Datalliance customer Berk-Tek, and one of Berk-Tek's key distributors Graybar, were recently featured in Electrical Wholesaling magazine. The article, written by Executive Editor, Doug Chandler, discusses the evolution of VMI in the electrical industry and the benefits that both Berk-Tek and Graybar have received as a result of their Vendor Managed Inventory (VMI) relationship.
The article explains that, "VMI is no longer a radical concept in electrical distribution "” the concept has been around since Wal-Mart and Procter & Gamble started working on it in the 1980s, and first appeared in the electrical industry in the early "˜90s. Graybar understood years ago that working with its suppliers on inventory could improve efficiencies throughout the supply chain. Since 1992, the company has been using several planning tools to engage in VMI with suppliers. About four years ago, it added VMI services provider Datalliance. Datalliance has been providing VMI services since its founding in 1991, and has been working in the electrical industry for the past 10 years. Datalliance is working with about 18 electrical manufacturers and about 75 electrical distributors, and has similar market share in automotive and truck parts."
Graybar had established VMI relationships with several large suppliers when it approached Berk-Tek in 2005. Berk-Tek, New Holland, Pa., part of the Paris-based global cable manufacturer Nexans Co., was very interested. "The ROI was certainly compelling, but our decision to proceed was also based on strategic advantages we could get from VMI," says Paul Trunk, senior vice president of sales and marketing for Berk-Tek. "Among these were additional benefits in improved trading partner relations with Graybar and, potentially, Berk-Tek's other large distributors."
The results have been positive for all involved. Berk-Tek saw an immediate increase in sales through Graybar, which it attributes to fewer stock-outs and better visibility of its product line, as well as making it easier to conduct business with confidence. "At the same time that we were increasing sales, we also enhanced our market share within Graybar by increasing the number of active SKUs over 18 percent," Trunk says. "Inventory turns improved nearly 30 percent and stock-outs were reduced to an all-time low of 3.1 percent, which tells us that VMI is helping us run our business more effectively."
"The benefits for Graybar start with a closer relationship with an important supplier", says Mike Dumas, Graybar vice president. "They (Berk-Tek) now have a stake in the game for the accuracy of our inventory. We get better turns, lower total inventory investment and less obsolescence and slow-moving product. This translates into better utilization of our cash and resources "” in other words, profitability. When it does work well, VMI benefits both distributor and supplier.. We want to be the lowest-cost, highest-value channel partner to our manufacturers and customers, and this is one way we can do that. It delivers benefits to all participants."
Visit http://ewweb.com/ebiz/electric_deep_partnership/ to read the entire Electrical Wholesaling article or visit http://www.datalliance.com/Berk_Tek.pdf to read more about VMI success at Berk-Tek and Graybar.
About Datalliance
Datalliance is the world's largest independent VMI service provider, processing over $4.8 billion in orders, 10.2 million SKUs, and 25,300 locations. Delivered as a managed service via the Internet using the "˜Software as a Service' (SaaS) model, Datalliance VMI makes it easy for suppliers and their customers to establish effective VMI relationships that fully align business objectives, improve collaboration, and streamline supply chain operations. Datalliance serves leading Fortune 1000 companies in a number of different industries. For more information about Datalliance and VMI, visit www.datalliance.com.
