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Case Study: Cost Savings Through Vendor Reduction/Kitting and Vendor Managed Inventory

Before coming to M-Line, one of our customers - a scientific equipment company - utilized a number of different packaging items to safely ship their equipment. One of these units required a wooden crate, a plastic case, four corrugated cartons, eight custom foam pieces and two paper tubes. They shipped approximately 10 units/month of this particular unit.

The customer purchased these packaging items from 5 individual suppliers, with some suppliers requiring minimum purchases of 50-100 pieces.

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Rendering of customer crate packaging with all pieces

M-Line proposed providing a single SKU to the customer - a complete, kitted package. The crate would be provided with all of the packaging items already inside the crate and ready to use when they needed it. The cartons would already be constructed with the appropriate items inside.

M-Line would provide these individual kits as needed, delivering them regularly instead of the customer having to warehouse them at their location.

 

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The customer experienced a drastic reduction in:

1) Administrative costs.  
The customer no longer had to manage placing orders with 5 vendors, receiving multiple shipments, and monitoring their packaging inventory.

2) Warehouse space. 
The customer no longer had to store 3-4 months’ worth of packaging product at their facility.

3) Labor savings.
The customer now simply opened up the crate, took out the appropriate item and placed their product in it, placing it back into the crate.

The customer estimated that conservatively, they began saving $85/unit. That translated to $850/month or $10,200/year.

They immediately began having us work on their other units so they could benefit from similar savings on those.

 

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