Bill Weldon, General Manager of Industrial Fasteners & Supply, puts it simply. He said “With our Business Edge Bin Stocking Program, we efficiently control our Customer’s Inventory better than they could themselves. The Customer doesn’t have to worry about their Inventory any more. In some cases, we even assign location numbers for them. We bill them weekly. They have no receiving. They can expend the items directly.”
“We begin with the Customer’s forecast of their requirements. If they don’t have a projection, we take their last three years of sales and we create the projection based on an average of their past history.”
“This becomes the base line. In most parts we want to do six turns per year. We take their annual volume and divide it by six and that becomes their reorder quantity. On a higher volume part, because of the cost of the part and the space required to store it, we will increase the number of turns to twelve per year. In certain cases we will even do twenty-four turns a year. ”
He further observed, “You look at each part individually and decide where your reorder quantities are going to be based on the cost of the part, the labor to transport it and the labor to store it. ”
This bin stocking program has been in place for almost 10 years. For the past year and a half the bin stocking has been done with The Business Edge Palm Pilot program. Bill explained, “The Palm Pilot has reduced the time required to take the orders by at least two thirds. The accuracy has always been good, even with our old manual system, but now it is nearly perfect. The data entry back at the office is completely eliminated. Since it is all fully integrated into The Business Edge there is virtually no chance for error. The Customers want to do business with people that are keeping up with technology.”
Not all Customers are the same. Each customer has their own way of dealing with these Class C types of components. Some Customers inventory them and maintain a central stock of them, while others expense them and distribute them among the production lines so that they will be available when and where they are needed.
Bill stated, “We have some Customers set up where we have a single location for each part. At the same time we have other Customers that have up to twelve locations for a single part. Each location has its own Minimum, Maximum and Reorder Quantity in the Palm Pilot. The Business Edge Palm Pilot program handles each of these varied situations easily. The bar code includes the Customer Location along with the Minimum and Maximum for that location if the part is at multiple locations. When the part is stored at multiple locations, the Packing Slip printed by The Business Edge actually prints the Customer Location for replenishment of the part. This greatly simplifies the restocking process and it further insures accuracy.”
The process also varies based on other Customer expectations. One Customer will have sealed bags and when a bag is broken, that inventory is considered used, while another will have loose stock and Industrial Fasteners’ Bin Stocking person will make a judgment call on whether or not the part needs to be reordered. Yet another Customer will have “back stock” and will have parts moved to the lines from the backup stock first. Then replenishment is done from Industrial Fasteners to the backup stock locations. The Business Edge Palm Pilot program handles all of these situations easily.
When he was asked about the toughest part of running a VMI program, Bill was quick to report, “It is the setup. That is the crucial part of the program. You must take the time to understand the Customer’s needs and design the system to accommodate those needs. The information that appears on the label and the information that is contained in the bar code are different for each of our Customers. Sometimes the description is included on the label and sometimes it isn’t. The location is included in the bar code if the Customer has multiple locations for the same part. This is fully integrated into The Business Edge and the Customer location is part of the information that is automatically uploaded with the order. The result is seamless end to end integration.”
Bill said, “We use this as a major selling tool with OEM’s. When you can go in with technology and show that you are keeping up with the latest times, you have an edge. All the OEM’s are looking for technology to help with their efficiency. It keeps us up with the major players in the industry. We have seen that a lot of people do bar codes, but their systems don’t work. We’ve been copied, but they don’t have a good system in place with integration into their ERP system, so they aren’t able to do it right. If it is not integrated with your regular Sales Order System you are just wasting your time.”