Inventory management has been a key pillar of business growth among industrial distributors recently, and for some it's been that way for more than 20 years. For the largest distributors that have capital for a vast inventory management program, it serves essentially as its own business unit rather than just a value-added service. A handful of distributors in Industrial Distribution’s Big 50 List have their own, in-house developed automated vending machines, lockers and more, while a growing number of other distributors are partnering with third-party vending providers to be involved.
MRO products distribution giant Grainger recently showed off its capabilities in inventory management during its 14th annual Grainger Show, held Feb. 11-13 in Orlando, FL for attending customers. The company — which saw 2017 sales of $10.4 billion increase 2.8 percent, including 6.5 percent growth in Q4 — had two center expo areas devoted to inventory management across the 450,000 square feet of trade show floor space of the Orange County Convention Center.
At those two solution centers, a group of other trade publication editors, including myself, were given a thorough overview of KeepStock — Grainger’s inventory management services program, including its newly-piloted Managed MRO offering. Brian Norris, Grainger’s vice president of services and solutions, and James Finn, senior director of e-commerce and Inventory Solutions, led us through KeepStock’s latest capabilities, which would take multiple blogs to describe in full, so I’ll highlight some of the biggest takeaways. Here’s what Norris and Finn shared with me and the editor group:
- Grainger has more than 65,000 KeepStock devices installed in the U.S., and it’s one of the company’s fastest-growing business segments
- KeepStock represents approximately $1 billion in annual sales — which would equate to nearly 10 percent of Grainger’s overall business
- Grainger has approximately 1,000 employees solely dedicated to inventory management services
- KeepStock inventory can be ordered right from Grainger.com when KeepStock customers are shopping for products
- KeepStock utilizes crowdsourcing to suggest replacements for product lines that have been discontinued by a supplier, enabling users to choose popular alternate if they’d rather not manually search for one
- For KeepStock customers that have devices at multiple locations, or even multiple devices within one location — they can view precise inventory composition and levels for each location or by room within a specific location
- All Managed MRO subscriptions are contract-based, starting out at 1-year plans
For those looking to go deeper with inventory management, Grainger has started to roll out an advanced KeepStock program called Managed MRO — which was in use by five customers as of Grainger Show. Managed MRO exists as the company’s latest and greatest method of helping customers drive down costs of maintaining their facility operations and centralizing their inventory data on a single platform.
As a data-fed system, Managed MRO fully manages inventory from all product suppliers a customer has. It involves Grainger bringing in a consulting practice to the customer to learn its inventory methods and buying methods to develop a complete program that ultimately shows that customer ways they can reduce costs.
And customers don’t have to worry about over-sharing information with Grainger. The company doesn’t see supplier pricing for that customer, and that customer is able to keep its relationship with all its current suppliers. Grainger won’t even suggest any supplier changes, though it may become apparent once the customer views the data. For example, a customer may be regularly stocking the essentially the same safety glove from four or five different suppliers, whereas the data could show it makes sense to narrow to one or two suppliers.
Managed MRO typically can be set up for a customer in three to six months, dependent on how open the customer is with their data. The program requires a minimum three-year contract. Finn said of Managed MRO’s five current customers (as of Grainger Show), its longest-tenured customer already has had Grainger expand the program’s involvement at their facilities.
Every industrial products buyer would be happy to lower their costs of procurement and inventory management. And in today’s age of big data, more and more buyers are using analytics to track their own habits. But the challenge is in making sense of that data to drive cost-effective decisions. From everything I learned about KeepStock, Grainger has plenty of ways to solve that challenge.