Supply Chain ManagementSupply Distribution: Victor Ugorji Doc. No.

Owner Date
Chain Management – Global,
Conestoga College OPER8080 A3-03
Capstone Project
Coolit Systems Case study-A3 Report Aman Sharma 10/8/2021
Rev. 0.0

A. PROBLEM STATEMENT: D. COUNTERMEASURE:

Problem Statement: 1) In order to overcome the capacity constraint and to meet the Forecasted demands of 75000 to 340000 pch , CoolIT needs to identify a new contract Manufacturer in
CoolIt founded in 2001 supplies direct liquid CPU systems to high performance computers in the gaming market. In 2015, North America
it begins to expand into the data centre market which is growing day by day. To sustain the growing demand, a new
supply and operational strategy is to be adopted. In 2019, the manufacturing had been transitioned from China to Calgary 2) Investment of $500000 can be done for expansion of their in-house manufacturing facility at Calgary to meet the expected demand of 230 Chassis Manifold to 1050
due to trade disputes between China and US. CoolIt sales two data centre market is expected to grow up to $30 million in and other products.
2020, $56 million by 2021 end $85,000,000 by 2022. To meet the expected demand, there is a need to invest in
equipment, establish to additional production line and hire more people to upgrade the lines. So, mainly the current 3) Considering an hybrid approach of distributing the production between the in house facility and contract manufacturer in North America would assist the company in
problem is that the production capacity is unable to meet the forecasted demand. managing their available space of storage and inventories. Moreover the company benefits in their increase in their production volume to more than double since the two
facilities working simultaneously for two shifts a day will maximize the overall production. As a result, CoolIT's supply potential of products to its customers will increase

4) The data centre market is expected to grow at a compound annual growth rate of 17% between 2019 to 2023. Thus, the demand for CoolIT’s liquid cooling
technology will also increase substantially every year. Therefore, a long-term solution for this can be a licensing model where CoolIT would license their intellectual
B. CURRENT CONDITION: property for specific products and charge a royalty on the sales for the manufacturer-licensees.
* According to the research, sales for the firm's commodities will increase substantially in the years 2022, 2023, & 2024. 5) Transport and logistic partner to be hired for smoothen the production line and minimize the lead time.
Until 2024, it is expected that consumption including all materials would have doubled. CoolIt transition their manufacturing
to calgary facility in 2019 and currently produce all their products for the data center market here.Plan currently runs in one 6) Inventory to be reduced which will improved Inventory carrying cost.
shift with total of 46 people which include 22 direct workers working on 5 lines and othe indirect works in materail handling
and control. 7) The number of items available for data centers around the world must be enhanced.

8) An American contract producer or start making the needed elements in-house.

E. TARGET CONDITION:

* For the company to have better market access, it would be beneficial to identify potential manufacturers or suppliers for components in the market. Moreover, it may
also choose to expand its existing manufacturing unit to meet customer demands. It is also recommended that firms adopt a hybrid production system, blending
additional suppliers with in-house production to meet the forecasted demand of all the projects. for exemple- They need to produce 60,000 PCL unit in 2024, 340,000
unit of PCH, 2100 unit of CDU, 1050 unit of chassic manifold and 560 unit of 10 Rack manifold to meet the forecasted demand.
* Calgary facility currently has the capicity to • It is depicted that the forcasted demand of the all the
produce 1600 PCH units per week, 200 PCL unit, prodcuts.for exemple PCL is 13000 in 2020 with an
20 chassic manifold and 10 Rack manifold per expected rise to 60,000 in 2024.
week
85
80 Before 2019 After 2019
70
60
50 45
40 35
30
20
10
1
0
Supplier Lead time

* due to trade disagreements among China & the

United States to are going from handling one supplier to • This shows the Revenue loss for not meeting the
dealing with over 80.They have lead time of more tha 35 increased demand from data centre market.
days now, whereas before 2019 it was 35.

C. ROOT CAUSE ANALYSIS:

In order to find the causes of problem, Cause and effect diagram is made and from cause and effect diagram we got 10 F. IMPLEMENTATION & FOLLOW-UP:
cause. So, i decided to work on one cause i.e due to less capacity of manufcaturing, CoolIt was unable to meet high
demand from the market to meet the customers forecasted demand. 2020 2021 2022 2023

Implementation Plan Who Plan Actual Plan Actual Plan Actual Plan Actual

• Allocate a budget of $500000 for the expansion of Peter

the manufacturing facility at Calgary Calverley

• Commission 2 new production lines by ordering Darko

new machinery and equipment Ulakovic

• Transport and logistic partner to be hired for Darko

smoothen the production line and minimize the lead Ulakovic
time.

• Hire new skilled manpower to run the plant in 2 Darko

shifts to increase plant Capacity Ulakovic

• Take steps to simplify the supply chain by reducing Darko

the raw material vendors by 30% Ulakovic

• Select a new contract manufacturer in North Darko

America to divide the demand between 2 Ulakovic
manufacturing facilities. (in-house and contract
manufacturer)

• Reduce the lead time of raw material from 35-40 Darko

days to 15 days. Ulakovic

1. Less number of Production lines- due to less number of production line , they are not producing much.
2. New to the market- The company was unable to understand the new processes involved in the data centre due to the
changing need to shift from gaming to data centre. It was difficult for the company to operate efficiently because it was new
to data centre processes.
3.Less Manpower :- The plant has 46 employees working one shift with increase in demand more manpower is required.
4. Insufficient machinery to manufacture- Because they are currently operating with one line that leads to significantly
lower to meet for forecasted volume for 2024

Root Cause :
The data centre market is expected to grow at a compound annual growth rate of 17% between 2019 to 2023.
With the increase in demand, CoolIT’s Calgary facility will not able to meet the demand even after running a double shift
as the production capacity is less due to inadequate production lines, low testing capacity and and insufficient skilled
manpower.
Thus, CoolIT needs to finalize a new Operations and Supply Chain Strategy to cope with the growing demand and to
meet the expectations of their new customers.
 85
85
80
75
70
65 Why
60
55
50
45
40
35
30
25
20
15
10
5 1
0
Supplier
Before 2019 After 201
 85

45
Supplier Lead time
Before 2019 135 35
After 2019 85 45

1
Supplier Lead time
Before 2019 After 2019
• Allocate a budget of $500000 for the expansion of the manufacturing facility at Calgary
• Commission 2 new production lines by ordering new machinery and equipment
• Hire new skilled manpower to run the plant in 2 shifts to increase plant Capacity
• Take steps to simplify the supply chain by reducing the raw material vendors by 30%
• Reduce the lead time of raw material from 35-40 days to 15 days.
• Transport and logistic partner to be hired for smoothen the production line and minimize the lead time.
• Select a new contract manufacturer in North America to divide the demand between 2 manufacturing facilities. (in-house and
•