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06.13.2024

Process Savings with Vendor Managed Inventory and Proactive Inventory Replenishment - VMI Case Study #2

MCE Provides Process Savings with Vendor Managed Inventory (VMI) and Proactive Inventory Replenishment 

The Problem 

An industry-leading car wash equipment manufacturer was considering supplier consolidation to streamline purchasing efforts throughout their nationwide facilities. However, the customer needed to be cautious in the transition approach as it was critical to avoid stock outages and downtime. 

Motion & Control Enterprises (MCE) was already a trusted supplier, carried many of their required parts, and worked with the customer on consolidating purchasing tasks.  

The customer’s existing process involved multiple weekly purchase orders (POs) to numerous suppliers. As their manufacturing demands grew, their team of Buyers began to struggle with the organizational efforts needed to monitor stock levels to avoid outages and production downtime.  

To consolidate their supplier list from over 100 to just a primary three, the customer sought a reliable partner who could provide all their supply needs for top-quality tubing and hose, connectors and fittings, valves, and filters. 

The Solution  

After thoroughly evaluating the customer’s needs, MCE developed an inventory management solution to meet their growing production demand.  

This customer said that MCE’s expansive catalog of products across categories like fluid power, flow control, and automation helped solidify their decision to consolidate their supply options. By having access to a large number of inventory items, they could rest easy knowing they would have the required parts when they needed them.  

In addition to supply procurement, we proposed our Vendor-Managed Inventory (VMI) program, which would further consolidate the number of POs processed weekly by the Purchasing team.  

We also proposed a Proactive Inventory Stocking Agreement available through the VMI program that positioned dedicated inventory for the customer in an MCE warehouse. This stocking agreement would help avoid any potential downtime resulting from extended lead times experienced in the past.  

Having access to inventory items isn’t enough for a high-demand manufacturing operation. So, we scheduled regular meetings with our VMI team. As a result, the customer gained added visibility and insight into their purchasing and replenishment activities.  

The Results 

The customer decided to move forward with MCE’s Vendor Managed Inventory (VMI) program.  

We then worked with the customer to estimate weekly usage and trends to establish a Stocking Agreement that housed mission-critical parts at an MCE warehouse specifically for their use. The VMI team relocated all awarded SKUs aligned to MCE to a centralized stocking location with new bins and labels for improved organization, visibility and efficiency. This move minimized lead times and reduced potential inventory outages that could trigger downtime events. 

Beyond our inventory supply services, the customer also appreciated our deep relationship with Parker as their preferred brand of tubing and hose products for service and selection. 

By consolidating their supply spend with MCE, this customer cut back on the number of purchase orders they were required to process. Today’s industry average for a company to process a PO is approximately $100 per transaction. Not only did our customer save money on the costs associated with processing purchase orders, but they also saved time and resources normally spent on those administrative tasks. 

The VMI team continues to visit the facility twice a week, reducing the number of orders placed throughout the week by 50%! 

At MCE, we take a hands-on approach to our customers’ inventory needs. As a result, we received superior buy-in from their team. The customer is now looking to expand their relationship with us as they grow their company footprint.  

 

Interested in an optimized inventory plan for your operation? Get in touch with our VMI experts and ask about our FREE inventory evaluation.

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