March 10, 2015 – Charlotte, NC – Falcon Fastening Solutions, an industrial supplier of fasteners and other “C” class production components used in high-volume manufacturing assembly, reports an average customer savings of 16 percent for 2014.
Falcon’s vendor managed inventory (VMI) programs are customized to reduce the total cost of ownership associated with “C” class components for original equipment manufacturers (OEMs) in the Southeastern United States.
“The direct acquisition cost, or piece price, of any component only accounts for 15 percent of the total cost of ownership (TCO),” explains Don Nowak, President and Owner of Falcon. “The other 85 percent of TCO is tied up in hidden costs like labor, freight, inventory-carrying costs, error-related costs, safety stock, and so on. We reduce our customers’ costs in all of these areas including the piece price.”
“C” class components are not limited to fasteners, but include a bevy of other low-value items consumed during the manufacturing process. They make up the largest portion of inventory line items for the average OEM.
For 2014, Falcon reports an average customer savings of 3 percent on labor-related costs such as purchasing, receiving/stocking, accounting, inspection and quality control activities, and kitting and subassembly tasks. Freight-related costs were the largest area of savings with more than 4 percent average savings. Error-related costs, such as down time, poor quality, expedites and item obsolescence accounted for close to another 4 percent of the average customer savings. Inventory carrying cost savings are reported at 3 percent and the piece price savings are an additional 2 percent of the average total cost savings for customers in 2014.
In addition to these savings, Falcon carries a safety stock of 3 months of inventory on hand in their local warehouse and another 9.5 months of inventory on order for customers taking advantage of their Reliable Stock™ vendor managed inventory programs. Falcon also reports a quality rating of 99.9% and an on-time delivery rate of 99.1% for their customers in 2014.
“We are pleased to provide such significant savings, service and commitment to our customers,” adds Giovanni Cespedes, Vice President. “As a distributor who markets our exceptional ability to reduce the TCO for our customers, it’s important to be able to document and quantify that cost savings. It’s especially rewarding to see the value at a customer level where these savings numbers increase even more depending on which Reliable Stock™ VMI program we are providing for that particular customer.”
Below is an infographic representation of Falcon’s 2014 Total Cost of Ownership (TCO) customer savings: