Decision support for vendor managed inventory – Eastman 

 Overview

Company Description

Eastman is a global specialty materials company that produces a broad range of chemicals, fibers and plastics materials found in items people use every day. With the purpose of enhancing the quality of life in a material way, Eastman works with customers to deliver innovative products and solutions while maintaining a commitment to safety and sustainability. The company’s innovation-driven growth model takes advantage of world-class technology platforms, deep customer engagement, and differentiated application development to grow its leading positions in attractive end-markets such as transportation, building and construction, and consumables. As a globally inclusive and diverse company, Eastman employs approximately 14,500 people around the world and serves customers in more than 100 countries. The company had 2018 revenues of approximately $10 billion and is headquartered in Kingsport, Tennessee, USA.

Project Description

Vendor managed inventory (VMI) is a promising service that provides a competitive benefit to Eastman and helps attain higher service levels. Currently, some of Eastman’s business lines deploy consignment inventories that could be transitioned to VMI, mainly in North America and EMEA.

Eastman’s VMI service currently does not provide the businesses who have agreed to inventory at customer’s or designated 3^rd party warehouse location with visibility of consumption throughout the month. Also, the current IT platforms to replenish inventory (such as SAP and Salesforce) do not provide an integrated view of all sales orders and replenishments orders. The current process relies on manual reconciliation to alert customers and Eastman that inventory held does not meet the contractually agreed turnover rates and does not provide for (automated) notification to an agreed-up notification period.

Goals of the Project

The intent of this project is to investigate the opportunity to improve Eastman’s current consignment and VMI services. A possible direction is to create more granular visibility of inventory levels over time (in contrast to today’s model of monthly consumption reporting) with the help of digital tools.

Scope of the project includes:

• Assessment of pro’s and con’s of traditional consignment agreement vs. VMI agreement in light of problem statement
• Assessment of impact of current functionality to enable effective execution of consignment and/or VMI agreements
• Screening of potential digital tools / IoT tools that allow real-time collaboration with collaboration with customer, end-to-end visibility of replenishment shipments & inventory and integration with SAP / SFDC.

Deliverables

What should the result be?

1. Options developed that will create an integrated view of all consignment and sales orders allowing for additional insights to the business to take advantage of potential opportunities in the market and/or the opportunity to address potential gaps in meeting monthly/ quarterly forecast commitments.
2. Options developed need to also allow to enhance our opportunity to improve our accuracy of planning/ scheduling / adherence to schedule and support timely invoicing & revenue recognition.
3. Options developed need to maximize customer and employee experience through minimizing manual processes and maintaining/ increasing customer trust
4. A reduction of inefficient inventory is expected to be an additional benefit.

Assess and develop options, generate insights through internal and external discovery, develop and assess feasibility of recommendations, validate boundary conditions for potential investment needs, and present project outcomes to Order 2 Cash Steering Team to ratify next steps.

 Be occasionally involved in ongoing projects to leverage learnings.

Essential Student Knowledge

What are the key learnings for the trainee?

• To work in a matrix organization and interact with different stakeholders from SBU members to all Supply Chain Operations functions, IT, Center of Excellence, commercial & finance stakeholders.
• To gain a deep understanding of an Eastman offer element essential to some business commercial offering, it’s impact to Eastman’s cash-flow and its opportunities that can be derived commercially from efficiency and excellence in best of class offer execution.
• Understand the elements of a transformative investment proposal and what capabilities are required to modernize a process which has not been designed for real-time visibility and agile decision making.
• To learn and implement effective techniques for discovery with various internal and external stakeholders.
• To learn developing and keeping on track the project while navigate a highly dynamic environment.

  To what extend will the trainee have exposure to clients?

This effort is a key step in assessing potential gaps in effective management of an existing yet growing offer element in support of commercial strategies& market segmentation as deployed by the businesses. Market & customer segmentation is ongoing. It is important to validate recommendations by the voice of the customer (not the voice of the salesperson), hence customer interaction is part of the process.

More information: escf@tue.nl