EMP is a leader in the distribution of emergency medical equipment and supplies. The Company ships a wide range of equipment, supplies and medication throughout the United States.
EMP is growing rapidly, both in terms of volume and breadth of products offered. SKU’s have doubled in the past two years. The company wanted to increase its fill rate, which was in the 94.5% range, without increasing its inventory investment.
EMP also opened a DC in California to shorten lead times for its increasing customer base in the western U.S. The company needed to determine the best mix of SKU’s and stocking levels for the new facility.
Rapid growth through increased market share is every company’s dream. However such success stories create new operating complexities, as well as infrastructure and capital requirements. With EMP’s steep growth curve came opportunities to offer a much broader range of products. Its fastest growth is in areas beyond the Midwest. Growing sales usually requires more working capital. And order fill rates need to be consistently maintained to keep market share gains.
“The nature of the emergency medical products business is that our customers need an extremely high fill rate on their critical items as well as quick delivery,” says Mike Buerger, Chief Financial Officer of EMP. “By responding to our customers’ needs and providing excellent service, our SKU’s increased from 4,000 to 8,000 over a two-year period and our sales increased at an exponential rate. With this growth, the inventory management capabilities of our ERP system needed to be enhanced. In particular, we wanted a complementary software package to enable us to more precisely manage under-stock and over-stock items.”
With the Company outgrowing its inventory planning capabilities it was at risk of reduced service levels. And over-stock situations could further increase working capital investment. EMP wanted a solution that fit its distribution-intensive business. The Company also wanted a software system that could be implemented quickly, that its planners would find easy to use and therefore be able to improve inventory optimization quickly. TCLogic met these needs with an implementation completed within 3 months. Planners find ROI+ to be intuitive and easy to use.
“We are impressed with the visibility ROI+ gives us into our data so we can get our arms around our inventory.
ROI+ eliminates the guesswork,” says Mike Buerger. “Purchasing is the primary user of the system and ROI+ enables us to keep moving closer and closer to a 100% service level. We can analyze demand spikes, something we couldn’t do before. Purchasing can also better manage the large number of slow moving items we stock. And ROI+ enables me to separately analyze our inventory from financial and investment perspectives.”
During the prior two years EMP had consistently gained market share in the western part of the country. However the shipping time to the West Coast from the central US was between 4 and 6 days, so sales in that part of the country were mostly non-critical items.
EMP’s market penetration in the West justified the addition of a warehouse in California to carry time-sensitive critical items to customers in 13 western states. When the warehouse opened, it was essential to avoid disappointing existing customers ordering critical items from EMP for the first time. But EMP did not want to borrow more than necessary to fund the stocking of the new warehouse. Using the demand history found in ROI+, EMP determined that it should stock only about one third of its total SKU’s in California. The Company was also able to set stocking levels for California below original estimates, thus investing several hundred thousand dollars less than would have been chosen without using the ‘what if’ analysis capabilities of ROI+.
Mike Buerger stated, “We wanted high service levels right out of the box. But we didn’t want to over-invest in inventory to get there. ROI+ is a powerful tool for expansion planning and helped us choose the right inventory solutions.”
Emergency Medical Products, Inc. uses Microsoft Business Solutions’ ERP system. TCLogic is a Non-Selling Solution Developer for Microsoft Business Solutions and the ROI+ web native platform allows for rapid implementation.
For the first six months of use TCLogic hosted ROI+ and EMP exported and imported the data over an Internet connection, made easy since ROI+ was developed as a web native application. Subsequently, EMP moved the application on-sight. Since ROI+ is fully web enabled, the data and analytical views are available from any EMP location via the Internet.
TCLogic, LLC www.tclogic.com
429 N. Pennsylvania St.
Suite 300
Indianapolis, IN 46204
Phone: 800.945.4877 e-mail: info@tclogic.com
Phone: 317.464.5152
Fax: 317.464.5153