From the head office in the Netherlands, Tom Arts explains: “We operate in many different markets with customers including sole traders, painting companies and maintenance firms. Furthermore, with our Verfland brand, we also target the private market. Finally, we also offer VVBHUSAN Industrial Coatings for the industrial market.”
Painters don’t plan
Typically, in the paint industry, the customer picks up the paints and accessories they need, on the day they need them.
Tom adds: “Larger companies naturally order a little further in advance and we also do some e-commerce activity, but many of our items are collected from our branches. Painters simply never know exactly when they are going to do which job and at which location. They are not used to planning, they just drive past the wholesaler and then assume that the stuff they need is just there! Which is true in most cases.”
In the past, every company within Verfsterk Groep, and every branch within it, was responsible for its stock. Store owners could decide for themselves what was on the shelves in their stores.
“This resulted in high stock levels, obsolescence and handling costs at our central warehouse.” The Supply Chain Director goes on to add: “Inventory management must be a data-driven process. As a result, you cannot leave it to commercial people. If a painter orders three pots of paint of a certain brand, a branch manager will put them in stock immediately, so as not to miss out next time. However, if you looked at the numbers, it is clear that most of the turnover was achieved with only 10% of the stocked items.”
Centralised inventory management
Under Tom’s leadership, the business kicked off a project to professionalise the inventory management process. As part of this project, management of all stocking locations was centralised. Furthermore, the commerce department now drives the ranging decisions. An important new role was defined for the group of stock managers who determine centrally how many units of a certain item should be kept in stock at a branch.
Given the positive results the business has seen within its VVBHUSAN subsidiary, Slimstock was selected as the right partner for Verfsterk Groep. As part of the project, the paint specialist implemented Slim4 to optimise purchase orders for the central warehouse and all replenishment orders for the branches.
Tom Arts adds: “Branch owners are still able to submit additional orders, but this must be substantiated with the figures. Ultimately, it is up to the central team to approve this.”
15% efficiency improvement
The new system has now been live for three years and has led to impressive results. The service level has increased to 97% as inventory levels reduced by over 10%. Given that Slim4 determines the optimal order quantities, the efficiency in the central warehouse has also improved by 15%.
The most important benefit, according to Arts, is the efficiency drive in the planning teams themselves. “With such a large assortment, determining the correct stock for each item at a store level used to be very time-consuming. We now manage all central warehouse and all branches with just three planners. This is possible because Slim4 has automated our workflows as much as possible. As a result, planners only focus on the exceptions.”
Increased purchasing power
By centralising the inventory management function, member companies can now also benefit from each other’s purchasing power. One company sometimes has better purchasing conditions with a supplier than another. Slim4 is set up so that items are always purchased by the most favourable subsidiary. The corresponding intercompany orders are then placed automatically.
“We can respond faster to demand. Large orders from customers that we can’t deliver from stock are converted by Slim4 directly into the right purchase orders. Previously, this involved several stages and sometimes days passed before the order was placed.”
According to Tom, the great strength of Slim4 is that the company can better anticipate future demand. “During the corona period, we benefited enormously from this. As suppliers were forced to close for a few weeks, Slim4 could calculate exactly which orders we had to bring forward. We accumulated extra stock during that period and normally management would have questioned this. But thanks to Slim4, they too had complete confidence in our inventory levels. I’m convinced we would have struggled without Slim4.”