Panduit s Vendor-Managed Inventory

Panduit’s Vendor-Managed Inventory

One of the pioneers in vendor-managed inventory is Panduit, which makes 60,000 different electrical products such as switches, fuse boxes, connections, and so on. The company markets solely through 1800 distributors. For its largest customers, Panduit set up a fully automatic computer-to-computer management system. The distributor and Panduit establish mutual goals for service level and inventory turns. The distributors then transmit a daily report on changes in inventory. Without human intervention, the system automatically

• Forecasts demand for each part number monthly.

• Determines the optimum replenishment quantity.

• Creates purchase orders in Panduit’s and the distributor’s business systems.

• Ships and transmits replacements and the associated electronic paperwork.

The advantage of this system is that Panduit has solved its customer’s business problems by having

• Freight costs reduced.

• Human errors eliminated.

• Operating costs minimized.

• Out-of-stock conditions eliminated.

• Profits increased.

• Distributor loyalty maximized—the distributors become relationship buyers.