Putting Supply Chain Management to Work for You
Posted on September 23, 2021 by Steven Tamasi
Driving costs out of the manufacturing process is a top priority for many organizations. One of the more apparent places to realize these gains is through the supply chain. Regardless of what industry you are in, speed to market is increasingly important. Supply chain management will also contribute to getting a product to market faster.
OEMs are continually looking for ways to streamline operations while reducing overall product costs. Partnering with a supplier that has the capability to manage the process—beginning with material selection through to delivery on an agreed upon schedule—results in savings, both in dollars and time. Of course, quality must not be sacrificed in the process.
Boston Centerless has worked with many customers over the years to design programs to support their production needs. Vendor Managed Inventory (VMI) programs ultimately produce cost reductions and increased efficiency.
For example, you might purchase raw material from one vendor, then ship it to a different vendor for a secondary operation or inventory a large quantity of material in-house until needed for production. This will tie up your resources to manage multiple vendors, increase shipping costs (as well potential for damage or delays in transit), and tie up working capital. A VMI program will not only reduce cost, but it will also increase speed to market by eliminating the additional time needed to move the material from vendor to vendor.
With a VMI, the customer benefits from the following:
- Reduced inventory cost
- Shorter lead times
- Shipments that meet Just-In-Time demand
- Reduced excess inventory and inventory shortages
- Less administrative work
We can work with you to determine the most beneficial program to accommodate your business so that you have the most efficient and cost-effective solution in place. Here is a list of the types of inventory management programs to consider:
- Dock to stock
- Dock to line (currently available in New England)
Here is how we helped a customer solve an issue through a VMI program.
VMI Kanban Program with Special Delivery Requirements
A fluid control manufacturer in the Midwest was having difficulty receiving and unloading large shipments of bar material. The oversized bars were very heavy, and the customer did not have an overhead crane at its facility, requiring deliveries to be made with a flatbed truck. They were also experiencing a large spike in material usage, and as a result, they were having difficulty procuring material fast enough to keep up with their customer’s demand. The usage got to a point where they could no longer accurately forecast when they would need Boston Centerless to deliver the material. They could only tell us they would need more—at a moment’s notice.
Boston Centerless arranged a Kanban program to hold finished goods inventory in our Minneapolis distribution center (DC). We then contracted with a local flatbed company that would work on an on-call basis to make same-day deliveries from our DC to the customer.
To solve the issue with the spike in material demand, we installed a short-term solution to get them back on track and long-term solutions to keep material flowing optimally for the months and years ahead.
- We contacted our suppliers and procured as much material as possible.
- After grinding the material, we held it in our finished goods inventory in Woburn, Massachusetts.
- We contracted with an LTL carrier that would pick up in Woburn and deliver the product within miles of the customer where it would be transferred to a flatbed delivery truck for “final mile” delivery to our customer. The LTL carrier also furnished the flatbed and final mile service, allowing for faster delivery by eliminating the need for a second carrier.
- Boston Centerless pre-produces a quantity equal to multiple months of their annual usage for that part.
- We hold the multiple releases in our Minneapolis DC, guaranteeing 24-hour delivery from the request for delivery.
- To manage the future flow of product, our Field Sales Manager meets with our customer’s planners to review raw material and finished good inventory levels versus current and future demand for the product. This allows us to make adjustments where required and ensure that supply and demand are in sync, preventing stock outs and excess inventory situations.
Benefits to the Customer:
- Transportation costs were reduced by 75 percent.
- Procurement of larger volume of material generated cost savings.
- Finished product is available locally with same-day delivery via a flatbed truck.
- Boston Centerless manages logistics and ensures that receiving material deliveries would not be an issue at their facility, saving the customer time and headaches in managing the process.
VMI programs can be arranged for round bar, precision flats, precision shapes, precision wire, precision tube, and cannulated bar. To better serve our customers, Boston Centerless has distribution centers strategically located across the country in Woburn, Massachusetts; Ft. Wayne, Indiana; and Minneapolis, Minnesota. This enables rapid shipment of material to customer facilities and reduces lead times and freight costs.
Let us put our experience with designing inventory management programs to work for you. We look forward to helping you with your challenge.