KeepStock Mobile® Case Study
GRAINGER CONSULTING SERVICES
This large national retailer has 10,000 technicians and an annual MRO supplies spend of $9.0 million. Process costs total $5.7 million for 90,000 yearly transactions. The retailer has five unique trades to support its entire customer base and utilizes hundreds of suppliers to meet the product needs of its technicians.
Technicians travel to local hardware stores several times a day to procure consumable products. Purchases are made with P-Cards and settled monthly via an internal expense reporting process. Technicians carry needed inventory items in their vans without an inventory management system to track demand and consumption. Some hub locations have residual inventory to manage day-to-day operations; however, each site is unique. Moreover, the technicians have limited visibility to the inventory in their vans. There is a high degree of variability in the items managed by the technicians within each trade.
The customer’s goal was to improve technician productivity to reduce effort and remove waste from an inefficient procurement-to-payment (P2P) process while improving customer service. Also, the customer wanted to improve its inventory management practices through process and product standardization for each trade on a national basis.
THE “GO SEE”
Grainger Consulting Services (GCS) performed seven baseline studies across several regions (see Figure 1) to gather current state procurement processes across all of the customer’s trades. GCS analyzed the P2P process using activity-based costing and evaluated P-Card data. The P2P cost per transaction was $63. With an annual spend of $9.0 million and 90,000 transactions, the cost was $0.62 for every dollar spent on supplies.
Each site assessment took 2 to 4 hours to complete. From a qualitative standpoint, technicians stated they do the best they can with the tools they have. They often maintain extra quantities in their trucks “just in case.” Furthermore, the inefficient P-Card reconciliation process was manual, which took several hours to gather, record and submit receipts to accounts payable. The consolidated current state process cost (shown in Figure 2) is the basis for which Grainger and the customer will track performance improvement.
The evaluation of the current P2P process involved a total of 23 steps over five functional areas. Total P2P transaction time was 143 minutes. The current process cost was $63 per transaction using activity-based costing. The annual spend was $9.0 million with 90,000 transactions. The “Searching/Shopping” activities performed in the P2P process represented 67% of the total process cost, or about $42 per transaction. These activities included, but were not limited to, searching print catalogs, browsing the internet and driving to local suppliers/hardware stores. In terms of scale, every minute the technician was not adding value to the end customer totaled 10,000 minutes (167 hours) they were unavailable for value-creating activities. The opportunity cost on a per minute basis was $5,845. That’s money that could perhaps be used to generate more sales, improve customer experience/satisfaction, improve productivity or make investments to support key initiatives.
In Phase One, GCS worked with the customer to standardize the procurement process online at Grainger.com® with order approval and to implement summary monthly billing for reconciliation. The customer identified key items required by each trade, designing a preferred list using employee surveys and feedback from lead technicians. To support the implementation, technicians were provided standard work instructions on ID cards to help with the process changes.
In Phase Two, Grainger assisted the customer in deploying a national KeepStock Mobile® program to all 10,000 technicians with order approval using the existing Grainger.com eCommerce platform. With the introduction of this technology, Grainger and the customer jointly defined a change management plan to assist with the adoption of the new process.
The new process resulted in a reduction from 23 to 10 steps taken over five functional areas. The improved process resulted in 34 minutes per transaction (down from 143 minutes) with an average cost of $13 per transaction. The new process led to a 79% reduction in total process costs with a yield of $4.5 million in annualized costs savings.
Grainger KeepStock Mobile® solution is subject to customer eligibility and agreements regarding software licensing and use of Grainger scanning hardware.
- Increased productivity
- Decreased search times and easier product lookup
- Negotiated shipping costs and more efficient pickup/delivery options
- Increased product availability
- Standardized item list with barcodes for each trade
CHANGE MANAGEMENT PLAN
GCS worked with the customer to initiate a pilot with the sites in scope for the assessment. The customer identified several key process owners by region to help ensure the documented plan is being executed and the training is delivered to all affected stakeholders.
A team of experts in Grainger technology and service initiated discussions with the customer’s key sponsors. From there, the local Grainger team worked with regional stakeholders to obtain critical data required for the new KeepStock Mobile implementation. Grainger’s operations team submitted all the required datato the implementation leads and began training and educating the in-scope sites with standard work documents, which included the new process and a guide on how to use Grainger’sKeepStock Mobile solution through the customer’s smartphone.
The customer was able to push the Grainger Mobile app across the organization and support the configuration changes required for the transaction to flow through the approval process.
The customer proceeded with the pilot group and worked with Grainger to capture additional learnings (check and adjust). Additionally, Grainger’s summary billing program was an added benefit. Technicians are able to purchase through an open account without a P-Card. The accounts payable team received a single monthly summary bill for the entire organization to settle the payment. The technicians no longer have to submit expenses for the purchases made via Grainger KeepStock Mobile inventory solution.
The customer was able to implement the new KeepStock Mobile process by region. In addition to providing continued support during the implementation, Grainger provided marketing information as needed to the customer to help socialize the new process and its benefit to the organization. GCS utilized the change management framework shown in Figure 4 to help technicians adapt to and become owners of the new process.
The keys to success in this very large implementation were:
- Identifying the key issues facing the customer and their goals
- Identifying the key sponsors and stakeholders to help improve process performance
- Collaborating with the core teams to ensure that technicians were involved through the entire process
- Taking action; implementing and seeking perfection
- Measuring and communicating the wins
For more information on how Grainger KeepStock® inventory management solutions can help you, visit Grainger.com.
Grainger KeepStock solutions are subject to customer eligibility and agreements.
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