IDEAL Industries Finds an Ideal Inventory Solution
IDEAL Industries is known around the globe for providing innovative technology in the construction, electrical, automotive, and aerospace industries, just to name a few. For example, Pratt-Read, one of the brands in the IDEAL Industries family, makes most of the screwdrivers hanging from workers’ belts across the U.S. And in the alternative energy industry, IDEAL’s AC/DC conversion connecters have become the global standard.
IDEAL Industries has been oriented around family, community, and customers since 1916. The company focuses on providing great products for technicians, and it does that well. IDEAL partners with TrueCommerce so it can focus on its product offering, not on solving supply chain issues. The company’s previous vendor managed inventory (VMI) program required too much maintenance without providing enough benefits. With TrueCommerce VMI, IDEAL Industries found an ideal inventory solution that slashes order processing costs, returns, and stockouts.
VMI: It’s What’s in Store
Not all VMI solutions are created equal. In fact, IDEAL Industries had been using a VMI program for years before switching to TrueCommerce, but it was high-maintenance and cumbersome.
To understand why VMI is not a commodity and requires careful selection process, we should look at what is VMI in the first place.
Vendor managed inventory provides real-time two-way communication between a vendor and its retailers. Traditionally, retailers periodically take stock of their inventory and estimate what product amounts to restock, and then they send that order to the vendor. By the time the vendor fulfills the order, stocks have changed, and the retailer is already thinking about placing a new order. This leads to inefficiencies like too many trucks that aren’t full and too much or not enough inventory.
Instead, VMI connects trading partners with a secure system that allows vendors to view inventory data at the distribution center or down to store level. Vendors can use this solution to automatically suggest ideal orders based on agreed-upon rules and forecasting data or execute on replenishment orders. VMI helps to keep the distributor’s shelf full, and the vendor’s fulfillment costs low.
Getting off the Ground
The legacy VMI system IDEAL Industries used was not based in the cloud but sat on IDEAL’s own hardware on premises. This system required frequent maintenance and updates, plus, it wasn’t very efficient. According to Chris Lamb, Vendor Managed Inventory Analyst for IDEAL, it could be time-consuming to deal with orders that had issues or needed more clarification. “Traditionally you’d need to call the customer about how to handle the issue, which often took up to two days.”
TrueCommerce VMI reduced that cycle time to a matter of a few keystrokes. Now IDEAL’s distributors receive a daily report in the morning that shows them if their orders have any quantity issues. According to Ms. Lamb, “This lets them quickly shoot off an email telling us whether they want to go ahead and order those products, or not—which effectively resolves the issue. Without VMI that proactive data wouldn’t be available, and it could easily take 24 hours to pinpoint the problem and deal with it.”
This is called proactive fulfillment. Instead of waiting for retailers to place orders whenever they want and then responding to each order manually, IDEAL Industries uses VMI-as-a-service to bypass busywork and go directly to sale.
Inventory and Replenishment: Electrified
TrueCommerce VMI electrified IDEAL’s order processing efficiency and enabled its team to process over 50 orders an hour. Almost all the orders that come in are error-free and go directly to the shipping department. That’s a huge improvement over the previous situation. Here are a few more benefits IDEAL Industries has found:
- More turns, fewer returns: IDEAL sees up to 20% fewer returns from VMI distributors, and those distributors report up to a 20% improvement in inventory turns.
- More supported: According to Ms. Lamb, “The support I get is absolutely phenomenal—it’s one of the top benefits of the solution. Issues are always resolved very quickly and they’re very responsive to our customers also.”
- More efficient: IDEAL’s VMI distributors report up to a 50% reduction in employee time handling IDEAL orders.
At the end of the day, having a lightning fast VMI solution helps IDEAL Industries to keep its network of distributors happy. As Ms. Lamb commented, “I think VMI definitely solidifies our relationships with distributors. They might be less likely to buy from a competitor that doesn’t do VMI or doesn’t do it well because they wouldn’t want to lose all the benefits they get from VMI.”
Value that Goes Straight to the Bottom Line
With TrueCommerce on its team, IDEAL Industries can get the right amount of stock sent to the right places. That means it can satisfy its customers better and keep providing for its family of employees. “When you think about your business being more automated and being able to take care of customers more efficiently, all that value goes straight to the bottom line,” says Ms. Lamb.
To learn more about how TrueCommerce supports IDEAL Industry’s goals, check out the IDEAL Industries VMI success story here.
About the Author: Yegor Kuznetsov is a former international news agency editor and a marketing communications veteran who loves telling customer success stories. Over the last 20 years, he has been working for an array of dynamic technology companies, most recently with TrueCommerce, a global provider of trading partner connectivity, integration and unified commerce solutions.