Project Description

Situation

A Trailer manufacturer was buying a custom made screw direct from a manufacturer licensed to make the part. To meet the minimum order quantity they were buying 4 to 6 months of inventory per order. The lead-time on every order was 10 to 12 weeks. They incurred freight costs on each order, and it required up to 8 pallets of storage space.

Falcon solution

Falcon purchased the screw from the manufacturer on a blanket PO equal to 12 months of historical usage (with 2 releases). Falcon delivers a single pallet in a quantity equivalent to 1/12th of the blanket PO we placed with the screw manufacturer.

Falcon results

The standard lead-time on this part has been reduced to less than 1 week (with Falcon making 2 next day deliveries to meet increased demand).

The customer has reduced their on-hand inventory by $15,611. (Annualized carrying cost on this inventory is $2,341.65 {at a 15% rate}).

At any given time, the customer only has 2 pallets of inventory in their stock. One is kept at the point-of-use and the other one is available to replace it as needed. When the second pallet is moved to the point-of-use, they issue Falcon a release to deliver another pallet (the following week). They now utilize the other 6 pallet storage locations for other products.

The product price is now FOB their dock, and they have eliminated the LTL freight costs for delivery from the manufacturer (approximately $1,500 annually).

Annualized hard cost savings is over $2,000 (Including the slight price variance)

Additional savings include:

  • Freed up storage space
  • Reduced lead-time
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Reliable Stock™ Lean VMI Solutions by Falcon

Falcon’s Reliable Stock™ lean VMI program delivers 100% production uptime efficiency, while lowering your overall inventory investment in class C production components and fastening supplies. Find Your Solution Today!

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