Vendor-managed inventory is the holy grail of cycle time reduction. When organizations can share information with suppliers in an accurate and timely manner, the suppliers can help manage inventory. When suppliers are able to monitor inventory, companies do not need to rely on buyers to interpret data and replenish stock.
A global manufacturer of telecommunications products wanted to reduce their cycle time by 50 percent. To meet competitive pressures, they needed to increase their inventory turns from two to four times per month. They had all the information necessary to meet their objective: they knew their daily inventories, demand forecast, and lead times. The challenge, however, was sharing information with their supply base.
Perfect Commerce helped them implement a global supplier portal to give their suppliers access to critical information. Suppliers could suddenly see how much of their product was in each plant and what the minimum and maximum target stock levels were. They could see the demand forecast 16 weeks into the future, which helped them manage their supply chain and in turn lowered their cost to serve the manufacturer.
The project helped the manufacturer lower inventory, decrease cycle time, and limit the administrative cost of processing a purchase order by 75 percent.