How a power transmission manufacturer found inventory freedom-MES
CUSTOMER SUCCESS STORY
How can a mechanical components manufacturer provide well-engineered and energy-efficient products to their customers in the face of constrained supply chains? What happens when their parts availability is at the mercy of long lead times? And how can they keep their administration costs (and sanity) at reasonable levels while dealing with hundreds of part numbers and just as many different suppliers?
These are exactly the challenges an industrial conveyor OEM faced – until MES took them off the logistics and supply chain treadmill and put them on a faster, smoother track.
“We helped our customer consolidate their supplier base and better manage their inventory – without the pain of change. Not only was the transition easy and seamless, they said our castings are way better in both look and quality.”
– Jay Ethridge, MES Business Development Manager
CHALLENGE #1
An unwieldy supplier base
As a global leader in power transmission industrial equipment, our customer was dealing with numerous suppliers across a range of supply categories. Through the years, their team had amassed a supplier base of literally hundreds and inching towards thousands. As the number of their suppliers grew so, too, did the costs and inconveniences of managing so many disparate vendors. That’s when they came to MES with the ask of reducing their supply base.
SOLUTION #1
Scale down to a single trusted supplier
Having worked with MES on other castings, the customer knew the level of quality they could expect from us. So, we took over 99 parts numbers provided by 8 different suppliers and consolidated them down to 1. “Managing fewer relationships is much more efficient,” says MES Business Development Manager Jay Ethridge. “Now, instead of going to a Supplier 1 with an engineering question, Supplier 3 with an issue, and Suppliers 6, 7, and 8 to expedite orders, our customer has a single trusted supplier that can do it all.”
CHALLENGE #2
Unacceptable lead times
Despite setting their system to kick out orders when supply levels dropped below acceptable levels, their large and disparate list of suppliers did not always fulfill a promised 8- to 10-week lead time. Not only did delays hurt the planning side, inconsistent and extended lead times wreaking havoc with their inventory management and warehousing.
SOLUTION #2
Creating a domestic pipeline
So, MES offered to take the supplier consolidation challenge one step further: “We helped them exchange a haphazard ordering process,” says Jay, “for a precisely managed methodology based on groupings.” Beginning with the 99 parts numbers, MES collaborated with the customer to determine the higher volume parts. The remaining parts numbers were divided further into two subgroups: (1) lower volume but critical components and (2) lower volume but can wait to be made to order. The result was a list of 20 essential parts that MES keeps in stock in its Columbus, Ohio-based warehouse, along with a list of 79 other parts that are made to order and delivered consistently on time and within budget in no more than 6 weeks.
TOTAL IMPACT
Saving dollars and sense
When it comes to streamlining suppliers, it’s not just a matter of creating a smaller base. It also means consolidating and leveraging the spend.
“With our approach, the customer already has realized thousands in soft cost savings,” explains Jay. “Reducing their supplier base also helped them air out their clogged books. Plus, we set them up to partner with key suppliers that are driven to meet their exacting specifications. That’s a far cry from the once cumbersome and random supplier list they used to have.”
As for the lead time and inventory problem, MES had an even greater impact there. “We worked with their buyers and warehouse management team to figure out logistically what needed to happen,” says Jay. “Thanks to prioritizing the parts and moving inventory to our warehouse here in Columbus, Ohio, they now get the parts they need in just 2 days. In fact, with our inventory management solution, we were able to free up their physical space, which was marked by confusion and inconsistency. We also freed up their mental space by easing the burden and eliminating the hassles.”
HIGH-MIX, LOW-VOLUME MANUFACTURING (HMLV)
Increasing profitability
HMLV is another invaluable way to satisfy customer demand for more product variations and choices. For manufacturing and supply chain professionals, however, HMLV means having to figure out how to find willing and qualified suppliers, not to mention overseeing a complex matrix of low-volume production runs. For many this just means welcoming in more and bigger headaches – unless, of course, they outsource HMLV to the right partner.
Here at MES, we’re experts at sourcing HMLV suppliers and managing them efficiently and effectively. For example, we’ve curated a global network of top suppliers. That means we have a bigger and broader pool of LEAN-qualified suppliers; more than any single manufacturer can possibly have. It also means we know which suppliers are best at handling high-variation production to ensure reliable, quality production. In other words, we handle the intricacies behind HMLV production, giving our customers more time and space to manage high-volume business.
Start your journey to worry-free, on-time delivery of projects that meet your specifications. Talk with an MES sales representative.
Industry
Industrial Equipment OEM
Engineered Mechanical Components
Power Transmission Products & Services
Size
10,000+ Employees
Applications & Outcomes
Streamline Inventory Management to Ensure Parts Availability
Consolidate Supplier Base to Minimize Vendor Risk
The MES Solutions Stack
