The company secured the agreement of four other key suppliers to the electrical components industry. Then Panduit modified its own system to accommodate the requirements of these four suppliers and, hopefully, most other suppliers. After two years of work, Panduit has persuaded 34 major electrical suppliers to adopt the QSP system. Panduit is currently testing with many more. Within 1.5 minutes after a distributor places an order through the EDI system, Panduit has received it, processed it, acknowledged it, and prepared a shipping manifest for printing in its warehouse.
Most products are on their way to the distributor the same day as the order.
Under this system, Panduit knows exactly what every one of its distributors has in their warehouses at all times. Receiving costs, inventory carrying costs, and many other elements are factored to determine the replenishment quantity and shipping frequency that will provide a distributor with the lowest total operating costs, at the service level specified by that distributor. Panduit automatically ships the needed items and generates an electronic invoice and advance shipping notice. If experience shows that some items are being used up at a faster rate than anticipated, Panduit VMI replenishment system automatically responds to ensure the specified service level is met at the lowest total operating costs for the distributor. Whenever the computer shows that customers are maintaining too much stock of slow-moving items, Panduit generates a return order with no restocking charge.