Recap of Schneider Electric, CapitalTristate VMI Webinar with Guest Moderator Dirk Beveridge

Changing customer expectations, the growth of ecommerce and rising transportation costs are driving electrical equipment manufacturers and their distributors to collaborate now more than ever to remain competitive. Part of their strategy to counter these shifts and enhance collaboration is vendor managed inventory (VMI).

On Thursday, April 6, 2017, best-selling author Dirk Beveridge, Ruth Cooper of Schneider Electric, Ken Avery and Steve Conroe of CapitalTristate, and Tom Hoar of Datalliance participated in a webinar to talk about these shifts and VMI. Here are some of the highlights of that webinar:

Electrical Webinar Presenters

(To access the full webinar, Click HERE)

Introduction and Market Forces with Dirk Beveridge –

Distributors are working off business models that are 50 years old and the industry is beginning to realize that they must evolve or be left behind. Here are eight market dynamics that are pushing the need to evolve:

Eight Market Dynamics Pushing the Need to Evolve

1) Generational Shift of Employees and Customers
2) Disruptive Technology
3) Changing Customer Requirements
4) Intensified Competition
5) Alternative Channels
6) Commoditization of Serving Existing Markets
7) Transfer of Power to Customers and End Users
8) Compressed Margins

What the Evolution will Look Like:

Collaborative Commerce – Instead of personality based trust, companies will move to organizational based trust. Activities like vendor managed inventory (VMI) is a gateway to organizational based trust.


Ruth Cooper, Schneider Electric –
Overview of Schneider Electric VMI Program
1) 53 Relationships
2) 346 Locations
3) $75M Inventory in Program
4) 20-25% Stock Purchases/Month
5) $475M Sell-through in 52 Weeks

VMI Adds Value
1) Operational Efficiency
2) Product Management
3) Product Platforms
4) Relationships
5) Visibility of Data

Schneider Electric Business Goals
1) Grow Sales
2) Decrease Costs
3) Improve Productivity
4) Improve Customer Satisfaction
5) Increase Profitability

Distributor Benefits
1) Improve Inventory Turnover
2) Increase Availability Levels
3) Collaborative Supply Chain

Things to Remember about VMI
1) Recommends Only Items that the Distributor is Currently Selling
2) Keeps Stock at Optimum Level
3) Dedicated Team behind Datalliance Platform
4) Regular Reviews Help the Program’s Profitability
5) VMI Works when All Parties Participate
Ken Avery & Steve Conroe, CapitalTristate –
Overview of CapitalTristate
1) Became a Sonepar Operating Company in 2000
2) HQ and Central DC in Washington, D.C.
3) Carry Products from More than 200 Manufacturers
4) Primarily Serve the Eastern Seaboard

VMI Overview for CapitalTristate
1) Doing VMI for More than 10 Years
2) Have VMI Programs with Four Manufacturers
3) Look for Industry Leaders
4) Require High Product Volume

VMI Benefits as a Distributor
1) Reduces Buyer Load
2) Increases Sales
3) Better Space Utilization
4) Less Inventory (Dead and Active)
5) More Items
6) Better Relationship with Suppliers

Key VMI Points
1) Volume
2) VMI Platform Alerts Both Parties
3) Same Language (Data) for Supplier and Distributor
Tom Hoar, Datalliance –

(Learn More about VMI by Emailing Tom)

Overview of VMI Platform
1) VMI is about Better Business Practice

a. Collaboration

b. Terms

c. Focus

d. Metrics

e. Profitability


Bonus – Answers to User Submitted Questions

(Click to View More FAQs on VMI)

Does CapitalTristate also use VMI with Datalliance between their CDC and own branches?

A: CapitalTristate does not use VMI between our CDC and our branches. We operate a typical centralized distribution model. We use an internal inventory management system to feed our network of branches. For VMI, we prefer to use it directly into our CDC and replenish our branches internally. With that said, we do have some branches that receive VMI orders directly from the supplier. Where this happens it helps to reduce handling costs for our CDC.

What are the service level norms that Schneider Electric has to perform for stock availability to customers of CapitalTristate?
A: For our business, the service level expectation is a 90% fill rate on the items we stock. Fill rate measures the number of units ‘filled’ as a percentage of the total ordered. In other words, if we buy 100 units and Schneider ships 90 on that order, the fill rate is 90%. The goal of the VMI program is to increase availability while optimizing inventory. Reports are issued regularly with key performance measures so that we can track service level results.

To the guys at CapitalTristate......if a local manufacturer rep is responsible for the vendor you do VMI with, what is their role?
A: The manufacture rep will continue to service the account. The mechanics for how orders are obtained/processed is different, so the rep will focus more energy on studying the stock orders. With VMI, the rep is still the main point of contact for resolving issues and complaints. Additionally, the rep is directly involved in making stock recommendations or introducing new products.

For Schneider: At what point is the vendor paid for the VMI inventory?
A: The distributor is invoiced for the material as per the normal conditions of sale. Our invoices go out 24 – 48 hours after shipment. This is not consigned inventory.

For Schneider: What do you do when you make a mistake and how do you smooth it over with your customer?
A: I’m sure this varies from vendor to vendor but for Square D by Schneider Electric, we always try to fix any problems that arise with VMI orders. We value our VMI distributors, and our relationship with them, so we strive to ‘make it right’ if they experience an issue.

For Schneider: How many VMI resources per $50M of business are required to manage the accounts?
A: I’m sure this varies from vendor to vendor but for Square D by Schneider Electric, this calculates to about 1/3 of a resource.

For Schneider: When adding distributors to VMI do you see additional resources need at the manufacturers location to manage?
A: We have a dedicated VMI team at Square D by Schneider Electric. All of our VMI account branch managers handle well over 100 branch locations. We are able to do this because VMI is highly automated, and needs little human intervention on a day to day basis. That being said, I believe that you still need a mind and body behind the tool. Minimally, I would recommend having a resource whom you identify as an ‘expert’ at VMI and has VMI as their main focus. I think the key to running on limited resources is building efficiency and good processes into the program from the start.

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