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Metro Stock Program
Metro offers a simple, straight-forward, and innovative approach to supplying
Custom Manufactured Components that allows buyers to virtually eliminate
lead times, minimum order quantities, and inventory (along with the
related investment, costs, and forecasting and administrative headaches) WITHOUT
paying a penny more or sacrificing assurance of having what they need
when they need it.
What really makes this tried and tested approach work so
well is that it not only benefits our customers, it also benefits us.
Since the real savings are in the mutual benefits, there's no hidden costs to
hide or pass along, no other shoe to drop: Everyone wins!
Original equipment manufacturers
(OEMs) often find themselves having to either sacrifice lower prices for
higher order quantities or bear higher costs for inventory investment, storage,
and handling. This is
particularly true in the case of custom manufactured parts, as suppliers are
understandably unwilling to commit to materials and inventory beyond what they
have orders in hand to cover.
There are several ways to resolve these conflicting interests, like blanket
orders and contractual agreements, but these generally fall short of the mark in
application because of things like forecast variances, complex administration,
and the recurring need to renegotiate or renew terms.
Thus, in 1997, Metro adopted a whole new approach to the manufacture and
supply of custom manufactured parts that actually works.
The Metro Stock Program has proven to be a truly win-win approach to
basic objectives held by both our customers and us.
These objectives include:
For our customers:
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Volume pricing based on
overall demand.
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Reduced inventory investment,
storage, and handling costs.
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Incremental shipments based on
short-term demand.
-
Lead times shortened to days
rather than weeks or months.
-
Enhanced assurance of
on-demand availability.
-
Simplified forecasting based
on overall demand.
-
Simplified administration
order as needed, single-tier pricing.
For us:
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Purchasing cost control based
on overall demand.
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Manufacturing cost control
based on economic production quantities.
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More efficient use of
materials through ability to consolidate production runs.
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More efficient use of labor
through production schedule control.
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Simplified administration
through fewer, larger production orders and material demands.
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Enhanced Customer
satisfaction.
The key to how this system works
is its simplicity. As a both a
manufacturer and distributor of both custom and standard products, Metro simply
had to eliminate a few unnecessary lines in our own system.
We asked, why cant we manufacture and stock custom products like we
purchase and produce standard products, that is, according to the most
economical purchasing and production quantities based on more general forecasted
demands? There was no
reason, at least for regularly used
parts and products. By
building to and shipping from stock, the objective becomes simply to have onhand
what is needed when it is needed, not produce a release on a blanket in the same
way we would a single order.
In the
end, buying custom parts becomes like buying standard off-the-shelf items for
our customers. There are no
scheduled releases or minimum quantities per se to administrate, no contracts to
continually review or administrate just simplified procedures that allow our
customers to buy what they need when they need it. In many cases, we can even ship parts directly to job
sites and/or ship kits of different parts by job, eliminating most or all
handling on the receiving end.
Of
course, in order for Metro to invest in the inventory necessary to maintain
finished goods stocks on custom products, customers must be willing to assume
ultimate responsibility for the costs involved.
The idea is to keep this obligation as simple and general as necessary,
which means that only exceptions to normal supply need to be covered.
Metro can manage its inventory levels based on historical usage and
whatever forecast information is available, so needs only assurances that
inventories maintained solely on behalf of the supply of custom products will be
covered in the event of obsolescence, design or specification revisions, or
other significant demand reductions or elimination.
This is
a tried and tested system that does not in any way attempt to wrangle
contractual obligations to buy our products no matter how well we do as a
supplier. Rather, the system simply
enables Metro to secure business the old-fashioned way through unrivaled
service and support, and the customer satisfaction that naturally follows.
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