 No Trouble In Store (Business North West - August 1999)
Warrington – based Integrated Engineering Stores Associates
launched its unique stores management system in the UK less than a year
ago. What makes the system tick and how is UK business responding to a
service that has revolutionised industrial distribution in the US? Business
North West talks to IESA chief executive Ben Caldwell.
IESA Ltd – part of the Caldwell Group of companies,
founded in 1770 and now in its seventh generation as a family-owned enterprise
– is something of a unique proposition. Cutting edge software development
combines with over a century’s experience in the supply of Maintenance
Repair and Operational goods, to provide total stores management solutions
for the 21st century. The proof of the pudding is the growing
list of blue-chip customers who have taken advantage of IESAs' expertise.
They form an enviable client list that has rapidly established the company
as the UK market leader in integrated stores management.
But why the need for a high tech service? What’s wrong
with the conventional works store? Well, fluctuating stock levels, for
a start. Who hasn’t experienced the frustration of a visit to the traditional
store-maintained as a place of mystery, with access denied to all but
the stores person?
His duty seems to be to nod sagely at your request,
trek to the dim reached of his domain and return to inform you that the
part you are seeking is not, at present, in stock. It must be ordered.
A process which will take a minimum of 14 days, regardless of the fact
that you need the thing by Wednesday at the latest. Not an ideal scenario
when efficiency rates high on the list of priorities of most operations
these days.
The hidden costs of purchasing and management of consumables
are also an issue, statistics show that 80 per cent of purchasing time
is spent buying goods that represent only 20 per cent of the value of
the company’s total purchases. Add to this the cost of stock management,
order and invoice processing, price negotiation with hundreds of suppliers
and the capital tied up in inactive stock and the true size of the problem
begins to emerge.
Awareness of these difficulties and of the more efficient
alternatives available in the US – where the top 50 industrial distributors
are all integrators – led the Caldwell Group to form IESAs' dedicated
one stop shop for companies wishing to outsource their complete supply
chain. So how does it work? The integration process begins with a detailed
assessment of a company’s operations and processes. This ensures a smooth
transition as IESA takes over the complete running of the stores at single
or multiple sites. IESA then purchases existing stock, freeing capital
and enabling the client to pay only for products actually in use rather
than the ones piled in the storeroom.
Smart Software
Stock Management and Replenishment Tracking (SMART)
software – developed by IESA – processes all transactions accurately and
effectively. Leaving the client with a single, fully itemised bill once
a month. The need to raise thousands of orders, stock issues, invoices
and receipts is totally eliminated. In addition, leading edge Extranet
technology provides the client with a fully illustrated electronic catalogue
of all stores products, with real time stock information and budget analysis.
Digital photographs of each part make it easy to identify exactly what
is needed and prevent costly and frustrating errors. Users are able to
enquire on all stock locations, as well as supporting stock at IESAs'
regional warehouses, checking actual availability and ordering at the
touch of a button.
Ben Caldwell says "Aside from the immediate benefit
of having no capital tied up in stock, IESA's purchasing power delivers
on average a reduction of at least 10 per cent of one year’s purchases.
At the start of the project, cost reduction targets are discussed and
set by the customer, IESA is paid a share of the reduction in costs achieved,
In effect we get paid on performance and in every case our fee is more
than covered by what the customer saves."
Contract Win
And those customers include Allied Signal, Glaxo Wellcome
and Pilkington, and the latest contract win to be announced is with Siemens
Power Generation, the steam turbine giant based in Newcastle. Stage one
of the operation at Siemens is already active with the supply and distribution
of all tooling and engineering consumables being handled by IESA through
dedicated on-site expertise, Stage two – full integration utilising the
Extranet technology to provide the virtual catalogue, stock information
and budget analysis – is well under way.
Bill Johnson, purchasing manager for Siemens Power Generation
sees the outsourcing of stores as a major step forward for the company.
"Our objectives were very specific, first a large part of Siemens business
is specialist tooling so specific OEMs had to be incorporated into the
integrated supply chain for strategic parts."
"In addition we felt that a manned stores facility on
site was probably unnecessary, Instead IESA has developed a total call
– off system with all suppliers being delivered direct to the product
areas. Finally, we now have the services of a full time IESA site envoy
whose industry experience enables him to assist in tool specification
and process improvements. The results have been outstanding. We now liaise
with a single integrator rather than 350–plus suppliers and significant
savings have been achieved in both process and unit costs. |
