Imagine a service that not only anticipates needs but fulfills them before they surface É a service that knows your preferences as well as you do and can modify its response based on factors that you may have overlooked. Sound too good to be true?
Fortunately for one Louisville distributor of industrial safety equipment, this system is quietly operating behind the scenes. Today, Orr Safety, a distributor of West Chester industrial gloves and protective clothing, realizes the advantages of West Chester's vendor-managed inventory (VMI) system on a daily basis. The right product mix is always available, in the right quantity, at the right time. What's better, all of this happens automatically.
VMI originated with mass merchants and "big box" stores that demanded that vendors shoulder the responsibility for monitoring sales and the subsequent reorder process. Today, VMI has spread to other industries, including the automotive and hospital categories. West Chester, a leading supplier of work gloves and protective clothing in North America, has taken the lead in offering VMI to the industrial safety industry.
The benefits of VMI are numerous. First, the inventory that a distributor must carry goes down.
"When you consider that the average cost of carrying goods in inventory is 25 percent of the cost of inventory, that's an immediate and significant savings," said Carl Hall, president of Enterprise Data Management whose Datalliance software powers West Chester's system.
Second, because the system is automated, it eliminates the need to hire employees to oversee inventory, place orders, verify receipt and authorize payment.
Third, VMI ensures that distributors will always have the right product at the right time.
"That could be the most important benefit of all," said George Smith, product manager, hand protection, for Orr Safety. "If a customer is unable to get product when he needs it, there's a strong possibility he'll start to look for other sources."
Together, these benefits translate to reduced costs of doing business, which can be passed along, plus better customer service – a winning combination in any equation.
Reliability built on partnership
For optimal performance, a VMI requires the input of both the distributor and his customers. A multitude of factors come into play in creating a system, including the popularity of an item, seasonality, customer purchase history, anticipated product changes and special promotions that may be coming from the manufacturer. More than 100 pieces of data are compiled to create the purchase profile.
"The more care taken at the front end in creating an accurate and comprehensive order history, the better VMI will work for all parties," said Smith. "When you work with many vendors as we do, the ultimate goal is to have the operation be transparent, which has been the case with West Chester."
After developing a proposed order schedule, West Chester shares it with the distributor for final sign-off.
From there, data is monitored on an ongoing basis. For large volume distributors, this may mean weekly or even daily adjustments. When either party changes its order behavior, the system must be adjusted.
"Our goal is to know what our customer needs before they do," said West Chester Executive Vice President Gary Cohen.
Smith concurs that VMI makes particular sense in today's business environment.
"With everyone trying to do more with fewer resources, you don't want to duplicate efforts. That's the beauty of VMI – it relieves me of having to micro-manage inventory," he said, noting that the system has been especially effective for high-usage items like brown jersey gloves, powder-free nitrile gloves and vinyl gloves for use in laboratories and clean rooms.
" If you can offer the best price because of managing inventory better, that translates into better customer service," said Smith.
Since Orr Safety began using West Chester's VMI a year ago, Smith can point to at least one instance of customer retention that he attributes to VMI.
"One of our customers who traditionally ordered a variety of different industrial products from a web-based resource was considering switching their glove order to the internet company as well. However, they quickly realized that the level of service we were able to offer – quick order fill and having product in stock – superceded all other benefits. We're pleased to say we have maintained our relationship with that customer, with assistance from West Chester's VMI," said Smith.
"VMI has been a great way to reinforce and supplement our inventory control."
For more information on West Chester's Vendor Managed Inventory, call 800-647-1900
