Deco Tool Supply helps customers reduce costs by keeping closer tabs on inventory.

by

Production facilities that want to reduce costs typically look at the price they pay and the number of tools they buy. Thanks to prodding from distributors like Deco Tool Supply Company headquartered in Davenport, Iowa, a growing number of companies are beginning to understand that they need to pay attention to more than just price.

Deco uses sophisticated inventory management tools that provide flexibility in how they track and report information to customers, making it easier to watch over their tooling and other MRO supply costs more closely.

“More and more customers are discovering that they don’t have control of their MRO supplies,” says Brad Burch, manager of Deco’s integrated supply division, PRISM, which stands for Process and Inventory Systems Management. “They spend a tremendous amount of time, energy and money sourcing those items. Plus, they don’t have any way of gathering that information.”

When you consider the thousands of cutting tools, carbide inserts, abrasives, tool and die supplies, precision measuring equipment and other consumable maintenance, repair and operations supplies that plants typically consume, managing those items creates huge headaches.

Enter Deco Tool Supply.

Utilizing bar code scanning technology, a tool crib management software package, automated tool dispensers, laptop computers and portable printers, this Midwest-based distributor specializes in helping production facilities manage what many considered unmanageable.

Deco uses WinWare’s CribMaster Windows-based software package designed specifically to manage tool cribs in industrial facilities. It tracks a variety of data that customers previously either didn’t bother to gather, or gave up because it proved too difficult.

For example, Deco manages all of the perishable tooling used by a hydrostatic transmission manufacturer with five separate plant locations. Since taking over inventory management responsibilities for the customer, tooling costs per part shipped dropped by nearly 40 percent and Deco documented more than $1 million in cost savings in one year.

It didn’t generate the savings by simply selling tools at lower prices. Instead, Deco analyzed where and how end-users use tooling, which enabled them to make suggestions for cost-saving process and applications improvements.

Numbers don’t lie
Here’s an example of how better data leads to cost-cutting opportunities: Suppose a customer issues carbide inserts from several tool cabinets located throughout a shop. Each month, the shop foreman receives a series of printouts from Deco showing the number of inserts issued from each cabinet, the piece cost, the average inventory on hand, total number of transactions and more (see sidebar, “Measuring Performance”). Analyzing the data, the shop foreman can quickly recognize unexpected spikes in usage, see where most of his inventory dollars are being tied up and have a better idea of where to focus his resources to get costs in line.

The CribMaster system has more than 150 standard reports, but Deco also customizes reports using report writing software from Crystal Reports.

“We can generate a number of special reports to give the customer information about inventory turns, price savings, usage reports, slow moving inventory and other information they may need,” says Burch.

At some locations, Deco trained customers to manage the inventory themselves, with Deco’s information technology (IT) people providing technical support. In other cases, Deco’s onsite representatives handle all ordering, stocking and inventory management responsibilities. In either case, when inventory leaves the tool crib or point-of-use cabinet, it’s scanned into the system.

“We document what’s been taken by machine number or by part number or however the customer wants to gather information,” Burch says. “We’re able to give him information about exactly what is being used and where.”

Getting an accurate picture
One of the most important pieces of information that Deco keeps tabs on is inventory turns. But it draws a distinction between how it reports turns compared to other companies.

“A lot of software programs use turn reports that are snapshots,” Burch says. They simply report what inventory was in stock on a given day. Deco uses a more classic definition of turns when it reports tool crib inventory to customers. Its reports measure the average daily turns for an item over a defined period of time.

Why is that important? Companies that use the snapshot approach run the risk of viewing a skewed picture. If they happened to receive a big shipment on the day the snapshot was taken, inventory levels will appear high. If inventory was low when they took the snapshot, it makes turns look high. By looking at an average daily balance over a 30-day, 60-day or even a 12-month period of time, it eliminates spikes caused by seasonality in product usage and paints a much more accurate picture.

Customers also benefit from information on demand. Because Deco route people are equipped with a scanner, a portable printer and a laptop computer with a customer’s database installed, they can scan inventory, print out a purchase order or even print out a usage report for a customer on the spot.

“We can generate an order out of CribMaster, e-mail it directly into our Prophet 21 system, and have the order shipped while we’re still on site,” Burch says.

In the past, they’d take out an Excel-generated spreadsheet, do a manual inventory count and enter the data onto the spreadsheet by hand, then bring it back to the office for someone to load into the system. Information that used to take days or even weeks to gather now takes hours.

Better quality information leads to better decision making. Better decisions lead to cost savings. And, as smart customers are finding out, that’s much more important than getting the lowest price.

This article appeared in the May/June '02 issue of Progressive Distributor magazine. Copyright, 2002.

Measuring performance
Deco Tool Supply Company of Davenport, Iowa, utilizes a variety of reports – including turn reports, inventory value reports, ranking reports and pricing analyses – to show customers how to manage their tooling. PRISM division manager Brad Burch or an onsite manager typically present the reports to customers in Microsoft PowerPoint. Here are samples of three Deco reports.

Turn report
This turn report allows Deco to analyze the turn rate for individual items and individual stock locations. It helps set order point/order quantity and min./max. levels. It's helpful in determining the optimum stocking point as well as in identifying inventory items with slow movement.

Ranking report
The ranking report allows a customer to view items issued over a self-designated time frame. It is helpful when considering order point/order quantity or min./max. levels, and determining order frequency. Deco utilizes this report to help manage satellite cribs and other stocking locations. It is also helpful in projecting usage, negotiating pricing and identifying the top and bottom items for establishing inventory classification.

Inventory value report
This report allows a customer to view not only his entire inventory value for a self-designated time frame, but also the value of the individual items making up the total figure. Deco uses this report to monitor the effectiveness of inventory reduction efforts.

Return to story

This article originally appeared in the May/June 2002 issue of Progressive Distributor. Copyright 2002.

back to top                                      back to e-business archives