- Headquarters: Charlotte, North Carolina
- Industry: Hardware
- Founded: 1922
"For the items on which we use Inventory Planner, in our first six months the annual moving calculation GMROI increased 19.1% and our turns increased 13.4%."
Kyle Little, eCommerce and IT Manager
Little Hardware Reduces Stockouts by Using Improved Forecasting Models and Suggested Order Points
Little Hardware Company has been providing the Charlotte, North Carolina area with industrial and hardware supplies for over 90 years. The family-owned business strives to maintain their reputation for excellent customer service, especially in helping customers locate those hard-to-find specialty items. Little Hardware's management team recognized that ordering products more intelligently and more strategically was becoming increasingly important in order to improve cash flow. "Over the past few years, we recognized that ordering the wrong items in the wrong quantity, was money out of our pocket. Money we'd rather have keep in the business," explains Kyle Little, eCommerce and IT Manager.
"We knew there had to be a solution designed to use our data to provide sophisticated suggested order points and forecasting models. Our goal was to make better business decisions related to ordering."
Reducing Costs and Stockouts
Little Hardware orders from vendors at various frequencies-from weekly to semi-annually. In addition, each vendor varies in its minimum requirements to qualify for prepaid freight. A "One Size Fits All" approach simply wasn't ideal. With Epicor Inventory Planner, Little Hardware easily determines the order cycle for each vendor by considering prepaid freight minimums, historical sales patterns, historical supply lead times, and other factors. "We now optimize order cycles on a vendor-by-vendor basis, by more effectively using our Epicor Eagle data," notes Kyle.
"We increased our ordering frequency, shortened replenishment times, and reduced outs because we are able to meet pre-paid freight minimums sooner than before. Our stock-out rates on A and B items dropped 25% during the first six months."
Forecasting for Success
Little Hardware also relies on Inventory Planner to help create accurate sales forecasts, essentially adding science to the art of forecasting. "There are about 18 forecast models to choose from and I can customize them to make my own. You can even use different models for different SKUs. We use the model with the lowest standard deviation to forecast sales," describes Kyle. "During the first six months of using Inventory Planner, we had more accurate forecasts nearly 58% of the time."
Safety Stock Calculated Using Service Levels
Like many retailers, Little Hardware was using educated guesswork to determine safety stock levels. "With Inventory Planner, we use data and algorithms to handle our safety stock calculations. I set the service level as high as 99% for our most popular items. As an item's popularity decreases, and the vendor's order cycle gets longer, I set the service level to decrease on a linear scale," explains Kyle. "We decreased our moving-annual average investment in inventory by 6.55% on items for which we used Inventory Planner."
Smarter Order Point Strategies
Little Hardware is reaping the benefits from its new approach to inventory planning. "With Inventory Planner, we are more strategic with our ordering, and spend less time doing it," asserts Kyle. "For the items on which we use Inventory Planner, in our first six months the annual moving calculation for GMROI increased 19.1% and our turns increased 13.4%. Inventory Planner really works for us!"
Epicor Software Corporation is a global leader delivering business software solutions to the manufacturing, distribution, retail, and service industries. With more than 40 years of experience, Epicor has more than 20,000 customers in over 150 countries. Epicor solutions enable companies to drive increased efficiency and improve profitability. With a history of innovation, industry expertise, and passion for excellence, Epicor inspires customers to build lasting competitive advantage. Epicor provides the single point of accountability that local, regional, and global businesses demand.For more information, visit www.epicor.com.