In the midst of the holiday season it’s instructive to learn how retailers face their e-commerce logistics challenges. But big box retailers aren’t the only ones reexamining their supply chains to find ways to make consumers buy a washing machine from them instead of their competitors. The manufacturer of the pump that goes into that washing machine has to stay competitive too, and their supply chain strategies represent an even more intricate competitive calculation because it has to transcend tiers.
The Gorman-Rupp Company sells to the distributors who sell to the big boxes, which makes them dependent on distributor feedback for demand planning. Even repair parts are ordered through the distributors, so that can make supply chain a major pain point if communication isn’t clear. The same holds true for all the other industries this manufacturer sells into, including construction, mining, agriculture, military and the medical industry.
When your inventory supports everything from small pumps that fit into the palm of your hand to bigger pumps that move several thousand gallons of water a minute, supply chain communication must be supported by visibility. Three years ago Gorman-Rupp didn’t have the software tools to provide that visibility, so it relied on manual inventory management by spreadsheet. That resulted in having either too much or too little in stock. If it was short on materials it missed delivery dates, which meant customer frustration and the potential for customer departure.
Eventually the company invested in a new ERP system (Infor’s SyteLine) that regenerates and recalculates their requirements every night. It saves them at least 20 hours a week in rescheduling of equipment and people and another 20-25 hours a week maintaining inventory records.
“The software gives us visibility to things we didn’t see before,” says Patrick Wischmeier, director of information technology at Gorman-Rupp. “We have forecasting tied in a lot tighter than we did before. We forecast based on incoming orders and whatever field level intelligence we can get from the distributors.”
What makes Wischmeier’s job more challenging is that Gorman-Rupp doesn’t have a steady stream of predictable customer orders. A customer can order one part or a whole pump at any given time.
“It’s not like they’ll order every week, so you need a lot of customers,” Wischmeier told me.
That’s why he has high hopes for the ERP modules he hasn’t applied yet.
“Advanced scheduling and planning will help us further gain some efficiency in scheduling and planning out in the factory,” he added. “We are looking at upgrading our distributor network so people can actually buy things online, like a small part. We might also do some selling over the web. We’ll equip our field sales people with mobile devices and that’s a huge initiative for us next year—mobility and getting information in the hands of the guy knocking on the customer’s door. Our products aren’t simple. Customers need education and that lends itself to longer term relationships. We knock on the doors to build those relationships and when we do we need information in hand. Mobility is top of the list in our five year plan, along with customer relationship management.”
This pump maker’s New Year resolution for 2013 is to improve reciprocal information flows, both upstream and downstream. That’s actually not far off from what those big box retailers are doing to stay competitive. He plans to offer his customers instant access to catalogs, product information, invoicing and delivery schedules. For suppliers he plans to give them a portal into Gorman-Rupp’s purchase orders. That way, when this manufacturer orders raw materials from China it will in turn have visibility into shipment locations and the delivery schedules.