Chabot Wallpaper Analysis Cavanaugh Dunn Powell 1 Agenda

Chabot Wallpaper Analysis Cavanaugh, Dunn, Powell 1

Agenda �Introduction �Manufacturing �Transportation/Service �Inventory �Summary Introduction Manufacturing Transportation/ Service Inventory Summary 2

Major Problems �Long production runs �Poor service from contracted carrier �High inventory levels Introduction Manufacturing Transportation/ Service Inventory Summary 3

Manufacturi ng Introduction Manufacturing Transportation/ Service Inventory Summary 4

Streamline Manufacturing Process �Postponement at the Tennessee manufacturing plant �Hold inventory earlier in the supply chain ◦ Work in Process vs. Finished Goods �Helps to create a more responsive supply chain Introduction Manufacturing Transportation/ Service Inventory Summary 5

Current Manufacturing Process Introduction Receive Order Packaging (1 day) Prepare Substrate (21 -28 days) Printing Pattern/Desig n (2 days) Apply Paste (1 day) Change Over Line (12 hours) Manufacturing Transportation/ Service Inventory Summary 6

Proposed Manufacturing Process Introduction Prepare Substrate (21 -28 days) Packaging (1 day) Apply Paste (1 day) Print Pattern/Desig n (2 days) Receive Order Changing Over Line (12 hours) Manufacturing Transportation/ Service Inventory Summary 7

How To Improve Lead Time Manufacturing Process Lead Time 25. 5 days Current Process Variation in Lead Time 3. 5 days Proposed Process 0 Introduction 7 days 10 20 30 Time (Days) Manufacturing Transportation/ Service 40 Inventory Summary 8

Transportatio n/ Service Introduction Manufacturing Transportation/ Service Inventory Summary 9

How To Improve Transportation �FOB Destination/Freight Prepaid ◦ Change freight terms to FOB Origin/Freight Collect if customer’s transportation is cheaper �Build relationships with more than one carrier ◦ Contingency planning Introduction Manufacturing Transportation/ Service Inventory Summary 10

Inventor y Introduction Manufacturing Transportation/ Service Inventory Summary 11

Inventory Solutions �ABC Analysis on item turnover rates ◦ Reduce case sizes for B and C items ◦ More responsive supply chain enables us to ship more A items to keep up with demand Introduction Manufacturing Transportation/ Service Inventory Summary 12

ABC Analysis Turnover Rates of Items 7 5 4 5 -6 Turns 3 2 Maximum Turnover 1 -2 Turns Per Year 6 1 Minimum Turnover <. 5 0 Top 20% Introduction Next 30% Items Manufacturing Bottom 50% Transportation/ Service Inventory Summary 13

Tradeoffs �As case sizes decrease… ◦ Packaging and handling costs increase ◦ Customer service levels increase ◦ Obsolescence costs decrease ◦ Inventory costs increase for Chabot, but decrease for retailers Introduction Manufacturing Transportation/ Service Inventory Summary 14

Summar y Introduction Manufacturing Transportation/ Service Inventory Summary 15

Summary � Postponement is key to increasing customer service ◦ Lead times will decrease � Improve carrier strategy to be more responsive to customer needs � Reduced inventory levels lead to better customer service � Customer service is at the heart of everything you do Introduction Manufacturing Transportation/ Service Inventory Summary 16

Questions 17