Detailed Results & Business Impact
“Huge” Order Processing Cost Efficiencies
IDEAL currently manages about 20% of its business through VMI. The program encompasses 35 distributors across 307 locations.
Ms. Lamb notes that “huge” order processing efficiencies and associated operational cost savings are among TrueCommerce VMI’s primary benefits for IDEAL INDUUSTRIES: “Our VMI group can process over 200 orders in four hours. One reason is that almost 100% of those orders are error-free and go directly into shipping.”
VMI offers equally significant cost efficiencies to IDEAL’s distributor partners.
“A number of our distributors have told us that if they didn’t have VMI they would have to hire more people,” Ms. Lamb continues. “So we know it’s a big time and cost saver for them also.”
Reduced Order Cycle Time
“What really improves order efficiency is that we always know if there are any issues with minimum order quantities on nonstock items,” Ms. Lamb remarks. “We can just remove these items and push the order through.”
Previously, this process involved time-consuming communication.
“Traditionally you’d need to call the customer about how to handle the issue, which often takes up to two days. TrueCommerce VMI reduces that cycle time to a matter of a few keystrokes,” explains Ms. Lamb.
Another way VMI reduces order-cycle time is with proactive daily reporting for distributors.
“First thing every morning our distributors get a specialized report that informs them if there are any quantity issues with their orders,” Ms. Lamb says. “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.”
More Bottom-Line Benefits
IDEAL Industries and its distributors using VMI realize a number of additional benefits that add significant value straight to their bottom lines.
IDEAL sees a steady reduction in return dollars the longer a distributor participates in the VMI program, up to 10-20%.
Compared with distributors not on the VMI program, IDEAL sells about 2% more product to distributors using VMI.
Distributors report a 20% improvement in inventory turns, a 20-30% stockout reduction, and a 50% reduction in employee time spent managing IDEAL orders.
IDEAL can also “do more with less” and save significant labor costs thanks to its ability to manage its VMI program by exception.
“We have essentially one person who manages our entire VMI order program,” Ms. Lamb asserts. “I know other companies in our industry who have anywhere from three to five people handling a similar VMI order volume.”
Stronger Partnerships
TrueCommerce VMI helps IDEAL strengthen trading partner relations.
“I think VMI definitely solidifies our relationships with distributors,” mentions Ms. Lamb. “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.”
Customer feedback proved VMI’s investment value.
“We did a satisfaction survey with our VMI customers two years ago and we ranked extremely high,” Ms. Lamb adds. “I believe they feel very confident and comfortable with everything they’re getting from VMI.”