Multiple MRO transactions add unnecessary business costs, but with support from the right supplier these can be removed
When Midlands-based control and automation systems manufacturer Power Panels Control and Automation found it was spending too much time on low volume transactions, it approached RS to identify streamlined processes. RS’s team suggested a consolidated delivery system, which would allow multiple POs to be raised over one day but with just one delivery the next.
Martin Allen, Purchasing Manager at Power Panels, explains that RS has proved to be the perfect fit with his business. “We are a manufacturer and assembler of control and automation systems for major OEMs in the UK, working with the likes of Yamazaki and Ishida,” he says. “We offer a complete outsourcing solution. We assemble panels and machines for customers while they focus on the R&D side of the business as well as sales and distribution.
“We’ll sell around 3,000 different assemblies and buy in between 9,000 and 10,000 different components during a year,” he adds. “The nature of our work means that we buy parts and products from around 600 manufacturers, so ideally we want to work with suppliers that can provide as many of those products as possible. RS has one of the widest ranges in the industry and can provide just under a third of those manufacturers’ products.”
"Consolidated delivery reduces the time and cost of making transactions, and deliveries arrive in recyclable, re-useable packaging, which is easy for us to handle "Martin Allen, Purchasing Manager, Power Panels
The volume of orders that Power Panels places with RS made it necessary to look at how to reduce the number of transactions and create efficiencies in the procurement process. “RS set up a consolidated delivery for us: it means we can send multiple purchase orders [six a day, on average] to RS’s Birmingham trade counter, and they combine all of our demand and send us a daily delivery with all the items we need,” says Allen. “This makes it much easier to deal with transactions: it reduces the time and cost of making transactions, and the deliveries arrive in recyclable, re-useable packaging which is easy for us to handle.”
This improved packaging is an element of consolidated delivery that companies are finding extremely useful – and not just in terms of their green credentials. “We deliver all consolidated orders at a set time that suits our customers, with the products packed in re-usable tote bins,” says Emma Botfield, Director of Customer Services. “By removing traditional cardboard packaging our customers massively reduce their recycling and increase the ease with which the products can be accessed and then stored, so it’s a real time-saver.”
Improved purchasing process
Power Panel’s Allen has also seen the benefits in the purchasing process; much greater efficiency. “If we didn’t have consolidated delivery we would have to try to do the consolidation at our end to avoid sending several individual orders throughout the day,” he says. “This would inevitably have a knock-on effect on cost and potentially delay orders from reaching us.”
To make the best use of RS’s consolidated delivery service, Power Panels has introduced a simple but highly effective process for monitoring stock levels. It has installed Kanban bins (Kanban is a Japanese principle for lean inventory control in manufacturing), which are used to house products.
“Quite simply, the Kanban system is a series of plastic bins,” explains Allen. “We work out the parts we need for a week, stock double that amount, then divide those between two Kanban bins. Once one bin is used up, we automatically re-order enough to replenish that bin and then work through the next. It’s pretty much a foolproof and effective way for us not to run out of stock.”
"We profile the product needs of our customers so that we can hold the appropriate type of stock, which makes it easier to fulfil consolidated orders"Emma Botfield, Director of Customer Services, RS
In addition, Allen’s team has worked closely with RS over the year to identify realistic stock levels. By sharing Power Panel’s MRO consumption data, the purchasing team can refine order levels to ensure they hold enough stock but aren’t wasting space by holding too much of it. We profile the products needs of our customers so that we can hold the appropriate type of stock in our Birmingham branch, which makes it easier to fulfil the consolidated orders,” says Botfield. “For Power Panels, we have regular review meetings with Martin and his team so that we can look at what products they will need in the future and ensure that we stock those items locally.”
Allen believes this collaborative approach is paying dividends for his business. “The perfect example was a couple of years ago,” he recalls. “An RS report picked up that we had been ordering a particular low-value item every working day, and in some cases twice a day. By having that data, we were able to adjust and bring in much larger stock levels of this item – while the purchase cost of this item is minimal, we were spending far too much time on the transactions.”
"Having a local RS branch makes it more of a personal service because the team in Birmingham have got to know our business and our requirements"Martin Allen, Purchasing Manager, Power Panels
Allen has also found that a local trade counter has proven invaluable. “The Birmingham branch is incredibly important to us because we can often ring up and actually speak to the person who’s picking the order for us,” says Allen. “It makes it more of a personal service because the team there have got to know our business and our requirements. There have been several occasions when they have rightly queried an order because it looks ‘off’ to them and it turned out a mistake had been made at our end.
“That’s the sort of relationship you want to have with your supplier and it genuinely adds value to our business.”