ASP Reduces Supplier Shipments, Inventory Space

Managing the tangled web of suppliers, inventory, and output in the supply chain can weigh on staff, and the bulk of the inventory can consume storage space. For a global computer hardware manufacturer, the back end of its supply chain involved 37 suppliers, each shipping on its own schedule to the manufacturer. Some suppliers would deliver once or twice per day, and others delivered once a month. The result? Jams at the receiving dock and extensive floor space used up for inventory.

The manufacturer turned to SalesLink Corporation (Boston), an ASP (application service provider) and 3PL (third party logistics) provider, which stepped in to streamline the process. Using SAP (Newtown Square, PA) software, SalesLink set up an information hub for the manufacturer's supply chain - and inventory management - that includes EDI (electronic data interchange) and forecast and demand triggers linked directly to the ERP (enterprise resource planning) system.

With the ASP, the manufacturer now has what seems like one supplier, rather than 37. The EDI triggers send information such as consumption reports and inventory balances to a Web site the suppliers can access. This reduces the time the manufacturer spends communicating with 37 different suppliers. By giving the suppliers access to data pertaining to the manufacturer's inventory and consumption, the suppliers can adjust their shipments to the manufacturer's needs. Essentially, the software solution gets the supplier as close to the real demand as possible.

The manufacturer has reduced its on-hand inventory by $6 million and converted the saved 70,000 square feet of warehousing space into a manufacturing area with the ASP. Material availability has improved as well, from 70% to 99.96%.