As part of its semimonthly electronic newsletter, the American Production and Inventory Control Society sent the following article to over 25,000 members on March 18, 2003.

BAR CODING OFFERS SOLUTION FOR VMI

Want to increase productivity, decrease inventories, and minimize errors in your ordering process? Atlantic Fasteners, an ISO 9002-certified commercial fastener distributor in West Springfield, Massachusetts, has done just that with the development of a system that achieves 99.99 percent warehouse accuracy.

The secret? Scanning power that has taken Atlantic and its customers to a higher level of service and efficiency. Atlantic places its own bar-code label on every item, even prepackaged boxes, to track parts back to the original manufacturing lot. "When warehouse workers scan items for orders," explained John Kraus, vice president of sales, "the computer alerts them to errors, signaling there are too many or too few items and if there’s an incorrect item or one that is omitted. The computer doesn’t close the order until it’s 100 percent correct."

Original equipment manufacturers (OEMs) achieve similar efficiencies in their own warehouses by working with Atlantic’s inventory managers who organize and bar code OEMs’ fastener stocking locations. "We maintain inventories through scheduled visits, and when supplies at a location drop below the minimum quantity printed on the label, the inventory manager scans for restocking," said Kraus.

"By using Atlantic’s bar-code solutions, our customers realize significant savings. We bar-code label all point-of-use stocking locations to eliminate workers walking to and from the stockroom. One manufacturer estimated a $51,000 per year savings after Atlantic helped set up more than 7,100 point-of-use bins in 37 assembly areas and took over the maintenance of stock bar-code scanning. Some 55 assembly workers used to leave their workstations and walk to the stockroom to replenish their fastener bins. Our process helped the manufacturer realize savings in time and money," said Kraus.

"Our inventory managers schedule their visits to ensure stock levels are maintained, and we download the orders directly into our computer without manual input. We ship packages clearly labeled by point-of-use destination to their receiving department," said Kraus. "Through vendor-managed inventory, customers reduce overhead, free purchasing people for more critical assignments, and ensure they never run out of the products they need.

"Our customers no longer waste time ordering and maintaining their supplies. Inventories decrease as bar-code scanning ends duplicate ordering and over buying, and errors all but vanish because the orders are no longer handwritten or entered into the computer manually," said Kraus. "One power equipment OEM estimated a 21 percent savings after one year and 13 percent each subsequent year."

When Atlantic started on its road to success, it realized that the number of picking errors in the manual process was a problem. With no standardized part numbers in the industry, a massive inventory, and customers who "need it yesterday," Atlantic took on the challenge. "The decision to use bar coding helped us reduce errors and gain productivity. Within 14 months we had written custom software and labeled the warehouse," said Kraus.

Atlantic also learned that it is best to have one person responsible for each order, start to finish. In 2002, Atlantic shipped more than 160,000 line items and reached 99.99 percent accuracy with only 16 warehouse mistakes.

"We are so confident our system works that we offer six guarantees, including a 100 percent satisfaction promise. We’re proud to say that only a handful of customers have collected," said Kraus.

--Mary H. King, Senior Manager
APICS Communications Division

For more information about vendor-managed inventory,
read "Hands-On VMI" by Brian C. Freund, CPIM, CIRM, C.P.M.,
and June M. Freund in the March 2003 issue of
APICS--The Performance Advantage