Like most sophisticated manufacturers, Interconnect Devices International (IDI), an industry leader in spring contact probes, follows the principles of just-in-time manufacturing. But sometimes schedule sharing, electronic data interchange, overnight delivery, and the like just aren't good enough. This Kansas City, Kansas, manufacturer found itself at a disadvantage against competitors on the East and West Coasts that could provide same-day delivery to coastal customers.
IDI overcame the problem with a consignment stock program for its high-volume customers. IDI stores inventory at the customer's location in a locked storage cabinet. The customer withdraws precoded bags and checks off the item on a listing sheet. Once a week the customer faxes the inventory record to IDI, an invoice is issued, and stock is replenished.
"Customers receive same-second delivery and are guaranteed that needed parts are in stock," says Kelly Robb, IDI's inside sales supervisor. To minimize the effect on inventory levels, the dedicated stock is offered only on fast, continuously moving items. Total inventory is reduced by focusing on cutting back slow-moving and obsolete stock. For customers who do not have the time or resources to self-manage consignment stock, IDI offers a safety stock program. Inventory is stored in a separate location for each customer and shipped upon request.
"Customers appreciate the fact that we take a risk," says Robb. "This has allowed us to become the exclusive supplier to large players in the industry and thus increase stock turns." Another benefit of the consignment stock program is that IDI is able to learn more about customer needs by getting product feedback directly from the end-user.