Thesis Project and Research Methods MIT SCM Class

Thesis Project and Research Methods MIT SCM Class of 2012 Orientation Bruce Arntzen

Thesis focus and approach n Focus of research is to answer a question q q n Should be practically vs. theoretically oriented Apply to a logistics or supply chain topic Advisor must approve the question to assure the scope is feasible Contribution to expand the knowledge base Different methodologies and approaches q q q Analytical – develop or enhance a logistics model or approach Case Study – apply concepts to (or develop them from) a real situation Technical Study – investigate a technology’s impact on logistics Secondary research or literature review – develop a knowledge base on a specific topic and synthesize/analyze … August 2010 2

Guidelines n Flexible: q q q n Approach – whatever is necessary Company involvement – welcomed, but not required Length – long enough to answer the question Not flexible: q q General structure Literature review & citation: position the work Rigor: accuracy and repeatability of the analysis Original thought, and to the extent possible, some contribution to knowledge in the field; generalize from specific results August 2010 3

Who is Eligible to Sponsor a Thesis Project? Supply Chain Exchange Members

What is it all about from sponsor’s view? Each sponsorship entitles the Thesis Partner company to the following: • One or two graduate students working on the project for 9 months (Sept – May) • A faculty member or research director with relevant experience as a thesis advisor • A completed Masters Thesis presented in May at MIT CTL’s annual Research Fest • A final presentation to the sponsoring company’s management team • A high-quality executive summary appropriate for distribution inside the company

What makes a great project? Good Design has: Good Execution has: - - Tight description Real problem Interviews Site Visit(s) Data Collection Analysis or Modeling Discussion/refinement Present results Early NDA Active Sponsor team Early Site Visit Early Data Collection Weekly con calls December Review Mtg. Sponsor to Poster Session Sponsor to Research Fest Students Present at Sponsor

Thesis Date approximate August 2010 7

Turning it in n Formatting q q n n n http: //libraries. mit. edu/archives/thesis-specs https: //web. mit. edu/21. Guide/www/th-form. htm Template? Submit title in March Printing August 2010 8

Research versus Consulting n Consulting projects look for specific numeric results while research looks to uncover insights, n Consulting projects result in production ready tools and approaches while research projects develop prototypes that prove concepts, n Consulting projects are usually time sensitive while research projects have an open-ended time frame, and n Consulting projects cover all aspects of the problem while research projects focus on relevant portions of the problem that are illustrative. August 2010 9

Examples of Recent Projects n n n Biofuel Supply Chain Characterization Demand Supply Synchronization For Promotional Events Inventory Segmentation And Operational Policies For A Chemical Producer Managing Risk In Premium Fruit And Vegetable Supply Chains Managing Risk Versus Managing Crisis: Mitigating Supply Chain Disruptions Optimizing Dedicated And Core Transportation Assets Quantifying the Value of Reduced Lead Time and Increased Delivery Frequency Replenishment Prioritization of Highly Perishable Goods: A Case Study in Nuclear Medicine Statistical Process Control Approach To Reduce The Bullwhip Effect Strategies For An Integrated US Industry Response To A Humanitarian Disaster Who Stocks The Shelf? - An Analysis Of Retail Replenishment Strategies August 2010 10

Example: CH Robinson Working title Key Research Question / Hypothesis Team Profile Impact of lead time on Transportation costs Does the length of time between when a shipment is tendered to a carrier and when it is shipped change the amount that is paid by the shipper? 1 -2 MIT students Plus specific Robinson personal needed to pull data and work with students. Project Description The TMC is a division of C. H. Robinson that provides a staffed TMS solution for clients. One of the questions they are asked all the time is what could I save if I tendered my shipments earlier? While there are many opinions on this subject there doesn’t seam to be any empirical data on this subject. Ideally we would like the research team to use our data from multiple customers to develop a regression model to determine if there is a relationship between tender lead time and pricing for TL shipments. And if there is a relationship what it is and does it very between customers? Data Type & Sources Data will be provided in either an Excel spreadsheet or an Access data base. In total there will be at least a million records (more if we do more than one years worth of data) Company Contact? Is Kevin Mc. Carthy Is Not August 2010 • Determine the correlation between tender lead time and price for TL shipments. Explain the correlation if any in % and absolute terms Determine if the correlation is the same or different when looked at the company level Determine if the correlation is different in tight capacity vs. loose capacity lanes or seasons. Determine if customers go deeper into routing guides with less lead time. We are not going to look at any of the other potential cost drivers in the dispatching process.

Impact of Lead Time on Truckload Transportation Rates n n n August 2010 12 Conducted analysis on 1+ years of data Developed OLS regression, Logit and other models Identified impact of policies on rates

Impact of Lead Time on Truckload Transportation Rates By Erik Caldwell and Bryan Fisher Thesis Advisor: Dr. Chris Caplice Summary: This project developed a model to quantify the impact of business policy decisions, such as tender lead time, on truckload transportation costs. This model demonstrated that business policies have a substantial impact on companies’ overall transportation spend and these policies can be quickly modified to reduce cost with little risk or capital investment. 1. 2. 3. KEY INSIGHTS Routing guide depth (the number of carriers to which a shipper tenders a load before it is accepted) drives transportation costs. Business policy decisions, such as tender lead time, affect the likelihood preferred carriers will accept a tender. Companies can modify business policies to increase carrier tender acceptance rates and therefore reduce transportation costs. August 2010 Final Presentation Video at http: //ctl. techtv. mit. edu/file/1101/

Sponsored Thesis Projects n Compensation q q n Students receive $2, 000 (half at end of each semester) Non-Sponsored Thesis projects are not funded Assignment q q q Thesis project book is distributed during orientation Sponsoring companies will present during orientation Students place bid for interested projects (teams of 2 are preferred) Companies place bid for students Students and Projects are matched up by mid September August 2010 14

Be prepared for the time thesis will take n n A master's thesis is the equivalent of two to three full subjects Equivalent to 2. 5 months of work at 40 hours/week Start early (October) – do not procrastinate Especially DATA COLLECTION q q This is an iterative process, always wrong the first few tries. Expect to have false starts here. August 2010 15

Research Methods Research Topic Methods Literature Research MIT Libraries, On-line searches, Scholarly Papers, Trade Journals, Conference Proceedings Background & Context Company Web-sites, Annual & Financial Reports, Site Visits, Interviews Data Collection Historical transaction data, historical metrics, surveys & polling, new data capture, benchmarking data, scenario generation, observing Analysis Back of the envelop, spreadsheets, database analysis, discrete event simulation modeling, optimization modeling Tools Excel, Access, Arena, What’s Best

Research Example 1 Setting: - Major Railroad, 1000’s of miles of track - Hundreds of trains/day of different priorities – all share the same tracks. - Track Repair, Crew Stops, Slow Restrictions, Passing/Pull overs, Weather, Delays, Hills/Grades Question: How to predict train run times from point A to point B. What research would you do?

Research Example 2 Setting: - Specialty (niche) Retailer (Brick and Mortar) with 100+ stores - Now wants to expand into e-commerce Question: What should be the capabilities of the e-commerce site? How should the supply chain be changed to support both businesses? What research would you do?

Research Example 3 Setting: - Global equipment services company - Service contracts demand fast response to customer breakdowns - North America has 10 factories and 50 major service branches - Purchasing of parts and supplies is done everywhere - Parts range from tiny to huge, pennies to $M, available from many suppliers to only one supplier Question: What level of purchasing control (ranging from central purchasing to free-for-all) should be imposed on each part? What research should you do?

Research Example 4 Setting: - Service Arm of a Major Equipment Manufacturer - Thousands of Spare Parts sourced at hundreds of suppliers - Late supplier deliveries cause many problems (high inventories, expedited shipments, poor fill rates) - A large team of supplier specialists work with vendors to help them improve delivery performance. Question: What should be the target level for supplier delivery performance? What research would you do?

Research Example 5 Setting: - Global Manufacturer of Electronic components - Full set of supply chain functions: purchasing, manufacturing, transportation, distribution, customer service in many sites globally. - Each function and site has its favorite set of narrow metrics - The metrics conflict and nothing rolls up globally. Question: What would a new top-to-bottom KPI architecture look like for this company? What research would you do?

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