Manufacturer of Commercial Van & Truck Equipment
PROJECT SIZE: $1M
VMI Program: Fast, Simple, and Easy to Use, Scanner System
Large Manufacturer of Commercial Van & Truck Equipment including shelving, partitions, ladder racks, drawer systems and accessories
Rochester, New York
THE SITUATION BEFOREHAND
The Manufacturer was using a lot of hardware kits, some pre-made but most made in house. Fasteners Direct was supplying the Rochester location, but the Montreal location was using a local supplier. As with many busy manufacturing facilities, they had outgrown their current fastener system.
SWITCH TO FASTENERS DIRECT
The Manufacturer decided to combine most production into the Canandian Facility, and at the same time, switch to only one fastener supplier: Fasteners Direct. Fasteners Direct then set up a fast, simple and easy to use scanner system for all parts.
The manufacturer is saving 50% in inventory, with the program set up by Fasteners Direct.
A COMPLETE LOOK AT THE PROJECT
THE CHALLENGES THEY FACED BEFOREHAND
MONTREAL NEEDED TO CHANGE THEIR FASTENER SYSTEM
Montreal was using the 'Open Bin Keep Full' concept which was very old school and inherently inaccurate.
A new lean system needed to be designed which would allow for the recently expanded production department to keep accurate inventory. Preventing stock outages and overstocked shelves was a must, and re-ordering parts needed to be seamless, easy and fast.
THE ACTION FASTENERS DIRECT TOOK
FASTENERS DIRECT COMPLETELY OVERHAULED THE EXISTING FASTENER VMI PROGRAM
Fasteners Direct conducted an onsite audit with allowance for growth potential both in fastener usage as well as a significant increase in the number of pre-packaged kits. As mentioned, the Manufacturer had outgrown their current fastener system, and resulted in many pain points including lost parts, overstock on uncommon parts, broken and half full boxes, loose parts laying around, no system for locating parts, inaccurate inventory, and stock outages.
Fasteners Direct came up with a tried and proven system that was also an advancement on the Rochester location's system, which Fasteners Direct was able to adapt and maintain. When the Rochester location started the fastener ordering system in 2013, it was 151 times less that the current usage in 2019.
Fasteners Direct set up the new system totally independent of the existing, which meant that the manufacturer placed an order of new stock to fill the new set up, ensuring that they were set up properly from the start. Almost all existing product was then brought back to Fasteners Direct warehouse, and a statement credit was given after everything was counted and logged. Any existing inventory that was not sent to Fasteners Direct was assigned a location just like all other parts.
1% of all invoiced sales were given back to the manufacturer as a loyalty bonus, and put towards the cost of the VMI set up.
THE RESULTS FROM BOTH TEAMS
OVERSTOCK AND INVENTORY MISCALCULATIONS FROM PREVIOUS SUPPLIER WERE FAR WORSE THAN ANTICIPATED
Due to the open bin concept, the previous supplier kept filling the bins to the top, resulting in almost 3 years of inventory for some parts and just minutes for other parts. Missing inventory was found, and inventory recorded in the books were no where to be found within the facility.
On paper, the manufacturer had over $100,000 of inventory, and they are now running on approximately half that dollar amount with no stock outages.
The previous supplier was coming to the facility 2-3 times per week, and while this may not seem like a big deal, it is an added liability and more bodies in the way of the production team. Fasteners Direct only visits the facility one time per week, and anticipate that number will be reduced in the future, as the new system runs itself!
The layout Fasteners Direct put in place was based off the Rochester design: Loading the product in from the back, and pulling from the front. This ensures that the stock turns over evenly without any extra effort.
Re-ordering parts are done by a scanner. At the end of each day the cards are scanned into the portal, allowing both the manufacturer and Fasteners Direct to monitor fastener usage daily. The product is then delivered less than 48 hours from time of scan.
Storage of inventory was changed to location, rather than part number to ensure all parts have a 'home'. This also allowed for parts with higher usage to be positioned in prime shelf locations, so the slow and dead items would be at the top or bottom. All parts arrive in a small box with bin location on the label. The small box helps to prevent heavy lifting injuries, and reduce stock take time.
To begin this program, Fasteners Direct sends a daily shipment, which may eventually be reduced when both teams were comfortable doing so. This way, product scanned into the system at the end of day one, will be back on the shelves at the end of day 5.
THE CARD SYSTEM
Inventory is now tracked and controlled by Fasteners Direct cards system. It's proven to be very successful at the Rochester location for years. The only stock outages seen are generally due to unexpected high usage of a low moving part, and average only 1-2 times per month. All parts arrive with cards attached to the side of the box. When the box is removed, the card is dropped into the re-order mailbox, determining the inventory level to avoid overstocking.
The Rochester location operates with 2.5 weeks of inventory on their shelf, allowing for any hiccips in the supply chain. The Montreal location operates with 3 weeks of inventory on shelf, due to planned growth projections.
Before Fasteners Direct, the manufacturer had 3 years of supply for some parts and less than one day for others.