Fewer days in inventory, less working capital and lower logistics costs – those are the results achieved by Xerox, a supplier of copiers, printers and print supplies, thanks to vendor managed inventory (VMI). DSV Solutions in The Netherlands plays a key role.
‘For some products, the time in inventory has been reduced to just 48 hours,’ says Marc Rottink, Manager Eastern Hemisphere Equipment Supply Chain at Xerox in Venray. ‘The inventory turnover rate has improved because we don’t need to buy the goods until we need them. Our suppliers have also been able to reduce their stock levels because they now have a better idea of what’s going on in our world and hence can respond faster.’ ‘In VMI, the key is that we share various data with one another,’ explains Rottink. ‘We share our order book weekly and provide a forecast. That enables our suppliers to anticipate developments more successfully because they become more familiar with the Xerox market dynamics. As a result, they can respond more effectively on a weekly basis and adapt their production base to be able to deliver on time.’
Reducing working capital
In Xerox’s case, VMI means that the suppliers in China and Japan manufacture based on the weekly forecasts. The goods are imported through Rotterdam and then stored in the DSV warehouse. Rottink: ‘At that moment, the goods are still the supplier’s property. We don’t actually purchase them until we need them. The benefit for Xerox is that we only have ownership of the stock for a very short period of time, which reduces our working capital.’
Even after purchase, transport shipments are not necessary because the products remain in the same warehouse and in the same storage location. ‘Furthermore, not having to move the goods around saves on handling costs,’ adds Rob Bech, site manager at DSV Solutions in Venray. DSV plays an interesting role in this set-up because it has a fully fledged customer-supplier relationship with both Xerox and the relevant manufacturer. Xerox and DSV have known each other for more than 20 years. Rottink: ‘DSV has always proved to be a very reliable partner and one who is not afraid to invest in solutions, such as the EDI which makes transfer of ownership possible.’