TEAM HIGH FIVE

EXECUTIVE SUMMARY

1. CO. BACKGROUND2. OPERATIONS3. TECHNOLOGY4. RECOMMENDATIONS

Background

•Founded in 1912 as Hall-Johnson Construction.•Officially split off in 1935 as a manufacturer of pipes and related products.•Owned by family members.•By 1980s, the company expanded to 11 western states.•The company has six production facilities, 2 in Oregon, 2 in California, one in Arizona, and one in Texas.

Background● Types of Steel Pipe Products:

•Corrugated Steel Pipe.•Corrugated HDPE Pipe.•Composite Pipe/Aluminum/Stainless Pipes.•Accessories and products based on customer needs.

● The company also offers complimentary products.● Pipe products come with different thickness and with different sizes

ranging from 6 diameters through 156 diameters.● Company consumes roughly 20,000 tons of steel per annum.

Background

• Projects breakdown is as follows:70% Residential and Commercial 10% State highway projects.10% Forestry 10% Miscellaneous.•Revenues:40% Southwest ((Arizona & New Mexico, with smaller projects in Utah, Colorado, and Texas).

40%: California (with small projects in Nevada).20%: Northwest (Oregon and Washington, with smaller projects in Alaska, Hawaii, and Idaho)

Background

Ordering process:•9 steel vendors:Ranging from highest quality A to lowest quality C•Contracts for 12-15 month volume commitment•Specifications given 2-3 months in advance.•Each of the PCP facilities generates their own forecasts•Inventory ranges from 150-180 days supply.

Background

ISSUE AT HAND:• INVENTORY TIES UP MILLIONS OF DOLLARS IN WORKING CAPITAL.• MUST SOLVE THIS ISSUES THROUGH EFFICIENT INVENTORY MANAGEMENT AND IT SOLUTION.

OPERATIONS

Current

Proposed

OPERATIONSAverage Cost 0.481$ 0.507$ 0.594$

Lead Time 4-5M 2M 2W@ &

* A B C Grand TotalAksteel 551 74 625 15.5%CSI 290 825 1115 27.7%Harvard 57 57 1.4%Nexcoil 8 8 0.2%Nucor 51 51 1.3%Severstal 276 66 342 8.5%SteelDynamics 16 16 0.4%UPI 1537 41 1578 39.2%Worthington 25 164 49 238 5.9%Grand Total 1142 2526 362 4030

28% 63% 9%1. AkSteel Purchased Severstal August 2014 24.0%2. Since Starting this Project -- New Contracts with UPI & CSI3. Possible JV with Worthington4. New policy - target zero purchases 2015 from Nucor, Nexcoil, Steel Dynanmics5. Reduce the Type C purchases with improved forecasting tools.

OPERATIONS Project Analysis Feb-May Jun-Sept Oct-JanQR 425 tons/month 51

297 754 289C 1100 ton

Logistics 140 tonsh 13%H 54 tonS $575L 4 Months

Minimum Order 100

1. Calculate Q* 56 90 56More Feasible 300 750 300

Compare to 2013-2014 238 576 4102. Calculate Std Dev 16.5 20.3 20.33. Calculate SStock 33.1 40.7 40.6

Average Inventory 183.1 415.7 190.6Compare to 2013-2014 1650 1269 1577

4. Calculate Holding Costs 9,838$ 22,336$ 10,241$ Compare to 2013-2014 88,647$ 68,161$ 84,737$ Potential Savings 78,808$ 45,824$ 74,496$

Total 199,129$

Information Technology

Information Technology

Information Technology

• Same old technology worked for 30 years

• Microsoft Dynamics stripped down version in use

• Unsuccessful last attempt to overhaul IT

Information Technology - Recommendation

• Incremental Approach Recommendation

• Use what you have Microsoft Dynamics

• Organizational buy-in

• Small wins to built on

• Centralized Data Collection

• Forecasting models using IT Short term

Information Technology Recommendation

• IT Strategy to support Business Strategy

• Outsource or cloud source IT

• Apply Lessons Learned

• Staff Training & Change Management

• We don’t need change it all overnight

Long term

Information Technology Recommendation

IMPLEMENTATION

YOUNG TURKSGRAY BEARDS

“I don’t always order pipe, but when I do I prefer fax.”

“#CRM, #Excel, #eFAX, @ I don’t have time to do this twice pops! Time is money!”

IMPLEMENTATION

• Submit monthly reports (i.e. cycle counts) to track usage and inventory on-hand. • Before PO submission ensure to check all on-hand inventory. • All PO’s approved by central person. • Every quarter check inventory for obsolete items. • Hire an SIOP software consultant to determine if the existing software is capable of accurately tracking and forecasting material demand.• Have an upgrade path in the SW RFID. • Create a training manual and create a position keep training relevant.• Disaster recovery.

Challenges with IMPLEMENTATION

IMPLEMENTATION - Results

• Operations • Savings of $250k/yr• Cleaner processes• Less overhead• Less heads or deploy for new positions

• IT• Unified system capable of feedback from customers, sales, and vendors.• Path for RFID

Questions