Kim Olesen, Director of Supply Chain at Vallen, shares her Experience Dealing with Inventory Management and Procurement Challenges
The global COVID pandemic has put supply chain professionals under more pressure than ever to get the right products on shelves with fewer resources. Companies in the industrial components industry that source significant portions of their inventory from overseas have been affected by shifting markets, and unstable supply and demand.
With over 80 years of experience, Vallen has established itself as an industry leader in the supply of industrial MRO and safety products. A Slimstock customer since 2018, Vallen has a broad customer base, working alongside local contractors and some of Canada's largest companies. As a part of the Sonepar family, their customers benefit from Vallen’s local experience, national reach and global resources.
Kim Olesen, Director of Supply Chain at Vallen, was kind enough to share her expertise with us. We spoke to her about some of the challenges she is facing in the industrial components industry and her solutions to them. The conversation has been lightly edited for clarity and length.
Q1: What makes the construction and industrial components supply chain unique?
Our products are Safety and Industrial MRO based. They are not a high spend category for our customers, which means that customer forecasts and data are hard to come by.
Q2: What are some of the trends you’ve seen recently in construction and industrial supplies?
We are heavily impacted by operations in the oil & gas, and mining sectors. Therefore, OpEx spend impacts us greatly. We get busy when these sectors go into shutdowns and plant turnarounds.
Q3: What are some of the most significant pain points your supply chain team deals with?
Some of the biggest challenges we face are no lead time on requests, and demand is very lumpy and highly seasonal. We also have to work around the fact that product changes are hard to get approved at customer sites, and customer spend data is hard to come by.
Q4: How do you tackle the challenge of both short and long lead times?
From the supplier side, we ensure our lead times are vendor confirmed and accurate, plus we carry buffer stock. Shorter lead times from customers lead to higher inventory levels of A and B items.
Q5: How do you deal with the unpredictability of demand?
We use forecast tools in Slim4 to manage this. And we confirm any demand anomalies with the sales team directly, to confirm the reliability and whether these were one-time events.
Q6: How do you make decisions regarding breaking and ordering the right bulk to control ordering cost?
We manage this by confirming EOQs and MOQs with our suppliers. By keeping communication channels open with them, we are able to identify potential problems and work through them before they cause disruption.
Q7: Large customer orders can bounce due to the unavailability of a few slow-moving items. How do you ensure the availability of slow-moving products to ensure you can deliver On-Time –In-Full (OTIF), thus reducing lost sales?
For large customer contracts, we load their usage and plan for these slow-moving items in our forecasts. Having this information available is key to meeting our customers’ needs.
Q8: How do you make sure you reach high fill-rates to your customers?
The data and measurement dashboards in Slim4 ensure our fill rates are high. If they drop, we can review the data and look for a root cause. This requires our team to monitor and review our service levels and demand forecasts. The variability of our markets means we can’t just use a “set it and forget it” approach.
Q9: Due to increasing urban density, many industrial supply customers require orders to arrive on-site JIT (Just-in-Time) because there is no space to store products at development sites. From a supply chain side, what changes have you made to adapt to this?
We have several functions built into our ERP data to hold orders for a finite period of time. We also set up vendor direct shipments when we are able to. This requires us to know the specific needs of our customers. Once we have this information, we are able to coordinate around their schedule.
Q10: Digital transformation is a hot topic across all supply chains today. But how does that apply to the industrial components supply industry?
Our ordering has a very large digital component so that our customers are able to order online. Digital ordering impacts the supply chain as the expectation for digital orders are next day delivery. We, therefore, need to have stock, and the capabilities to get the product to the customer fast and efficiently.
Want to know more?
To read more building materials and industrial supplies related article, Click here.
During these unprecedented times, Slimstock is committed to helping you through this challenging period. Click here to know more.