Capturing Costs

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Point of use vending solutions enable companies to lock down indirect and MRO materials spend.

By Spence Webb

Industrial vending and point of use (POU) solutions have evolved over the past twenty years to accommodate an ever-increasing demand for clients need to operate smarter, leaner, and capture out-of-control spend in the historically taken for granted and largely ignored category – indirect/maintenance, repair, operations (MRO) materials.

Depending on the needs and desires of each client’s application, there can be many POU options and styles to choose from. Security and accountability are usually primary performance drivers along with data-driven intelligent usage/requirement based purchasing and stocking decisions. Clients can choose from carousel or locker style machines where selected securities can require badge or RFID identification, controlling product style and volume limits and providing for multi-layered spend analysis to eliminate spend waste and identify rouge usage. These solutions also provide for dispensing and usage tracking on high volume low dollar items and/or VMI managed products that serve the end user better by being as close as possible to the usage location.

While the application of vending and its designs were born from a need to reinvent the entire structure of inventory management from purchasing to inventory/crib management, strategic stocking levels and disbursement strategies, the clear missing link in the entire strategy until this reinvention was the data management. Although systematically the information existed in corners of whatever ERP system was used at the time, it sat unnoticed and largely ignored until the onset of material integrators came to be. Third party indirect material managers (3PIMMs), commodity managers and integrators came on the scene in many names and structures. Distributors who saw the opportunity to strengthen their product sales position by being the overseer of Indirect at site locations attempted to inject themselves as integrators – ultimately a self-defeating prophecy. One of the primary functions of implementing a vending/POU solution is to lock down (to the desired degree) the spend and understand how it’s being used. The task then is to identify and categorize the spend to identify what is critical and necessary and what is superfluous and unnecessary. Eliminating unnecessary spend and machine downtime is the start of improving the overall and will launch production improvements across the board.

Vending and POU in general, along with a very defined and systematic approach to managing Indirect/MRO inventory, are key responsibilities of a 3PIMM organization. Executed by a group whose core competency is specifically the management of indirect/MRO, programs combine a robust ERP system, a holistically designed plan for every part, a process and procedures driven warranty and repair program, an excess and obsolete strategy and a historically proven P2P and product performance improvement strategy and plan. These key areas when combined result in a spend reduction and cost savings strategy that goes beyond the cost of managing the program to provide a net ROI that can take this category spend to performance levels never experienced and add profit to the client's bottom line year over year.

Spence Webb is the business development manager at ValuePoint Material Solutions. He’s worked in indirect materials for two decades and has held various management and sales leadership roles within the distribution and manufacturing environment.

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