8 Ways To Reduce Cost …..With…..Automated Vendor Managed InventoryJohn P. AielloDirector of Business DevelopmentEF Bailey CompanyDate:

What is Automated Vendor Managed Inventory and AutoCrib Industrial Vending Systems ?A point-of-use industrial vending system, that gives you 24/7 secure access to your indirect manufacturing, processing, MRO and PPE items.A way to have your industrial supply distributor save you money by managing your indirect inventory

What’s Your Real Cost ?Reduce Acquisition Costs! Reduce Receiving Costs Reduce Carrying Costs Reduce Purchasing Costs Reduce A/P Costs Eliminate Obsolete Inventory

1 Reduce Consumption – Stop Waste, Fraud, Theft and Abuse24/7 Controlled AccessAccountability – Track usage by department, workcell, job, employeePoint-of –use “pull” system dispensed in the correct package quantity

24/7 Controlled Access

Accountability – Track usage by department, workcell, job, employee

Point-of –use “pull” system dispensed in the correct package quantity

2 Reduce Inventory Carrying CostsPromotes supplier-consigned inventory - 80% of automated dispensing machines have consigned inventory from the supplier.Move to demand-based ordering. Case studies show that demand-based ordering with a point-of-use dispensing system allows on average about 20% less inventory on hand than standard min/max based purchasingDemand-Based Inventory Management Software allows most users to cut inventory up to 20%

Promotes supplier-consigned inventory - 80% of automated dispensing machines have consigned inventory from the supplier.

Move to demand-based ordering. Case studies show that demand-based ordering with a point-of-use dispensing system allows on average about 20% less inventory on hand than standard min/max based purchasing

3 Cut Spend on New Tools – Force use of Reconditioned ItemsIssue reconditioned items first, before allowing access to new items

Issue reconditioned items first, before allowing access to new items

4 Reduce Obsolete InventoryIncreased visibility of slow and dead inventoryWith AVMI contract – your Industrial supply vendor can more easily dispose of unused inventoryDispense older inventory firstAutoCrib software tracks RATE of use over time for each item, so it will not automatically reorder slow-moving items until they are neededMost shops see obsolescence reduced by 50% after implementing industrial vending

Increased visibility of slow and dead inventory

With AVMI contract – your Industrial supply vendor can more easily dispose of unused inventory

Dispense older inventory first

AutoCrib software tracks RATE of use over time for each item, so it will not automatically reorder slow-moving items until they are needed

5 Reduce and Eliminate Stock-OutsCut Spend on unnecessary overnight shipmentsCut spend on carrying duplicate tools and supplies

Cut Spend on unnecessary overnight shipments

Cut spend on carrying duplicate tools and supplies

6 Remove Traditional Tool Cribs and Tool Rooms entirely – at the same time making tools and supplies available 24/7 at the point-of-useReassign tool crib attendants to more productive workTools / Supplies available 24/7 while maintaining securitySupport increased production without adding to headcount

Reassign tool crib attendants to more productive work

Tools / Supplies available 24/7 while maintaining security

Support increased production without adding to headcount

7 Reduce or Eliminate Purchase OrdersItems can be automatically reordered when they fall below preset levelsConsolidated monthly invoicing with AVMISubstantially reduced paperwork for purchasing departmentAverage time/personnel cost of a purchase order is $150

Items can be automatically reordered when they fall below preset levels

Consolidated monthly invoicing with AVMI

Substantially reduced paperwork for purchasing department

8 Reduce Support Staff CostsReal time inventory management visibility eliminates time spent doing cycle counts, managing min/max inventory levelsWith AVMI, receiving, accounting and inventory control staff costs can be reduced and staff reassigned since the supplier can absorb these responsibilities

Real time inventory management visibility eliminates time spent doing cycle counts, managing min/max inventory levels

With AVMI, receiving, accounting and inventory control staff costs can be reduced and staff reassigned since the supplier can absorb these responsibilities

Calculate Your Cost Savings ….Trips to Tool Crib / Looking for Tools & Supplies / Retrieving ItemsT = Average time looking for and retrieving item (15 minutes is the US average)E = Current # of shop employeesS = Current # of shiftsP = Average # of trips per day per employeeR = Average shop rate per hour$ Cost Savings (Item Retrieval) = ((T-4)/60) x E x S x P x REXAMPLE: 10 shop employees per shift, operating 2 shifts per day. Each employee making an average of 2 trips per day at 15 minutes each to retrieve tools. Average shop rate of $60/hr.$440 / Day Cost Savings = ((15 – 4) / 60) x 10 x 2 x 2 x $60

Calculate Your Cost Savings ….Stock Out ReductionS = Number of Stock Outs per weekU = Average Cost of UPS Red ($19.50) or your cost of a stock out $ Cost Savings (Stock Out) = S x U x 4.25EXAMPLE: 2 Stock Outs per week, UPS Red $19.50 $165.75 / Month Cost Savings = 2 x 19.50 x 4.25

Calculate Your Cost Savings ….Reduction of Obsolete InventoryV = Current Inventory ValueR = Obsolete Inventory (Industry average is 4% per year)$ Cost Savings (Reduction of Obsolete Inventory) = V x R /100EXAMPLE: $500,000 in indirect inventory, 4 % of inventory obsolete per year$20,000 / Year Cost Savings = 500,000 x 4 / 100

Thank You for attending our webinar !To save your spot on our next Webinar: “10 Ways to Improve Productivity”Please email or call:John AielloDirector of Business DevelopmentEF Bailey Company206.518.2327jaiello@efbailey.comwww.efbailey.com