Industry / Company / Service

Manufacturing / Electrical Components / Build SaaS Prototype

 

 

Need:

This manufacturer had recently experienced significant growth through acquisition and needed a new service to improve sales penetration across existing customers.

Approach:

Skunk works project to build a new replenishment service that would improve distributor customer inventory turns and fill rates.

Results

The new service improved inventory turns, fill rates and grew sales for the manufacturer allowing them to get a larger percentage of their products in the distributors inventory.

Keys to Success: Extensive research into current operating practices followed by rapid design and prototyping with quick market feedback.

Short Description

The manufacturer desired to create a new service that would provide greater benefits to both their company and it's distributor customers.

The plan that took shape was to launch a bold initiative to improve a distributors' throughput, reduce their inventory, and lower their operating costs through the creation of a new service/program. Quickly a high-caliber multi-discipline skunk works was established under the code name The Manhattan Project.

The solution identified was to drive increased purchases of product in return for an advanced Distributor Manufacturer Integration (DMI) program/service; essentially a vendor managed inventory (VMI) service with additional features to reduce billing and collection costs.

The keys to the project's/pilot's success were rapid design and development of a pilot service (i.e., getting the application ready by the next annual Signature Service commitment period) and gaining industry acceptance of that service.

The skunk works determined that a new ASP/On-demand architecture would allow the greatest level of industry utilization while also facilitating continual rapid improvements to the services.

Additionally, it was determined that with only about 10% of a distributor's SKUs the companies influence was too small to gain the distributors' full attention for such a bold program. In response they boldly enlisted the participation of larger industry players to jointly make the service and program a success.

The pilot proved to be a huge success for distributors (i.e., increased fill rates while doubling inventory turns) and manufacturers (i.e., increased sales).

The manufacturer then found an independent third party to run the on-demand service as a full-time business to everyone's satisfaction and gain. The company sold the application to a boutique distribution consulting firm. The sale resulted in an extremely effective and successful VMI ASP which directed over $4.5 B in global replenishment transactions.