Original Date: 10/07/2002
Revision Date: 01/18/2007
Best Practice : Supply Management Partnership
General Tool Company implemented a tooling and supply management relationship with Dayton Supply and Tool that uses barcode inventory tracking and specialized tool crib software. This partnership allows General Tool Company to reduce its inventory commitment by greater than 50%, provides access to state-of-the-art cutting tools, and infrequent stock outages.
General Tool Company (GTC) requires the highest quality tooling and an appropriate inventory level in order to provide excellence and timely delivery of hardware to customers. GTC’s annual expenditure for tooling and supplies is approximately $1 Million in which inflated inventories result in a reduced cash flow and the risk of obsolescence of supplies. In the past, the cost of procuring these supplies was approximately $100,000 per year, and in spite of maintaining a high inventory level ($600,000), frequent supply outages resulted in significant additional expenses for premium freight and order expediting as well as lost production time.
GTC resolved its supply management issues by implementing a tool and supply management agreement with Dayton Supply and Tool (DST) company. DST is GTC’s supplier of choice and has first refusal on all GTC tooling, shop supplies, and welding/fabrication consumable orders. GTC is able to keep a minimum stock level and DST guarantees available backup quantities with no more than a 24-hour delay. In addition, GTC and DST are electronically linked through tool crib inventory software, while daily inventory usage and supply levels are closely monitored. When minimum supply levels are reached, a replacement order is initiated through an on-going purchase order. Through this partnership with DST, GTC has reduced its inventory commitment by greater than 50% and has access to state-of-the-art cutting tools and infrequent stock outages.
For more information see the
Point of Contact for this survey.