Royal Wholesale Electric is a distributor based in Salt Lake City, Utah, specialising in electrical components for use in automation and industrial applications. It is part of Consolidated Electrical Distributors, one of the nation's largest distributors of electrical components.
But Royal faces a problem common to every distributor, regardless of offering or size — competing for business with a service that can be easily commoditised.
Combatting "3 Bids & a Buy"
All too often, customers request proposals from three distributors and choose the lowest bid without considering the value a distributor brings to the relationship. To avoid this price-based competition, Royal looked at how technology could set them apart.
According to Dusty Siddoway, Royal's PC manager, they began using the ACTYLUS Smart Bin Solution from Apex Supply Chain Technologies to automate some of the distributor's vendor-managed inventory (VMI) programmes. One of their first installations was with Intermountain Electronics (IE). IE manufactures rugged electrical distribution and control equipment designed for the oil and gas, mining and power generation industries.
Before the ACTYLUS Solution, IE was using a large, homemade metal shelf with slots to store its components. Bulky by design, it could easily accommodate any inventory IE might have on hand. This resulted in IE carrying surplus inventory, at significant expense.
"It was obvious IE had more inventory on hand than they needed," said Siddoway. "We knew automating their VMI program for electrical components would decrease their inventory and make them more efficient. This frees up money and floor space for IE, without creating any new or additional costs."
Solution Allows For 24/7 Inventory Monitoring
Now three ACTYLUS racks, with a mix of 144 large and small bins, handle the homemade shelf's SKUs with room to spare, all within a smaller footprint. Its LED lighting and brightly coloured bins make it easier for workers to identify components accurately. For Royal, the biggest benefit the solution brings is the one you can't see, the Apex Trajectory Cloud data platform.
"With the Trajectory Cloud platform, we know when IE's bins are running low," said Siddoway. "This helps prevent stock-outs and eliminates the need for us to conduct bin checks. And since IE is located in Price, Utah, every customer visit entails a four-hour round trip. So, this visibility into IE's material flow is critical."
Trajectory Cloud can be accessed online from any computer or through a mobile phone. In addition to automatically notifying Royal when preset minimum thresholds are reached in each bin, it generates monthly reports to show IE inventory consumption.
"We wanted to eliminate bin checks from the replenishment process," says Siddoway. "The 24/7 access to real-time inventory levels makes this possible. We would not have this customer without having the ACTYLUS Smart Bins in place."
With an accurate inventory count, Royal provides IE with only the amount needed to replenish its inventory each week. This has helped streamline the procurement process and decrease the number of suppliers needed to service IE.
Since the ACTYLUS Smart Bin Solution virtually eliminates stock-outs, IE no longer needs safety stock. All of this, in turn, decreases IE's spend and their inventory manager has been able to make better use of her time. This includes working with Royal to look at opportunities to expand IE's use of this technology.
ACTYLUS Brings Royal New Business & a Fast ROI
Not only has ACTYLUS made Royal more competitive, it's also proven to be surprisingly affordable. To that end, Royal's smart bin systems were obtained through the Apex Complete Technology Subscription (ACTS). This leasing program makes the investment in ACTYLUS an operational expenditure. Based on this and on Royal's ability to calculate a return on their investment, the ACTYLUS solution has been easy to afford.
Siddoway simply takes the amount of revenue ACTYLUS generates each month, subtracts the cost of the ACTS subscription and reflects the cost savings generated by only having one visit to IE each week. Using these factors alone, Royal estimates it sees a return on investment every month.
This math may become even more attractive for Royal. With 12 empty ACTYLUS bins in its system, IE can give more SKUs to Royal. And as the ACTYLUS Solution enables remote site monitoring, the distributor has been able to expand its new business efforts to a broader geographical area.
"By automating VMI replenishment, we can expand our business without investing in additional overhead," said Siddoway.
ACTYLUS Smart Bins have helped set Royal apart from its competitors and expanded new business conversations to a broader base of potential customers. This helps ensure its services won't be commoditised with other distributor programmes. Instead of focusing on "a vendor's price," now Royal can show their potential and existing customers "a business partner's value."