How MSC Is Helping Customers Streamline Inventory Management

To excel at B2B ecommerce, manufacturers and suppliers need to innovate - to make customer experiences seamless and convenient, to get products in the hands of customers quicker, and to provide services that help customers better manage their operations and their spend.

MSC Industrial Supply is well aware of these demands. As the leading US distributor of metalworking and maintenance, repair, and operations (MRO) products and services, MSC Industrial Supply helps customers drive greater productivity, profitability, and growth with more than 1.6 million products, inventory management, and other supply chain solutions. Specializing in metal-cutting tools and other industrial supplies which companies use to repair, maintain, and operate facilities, the multi-billion-dollar company's commitment to ecommerce innovation is the key to its ongoing success.

MSC Industrial Supply posted an 8.2% year-over-year increase in sales for its first fiscal quarter, followed by a 7.0% YoY increase in Q2. Speaking on a conference call with investment analysts in January 2019, Erik Gershwind, President and CEO of MSC, said that ecommerce sales in Q1 accounted for 60.1% of total sales - equating to an 8.7% increase to $499.79 million, up from $459.6 million in the year-earlier quarter. Gershwind said that these increases in ecommerce were primarily associated with its flagship website and its Internet-connected vending machines.

Vending Machines Driving Ecommerce Growth

Industrial vending has grown significantly over the past decade or so. When implemented properly, vending increases productivity and decreases costs for end-customers through better inventory control. MSC Industrial Supply places its connected vending machines at customer sites to sell items ranging from drill bits to work gloves directly - in the exact quantities required - precisely where they're needed.

In MSC's Q2 2019 Earnings Call, Gershwind said that "Vending signings are up over 50% for the year. And while it takes time for signings to turn into revenues, they are a good indicator of future growth prospects and share capture."

MSC's advanced vending locker units provide secure accommodation for a range of items that MSC customers need on a regular basis. The benefit of these machines is that they enable customers to better track inventory and tooling usage, resulting in reductions in excess inventory on the shop floor as well as the associated spend. As MSC customer Darrin Soukup of Accurate Gauge puts it: "While the vending solutions save money on tooling, they also save money as a result of the automated tool tracking and reordering, cutting time spent on procurement in half. The system typically saves us well over $2,000 each month in time that would be spent ordering items manually."

For MSC, internet-connected vending machines are proving to be an effective ecommerce solution, providing greater inventory control and convenience for customers, while contributing to "strong positives in terms of revenue growth" for MSC, as the company's CFO Rustom Jilla told analysts in a conference call earlier this year.

Helping Manufacturing Customers Document Operational Cost Savings

And it's not just with industrial vending and inventory control where MSC is innovating. The company also wants to help its customers gain better control over - and visibility into - their spend with MSC, particularly what inventory and operational cost savings are being achieved through the use of MSC's services.

In February 2019, MSC announced that the company had received a patent covering a new technology system and business process that enables its manufacturing customers to document the cost savings they make with MSC.

In a press release, MSC explains that the system involves a computer-based data warehouse that contains a cost-savings delivery mechanism. "When a manufacturing customer utilizes one of MSC's ControlPoint inventory management solutions, such as vending, customer-managed inventory, or vendor-managed inventory, the system helps identify the actual savings achieved against specific cost-reduction metrics selected by the customer."

In addition, the solution enables MSC customers to calculate the impact of savings from MRO products and services delivered by MSC, including improvements in productivity, processes, procurement methods, pricing, and freight. For ease of reference, the system then produces a customized report, enabling customers to get a full, quantified view of the savings that have been realized.

"MSC's patented cost-savings documentation system supports our associates' ability to bring deep expertise and insights to customers to not only keep their manufacturing operations up and running, but to improve their productivity, profitability and performance," said Doug Jones, Executive Vice President and Chief Supply Chain Officer for MSC. "Our system is unique in that it provides our customers the ability to select the specific savings metrics that are most important to them in managing their operations, and the automated system quantifies the actual savings achieved."

Final Thoughts

MSC's cost-savings documentation system is likely to have many benefits. Aside from being an effective solution for customers looking for a clearer view into where their money is going, it is also a powerful marketing tool for the company - what better way to reinforce relationships with customers than to provide them with regular reminders of the value and cost savings achieved by doing business with MSC? Combined with internet-connected vending machines enabling customers to better streamline inventory management, MSC is ensuring its customers can always optimize and be in control of MRO spends.

Innovative ecommerce strategies and technologies are set to be hot topics at B2B Online 2019, taking place this November at the JW Marriott Marquis Miami, FL.

Download the agenda today for more information and insights.

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