of Evonik Industries. We appreciate our industry sponsors and partners for continually introducing interesting business issues to the Center, which enable our faculty and students to learn about unique, developing industry challenges. We are actively collaborating with our sponsors and exploring
various project opportunities. It is our sincere hope the interaction with our talented faculty, our energetic students, and your fellow practitioners will continue to be of great benefit to you and your organizations. We hope you’ll share the benefits of the conference and our Center with your colleagues. We truly appreciate your interest and support of the Krannert School of Management and the Center. We look forward to hosting you again at the upcoming GSCMI Spring Conference and Case Competition, April 23-24, 2015. Best Regards,
Dr. J. George Shanthikumar Richard E. Dauch Distinguished Professor in Manufacturing and Operations Management Director, DCMME-GSCMI
THANK YOU. Dedicated industry partnerships are at the heart of success for the DCMME & GSCMI Centers. We thank our many distinguished industry partners for their significant and ongoing involvement and support. Our mission and the many important objectives set for the Center could not be accomplished without you!
FALL CONFERENCE Participating in the DCMME Fall Conference has been an outright great experience. First of all, I very much appreciated the networking opportunities with industry professionals. There was enough time during breaks and after the conference to ask questions and to learn about the careers of the speakers. In a laid back atmosphere it was possible to really dive deep into certain topics, learn about companies and hear honest tips about career development. It was also great to have a mixture of students, professors and industry experts to discuss current trends. Second, getting exposure to a trending topic in Supply Chain was
a great learning opportunity. The importance of analytics when making business decisions, the usage of big data to drive innovation is gaining ever more emphasis. Especially in classes at Purdue we are constantly working with statistical models to mine and analyze data in Supply Chain Management. While these theories provide immense benefit when solving case studies it is sometimes hard to see how they can translate into the real world. This conference perfectly bridged the gap between academia and business and showed ways in which we can apply our learnings once we enter the workforce. For my personal development it was a great
opportunity to be the master of the ceremony. It gave me a chance to realize how much preparation goes into such a conference. It also allowed me to learn more about each guest speaker, their interest and experience. I therefore had a lot of discussion points after the actual conference and received great answers from the speakers. Tiffany Wendlerâ€”MBA 2015
Thank you speakers and panelists!
The 2014 DCMME conference was a great success. I was very impressed with the attendance and the speakers. The theme was very interesting, and I was excited to hear what industry leaders would have to say. I was not disappointed when learning what each company is doing to add value to their supply chain using analytics. AAM, FedEx, HP, Cummins, IBM, Caterpillar, and Evonik are global companies that set the pace for the rest of the competition, and to have them here on campus to talk about supply chain analytics was extraordinary. Also, to hear from one for the most recognized faculty at Purdue was a privilege. Dr. Shanthikumar is very knowledgeable with many publications and theories developed. It was an excellent opportunity to hear from him. Gustavo Amorim (MBA 2015) The GSCMI Fall 2014 Conference was very informative and insightful. I appreciated learning about these diverse companies and the creative solutions they implement to increase efficiency and bolster their operations and supply chains. Greg Meyer (Undergraduate) The DCMME & GSCMI conference, in a nut shell, truly goes beyond traditional academic forums by bringing industry professionals and educational stakeholders together to share and provoke insightful conversation around the role of analytics within the area of supply chains. As analytics becomes more important with big data, I now have a better understanding of practical applications of analytics to real world examples. Raudel Medina (MBA 2015)
2014 DCMME Fall Conference Newsletter
The conference was very insightful to me. I enjoyed hearing about real world applications of the things I am learning in school about analytics and also various supply chain models. I was impressed with how organized the conference setup was, and I especially appreciated the Q&A session that followed the presentations. Jordan Arteberry (Undergraduate) Krannert professors emphasize the value and increasing relevance of analytics in our operations and supply chain courses. In these courses, I often wonder if the theories and models that are being developed by academics and researchers are actively being applied within industry. I learned from the industry representatives that not only are these models being applied, but they are increasingly becoming sources of competitive advantage. Peter Jacobson (MBA 2015) I thought that the conference was very beneficial and it gave me some great ideas of how analytics and what we are covering in class translates to the real world. Samuel Dorsa (Undergraduate) The conference was very helpful to me in many ways. Supply chain to me was very broad, and I did not know much about how it was applied in companies. I took this class to see if I would be interested in possibly switching my major, and after the conference I can see myself furthering my education in supply chain. The conference as a whole was well put together with different companies, which gives an idea about the different ways different companies go about the use of supply chain in their businesses. Chris Tassaro (Undergraduate) The conference was a great experience to understand the role of analytics in supply chain initiatives and to connect with the professionals learning the future state of supply chain roles and requirements. Furthermore, the event gave insights into the power of analytics in offering cutting edge business solutions to companies belonging to any industry by optimizing their operations and supply chain performance. Anuj Gupta (MSGSCM 2014)
The conference was very useful to gain insight on applications of analytics in real world problems in that the speakers brought with them real world business problem examples and were able to demonstrate how analytics was helping in solving these problems. The breadth of businesses covered was amazing which ranged from heavy parts manufacturers such as Caterpillar to Pharmaceutical such as Evonik Industries and from Software and consulting firms such as HP and IBM to logistics or shipment solutions provider such as FedEx. Additionally, the conference was well organized and executed and presented opportunities to interact with business leaders of respective industries and also with fellow students with similar interests. Narender Singh (MSGSCM 2014) The conference had a very selective group of speakers, representing various industries across the U.S. With the topic, “Unlocking the Value of Your Supply Chain with Analytics,” it was very intriguing to examine the various frameworks that industries used. The conference motivated the attendees to focus more on organizing and utilizing data in a more accurate fashion rather than blindly implementing and analyzing data as a whole. I thoroughly enjoyed the conference, as it had high quality speakers who were able to connect data and analytics to practical applications in their respective industries, further enhancing our education. Priyanka Govindraj (MBA 2015) The 2014 DCMME Fall Conference on “Unlocking the Value of Your Supply Chain with Analytics” was an extremely interesting and enriching experience. The speakers through their varied experience in the companies gave insight on the growing importance of data analytics impacting global operations and supply chain. The conference was an excellent platform to hear the experience of speakers from various industries ranging from manufacturing and logistics to information technology. The information I received in the conference has made me curious to explore more on this topic. Tarun Aggarwal (MBA 2015)
I was so honored to attend this event, and I have learned so much. This conference really is an amazing opportunity to develop your networks and learn best practices and new ideas from industry experts and leaders. By participating in the conference, I was able to talk to the representatives from leading companies in the industry, and to gain better knowledge about the industry as a whole. Xingying Zhao (Undergraduate) It was a great event which was extremely well organized by the GSCMI center. I am sure it was a great learning experience for most of the students and we thank the organizers of the event for presenting us with this opportunity. Sumit Gangwani (MBA 2015) The whole conference was a huge success. It brought together students, faculty and industry experts that all strive to understand how to leverage existing data in order to improve business results. One topic that became obvious in almost all presentations was that it is not enough to “crunch numbers”. The real challenge lies in the connection between data analysis and business impact. It was great to see speakers from different companies and learn how they use advanced analytics methods in often a similar, but also business specific way. The organizers of the whole event did a great job bringing industry experts to campus. These experts shared useful information and gave great starting points for further discussions with fellow students. Patrick Haslanger (MBA 2015) The 2014 Fall GSCMI Conference presented a great opportunity for students, like myself, to listen to supply chain experts speak about “Unlocking the Value of Your Supply Chain with Analytics”. Many different companies attended with representatives from industry leaders such as IBM, Caterpillar Inc., American Axle & Manufacturing, Evonik Industries, Cummins Inc., FedEx Services, and HP Inc. Each provided concrete examples on how they have used analytics within the past year to make strong improvements to their businesses. The key message from the conference was how analytics can be adapted across a range of different platforms to drive success. From steel manufacturing to
pharmaceuticals, everyone can benefit from understanding how analytics can fuel progress. Personally, I enjoyed the layout of the conference as it held built in time slots to network with the speakers and company representatives. This was a great way for me to ask further questions about projects the speakers had mentioned. Nicholas Bafunno (MBA 2015) During the Fall GSCMI Conference I had the great pleasure to listen to various experts from different top-companies on topics about the crucial interface between supply chains and analytics. The conference was very well organized and was composed of eight compact presentations. It provided good opportunities for networking and exchange between students, faculty and industry experts. From each company who presented I could gain insights and knowledge that improved my overall understanding of supply chains, their challenges and their potentials. Lukas Brenner (MBA 2015) This was my second time attending a GSCMI conference, and I was curious to see the new companies that would be attending this semester’s event and their presentations. It was quite interesting to hear how companies from various industries study and measure data for decision-making purposes. This semester’s conference provided a great opportunity to be exposed to how various companies utilize data within their fields. Hearing the presentations reinforced how many of the concepts learned in classes are applied across industries. Andrew Ellis (Undergraduate) The conference was very helpful for understanding how some of the things in our classes are integrated into corporate supply chains. It is a great opportunity to gain exposure to some of the great research happening in Krannert as well as in depth knowledge of how companies like IBM, Cummins, and FedEx deal with technology in their supply chain. Trevor DeWitt (Undergraduate)
2014 DCMME Fall Conference Newsletter
CONFERENCE SPEAKERS Mike Crossk, Senior Value Stream Engineer, American Axle & Manufacturing
Material Flow & Packaging within the Internal Value Stream One topic that resonated with me was given by Mike Crossk from American Axle & Manufacturing. He spoke about designing the internal value stream such that the manufacturing floors are the most efficient. This topic was unlike the others in that it did not talk about the external supply chain, but it was obvious from this presentation that AAM uses analytics to optimize the flow of materials inside their factories. At AAM they learned how to ergonomically design the work stations to best suit the human body. They also aligned racks and shelves to best suit the forklifts and material handlers. They even laid out their factory floor to optimize flow by recording traffic in the various lanes. They used analytics to accomplish this by gathering data on all the variables, then optimizing the work stations and layouts. This topic resonated with me because my previous work attempted to do this, and only partially succeeded. Daniel Rowe (MBA 2015) Mike Crossk from American Axle & Manufacturing spoke in detail about lean manufacturing. Every company wants to cut costs and create more value for its customers. Mike spoke about this and the ways that they are creating value. I found it very interesting the way that AAM has laid out their warehouse and the way material flows through it. The “robot tugger” made their employees’ job easier, and also made pulling material more efficient. There is also an environment at AAM of making the environment safe and better for the employees. I think that this speaks volumes for the type of company culture that exists there. Brandon Herbert (Undergraduate) Although all of the speakers presented very insightful findings, the topic from
Mike Crossk, Senior Value Stream Engineer from American Axle & Manufacturing interested me the most. As I’ve worked in both the Railroad (Union Pacific) and Retail/E-commerce (Amazon) industries, I’ve always admired increasing the efficiency of the material flow and part presentation to the operators. By creating opportunities to collect data based on frontline operators’ movement in the internal value stream, we can improve not only efficiencies in the workforce but also increase employee morale. With technology such as the value stream mapping that American Axle has been utilizing, frontline employees & managers now have a direct measurement of data for typically un-quantifiable factors such as body movement and repeat steps and motion. With the ability to monitor parts through process mapping, American Axle has been able to classify parts to support optimum inventory turns and develop display racks to support delivery within each respective zone. In examining how American Axle’s technology could help with my experience at Amazon, perhaps a greater number of packages could be packed and shipped due to the technology physically tracking the motions of the packers/pickers/ stowers/receivers. For both the inbound and outbound departments of Amazon Fulfillment, the amount of items received and the amount of items shipped out could be better allocated and or tracked. Focusing mainly on the inbound department, even having the information of how associates handle certain materials from certain suppliers would help identify which suppliers’ products are taking longer to process through the system as opposed to others. With American Axle’s application of extended flow lanes to one single lane, Amazon can also utilize
this method. While unloading pallets of product from incoming trucks, the amount of lanes used to unload can be reduced which can help in safety records as well as efficiency in unloading practices. Wasted motion would be eliminated and more products can be brought in. All in the all, American Axle truly depicted a usable and thought provoking technology, which can be implemented across industries. Priyanka Govindraj (MBA 2015) One of the topics that impressed me the most was the presentation by Mike Crossk from American Axle & Manufacturing. It was interesting to see how the company looks at ergonomics using simulation before equipment is built and the process is established. It was also neat to see the 3-Dimensional rending of their storage dock and how they can implement the safety factors before actually building. My previous experience in warehousing observing CAD modeling for design used data but not too this extent. Safety in warehousing and manufacturing is very important due to the potential of employee / equipment accidents along with injuries relating to ergonomics. I am impressed that AAM is able to factor in equipment traffic ahead of time and ergonomics using data to plan their manufacturing facility layout. It was interesting to understand how AAM has been able to use data to make their material flow and packaging more efficient. The reduction in forklift traffic by using their optimization model also will help save on direct labor needs. This is not only great as it saves on headcount requirements, but it also reduces the risk of a work related injury. The self-guided parts delivery vehicles also will save on labor needs and are also more efficient than humans. It is amazing to see how analytics
can be used to reduce direct labor rather than just using it for modeling and analyzing a supply chain. Brandon Titelbaum (MBA 2015) Of all the guests, I believe Mike Crossk of American Axle & Manufacturing (AAM) gave the most revolutionary presentation. Mr. Crossk discussed the human factors of developing and maximizing manufacturing profit. He covered 2 points in particular that caught my attention. The first is quantifying ergonomic factors in process design. AAM has a focus on maintaining a work environment where production workers can be happy and ergonomically healthy. While many other manufacturers claim they care about these factors, AAM actually implements this vision as well as understands and captures the value in dollars. In the manufacturing environments I have experienced, these workplace conditions are either not considered, or considered only as a function of safety, with no financial impact identified. Quantifying workstation functionality in this way provides not only more productive employees, it also contributes to a firm’s financial solvency. The second point that I found very fascinating, was Mr. Crossk’s attention to separating labor from non-productive distractions. He spoke at length about various ways in which he has had success keeping employees focused on their tasks. He described designing workstations where fork truck traffic is physically separated from assembly employees. This allows employees to work solely on assembling parts. The distance between these workstations and transportation is bridged by specially designed conveyers that do not require operator input. This of course contains gains in safety, by removing mobile equipment hazards, but also allows employees to strictly spend their time performing value added tasks. Even small incremental gains could have massive impacts on overall facility productivity, making the cost of the workstation redesign manageable, and possibly insignificant. Nicholas Grady (MBA 2015)
The topic “Material Flow & Packaging within the Internal Value Stream” by Mike Crossk from American Axle & Manufacturing impressed me the most. The reason for this is Mike not only analytically analyzed the value stream within his supply chain to identify the bottlenecks but also dug deep into optimizing the system on the operators’ side because machines perform at their best when operators can fully utilize them. Mike then further talked about the “Criteria for Successful & Efficient Material Flow & Packaging” that includes Inventory Classification, Visualization Optimization, and Explicit Classification Between Man & Machine. His approaches impressed me most because often times we ignore the importance of optimizing the ‘tools’ for machinery operators. His approach mimics that of Toyota Production System where workstations are always ergonomically optimized to reduce associate fatigue. Daniel Terayanont (MBA 2015)
About the Speaker:
Michael Crossk began his career at AAM in June of 1997 as a College Graduate In Training in the Detroit Gear & Axle Materials Department. He has served primarily in the Material Handling and Packaging group in both a daily operational and advanced engineering role. Early on in his career Michael assumed the role of Material Handling Engineer with responsibilities for all Material Handling and Packaging throughout AAM’s North American facilities. This included
responsibilities to develop program budgets and forecasts as well as procuring all necessary packaging and material handling devices. Between 2008 and 2013 Michael has explored opportunities with Cummins Turbo Technologies and Fiat Chrysler Automobiles. Within these positions, Michael has had the opportunity to become well versed in lean packaging and lean material display strategies to optimize the operator’s productivity and efficiency. Upon returning to AAM, Michael has been appointed Senior Value Stream Engineer for the North American Driveline Business Unit. In this role Michael is responsible for all the Advanced Engineering for new production programs with a specific focus on advanced value stream maps and Non-Value-AddedActivity reduction thru Lean Packaging and Lean Material Display. Michael has challenged himself to invoke a culture where optimum operator productivity and material delivery driver efficiency can be achieved thru establishing a Lean Methodology in step with the development of new manufacturing programs and product development. Michael holds a Bachelor of Science degree in Industrial Technology. He is the last in line from a large family of proud Purdue Boilermaker alum.
2014 DCMME Fall Conference Newsletter
CONFERENCE SPEAKERS Gary Smith, LEC Supply Chain Manager, Caterpillar, Inc
Logistics Cost Analytics Being a civil engineering major I was particularly interested in Gary Smith with Caterpillar. In the civil construction industry, CAT is a widely used brand with numerous markets, parts, machines, etc. During my undergraduate studies I was afforded the opportunity to tour the Caterpillar Engine Plant located on the south side of Lafayette, Indiana. All these previous encounters and experiences made Mr. Smith’s presentation about logistics cost analysis in CAT’s supply chain very intriguing. Although it seems intuitive in thinking, I didn’t realize Caterpillar sales outside of the United States were greater than 2/3 of their market share, servicing over 180 countries worldwide. Listening to Gary’s analysis of how to handle freight vs. build options showed the true impact proper supply chain management can have. The freighting cost for some items was 10%-20% of total cost; in a market where contractors are the main customer, providing cost efficient machines is crucial. Using the analysis model Gary helped to build, it is apparent how forecasting and tracking potential sales is very important to lower overhead cost, shipping (bundling if possible) and manufacturing accurate quantities. In listening to Gary discuss the model, I was very entertained by the multiple comparisons he made regarding the initial model (with a correlation of .52) with other random items in the market such as tea etc., many ironically
following the same trends up and down as the CAT sales no less. It was nice to hear during Gary’s talk that the company went through over 50 models before finding the final model (with a correlation of .82). In college courses there is generally speaking, an exact answer. In industry from my experience there is almost anything but an exact answer. From Mr. Smith’s and the many others at the conference I think students can build on actual in-class information by relating to these actual work force leaders. Nathaniel Grove (MBA 2015) One of the standout speakers to me was Gary Smith, LEC Supply Chain Manager at Caterpillar Inc. Smith’s presentation revolved around how logistics cost analytics is an important tool for Caterpillar to use in order to manage freight efficiently. Smith further elaborated on their analytics process by explaining the steps they take to find solutions. First they generate a process map to understand key parameters of what causes logistics costs. He mentioned that in this step it is key to involve the process experts, because they can provide detailed insights on the issue. From my internship experience, I agree with this statement because it is important to have as much employee buy-in as possible in order to find a solution. The next step is to break the process into sub-process, so you can find
the root of the problem easier. After that it’s time to dive into the data to verify correlation after validating it makes sense. This step can be intimidating, but it is critical to be able to interpret what the data is showing. With the correlation data at hand, the next step is to use it to predict the next few cycles. This is where companies can improve their supply chain efficiency if their predictions are accurate. Lastly, Caterpillar constantly evaluates the model to continuously improve their processes. I found this methodology impressive, as it is an all-encompassing approach to business analytics. As an industry leader Caterpillar must always be improving their performance especially in the field of logistics, and I was happy to have the opportunity to learn from the best. Nicholas Bafunno (MBA 2015) While all the speakers were extremely informative, I believe the one speaker that I enjoyed the most was Mr. Gary Smith from Caterpillar. He spoke on “Logistics Cost Analytics”. The reason I was deeply intrigued by this topic was my past experience with global logistics. The topic touched the various cost aspects associated with a complex supply chain. Gary gave information about a business forecasting model that addressed the issue faced by a supply chain having about 800 different suppliers with varying lead times and
having different products. I believe this is a very common issue faced by a majority of the industries today. Getting cheaper products has forced companies to source from multiple suppliers and thus has increased the complexity of the whole supply chain. The business model proposed by Gary involved the use of various regression techniques to map and determine various key process parameters that affect the overall cost structure of the operation. The processes are sub divided to ensure all the parameters are taken into account. Thereafter the data is analyzed to assess the correlation between the various parameters. Based on the correlation information, various models are generated to predict the cycles and trends and forecast the cost of operations. The cost model that is generated has to be PGA (Practical, Graphical and Analytical). Once these models are generated a 3 month moving average of the actual data is considered to verify the accuracy of the models and accordingly changes are incorporated in the model to make it more accurate. This model is then finally used for forecasting the cost structure of the operations for Caterpillar industry. This model is constantly evaluated to incorporate changes in the industry and other key factors considered for building the model. In my opinion this model is extremely effective in gauging the impact various factors have on the cost structure of an organization. This model uses historical data for forecasting and since it is verified against the actual data, it makes the entire model even more robust. Also I believe establishing the correlation between various key factors helps evaluate the relative importance of the various factors. This information is helpful in identifying and eliminating factors that may be redundant. Also the main cost intensive factors can be identified and processes can be setup to manage these better.
Also I believe this model can be applied across all industries and thus is easy to replicate for the various business units of an organization. As the supply chains in the industries become more complex, comprehensive data analysis tools can be used to make more informed decisions. These tools can unlock greater value in supply chains by generating savings across each step and by eliminating redundant aspects of the supply chain. As managers move towards a more data intensive approach of decision making, the supply chains will become more efficient. Tarun Aggarwal (MBA 2015) The company that I was most interested in listening to was Caterpillar. I recently applied to intern at Caterpillar because of the size and reputation of the company. Caterpillar has locations all across the United States, as well as numerous other countries across seas. The speaker focused on the logistics and cost analysis of the productions across the world that Caterpillar conducts. Analytically, he proposed the question of meaningful patterns in data and how to make the complex simple. This is very relevant to what we talked about during our analytical section in class. They were not trying to solely find data, but trying to find the right data that is applicable to cut cost in their supply chain. As we also talked about in class, he showed how their freight model had a 0.94 correlation of a 3 month moving average. He stated freight costs were 10-20 percent of total operation costs, so it shows that finding the correct correlations can help reduce the costs and improve the supply chain. Caterpillar was a very interesting company to hear from about their supply chain. Between analytics and logistics, the company has a lot going on within their supply chain. Hearing about how they develop strategies and operate to save costs makes me want to learn more about
the uses in supply chain not only within Caterpillar, but other companies as well. Chris Tassaro (Undergraduate)
About the Speaker:
Gary Smith is currently the Supply Chain Manager for Caterpillarâ€™s Lafayette, Indiana Large Engine facility and is responsible for leading all supply chain activities including strategic process transformation, supply chain planning, material requirements management, inventory management, demand and orders management, supply chain performance and logistics, and ensuring linkage between process planning and execution. Gary has a Bachelor Degree in Electrical Engineering from Rose Hulman Institute of Technology and an MBA from Lewis University. Gary has extensive experiences in order to-delivery processes at various Caterpillar facilities as well as 6 Sigma and Lean continuous improvement processes and operating principles.
2014 DCMME Fall Conference Newsletter
CONFERENCE SPEAKERS Larry Hanson, Director - Manufacturing Functional Excellence, Cummins, Inc.
Journey of Data Analytics at Cummins
I really enjoyed the “Journey of Data Analytics at Cummins”. I enjoyed his managerial view and the understanding of all the value that they have gained from analytics. His presentation was extremely engaging and easy to relate to. He had a very strategic approach and he properly explained that impact it has had on the company. Javier Arguello (MBA 2015) The specific talk that impressed me the most was the talk by Larry Hanson of Cummins, Inc. Larry had a great way of presenting his information. His use of a prop was definitely the most memorable part of the conference for me. The topic of his presentation was “Journey of Data Analytics at Cummins”. The main takeaway from his presentation was the importance of using raw data to get useful information. It means nothing to have the data if you do not interpret it to give you actual information; I think this is a profound point. In my coursework, when I face a problem with too much data to work with, it always helps me to apply logical filters and create graphs of the data. By doing this you can more effectively interpret your data and achieve a result. Another learning point from his presentation his emphasis on making money in times when the economy is down. I think that this is
an essential part to having a lasting business, and it can be one of the most challenging aspects to doing so. Fluctuations in the economy are natural and almost unavoidable. If your supply chain is flexible, planning for economic downturns as well as upswings can be much easier and can keeps the cash flow of the business coming. Larry’s explanation of how Cummins changes their supply chain philosophy every few years is important because it shows that a supply chain strategy is not a blanket strategy for all companies; every company needs to have their own strategy that fits their needs. Greg Nichter (Undergraduate) The topic that impressed me the most is the presentation by Cummins. Mr. Larry Hanson delivered his topic over the Journey of Data Analytics at Cummins. Mr. Hanson gave a brief history about Cummins. Cummins was once viewed as a technical company. Over the years Cummins adopted the six-sigma methodology in order to transition the company from technological to manufacturing. He also stressed that Cummins share their progress with people that work on the shop floor so workers are able to measure their goals and productivity. One of Mr. Hanson’s strongest points was how to develop core competencies
within the company. He mentioned that the Cummins’ plant KPI’s (in order) are: Safety, Quality, Delivery, Expense, and Inventory turns. Each of these KPI’s must tie in with the company’s core competencies in order to translate to the bottom line, how to become successful in an industry. Sheena Harris (Undergraduate) The point I found most interesting was ergonomics and the weight that it holds out on the shop floor. Ergonomics was touched on by two different speakers, Larry Hanson of Cummins, and Mike Crossk of American Axle & Manufacturing, who made it a big focal point for his presentation. The question was even proposed by a student in the crowd on how much ergonomics influences factory layout versus time or space limitations on the floor. Hanson said that it was the number one priority when thinking of factory layout, and even with outstanding performance metrics he would lose his job if workers were constantly getting hurt. Crossk had a similar mindset and briefly discussed several replenishment processes that American Axle had implemented to make the job more convenient for the workers. I found this to be the most interesting coming from an internship with John Deere in 2013 that was primarily focused with factory
line layout and replenishment processes, and even when time and space are constrained, ergonomics would still uphold the same level of expectations when it came to work standards. This often times caused the processes to be slower or involve a greater area for the assembly cell on the floor. The question was posed at the conference as to how one weights all of these restrictions when determining the material flow for a factory. Personally I feel like there is no reason to lower ergonomics standards even if it causes longer cycle times or a greater use of space on the plant floor, even though both of these issues will cost more money, the long-term effects of inappropriate ergonomics plans will be far worse coming from a company ethics standard. Derek Smallwood (Undergraduate) The presentation by Larry Hanson from Cummins Inc. was impressive to see how the company collects data from a high level and analyzes. The data is then used on the shop floor to drive change through the use of Six Sigma tools. The examples of how the data is displayed on large boards within the manufacturing floor is neat to see as it is easy to see and understand. A lot of companies collect data everyday but to learn about how Cummins only collects data that they will use to measure performance is impressive. It was also interesting to see that Cummins uses the following Key Performance Indicators to measure success: safety, customer quality, delivery, expenses, and inventory turns. It was great to see how Cummins has used analytics over the years as they have transitioned over the years. Brandon Titelbaum (MBA 2015)
About the Speaker: Larry has 28 years of cross-functional manufacturing experience with Cummins. He has served the company in Manufacturing Engineering Project Management, New Product Introduction, New Plant Startups and Shop Operations Leadership within Engine Assembly, Test & Paint. Additionally, he has years of General Manager Experience, including Profit & Loss Responsibility, Facilities, Security, Real Estate, and Corporate Support Roles. Currently, he is responsible for driving common approach methods across 20 engine plants. Larry has also been involved in campus recruiting for the manufacturing function and the Manufacturing Development Program for 12 years. He serves as a talent scout on his recruiting team and is a mentor for several new hires. Larry holds a Master of Business Administration degree in Operations Management from Indiana University, Bloomington and earned his Bachelor of Science in Mechanical Engineering from University of Illinois, Champaign.
2014 DCMME Fall Conference Newsletter
CONFERENCE SPEAKERS Matthew Van Hoosier, Director of Supply Chain, Evonik Industries
Balancing Probabilities & Uncertainties for Long Term Forecasting
Matthew Van Hoosier from Evonik talked about long-term forecasting in the pharmaceutical industry. Due to high uncertainty of how successful a new drug will be and whether a new drug can be developed at all this is a highly complex task. Although the forecast accuracy is around 60% in the near future with a significantly decreasing percentage in the far future, forecasts are needed to make long-term decision, e.g. hiring or capital expenditures. In general, the risk-weighted cost of developing a drug is around $1.3bn. The number is very high due to the low success rates in various phases of the drug development (e.g. phase I, phase II,...). Mr. Van Hoosier said that one out of 100,000 attempts is successfully. Based on my experience with the ELI Project “Commercialization of Cancer Drugs” the success rate is rather around 2-3% over all phases. This success rate has to be factored in when calculating revenue forecasts. In addition, the revenue for a drug is reduced by up to 90% after a patent expires. The timing of this cliff can be easily determined, however, it is hard to forecast by how much the revenue will decline. Due to all these uncertainties a three step multivariable/probability analysis is used to adjust projected sales. 1) forecast what you know (existing drug sales), 2) forecast what you are unclear about (drugs in the development phase that could materialize or die over night), 3) forecast what you don’t know. Mr. Hoosier’s presentation gave a good overview over the problems the pharmaceutical industry is facing. Patrick Haslanger (MBA 2015)
While all speakers added valuable viewpoints on how to use analytics in order to improve their companies’ supply chains the presentation by Matthew van Hoosier from Evonik stood out to me due to my strong interest in the fast paced health care and chemicals industry and past experience within this industry during an ELI project at Purdue. Matthew talked about balancing probabilities and uncertainties for longterm forecasting. Evonik being a special chemicals manufacturer and supplier is strongly subject to the trends and changes in the healthcare industry. Matthew mentioned that these are comprised of globalization where chemicals are being sourced globally (especially from China and India) and medication is supplied worldwide; and cost increases in drug development. He stated that the average cost of drug development is $1.3B. Patents are a major concern as they expire drug companies lose major revenue streams and therefore have to heavily invest in R&D to introduce new blockbuster drugs. During my ELI project I was engaged with Purdue’s Center for Cancer Research, a national cancer institute with 8,990 members from 176 departments and six colleges and the ultimate goal of curing cancer through discovery and the development of innovative cancer solutions. In order to continue their research PUCCR has to develop an efficient method of evaluating drugs in development and above all a method to determine the optimal licensing stage in order to obtain the necessary funding to be self-sufficient. This was the goal of my team’s ELI project: The development of a financial model
to determine the optimal licensing stage during drug development. During this project I analyzed revenue streams in drug development and forecasting of drug and supply demand was a major component. Similar to Matthew’s approach I considered three types of factors: Known factors, unclear factors and unknown factors. What stood out to me was Matthew’s approach of using a multivariable/probability analysis. Another helpful factor I learned from the talk was the classification during forecasting into categories depending on variables and their probability As Matthew mentioned knowing when to shift from one category to the next is extremely important as the variables can change. This is something I will remember for the future. It was also useful to hear a company benchmark of 2-3 degrees to balance the analysis with ability which is a great learning as we are often flooded with data and it becomes hard to see what’s really relevant. This seamlessly links to the presentation of Gary Smith from Caterpillar who stated that “You can have data without information, but you cannot have information without data.” A categorization of which data and variables are critical for which case in drug sourcing as described by Matthew is therefore crucial and something I will remember for future projects in the healthcare industry. Tiffany Wendler (MBA 2015)
Evonik is a large pharmaceutical company headquartered in Germany. Representatives from Evonikâ€™s Lafayette branch visited the GSCMI conference last week. Their focal point was sharing techniques on how to forecast in such a large industry, such as the pharmaceutical industry. Evonikâ€™s analytics system is based around multivariable and probability analysis. They demonstrated how it is paramount to analytics to know when certain variables as well as assumptions change. Some of the variables to consider are competition volume erosion, product life cycle (patents expiring) and supplier strategy. These three dimensions are key to successful forecasting and supply chain analytics because they take into account different aspects of their business. The three dimensions listed are important to the sale of their drugs because it allows Evonik to know when to shift their selling strategy, which was the main point of their presentation, as well as a crucial aspect to their business model. In general, I was very interested in Evonikâ€™s awareness and discipline to change their analytical model based on predictive market changes. Jordan Arteberry (Undergraduate)
About the Speaker: Matt VanHoosier is the Director of Supply Chain for Evonik Industries at the Lafayette, IN site. The Lafayette site is a contract pharmaceutical manufacturing site for Evonik. In this role Matt is responsible for overseeing the production planning, forecasting, and new business proposal functions at the site in addition to being responsible for the warehouse and logistic operations at the site. Prior to this role he held various plant manager roles in pharmaceutical manufacturing operations at the Lafayette site. Matt has over 20 years of manufacturing experience in different leadership roles across multiple industries including petrochemical, specialty chemical, and pharmaceutical industries. Matt has a BS degree in Chemical Engineering from Rose-Hulman Institute of Technology and an MBA from Indiana Wesleyan University.
Matthew Van Hoosier, Director Supply Chain at Evonik Industries, gave a fascinating presentation on balancing probabilities and uncertainties for long run forecasting. It is difficult enough to forecast for the long run but it becomes even more complicated when you must account for variables that are not easily defined such as failures in the pipeline. His solution involves multivariable and probability analysis. In addition to accounting for variability in variables, he mentioned that it is important to know when the focus is being shifted from one product to another as well as when the assumption you made for the model no longer applies. For example, demand for a drug when it is covered by a patent will be very different from demand after the patent expires. While it was not said directly, it is clear that a solid understanding of statistics and probability is necessary for the successful operation of a business. Sarah Komen (Undergraduate)
2014 DCMME Fall Conference Newsletter
CONFERENCE SPEAKERS Lia Douglas, Sr. Strategic Solutions Manager, FedEx Services Sean P. McCreave, Manager, Business Support and Analytics, FedEx Services
Analysis & Modeling- Quantifying the Value of a Supply Chain Solution
The speakers that caught my attention were from FedEx. Lia Douglas and Sean McCreave did an excellent job developing the theme of quantifying the value of a supply chain solution and optimizing the FedEx customer experience. FedEx has a very complex business with many different solutions for many customers. This reminded me of an AT Kearney guest speaker in my Sourcing and Procurement class. Both companies (AT Kearney and FedEx) face difficult challenges in a variety of industries and seek to provide value to their customers. FedEx goes through a process of assessing a customers’ needs, link to ROA and value drivers, designing a solution personalized to the customer, quantifying the solution, and presenting the solution to the customer. Lia explained that if there is no real value added to the customer the proposal will go to the bottom of the shelf. Linking to ROA demonstrates the meaning to the customer. There are many points where there can be a ROA formula impact. Some key value drivers include revenue, total expenses, current assets, and fixed assets. Using the revenue value drivers we can notice that FedEx can reduce order-to-delivery cycle, improve visibility, and improve reliability. All those points are traceable and bring real value to the organization. These won’t be imaginary or hypothetical numbers, but actual figures that will appear in the customer financial statements. The second point that caught my attention is the integration that FedEx seeks to better help their customers fulfill its needs. After
working with the customer to identify objectives they present the solution to the customer need after doing a great deal of data analysis. What surprised me the most was that FedEx does not charge its customers for this service. FedEx is very customer centric and what they are trying to do is to keep the relationship going adding value to the customer’s supply chain to make sure FedEx is their primary supplier to solve their needs. It is extraordinary that a company goes this far as to give free, in-depth supply chain analysis to its customers to make sure that the company is adding value to its customers. It was a fabulous experience to hear how a global company cares about its customers and how they seek to integrate and find the right solution that will add value to a corporation. Gustavo Amorim (MBA 2015) Lia Douglas and Sean McCreave from FedEx also gave an inspiring presentation. Lia spoke about the FedEx process: accessing the needs of the customer, linking to ROA elements, linking to value drivers, designing solutions, quantifying solution, and presenting a solution. I found this part particularly interesting as organizations rarely speak about their particular process, but usually in more generalities. They also spoke about the importance of defining value both internally and to the customer. To define value, one must look at the value drivers. One way to do this is by understanding
the value qualification concept map ((Revenue-Expenses)/(Current + Fixed Assets)). In the end Lia tied it all together by asking: why would a customer be willing to go through this process? The answer is FedEx’s customer wants to meet their customer’s expectations. FedEx is able to help them accomplish their goal. I was extremely impressed with their candor and presentation style. Stephanie Kruse (MBA 2015) I found FedEx’s presentation especially interesting because I did not know that it offers supply chain optimization services; I had always thought of FedEx as simply a delivery company. Mr. McCreave and Ms. Douglas outlined FedEx’s steps for quantifying the value of supply chain solutions: 1) Assess customer needs 2) Link the solution to return on assets 3) Link the solution to value drivers 4) Design the solution 5) Quantify the solution 6) Present the solution to the customer This service is all about adding value to a customer’s business by helping streamline the logistical side of the business. Ideally, FedEx adds value to business owners that allow those business to reach more consumers more efficiently. This feeds directly into a point which Ms. Douglas touched on several times: capturing perishable demand. She stressed how
fleeting demand can be and how important it is to capture those marginal customers while theyâ€™re still on the hook. Greg Meyer (Undergraduate) Lia Douglas from FedEx presented material on the Supply Chain of FedEx and how they use Analytics to quantify their value. FedEx has its own Supply Chain and Information Analytics team in which they are responsible for analyzing correct shipping numbers and many other tasks for getting the customer their product the quickest and most efficient way. The two presenters explained an example process of what the Supply Chain and Information Analytics team uses when analyzing data for FedEx. After analyzing the data they use the results to minimize daily cost. Also, I found it interesting that they are able to take a large amount data gathered from other customers in similar areas and with similar taste and use that data to help make the next order better for the next customers. I didnâ€™t think that Analytics would play such a huge role in FedEx however I was proven wrong by the end of the presentation. Darren Young (Undergraduate) I found myself interested by the FedEx presentation. I have never thought in depth about FedEx or what it is all about but the fact that they have over 200 services greatly surprised me. How they use analytics to make their company better was
what I would have expected. They really talk and listen to what customers have to say in order to try to improve what they can do. They then present a solution to try to help the exact problem that was previously identified. This is a long process that must be followed full of researching the problem and ways it can be improved. FedEx, as a transportation company, focuses greatly on reducing delivery time. This makes for more goods sold, happier customers, and more products produced because the customer is being reached faster therefore being able to consume the product sooner. Sean focused on how analytics is used at FedEx. One thing FedEx does to determine how to network with customers is look at customerâ€™s current shipping habits or patterns. FedEx is not a small delivery company that only delivers finished products to customers. FedEx is in charge of shipping many raw products to producers in order to be made into final products. So, FedEx does not only affect the end customer. FedEx is in charge of delivering things to many different customers and has to use analytics in order to figure out how it can go about making happier customers by researching their results to see what needs to be improved. Megan Isbell (Undergraduate)
the first being a value driven solution process, and the second being analysis and modeling. From what I understand, a value driven solution process consist of certain steps including assessing needs, linking to ROA (return of assets), linking to value drivers, designing a solution, quantifying a solution using analytics, and presenting a solution. One thing that caught my attention in this process was linking to valued drivers. FedEx drivers have a lot of interaction across FedEx hubs and headquarters, as well as with users of FedEx so they would know a lot about what the best things to do would be. That was probably the piece that stood out the most in the presentation. As for the analytics and modeling part of the presentation, FedEx works collaboratively with customers to help identify primary objectives and rank the transportation-based networks. FedEx also bases all its models on finding optimal origins. I do not necessarily have a clue what all of this means, but in a few years, after continuing my plan of study, I hope to be able to comprehend, and maybe even find ways of improvement for supply chain and analytics infrastructures. Nicholas Russell (Undergraduate)
The information I gathered from the FedEx presentation was interesting. FedEx uses two main reasonings for their supply chain:
2014 DCMME Fall Conference Newsletter
About the Speaker: Lia Douglas is part of a team that supports Corporate and Worldwide accounts in the design and implementation of customized logistics solutions. As a supply chain consultant, she is charged with assembling and managing crossfunctional teams who work across all aspects of a customerâ€™s business to determine how FedEx can provide unique solutions to issues in their supply chain. The results range from strategy development, global supply chain optimization, mode optimization, direct distribution, network modeling, and system integration that can improve the inbound, outbound, and returns stages of distribution. The impact of these results are quantified through improvements to various accounting and financial metrics. Prior to this role, Lia held positions in various FedEx departments including Global Sales, Corporate Training, Sales Management, and International Direct Distribution Management. Lia holds an MBA in International Business from Bocconi University in Milan, Italy and is a graduate of Florida International University in Miami, FL. She is fluent in Italian, Spanish, and French.
About the Speaker: Sean McCreave leads a team of FedEx business professionals who have developed analytic tools to meticulously measure current and future supply chain performance in quantifiable terms. The Business Support and Analytics organization is an industry leader in delivering analytic solutions for complex global supply chain performance for Fortune 500 companies around the globe. His highly skilled team of professionals provides comprehensive supply chain analysis and cost modeling using stateof-the-art network and transportation modeling tools. By evaluating historical supply chain data and business requirements they are able to design and recommend best-in-class solutions for businesses around the world. FedEx Business Support and Analytics also provides design, forecasting and planning for FedEx holiday and peak planning, and are instrumental in providing the corporation the information necessary to maintain on-time performance when volumes have the capability to push global systems capacity. Since joining FedEx, Sean has been a contributor in the development of global customer focused solutions through the power of analytics and is a member of the eCommerce Center for Excellence. His team leverages the FedEx portfolio of operating companies to provide end-to-end business solutions that connect companies and their customers to over 220 economic markets throughout the world. Sean is an active member in his community, a frequent speaker on topics including optimizing global supply chains and leveraging analytics for better supply chain performance. He earned his Bachelor of Science degree in Mechanical Engineering from the University of Mississippi.
TVS India Internship Upcoming Events May 9-30, 2015
Who is TVS? TVS is a Deming Prize winning twowheeler manufacturing company producing motorcycles, scooters, and mopeds. TVS has been credited with many innovations in the Indian automobile industry, notable among them being the introduction of India’s first two-seater moped. Krannert alumnus Venu Srinivasan (MSM ‘77) is the chairman and managing director of TVS Motor Company. The TVS India Internship organized by the DCMME/GSCMI Center in conjunction with the TVS Motor Company was developed in 2006. Providing a unique study abroad internship opportunity in Bangalore, India, this trip assists students in developing a global business perspective while enhancing their resume profiles. Participants have a distinctive occasion to take concepts learned in the classroom and apply them to real life business situations.
credit course begins in mid February when students begin communication with their mentors. Discussions with their mentors regarding project objectives and completion of research pre-departure for India help to ensure a productive and successful internship for everyone involved. The course culminates with a three week visit to Bangalore, India in May where students continue work on their projects with TVS mentors and present their final work to TVS Company representatives. Projects cover a wide range of areas including Operations & Supply Chain management, Human Resources Management, Sales & Management Information Systems, and Marketing to name a few. Project topics vary each year.
This innovative & challenging global program is celebrating its seventh year of success with a total of 97 students having participated, represented by MBAs, MSHRMs, as well as engineering and management degrees. Work on this two
... View more details on last year’s trip at gscmi.org
This experience exceeded my expectations in every way. We received intimate exposure to TVS Motors and other businesses in India. Through my project, I was able to study and understand the dramatic political, economic, social, and technological changes India is undergoing as it develops. We were exposed to the richness and diversity of Indian culture through events and weekend travel to different parts of India. As a student, I can’t think of a better way to gain international business experience—I worked in a different country for a company based outside of my own, on a project focused on foreign markets, alongside a partner from a different country. Peter Jacobson (MBA 2015) An amazing opportunity to work for a company in another part of the world and learn how business is done in a different culture. We were given real projects that TVS valued and we therefore got to make a positive impact on the company.... Sarah Tanoury (BSIM 2013)
2014 DCMME Fall Conference Newsletter
CONFERENCE SPEAKERS Cara Curtland, Strategist, Strategic Planning and Modelling, HP, Inc.
Managing Complexity with Analytics and Governance
Cara Curtland’s talk on managing complexity with analytics at HP was the one that impressed me the most. The sheer scale of HPs product and customer portfolio makes it a perfect battleground for supply chain innovation. To quote some numbers, in every 60 seconds HP sells – 1 server, 105 PCs and 88 printers, and has 600 suppliers, 92 distribution centers and 160 thousand retail stores. As customer preferences are unique it becomes essential to offer customized, build-to-order products which results in more SKUs. Combine this with HPs business units (IPG, PSG, and EBG) who may all be using similar components it introduces high complexity in the number of SKUs needed. The challenge with having a high number of SKUs is that demand planning and forecasting needs to be done for every SKU which increases the variability. Add to this the challenges of managing inventory and deciding when to get rid of excess inventory. There is also significant storage, transport and human capital overhead involved in managing this many SKUs. So SKU reduction by analytics and governance becomes an important aspect of the supply-chain. HP’s target is to reduce the number of SKUs that they have by 50%. HP is leveraging their scale through convergence and standardization to drive component standardization across all HP product lines. For example, memory used by IPG and PSG may be similar for certain products. By streamlining and consolidating spending across the business units for these common parts, HP can gain significant negotiating power over their suppliers. Also, standardizing components across the business units for components may help HP get volume discounts from
their suppliers. Post standardization, HP could look at consolidating their suppliers and manufacturing partners to reduce complexity of dealing with too many suppliers that was a result of the complexity in SKUs. Profiling the category by doing a ‘Spending Analysis’ could provide insights on spending with respect to different vendors. Also ‘Needs Analysis’ to develop a thorough understanding of the product, any enhancements that may be required, and a view of the supplier performance could help drive product standardization. The strong need for governance that drives results was emphasized. The governance team should be responsible for getting buy-in between cross-functional teams and getting the right people on board to get perspectives. It needs to have the right focus and necessary tools for making informed decisions. This team will be key in driving product standardization across product lines and business units and will be the overall flag-bearer to drive supply-chain optimization across the enterprise. It would have been better if Cara would have illustrated how a new product development & SKU selection decision was affected by the governance team. On the flip-side, with very short product life-cycle adding an additional governance process could lead to increased product development time and delay the time to market. So there should be a balance between focusing too much on standardization and the strategic importance of the product in the market. Shiva Chandrashekher (STEM MBA 2015) Cara Curtland, Strategist at Hewlett Packard, discussed the interesting topic of
managing complexity with analytics and governance. She started talking about the history and scope of HP as “The World’s Largest Technology Company”. HP’s reputation is the result of 75 years of innovation including a strong back record and thousands of customer problems solved thanks to the integration of crossfunctional teams and the combination of infrastructure, software and services that bring value to customers. Cara Curtland provided specific numbers to illustrate HP’s heavily scaled and high complex supply chain. She mentioned that every 60 second, Hewlett-Packard sells 4 servers, 105 PCs and 88 printers. Moreover, their operation is combined with more than 600 suppliers, 136 manufacturing sites, 92 distribution nodes, 42 thousand direct enterprise customers and 160 thousand retail stores worldwide. In this way, governance takes an essential role in the organization in order to monitor projects and mitigate risks through challenging processes. One of the main topics that Ms. Curtland addressed was portfolio optimization, as a way of evaluating the number of SKUs managed by the company. Having several numbers of SKUs represents variability and more required resources since the demand planning analysis and inventory management should be done for each SKU individually. There are also several cost implications in terms of warehouse and distribution after managing an expended portfolio. In order to guarantee Portfolio Optimization, HP performs first an asset consolidation as a way to minimize component variation and costs, while improving quality and innovation. Second, the analysis is expanded through SKU compression to serve country requirements
and finally the company develops the “Ongoing Long Tail Analysis” to eliminate SKUs based on revenue, volume and margin. In conclusion, Cara Curtland’s speech discussed the importance of continuous improvement process develop through governance, as a powerful tool aimed to guarantee profit maximization and customer delight. Governance involves data analysis, decisionmaking process and metrics that monitor and challenge strategic processes of the organization in order to leverage every day opportunities in the supply chain. Gisela Condado (MBA 2016) Cara Curtland from Hewlett-Packard (HP) presented on ‘Managing Complexity with Analytics and Governance’. HP has a long history of innovation and great achievement. They continue along this same path not only in their approach to supply chain optimization, but through cutting edge programs such as Project Moonshot. Cara highlighted the need to “drive design and supply chain changes to optimize customer satisfaction and system profitability”. This highlights the complexity the HP team faces when balancing fulfilling customer’s individual needs with maintaining a manageable SKU count. As one can imagine, given the number the options available on HP products, the SKU count is quite high. The more SKUs the greater the uncertainty in forecasting demand and the higher risk for an excess/ shortage of inventory. They approached reducing the SKU count through portfolio management. HP eliminated SKUs based on margin, revenue and volume. They also minimized the amount of component variation and used ‘fewer option codes to serve country requirements’. To further simplify the supply chain, they use postponement to delay customizing each until the last possible moment. A similar approach can be used for products with low volume, high margin, and above average variability. One way to measure product interdependencies is through the revenue coverage. It allows the user to determine how much revenue can be fulfilled from the portfolio. Overall, Cara’s presentation was both engaging and rewarding. HP is using cutting edge supply chain and manufacturing techniques to make the decisions for the organization. It will be interesting to see where HP ends up next! Stephanie Kruse (MBA 2015)
About the Speaker: Cara has been with HP for 16 years. At HP, Cara developed and diffused best practices in inventory management, network design, forecast accuracy, SKU reduction, product planning, manufacturing, and distribution. During her personal time, the Cara spends time with her husband, two sons, and their dog. They enjoy hiking, camping, taekwondo, reading books, travelling, and watching movies together. Cara graduated with both BSIE and MSIC from Purdue University.
2014 DCMME Fall Conference Newsletter
CONFERENCE SPEAKERS Sean Anderson, Senior Procurement Manager, IBM, Inc.
Smarter Supply Chain – Innovative Use of Analytics in IBM Supply Chain to Drive Business Value Sean Anderson provided concrete examples and well-defined strategies for accomplishing a company’s supply chain vision through “Smarter Supply Chain Analytics.” With a degree from Marquette University in Finance, as well as an MBA from Purdue, Anderson joined IBM in 2004 and is now the Senior Procurement Manager at the globally integrated enterprise. The theme of his discussion was establishing a smarter supply chain through a new era of reinvention. With IBM’s supply chain scale recently extended to the back end of the process, it experiences $100 billion in cash flow and over $7 billion in annual procurement savings. While IBM is still working to increase its value deliverables, it has created a four-prong system to effectively leverage big data. First, the Descriptive section answers the question of “What happened?” through synchronization, visibility, and optimization. This transparency of the supply chain through real time visibility to all employees has resulted in an internal culture shift. While there might be a slight learning curve associated with this transparency throughout the organization, I think that it will ultimately result in increased collaboration and more informed decisions. The Predictive and Prescriptive sections address the issues of “What will happen?” and “What should we do about it?” In a case study on these two, forecasting algorithms were built to improve the supply chain through life cycle analysis and predictive models, where IBM delegates its suppliers what to order and pull for stock, in exchange for price protection. This resulted in benefits including a serviceability increase of 10% and return reduction of 50%. I was
curious of the risks IBM took by assuming decision-making power for its suppliers. The supplier would presumably receive some benefit, but it is seemingly IBM that is accepting the risk. This question was clarified during Larry Hanson’s presentation on Cummins when he said, “We are responsible for the entire supply chain, whether we make it all or not.” Although IBM is outsourcing through various partnerships and suppliers, it is ultimately IBM’s name on the finished good, despite all the other contributors. Finally, the Cognitive section of using big data analyzes “How do we optimize a big data dynamic?” The case study on this is the expansion of Watson and cognitive capabilities. This model’s capabilities are trifold: asking the correct questions to interpret human data, discovering how to adjust to the specific user, and deciding on a hypothesis. Anderson stated that the benefits of the Watson approach are that it acts as a proposal professor, quality quasar, and risk rover. He said that this is especially useful in the medical field, as the device can sort through journals and research quickly to decide how to treat a patient. With much exposure to healthcare, I found this to be debatable. Each diagnosis and treatment is patientspecific, so sorting through data should not be the basis on making a medical decision. While it might be helpful to tag articles for the practitioners to read and consult, I hope that the ultimate decision is not left to the Watson approach. Anderson summarized that IBM, and presumably many other supply chains, have the ultimate goal of attaining supply chain transparency, leveraging big data and advantage analytics, and extending to a multi-enterprise supply chain. His
presentation was very cohesive in terms of the steps and mindset that could really be implemented in any type of sourcing and procurement method. Dawn Edwards (MBA 2015) One company that I found to be most interesting was IBM. The presentation was given by Sean Anderson, a senior procurement manager at IBM and former Krannert MBA graduate. In 2013, IBM collected $99 billion in cash. They are a perfect example of a company that is trying to access all of the information available to them in big data. Some of the goals of the company were to become a more globally integrated enterprise, to have a smarter supply chain and new era supply chain reinvention. They planned on achieving these goals by using descriptive, predictive, prescriptive, and cognitive analytics. They have taken analytics one step farther, including cognitive analytics as well. Cognitive analytics is the use of deeply analytical computing systems that can learn and interact naturally with people. Sean gave a few examples of how they are using these types of analytics. They use descriptive analytics in their development of a transparent supply chain. IBM wants to have a consolidated information framework; they want to be able to work with advanced analytics and optimize user experience as well as continually collaborate with partners. They have also created Watson. Watson is their attempt to use cognitive analytics. Watson will help them solve problems using unstructured data, generate and evaluate evidence-based hypothesis, understand natural language and human language, and adapt and learn from user selections and responses. Essentially they want Watson
to be able to ask, discover and decide. The future of the analytical side of IBM is to increase their supply chain transparency, leverage big data and advanced analytics and to improve Watson. I thought this presentation was particularly interesting and helped me better understand the big picture of analytics and supply chain. Samuel Dorsa (Undergraduate) The GSCMI Fall 2014 conference offered a fantastic opportunity to hear from many industry professionals. One of the speakers I found particularly interesting was Sean Anderson. Sean Anderson a Senior Manager in Global Procurement from IBM presented on “Smarter Supply Chain Analytics”. I found his presentation insight as he spoke of moving supply chain management from a cost center to a value center. The business impact was quite impressive. IBM wanted to be a globally integrated organization by focusing on three areas: global, functionally, and products. Analytics is a key driver in making this idea a reality. IBM streamlined global processes and increased information sharing. This led to greater supply chain transparency and improved use of big data. IBM used supply chain analytics to improve the usage of Big Data. Analytics at IBM is broken into four categories: Descriptive, Predictive, Prescriptive and Cognitive. Descriptive looks at what happened and focuses on visibility and transparency. Predictive is driven by analyzing future scenarios and the potential impact on the businesses. Prescriptive focuses on collaborating to determine a next step or solution. The final category, cognitive, is IBM’s newest and is centered on Watson Analytics. Watson is a computing system deeply rooted in analytics that learns and interacts with people. Watson utilizes three steps to analyze large amounts of data. First, the user asks a question. Watson has the ability to understand normal, everyday language and communication. Then, it discovers by using the data and understanding the user’s responses. From there, Watson generates a hypothesis. The system has a wide range of possible uses from outer space to a patient diagnosis. It is quite impressive technology and I am glad Sean was able to share it with us today. Stephanie Kruse (MBA 2015)
About the Speaker: Sean Anderson is currently a Senior Procurement Manager in IBM’s Services and General Procurement organization. In his current role, Sean supports IBM’s Global Service organization by ensuring business unit strategies and operations align with the procurement organization and IBM’s extended supply base. He has worked for IBM since 2004 and has held various positions across IBM’s supply chain in areas such as Manufacturing, Strategy, Supply Demand Planning, Procurement and Sales Operations. He has particular expertise in strategic planning, financial and data analysis and, project management and has leveraged these skills in leading large global projects and teams within IBM’s Global Supply Chain division. Prior to working for IBM, Sean was a Credit Analyst at Wachovia Bank in North Carolina. Sean graduated with an degree in Finance from Marquette University and a Masters in Business Administration from Purdue University. Sean lives in Rochester, MN with his wife and three daughters, and enjoys spending time with his family, playing sports and enjoying the Minnesota outdoors.
2014 DCMME Fall Conference Newsletter
CONFERENCE SPEAKERS Dr. J. George Shanthikumar, Richard E. Dauch Distinguished Professor in Manufacturing and Operations Management, Purdue University “Shaping Consumer Demand within the Supply Chain”-- DeVos Faculty Research
One of the speakers I found most interesting was Dr. George Shanthikumar from Purdue University. He presented a research topic “Shaping Sustainable Demand to Match with the Supply” (contributors: Karthik Kannan and Na Zhang). Supply and demand models benefits greatly from analytics and big data. Marketing can cause problems in demand forecasting, price and promotion. Prior to analytics, the marketing department would set a price based on elasticity. Now we can use analytics to determine who will buy at full price and target those customers will buy repeatedly and/or buy at full price. The organization can eliminate those potential customers who will only buy at a discounted price. I found this part of the conference particularly insightful given my past work experience. While working for a retailer, we found that customers were often not willingly to pay full price for merchandise. They had been trained to buy products on promotion. If we were able to better utilize our data through advanced analytics, we could target those customers who are willing to pay full price for the products. Stephanie Kruse (MBA 2015) The topic that was most interesting to me was the presentation by Dr. Shanthikumar on Sustainable Supply Chain. This was a research presentation that looked at tackling a real world problem and was able to walk through the entire analysis similar to our case studies. And it was
a concept that was easy to connect with (matching sales and discounts with procurement) despite the level of detail presented. Additionally, this was a topic that I connected with on a deeper level, as I have a keen interest in sustainability topics. There were so many different aspects included in this study, from psychology to marketing, and obviously procurement that the complexity and communication required for such a system to be implemented seems very intensive. It would be interesting to see such a system tested out somewhere on campus, a bookstore for example, and see the real world implications on a typical consumer product. David Howarth (STEM MBA 2015) The topic that impressed me the most was ‘Shaping sustainable demand to match with supply’ by Dr. George Shantikumar. Grass fed beef was a new product in the market that contained lesser fat and more vitamins. However, the company was facing a serious issue in terms of a mismatch between manufacturing, demand forecasting, pricing and promotion. This was a serious problem since beef is a perishable product. Data driven technology & analytics were used to find which customers will buy, and how they will react if the price is increased versus the behavior if the price is reinstated. The results from this technique were then used to develop precision marketing plans to target specific groups and giving them offers such as coupons.
I intend to major in marketing and the takeaways from this topic in particular were very important. This was a unique example where we learnt that an organization can’t work and be viewed in a silo form. Also one function is interdependent on the other (in this case marketing/pricing affecting production). It is very important for a company to have an accurate demand forecast and adjust its production accordingly to minimize both losses and lost sales. Bipinchandra Kadiri (STEM MBA 2015)
CASE COMPETITION The third annual Boeing Case Competition involved a total BOEING JUDGES of 30 students from Purdue University competing together in Vicki Burris Christopher Johnson teams for a chance to qualify for the second round against the Pat Strange Courtney Barber University of Illinois. David Poplawski Zachary Lessem
CASE PARTICIPANTS AIMS
Krannert FA Super Hornets
M2 Logistics Malcolm Hooks
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Congratulations Final Round Winners! TeamIMPACT: James Yeh, Wesley Huang Angela Li, Kelvin Dieser, Vince Coiro This team won the final round competition vs. University of Illinois in Seattle, Washington hosted by Boeing.
2014 DCMME Fall Conference Newsletter
CLASS PRESENTATION: Marc Hochman, AT Kearney “Supply Team 2020 – The Future of Procurement”
On September 29, 2014, Mr. Marc Hochman gave a guest lecture, titled “Supply Team 2020 – The Future of Procurement” in the Strategic Sourcing and Procurement class. As a Purdue undergraduate, as well as Krannert Master’s alum, Hochman has over 25 years of consulting experience, and is A.T. Kearney’s Vice President of Procurement and Analytic Solutions. His presentation on the “Assessment of Excellence in Procurement” gave an overview and strategic plan as to where the profession and supply team needs to be by 2020, in order to accomplish its industrial goals.
STUDENTS’ COMMENTS Mr. Marc Hockman’s session was excellent. First, it was good to learn real examples of how companies value procurement and strategic sourcing nowadays. Secondly, I was able to relate many aspects of the speech to my personal experience working in the performance
management department at Saudi Aramco Oil Company. I had faced many issues implementing the right metric to drive people’s behavior positively. Marc exposed me to the ROSMA model, a model developed by expertise in Procurement Function with the objective to measure performance and display management opportunities for continuous improvement. I enjoyed the session, and I think it is very relevant to what we discuss in the Strategic Sourcing and Procurement class. I am interested in learning more about ROSMA and how companies benefit from such model. Mastafa Alhassan--MBA 2015 It was truly a pleasure to have Marc Hochman in our class as a guest speaker. He is a great consultant for a leading consulting firm and for him to take time from his busy schedule to come and speak to us is a great honor. As an experienced industry leader, he gave us great insights about procurement in general and how
ROSMA can make an impact in many companies. It was very enlightening to learn about procedures and standards that AT Kearney is implementing in other companies and how it is becoming industry standard. Gustavo Amorim—MBA 2015 Marc Hochman’s speech was compelling, and I could tell that he was passionate about how ROSMASM could change the game in how companies and investors gauge their procurement performance. I really enjoyed this speaker because it further solidified my understanding of how procurement can be crucial to the success of a company. Nicholas Bafunno—MBA 2015
STUDENTS’ COMMENTS Marc Hochman’s very insightful presentation on “Supply Team 2020” provided us with a thorough overview of A.T. Kearney’s ROSMA ratio, it’s impact on the current industry and its implementation. In today’s world having an efficient and optimally working supply chain is imperative to be competitive (“in the game or watching the game”). Lukas Brenner—MBA 2015 What made Mr. Hochman’s lecture unique and particularly useful is his clear outline of where we’ve been, where we are today, and what the future may hold. While keeping his thoughts applicable to many industries, Hochman was able to describe the ROSMA model used by A.T. Kearney. The greatest benefit I found the standardization of ROSMA framework to have is the creation of a benchmark for the procurement against other industries. Through the various case studies in Strategic Sourcing and Procurement, along with the outsourcing and negotiations exercises, I now understand how vital it is to be fully aware of not only the productivity of one’s own procurement, but also the functionality of the supply chains of competitors within similar, as well as different, industries. Overall, the concise and fluid presentation allowed us to better understand the importance of maintaining a structured and wellrounded procurement, in addition to constantly thinking about the future in terms of competition and innovation. Hochman was a very consistent and thorough speaker, and his explanation of ROSMA is one that I will take into
account no matter what industry’s supply chain I become a part of after graduation. Dawn Edwards—MBA 2015 Marc was an excellent speaker and paid attention to fine details while answering our class’s questions. He demonstrated his industry knowledge as well as ATK’s strength in quantifying and delivering results in a field where responsibility and accountability are a challenge. I thoroughly enjoyed his presentation and learned about the evolvement of the sourcing & procurement sectors across industries. Priyanka Govindraj—MBA 2015 I truly appreciate Marc Hochman’s active engagement with Purdue and Krannert. It is great to have the active support of such an influential business leader from a firm that has such a strong fit with the operations / supply chain and analytical focus of this program. I have enjoyed many interactions with Marc in his many visits to Krannert. Peter Jacobson—MBA 2015 Marc did an incredible job in opening the perspective on how procurement can advance a company’s merchandise, be
economical, and be more competitive. I believe Marc and A.T. Kearney are in the forefront of benchmarking organizations and his experience gives us, as students, the insight into what measurements will be used in the future as part of quarterly results and earning calls. Raudel Medina—MBA 2015 Marc Hochman did an excellent job of presenting. He challenged the intellect of the students by presenting to us as though we were CEO’s, CFO’s and top executives. This made for a great Q&A session throughout the entire lecture. After his talk, I feel that I am able to go into an organization and make a huge impact by just looking at the procurement function and growing the revenue by cutting spend and avoiding unnecessary spend year-over-year. Marc talked about how holding people accountable is one of the hardest things to do when they do not care, so it is important to hire people that want to win. Marc gave ideas on how to improve, start using principles, hold people accountable, coach the winning team, and celebrate success. John C. Upshaw —MBA 2015
2014 DCMME Fall Conference Newsletter
LECTURE SERIES STUDENTS’ COMMENTS
Marc definitely commands a presence. I enjoyed having him come and speak with us and share his tidbits of knowledge from practical experience. As usual with the guest speakers, it is evident that there is a difference in the practical and theoretical learnings that happen, but Marc did a good job of showing how the industry is changing to bring the two closer with more accurate metrics. Najib Yang —MBA 2015 During the presentation I found the presenter extremely knowledgeable in his selected profession of supply chain management and improvement. Not only was Mr. Hochman extremely well informed, but he was passionate about his subject, making the entire class interesting and informative. Mr. Hochman was decisive with his replies to questions, not only supplying an answer but willing to add extra information and background to help our class to understand why the
answer was correct. I enjoyed Marc Hochman’s presentation greatly and would look forward to other presentations from him. Nathaniel Grove —MBA 2015 This was a very interesting lecture as it allowed me to understand further of the application of what we learn in class and how much it can evolve. The presentation was very well prepared and very well delivered. Daniel Terayanont—MBA 2015 Marc was dynamic and very informative in his presentation. We could correlate our learnings from procurement lectures to Marc’s content. Marc was superb in explaining to us the need for a procurement metric. Rohan Kekatpure—MS GSCM 2014
LECTURE SERIES Old Master’s Speaker Class Presentation Scott Bracale, President of Tween Brands, Inc. BS 1983 Krannert School of Management, Industrial Management MS 1986 Krannert School of Management, Finance Scott Bracale’s presentation had a lot of real world advice that will benefit me in the future. I believe Scott’s top three words of advice were 1.) Differentiate yourself 2.) Know how to leverage people 3.) Don’t be a perfectionist. Each of these was applicable to my real life. In fact, if I am able to apply them correctly and continuously in my life, I believe it will improve me as a person. Scott emphasized that differentiating yourself from others was important in the job market, and that attitude is the game changer. Passion and a positive attitude are the keys to success. In fact, most recruiters are looking at the attitudes of their candidates, instead of their skills. This was a shocking statement, but it most definitely is true. Skills can be taught, while attitude is not always fixable. Bad attitudes can spread like a virus in the workplace. Therefore, it is important that you learn to control your attitude. Scott said that if you’re not happy now, you need to take time and figure it out and fix it. I experienced this first had at my internship last summer, when I was unhappy with my position, manager, and summer project. After several weeks, it became apparent that my bad attitude had seemed to spread to my fellow interns. Just as I was slacking on my work load, some of my fellow interns were doing the same. As a result, I choose to change my attitude. I tried to find passion in my job by pursuing other involvement in the company. Also I tried to establish a positive attitude through hbetter communication with my manager about my summer project. Attitude is everything in the workplace. Next, Scott drew on the importance of knowing how to leverage people. This is not only important in the workplace, but in life in general. You can’t lead people that don’t want to follow. As a result, you must understand the reasons why people follow
leaders. The most fundamental reason people follow leaders is because they believe the leader has interest in their success. The most successful leaders engage their followers and express interest in their followers. I have found this to be a very true statement. The most influence leaders in my life were the ones that expressed interest in my future and my success. Likewise, it is apparent that the friendliest people are always the people that make their conversations about you rather than about themselves. People like to talk about themselves, so well liked and successful people will always let people talk about themselves. As a future manager, it is important that I accomplish this skill. Lastly, Scott specifically stated to NOT be a perfectionist. This was probably the most influential part of his presentation for me. I consider myself to be a perfectionist. For the longest time, I thought being a perfectionist was a good quality; however, Scott made it clear that being a perfectionist is not as great as it is made out to be. Perfectionists in the workplace cause problems by getting in the way and frustrating other employees. Therefore, it is important to pick your moments very carefully as to when to be a perfectionist. Perfectionists must learn to tolerate imperfections and let things be ok. This is and will continue to be a challenge of mine. I have been a perfectionist all my life, but I am trying to learn to let go. I have seen first-hand the challenges that perfectionism can bring to the workplace through my internships. The most evident being that my projects take much longer than what my managers expect; however, my projects also seem to exceed my manager’s expectations. One day, I hope to overcome my perfectionist qualities.I really enjoyed Scott’s presentation. He had some really great advice and experience to share with our class. Kelley Pund (Undergraduate)
information on many topics ranging from motivation to career advice. He started by explaining how he progressed from graduate school to his first job as a consultant. Consulting was a good choice for him because he wanted to start out broad to see what he really wanted to do. From there, he talked about taking bold chances when you’re fresh out of college. Many new grads don’t have a lot of obligations to start out, so taking chances at this point in your life can lead you to many opportunities or experiences that you may never get to have. The most interesting part of the presentation was when he talked about customer intimacy. Personally, this talk was beneficial to me because it helps me bring my future career into perspective. Since I want to work in manufacturing, I now know that I don’t necessarily have to work for a manufacturer of something that is of personal interest to me to be successful. As long as I can continually grow in what I’m doing and be happy, it doesn’t matter if I’m working for a paper plate manufacturer or a high end car manufacturer. One way that I am already following the speaker’s advice is by being bold and applying to graduate school. I realize that there are risks associated with this, but it is good for me to take advantage of the fact that I have little obligation to anyone but myself at this point. The Old Master’s speaker was a great experience, and I would advise other students to take advantage of listening to some of the speakers that are currently on campus. Greg Nichter (Undergraduate)
Today’s speaker gave us a lot of good
2014 DCMME Fall Conference Newsletter
JOIN US FOR THE 2015 GSCMI SPRING CONFERENCE
“Collaboration: Strengthening the Links in Your Supply Chain”
April 23 UNDERGRADUATE & GRADUATE STUDENT CASE COMPETITION
April 24 SPRING CONFERENCE & Intercollege Case Competition
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DCMME / GSCMI Krannert School of Management 403 West State Street West Lafayette, IN 47907 firstname.lastname@example.org www.gscmi.org 2014 DCMME Fall Conference Newsletter