8 ways to cut costs using vendor managed inventory
TRANSCRIPT
Unlock Simplicity
Key Services, Inc. key-services.com 3921 West Point Blvd., Winston-Salem, NC 27103 (336) 768-4400
8 Ways To Cut Costs Using Vendor Managed Inventory
About Key Services
For 38 years, Key Services has created a legacy of helping customers unlock simplicity. We partner with large corporations, Third-Party Service Providers and OEMs to provide end users with customized depot repair and logistical support services that are fast, flexible, and reliable.
Key-Services.com
Inventory Management
Companies in the technology industry are being asked to do more with less. Department leaders are expected to identify and implement ways to reduce costs and extend the life of capital investments. To that end, parts and equipment inventory is often the largest single asset and the largest expense.
Excellent inventory management is expensive, and the true cost of inventory extends far beyond the cost of the items and the cost of managing the inventory.
In this presentation, we explore the hidden and forecasted costs of inventory management, and share the benefits of using third-party vendor managed inventory.
Snapshot: Complete Cost of Inventory Management
Costs Associated with Inventory Management:
Capital and FinanceStorage and Warehouse OverheadMaterial HandlingOperating Costs From System Downtime
The complete cost of inventory management varies depending on the industry and the field. Below is a snapshot of costs associated with inventory management in the technology industry.
Insurance and TaxesInvestment Opportunity CostEmployee CostsExpansion Costs
Opportunity: Explore is the benefits of using a third-party vendor to support inventory management.
# 1 CAPITAL AND FINANCE
Capital and Finance Costs Upfront costs to purchase starting inventory
Costs associated with maintaining stock level of inventory
Costs of financing inventory purchases
Benefits of using Vendor Managed Inventory Vendors have better access to inventory, parts and
competitive prices
Using a third-party vendor reduces cost of procurement and ownership of inventory
# 2 STORAGE AND WAREHOUSE OVERHEAD
Storage and Warehouse Overhead Costs Fixed costs of rent, taxes, insurance and other facility related
costs Lost Opportunity Cost – How else could the space be used?
Could the space be sold for a profit? Could the space be rented for an additional revenue stream?
Benefits of using Vendor Managed Inventory Provides a single point of contact and reduces administration
costs
Rarely do all parts and equipment come from one manufacturer – the vendor streamlines the process
Vendor absorbs warehousing and storage costs
# 3 MATERIAL HANDLING
Material Handling Costs Costs associated with receiving, stocking and processing
inventory
Employee wages, insurance and benefits
Purchase and ongoing repair of equipment
Supplies needed for inventory management
Benefits of using Vendor Managed Inventory The vendor relieves the company of high costs associated
with materials handling and frees capital for use with other areas of the core business
# 4 OPERATING COSTS FROM SYSTEM DOWNTIME
System Downtime Costs The more technology-driven business become, the greater
the risk for system downtime Downtime directly affects service and revenue
Benefits of using Vendor Managed Inventory Third-party vendors invest tremendous amounts of capital in
training technicians
The expertise of technicians allows them to identify what is likely to go wrong long before it will and lengthen the lifecycle of parts and equipment
Third-party vendors build their business around fast, reliable services and have established depots in strategic geographic locations to ensure parts are ready when needed
# 5 INSURANCE AND TAXES
Insurance and Taxes Costs Inventory is a company asset that must be insured
Taxes are assessed for inventory
Costs fluctuate based on the value of the inventory and can be difficult to budget
Benefits of using Vendor Managed Inventory Costs associated with inventory and taxes remain with the
third-party vendor
# 6 INVESTMENT OPPORTUNITY COSTS
Investment Opportunity Costs Lost opportunity from purchasing inventory – funds could be
invested into a money market account or mutual fund
Benefits of using Vendor Managed Inventory Third-party vendors offer scalable solutions to best meet the
operational needs of the business and at the most competitive price
Provides the opportunity for capital to be used for other business opportunities that support the core business
# 7 EMPLOYEE COSTS
Employee Costs Employee costs go beyond those managing the inventory -
accounting department to capture the costs of inventory, cost of management time and supervision of the inventory process, and the high costs of training repair technicians
Benefits of using Vendor Managed Inventory Using a third-party vendor places the accounting and
leadership functions on the vendor
Training qualified technicians and engineers on repair is also transferred to the vendor
Field engineers test and service hardware from all the leading suppliers
# 8 EXPANSION COSTS
Expansion Costs As business grows there are added costs of building out
infrastructure to accommodate for growth
Benefits of using Vendor Managed Inventory Using a third-party vendor offers scalable, flexible service to
fit the current and future business operations
Search for these capabilities with a Third-Party Vendor
With 38 years in the technology industry, Key Services has developed an extensive knowledge base of the technologies that keep businesses up and running across industries. When considering a third-party vendor, look for these capabilities:
ISO 9001: 2008 certification, demonstrating a commitment to continual improvement and quality
State-of-the-art infrastructure and extensive knowledge base to with the ability to manage all aspects of product support
Responsive service available 24 hours per day, 365 days per year using a customized web portal
Ongoing training for technicians and engineers on a variety of equipment and manufacturers
Reverse engineering capabilities to assist with branded and non-branded parts repair
Scalable, flexible workforce with strategic partnerships for responsive, fast, reliable service
Customizable web portal for streamlined project and inventory management
Our Certifications
Our state of the art technology center, including theCustom Web Portal and Data Analytics, A+ certified technicians, and ISO 9001:2008 certification, demonstrates Key Services’ commitment to quality and efficiency.
Our Team
Michelle DealPresident• NC based
• 20 years general management with Key Services, 3 years as President
• BS Electrical Engineering
Lisa Hodges Vice President, QA
• NC based
• 15 years in general management
• 5 years small business ownership
• BS Business Administration
Mike Vaughn VP, Materials Management
• NC based
• 27 years with Key Services with experience in all aspects of operations and technology
• AAS in Computer and Electronic Engineering
Roger DaltonChief Engineer
• NC based
• 17 years of electrical design engineer service with Key Services
• 9 US and Foreign patents
• MS Electrical Engineering
Teresa Bullock Director, Business Intelligence
• NC based
• 14 years in accounting and finance
• SQL Server Business Intelligence Certified Professional
• CPA
• BS Accounting