Original Date: 06/26/1995
Revision Date: 01/18/2007
Information : Distribution Program
Dayton Parts, Inc. (DPI) maintains a warehousing and distribution center in Harrisburg, PA that stocks and distributes over 20,000 different items at any time. The warehousing and distribution center is a well-organized, well-controlled facility of approximately 150,000 square feet and maintains an inventory accuracy of over 99%.
The method of distribution of inventoried goods is unique. Prior to recent changes in the process, customers could submit orders to DPI before the last three days of the months. If the order met certain minimum dollar amounts, the customer could take until the 15th of the next billing month to pay for the order. This process created large amounts of overtime for personnel at the end of each month, and customers had to spend extra dollars in inventory to be eligible for the delayed billing.
To alleviate both problems, DPI created an Inventory Management Plan that encourages customers to place regular weekly orders and receive their products with guaranteed delivery dates and pre-paid freight charges. In establishing this system, agreements were reached with small trucking companies that guaranteed them full loads on specific days. Because the trucking company was paid by mileage, no funds were lost if a full truckload was not available. Delivery zones were established within the U.S. and Canada, and order days, shipping days, and receipt days were defined.
This change allowed DPI to reduce shipping costs by approximately 2%, significantly reduce overtime by company personnel, guarantee customer delivery dates, and allow customers to reduce the amount of inventory they must carry because of uncertain delivery and minimum order requirements. The average time of shipment from order placement is now 1.3 days.
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