Several years ago, a contractor client was struggling with inventory management. I set up a meeting with their primary supplier to discuss how the supplier could essentially take responsibility for all aspects of their inventory. We discussed seasonal planning, min-max trigger points, racking and slotting, order management, receiving management and more. This strategy had the potential to streamline the contractor’s daily work flow plus reduce the contractor’s headcount by half a person … a part-time person they had hired who was trying to solve problems that were created by the inventory chaos.
The supplier was asked to provide this support in exchange for a business commitment to all of the contractor’s business. They agreed that this was reasonable as long as the supplier kept an eye on their pricing to ensure that they were kept “competitive” in their market. Their understanding was that “competitive” meant being within a percent or two of the best pricing that similar contractors received.