Siemens Industry and Viking Electric collaborate to improve performance
As part of their High Value Partner program, Siemens is committed to working more collaboratively with key distributors to better manage inventory through their Inventory Collaboration Program. When Siemens initially approached Viking Electric Supply, a key distributor for Siemens, about participating in their Inventory Collaboration Program (ICP) and using Vendor Managed Inventory (VMI), they had to overcome Viking’s poor experience with a similar program with another supplier. However, when Siemens explained how VMI was an integral part of their ‘High Value Partner’ (HVP) initiative and Viking saw the success that Siemens had experienced with TrueCommerce VMI, they decided to give VMI another look.
“We had very open discussions about how TrueCommerce VMI did things and how we could tweak the system to make it work best for us. They were able to adapt the system to work for us in the way we needed it to work. Unlike our first VMI experience, the TrueCommerce system adapted to support the way we run our business and we did not have to make compromises based on how the VMI system wanted us to do things.” stated Doug Herberg, Viking VP of Marketing & Materials.
The bottom line of what Viking considers the strategic value of VMI is measured by one of the Viking’s key business metrics – Gross Margin Return on Investment (GMROI). “Our business environment is very challenging right now, as is the case with all industries,” stated Herberg. “By helping us better manage inventory and improve fill rates, we have been able to improve our GMROI for our Siemens products from 1.66% to 1.84%. So for every dollar of Siemens inventory that we bring in, we are able to generate $1.84 of gross margin. This improvement in GMROI is a great trend for us!”