A longstanding relationship between the supplier and the customer generally means that the supplier knows the products and quantities the customer requires. If that is the case, both parties may benefit from establishing a robotic warehouse on the customer’s premises.
A robotic or automated warehouse means that you move a proportion of the stock to the customer’s premises, making the products readily available to them. All the while, you remain in charge of maintaining and monitoring the robotic warehouse’s processes similarly to your primary warehouse.
Who Is This For?
The solution is ideal for wholesalers, who can keep the supplies crucial to the customer on-site at the customer’s warehouse. For example, Erply’s software is frequently used by industrial enterprises, for whom a supply failure can mean delays in production. The software is also popular among companies that work in three shifts, allowing employees access to the required parts even at night when the warehouse keeper is not available. In essence, a robotic warehouse guarantees reliable operations.
How to Use?
The Erply robotic warehouse is extremely easy to use – the employee uses a contactless smart card to open the door to the warehouse or locker, selects the required product and closes the door. The customer can choose to grant access only to the people who need to enter the automated warehouse.
However, the use of the warehouse’s equipment is not limited to a locker or room. The goods can also be stored on shelves – whatever suits the supplier and customer best. If the parties cooperate well and trust each other, they will understand that the warehouser is liable for the products until they are sold to the end-user.
Case Study: Warehouse Service Built with Erply
For almost twenty-five years, Alas-Kuul has been providing hardware to industrial companies. They sell, rent and service a long list of welding equipment, plasma and gas cutters, compressors, vacuum pumps, compression springs, relays, electric motors, frequency inverters, couplings, seals, washer, ratchets, pawls, bearings, racks and much other equipment, parts, and components.
They have become the number one parts and equipment provider for hundreds of large industrial companies in Estonia, and have now expanded their business to Riga, Latvia, where one of the biggest Baltic Sea ports is operating.
Vendor-Managed Inventory Built on API
There is obviously a strong need for advanced inventory management, and Alas-Kuul has been using inventory management software for years already. Being a hardware distributor, their normal role in ICT technology ecosystem is to use software services. All of a sudden Alas-Kuul is doing the opposite: they offer Software as a Service to their customers. They are now one of the leading providers of Vendor-Managed Inventory (VMI) service in the Baltic region.
So how does this work? Recently, we wrote how APIs let you create customized applications that your clients need. This is exactly what Alas-Kuul has done: used Erply’s retail software backbone to build a business to business (B2B) software service with a great level of automation. Warehouse management is now one of their four main business areas, and it is growing at a fast pace.
This is how vendor-managed inventory works:
1. The client introduces their order nomenclature and manufacturing process. According to his, Alas-Kuul stores all the materials and parts in their own facilities, cost-free for the client.
2. Alas-Kuul takes full responsibility that the materials and parts are ready for the client in correct quantities and at the right time. Alas-Kuul takes care of stock replenishment and sourcing and maintains optimal stock levels.
3. Alas-Kuul provides its clients with a web service that delivers clear and quickly readable reports on stock levels, orders, bills, and offer of the materials and parts.
The Benefits of Vendor-Managed Inventory
For a vendor, there is an evident advantage in building a long term alliance with a customer. It greatly reduced business volatility risks and helps to keep a steady cash flow. A vendor also gets to know the customer better, and can thus provide better service, resulting in mutual business growth.
For a client who gives its inventory management to a vendor, there are four major benefits.
1. Company’s financial resources that would have been occupied by stocked material and parts, can be put to use elsewhere.
2. Significant cost cuts on sourcing the materials and parts needed for manufacturing. It takes less work, time and transport costs, and most probably the vendor can offer favorable pricing.
3. Real-time reports on all the materials and parts, orders, bills, expenditures, and stock levels.
4. Comfortable billing, payment automation, and financing by factoring as an option.
“We have built the service flexible, starting from what our customers need,” tells company’s CEO Indrek Orro. “The service can be adapted to any industry. Already 30 manufacturers have subscribed to our VMI service, and have already calculated significant cost cuts, not to mention the unprecedented smoothness or sourcing process.”
The physical storage of parts combines the capabilities of the vendor’s and customer’s warehouses, which are both managed from one central inventory management software interface. If the parts are stored already by the customer already, an employee there finds it quickly according to the barcode. As the part is taken into use by the customer, the inventory management software automatically orders a new piece from the vendor’s central warehouse or supply source. As the manufacturing plant practically does not run out or materials and parts, the likelihood of disruptions of the manufacturing process is extremely low.
From Central Warehouse to Cross-Docking
Alas-Kuul started its business as an intermediate and local maintenance representative for large Scandinavian industrial hardware and equipment providers. The company gradually decided to source the parts from original manufacturers, which led to a 25-30% cost cut.
As the sales volumes grew, Alas-Kuul had to turn their attention to logistics. Not only let logistics management provide better pricing; the efforts resulted in much smoother operations and fast delivery times. The goods that arrive at the central warehouse location, are dispatched daily or several times a day. In many cases, even a large order made in the morning is fulfilled in the afternoon, even if the client is located hundreds of miles away.
Yet another feature that gives Alas-Kuul a great competitive advantage, is cross-docking. Cross-docking is a practice in the logistics of unloading materials from an incoming truck or railroad car and loading these materials directly into outbound trucks, trailers, or rail cars, with little or no storage in between. It does ask for advanced retail and inventory software but the cost cuts on transport, stocking, and re-stocking can be immense. Multinational retail corporations like Walmart have been highly successful in using cross-docking practices to lower retail costs.
Alas-Kuul moved to cross-docking practices gradually, just as their inventory management software evolved. Now their inventory management is based on Erply enterprise management suite. While small quantities of diverse orders go through the central warehouse, a large part of the larger orders are packed already in manufacturer’s facilities and are shipped to customers without even touching the shelves in the central warehouse. Again, not only a cost cut is involved; customers also receive their parts and equipment in shorter delivery time.
Distributor as a Provider of Full Service
After implementing Erply’s enterprise management software, Alas-Kuul now works in four profitable and growing business areas. It sources and sells hardware, rents it, services and repairs it, and also helps their customers to manage warehouses and inventory. For a manufacturer or a building company, this kind of partnership means full service and substantial gains in time-saving and spending cuts.
“Our aim to be a smart company,” company’s CEO Indrek Orro tells. “It’s not really necessary to keep huge stocks and risk stock overflow. It’s much better to arrange your operations so that your client receives their orders fast. Partnership with Erply is a highly valuable experience because their professionalism has helped a build a whole new service.”
Mr. Orro: “We are different from our competitors because we can offer an excellent full package that consists of parts and equipment, which we are able to service, too. And we’re the kind of partner who knows how our clients work and which machinery they use. Amazing where how far from the concept of a simple “salesman” have we moved. Now with the warehouse and inventory service we offer, we have moved yet another step to the future. A step ahead of our competitors.”
To find out how can your company start making money with an API based software service, please call us today at +1 917 210 1251. The possibilities are countless, including automatic stock replenishment, RFID based warehouses, integrated retail and e-commerce and cutting edge logistical services.