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Siemens Industry and Viking Electric Collaborate to Improve Performance(January 27, 2012)
CINCINNATI, OH -- (Marketwire) -- 01/27/12 -- As part of their High Value Partner program, Siemens is committed to working more collaboratively with key distributors, such as Viking Electric, to better manage inventory through their Inventory Collaboration Program (ICP). Siemens uses Datalliance Vendor Managed Inventory as the solution foundation for their ICP. Viking Electric is a key wholesale distributor for Siemens, serving the electrical industry in the Upper Midwest with 24 locations in Wisconsin and Minnesota.
Kathy Green, Viking Production Manager, stated, "We were very impressed from day one with the detailed and systematic implementation approach that both Siemens and Datalliance took with us. We held weekly meetings where members of our staff, Siemens and Datalliance all participated in a step-by-step plan where we addressed everything from a thorough data scrub to resolving terminology differences so we were all on the same page. This was very well planned and organized, and no one rushed the process. The result was a solid foundation for moving forward with confidence."
Inventory management was one of the first areas where Viking realized improvement. Doug Herberg, Viking VP of Marketing & Materials, explained, "VMI gave us the information and visibility to fine tune our inventory stocking plan to better reflect the actual demand trends of our customers. We found items that we actually did not need to stock and generally cleaned up our inventory to the point where we were able to reduce the value of our inventory by about $80,000 or 15%. That represents a significant cost savings for us. We are doing a better job of managing our inventory while we grow our business with Siemens products."
Green noted, "We liked the added visibility that we gained through VMI and have made some changes to our business system based on what Datalliance VMI does. The improvements in matching inventory with anticipated demand have helped us improve our fill rates from 95.7% to 98.5%. This is a huge improvement in our customer service and is the result of anticipating customer demand and having the right items available when our customers need them -- but without excessive inventory that would drive up costs."
The bottom line of what Viking considers the strategic value of VMI is measured by one of the Viking's key business metrics -- Gross Margin Return on Investment (GMROI). "Our business environment is very challenging right now, as is the case with all industries," stated Herberg. "By helping us better manage inventory and improve fill rates, we have been able to improve our GMROI for our Siemens products from 1.66% to 1.84%. So for every dollar of Siemens inventory that we bring in, we are able to generate $1.84 of gross margin. This improvement in GMROI is a great trend for us!"
Datalliance is a leading provider of collaborative commerce services, and the world's largest independent VMI service provider. Delivered via the Internet using the 'Software as a Service' (SaaS) model, Datalliance solutions make it easy for suppliers and their customers to establish sales and inventory management relationships that fully align business objectives, improve collaboration, and streamline supply chain operations. Datalliance manages billions of dollars in orders, millions of SKUs, and thousands of locations for leading Fortune 1000 companies in a number of industries. For more information about Datalliance, visit www.datalliance.com.
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