Embrace Customer Managed Inventory in the Era of COVID-19
By Rock Rockwell
While the right ecommerce website is necessary for distributors, a Customer Managed Inventory program supported by the right technology is a better way to replenish inventory, especially given today’s social distancing requirements.
Why you should offer Customer Managed Inventory
Inventory replenishment for critical or frequently used items is better managed away from your website. Why? Ecommerce takes the customer longer, because they have to enter in their item numbers multiple times by hand. They likely have to walk out to the warehouse, go through the bins, look at each item, write down the part numbers and quantity, then sign in and start keying in those numbers.
Secondly, ecommerce encourages price shopping. As long as they are entering those item numbers into your website, they might as well be entering them into other websites to see who has the best price. Without a relationship that goes beyond the transaction, what’s stopping them?
Get closer, and remove friction from the sale. Give the customer an app on a mobile device such as an Android, iPhone or tablet. When they decide they need more of an item, they simply scan a barcode. The package quantity automatically comes up on the device. They tap, submit and go back to work. After an order is placed, the distributor makes the delivery, touch-free.
Apps can even record the item location at the time of scanning, which helps the put-away process. This kind of Customer Managed Inventory (CMI) technology is far faster, eliminates price shopping, and reduces the risk of error.
Distributors that implement CMI with the right technology:
- Reduce procurement costs through automation.
- Eliminate complaints of bin stuffing because the customer controls what and when and how much they order.
- Increase revenues. Despite a reduction in inventory, distributors often find that customers expand spend with distributors due to the ease of ordering directly from a mobile device.
How COVID-19 changed inventory replenishment
A common service is Vendor Managed Inventory (VMI), where a rep regularly visits a customer to see how much inventory needs to be stored with that customer, making sure bins are full enough not to run out until the next time.
Now, in the age of COVID-19, does the customer really want the rep coming out? Does a rep really want to go out? In many cases, we’ve heard the answer is no. Reps still aren’t visiting customers in person.
The only difference between CMI and VMI is whose hand the scanner is in. It’s a touch-free high-value option. The customers know what they want, when they want it and how much they want. Because replenishment is driven by actual usage, it reduces the amount of inventory they hold in their stockrooms. That means less cash tied up for both the customer and the distributor, and more confidence in having the right part when they need it most.
Beyond COVID-19, CMI remains a long-term play for distributors. Chances are, reps aren’t going to be as welcome as they once were, and technology makes it much easier to serve customer needs more efficiently – no disruption to the customer’s day necessary. As a result, reps can spend less time counting widgets and more time on solving customers’ real problems.
The distributor reaps the benefit of the value-add, and customers tend to be more loyal because you’ve made it easy for them. Even easier than an ecommerce transaction.
Contrasted with ecommerce as a “search-to-order” mechanism, apps that use “scan-to-order” technology make replenishment faster and more productive — and help distributors create more lasting customer relationships over time.
Rock Rockwell is CEO of eTurns, a point of use inventory management system used by distributors to automate inventory replenishment at the point of use in stockroom and service trucks. Contact Rockwell at rock@eturns.com.
INDUSTRIAL SUPPLY MAGAZINE
The November/December issue of Industrial Supply magazine features an in-depth cover story about Kimball Midwest. Plus, we're featuring articles by contributing writers Dirk Beveridge, Frank Hurtte, and Mike Marks, as well as interviews with numerous product and distribution industry experts.
