Wornall Carwash Supply is a national distributor serving carwashes. One of their highest selling sku’s is a specialty stainless steel swivel fitting designed by their founder, Mr. Wornall. The fitting was being manufactured by a regional job shop that was struggling with a large backlog, resulting in long lead times and backorders for Wornall.
On a routine sales call, Midland’s sales rep heard about the frustrations that were the haunting Wornall due to the low inventory on their specialty swivel. Wornall wanted to change the subject as there was nothing he thought Midland could do about it, since it was a specially manufactured item. Midland’s sales rep introduced him to the Midland OEM Solutions program. With Midland OEM Solutions, Midland’s engineers work with distributors to engineer and manufacture specialty solutions.
Mr. Wornall provided Midland with a sample of the swivel, as well as design notes. Midland’s engineers worked with Mr. Wornall on understanding the functions and design advantages of the swivel. Midland provided Wornall with samples to approve. Once the samples were approved, Midland stocked a year’s worth of swivels for Wornall, lowering Wornall’s overhead and carrying costs.
Wornall Carwash Supply no longer had to worry about backorders on one of their best selling items. Midland kept completed stock of the swivel on hand for Wornall, decreasing their turnaround time on follow-up orders from 150 days to 2 days. In addition, by running production of the item in larger runs, Midland was able to lower Wornall’s cost of the swivel, increasing Wornall’s profit margin.
The end result for Wornall Carwash Supply working with the Midland OEM Solutions program was higher inventory turns since Wornall didn’t need to carry as large of an inventory on the parts since Midland stocked it for them. They also had higher gross profit margins since Midland was able to decrease the per unit cost by larger production runs. The combination of these factors brought about a much improved cash flow for the distributor.