The Electrical Equipment Distribution market is highly competitive and very dynamic. Industry-wide shortages in addition to rapid swings in demand over the last year have left many electrical distributors scrambling to reconfigure their supply chains on very short notice. Needless to say, this is not a scenario electrical distributors are eager to repeat. So, what is the “new way forward?”
More inventory is not the answer
Too much of the wrong inventory on hand adversely affects service and profitability. Low volume items with sporadic demand drive high costs due to limited visibility of future demand. Couple this with the dramatic increase in commodity pricing like copper wire and PVC pipe, on-hand inventory costs can rise at an alarming rate.
Recent demand history generates a lot of noise for all the exceptions due to supply shortfalls as a result of the pandemic. Knowing exactly how to buy, stock, and distribute the product at the right time and place is a challenge.
Lessons from Graybar
When faced with these same issues, Fortune 500 company and leading North American distributor of high-quality components, equipment, and materials Graybar, turned to GAINS.
Among their goals were to:
- Increase inventory availability
- Optimize planning in both volumetric and financial measures
- Boost planning productivity with automation
- Streamline purchase and transfer order processes
- Minimize expediting activity and costs
Right Products, Right Place at the Right Time
Optimized inventory planning was used to align Graybar’s inventory with their demand plans increasing material availability and reducing the number of days on hand. Graybar began to make larger, more efficient buys and established a 33% reduction of inbound PO lines year over year. This resulted in significant productivity gains, inventory cost savings and increased service goals.
Faster Inventory Turns Drive Efficient Use of Working Capital
Graybar adopted resilient planning to sense and respond to the pandemic market with agility and inventory investments that were optimized to meet customer demand. This resulted an ability to continue meeting high service goals with strategic inventory investment and placement.
— Jeff Gosz Chief Operating Officer at GAINSystems
A 2020 McKinsey survey of global supply chain leaders found that existing time frames and planning cycles cannot keep pace with rapidly changing demand.
85% were too slow to match demand from digital customers.
60% of supply chains have not been designed for resilience.
“With GAINS, Graybar has a robust planning platform that empowers our inventory planners and drives informed, economic buying decisions to provide great service – even during times of significant volatility.”
Mike Polansky – Director, Planning & Procurement