The idea of spending less money to get more product and better supply chain security might sound like an oxymoron. But it doesn’t have to be.
In reality, by increasing the size of your production runs and utilizing unique inventory management solutions, you can cut down your price per item and reduce shipping costs while setting yourself up with a bigger and more accessible inventory.
And you can do it all without needing a single extra square foot of storage space.
Here’s how we helped a real customer to do it.
The Challenge: Ensure Our Customer Has Constant Inventory Levels
Recently, we received a request from a customer to help reduce their costs and improve their supply chain.
This subscription-based service wanted to ensure they never ran out of their key product–their business’s atomic particle.
So, we used our Vendor Managed Inventory system to help them achieve their goals.
Solution: Stocking a Month’s Supply of Inventory at Any Given Time
To help this customer keep a constant level of inventory, we collaboratively opted to stock a month’s supply of their products at any given time. To achieve this, we began running two months’ worth of inventory at once. Now, every time we hit zero, we produce another two months’ worth of products.
From each production run, we ship the customer one half, store the other half, then produce another run.
Given that these items are the company’s mission critical product, it’s vital that they’re always readily available. So, having an extra month of inventory available means the customer will never find themselves in a precarious situation.
In addition to this supply chain security, this customer also enjoys some other benefits as well.
First, the company benefits from a double-month production run, and those economies of scale mean we can produce bigger quantities and supply them at a cheaper rate.
Second, the customer’s shipping times are cut significantly because we’re shipping their products the same day they order it. That means they get their items, fully branded, the next day.
Since Northern Specialty Supplies manages inventory on the customer’s behalf, monitors trends, and ensures stock is never depleted, the entire situation becomes less risky and more cost-effective.
And all that was required was a one-month ramp-up period to get the double-month production run underway.
If you’d like to learn more about how our Vendor Managed Inventory system can benefit your business, get in touch with us today.