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    Caterpillar, Inc: Consolidating Packaging Material Vendors to Reduce Supply Chain Costs

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    Date
    2011-12-14
    Author
    Davignon, Katie
    DeBow, Danielle
    Eldridge, Christine
    Gay, Brad
    Kim, Young Gul
    Moon, Heeseung
    Suen, Courtney
    Wood, Daniel
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    Abstract
    Caterpillar purchases products and parts from over 1,000 suppliers worldwide. Suppliers select packaging material vendors and pass related costs to Caterpillar. To consolidate this vendor base, the team designed and implemented a combinatorial auction that allows for single-product bids along with bids on bundles of products to receive quantity discounts. The team developed a tool for selecting winning vendors through an integer program with business constraints. The solution is estimated to provide an annual savings of $700K-$1M in the Midwest region, and is scalable to be implemented globally.
    URI
    http://hdl.handle.net/1853/42162
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