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Key Services, Inc. key-services.com 3921 West Point Blvd., Winston-Salem, NC 27103 (336) 768-4400

8 Ways To Cut Costs Using Vendor Managed Inventory

About Key Services

For 38 years, Key Services has created a legacy of helping customers unlock simplicity. We partner with large corporations, Third-Party Service Providers and OEMs to provide end users with customized depot repair and logistical support services that are fast, flexible, and reliable.

Key-Services.com

Inventory Management

Companies in the technology industry are being asked to do more with less. Department leaders are expected to identify and implement ways to reduce costs and extend the life of capital investments. To that end, parts and equipment inventory is often the largest single asset and the largest expense.

Excellent inventory management is expensive, and the true cost of inventory extends far beyond the cost of the items and the cost of managing the inventory.

In this presentation, we explore the hidden and forecasted costs of inventory management, and share the benefits of using third-party vendor managed inventory.

Snapshot: Complete Cost of Inventory Management

Costs Associated with Inventory Management:

Capital and FinanceStorage and Warehouse OverheadMaterial HandlingOperating Costs From System Downtime

The complete cost of inventory management varies depending on the industry and the field. Below is a snapshot of costs associated with inventory management in the technology industry.

Insurance and TaxesInvestment Opportunity CostEmployee CostsExpansion Costs

Opportunity: Explore is the benefits of using a third-party vendor to support inventory management.

# 1 CAPITAL AND FINANCE

Capital and Finance Costs Upfront costs to purchase starting inventory

Costs associated with maintaining stock level of inventory

Costs of financing inventory purchases

Benefits of using Vendor Managed Inventory Vendors have better access to inventory, parts and

competitive prices

Using a third-party vendor reduces cost of procurement and ownership of inventory

# 2 STORAGE AND WAREHOUSE OVERHEAD

Storage and Warehouse Overhead Costs Fixed costs of rent, taxes, insurance and other facility related

costs Lost Opportunity Cost – How else could the space be used?

Could the space be sold for a profit? Could the space be rented for an additional revenue stream?

Benefits of using Vendor Managed Inventory Provides a single point of contact and reduces administration

costs

Rarely do all parts and equipment come from one manufacturer – the vendor streamlines the process

Vendor absorbs warehousing and storage costs

# 3 MATERIAL HANDLING

Material Handling Costs Costs associated with receiving, stocking and processing

inventory

Employee wages, insurance and benefits

Purchase and ongoing repair of equipment

Supplies needed for inventory management

Benefits of using Vendor Managed Inventory The vendor relieves the company of high costs associated

with materials handling and frees capital for use with other areas of the core business

# 4 OPERATING COSTS FROM SYSTEM DOWNTIME

System Downtime Costs The more technology-driven business become, the greater

the risk for system downtime Downtime directly affects service and revenue

Benefits of using Vendor Managed Inventory Third-party vendors invest tremendous amounts of capital in

training technicians

The expertise of technicians allows them to identify what is likely to go wrong long before it will and lengthen the lifecycle of parts and equipment

Third-party vendors build their business around fast, reliable services and have established depots in strategic geographic locations to ensure parts are ready when needed

# 5 INSURANCE AND TAXES

Insurance and Taxes Costs Inventory is a company asset that must be insured

Taxes are assessed for inventory

Costs fluctuate based on the value of the inventory and can be difficult to budget

Benefits of using Vendor Managed Inventory Costs associated with inventory and taxes remain with the

third-party vendor

# 6 INVESTMENT OPPORTUNITY COSTS

Investment Opportunity Costs Lost opportunity from purchasing inventory – funds could be

invested into a money market account or mutual fund

Benefits of using Vendor Managed Inventory Third-party vendors offer scalable solutions to best meet the

operational needs of the business and at the most competitive price

Provides the opportunity for capital to be used for other business opportunities that support the core business

# 7 EMPLOYEE COSTS

Employee Costs Employee costs go beyond those managing the inventory -

accounting department to capture the costs of inventory, cost of management time and supervision of the inventory process, and the high costs of training repair technicians

Benefits of using Vendor Managed Inventory Using a third-party vendor places the accounting and

leadership functions on the vendor

Training qualified technicians and engineers on repair is also transferred to the vendor

Field engineers test and service hardware from all the leading suppliers

# 8 EXPANSION COSTS

Expansion Costs As business grows there are added costs of building out

infrastructure to accommodate for growth

Benefits of using Vendor Managed Inventory Using a third-party vendor offers scalable, flexible service to

fit the current and future business operations

Search for these capabilities with a Third-Party Vendor

With 38 years in the technology industry, Key Services has developed an extensive knowledge base of the technologies that keep businesses up and running across industries. When considering a third-party vendor, look for these capabilities:

ISO 9001: 2008 certification, demonstrating a commitment to continual improvement and quality

State-of-the-art infrastructure and extensive knowledge base to with the ability to manage all aspects of product support

Responsive service available 24 hours per day, 365 days per year using a customized web portal

Ongoing training for technicians and engineers on a variety of equipment and manufacturers

Reverse engineering capabilities to assist with branded and non-branded parts repair

Scalable, flexible workforce with strategic partnerships for responsive, fast, reliable service

Customizable web portal for streamlined project and inventory management

Our Certifications

Our state of the art technology center, including theCustom Web Portal and Data Analytics, A+ certified technicians, and ISO 9001:2008 certification, demonstrates Key Services’ commitment to quality and efficiency.

Our Team

Michelle DealPresident• NC based

• 20 years general management with Key Services, 3 years as President

• BS Electrical Engineering

Lisa Hodges Vice President, QA

• NC based

• 15 years in general management

• 5 years small business ownership

• BS Business Administration

Mike Vaughn VP, Materials Management

• NC based

• 27 years with Key Services with experience in all aspects of operations and technology

• AAS in Computer and Electronic Engineering

Roger DaltonChief Engineer

• NC based

• 17 years of electrical design engineer service with Key Services

• 9 US and Foreign patents

• MS Electrical Engineering

Teresa Bullock Director, Business Intelligence

• NC based

• 14 years in accounting and finance

• SQL Server Business Intelligence Certified Professional

• CPA

• BS Accounting

How can we help

you simplify your

business?

Key Services, Inc. key-services.com 3921 West Point Blvd., Winston-Salem, NC 27103 (336) 768-4400