Purchasing Class “C” production components in today’s original equipment manufacturer (OEM) market is a challenge. Usually less than 5% of the total spend, these parts represent a high number of low-value items.

It can be difficult for Purchasing departments to manage these items. They must meet their company’s goals, ensure the parts are at the point-of-use when required, deal with obsolete parts, and be responsible for sourcing new items. Between inflationary pressures on products and fluctuating production schedules, trying to reduce inventory levels – and lower carrying costs – can be problematic.

Examining the OEM’s Class “C” production components reveals another roadblock. The majority of these parts are custom-designed to specification.  This customization can be in the design of the part, or it could be a standard part with special plating.  These parts are supplied by both domestic and import manufacturers. Importing parts can cost less, but longer lead-times and dealing with any quality issues can be more difficult.  Domestic parts can cost more, and may have shorter lead-times.  

Companies can reduce their on-hand inventory investment by implementing a Vendor Managed Inventory (VMI) Solution. These programs can include consigned inventory on high-usage parts, blanket purchase orders with scheduled releases, and scheduled service visits by the supplier. Some companies are able to leverage product price through bulk purchases on high-moving items.

To guarantee an effective VMI solution, it is critical for the OEM customer to select a supplier that is focused on managing inventory beyond relying solely on forecasts and visual bin inspections.  

At Falcon Metal, our knowledgeable and experienced Account Managers are our customers’ one point-of-contact. From ordering, quoting, working directly with the service person to purchasing our stocking inventory, our Account Managers do it all. This unique model results in a very successful VMI solution in both the customer’s facility and our warehouse. We conduct scheduled accountability meetings with our customers to review our performance, our commitments, and to identify continuous improvement opportunities.