Distributor is extension of purchasing
By Staff -- Purchasing, 11/19/1998
In the still often-overlooked MRO buy, Bearing Headquarters Company and its subsidiary Storeroom Management Systems Inc. (smsi) have decided to gain visibility and achieve customer savings by becoming a branch of customers' purchasing departments. To generate a solid base among customers, the companies recognized they had to reduce customer costs in the purchasing department as well as the factory floor.That's exactly what happened, says Keith Lawrence, director of purchasing at FAG Bearings Corporation and FAG Automotive Inc. He says that smsi is "an extension of the purchasing department" due to the cost savings that the supplier realized based on taking over some of the MRO purchase for the customer. Distributor personnel have a "special warrant to enter purchase orders on FAG's behalf" and receive MRO product.
This relationship was especially important as FAG expanded. Lawrence notes that FAG was able to avoid hiring more people to participate in MRO sourcing and service. Outsourcing to smsi "takes a lot of the administrative work off our backs," he points out.
Indeed, service is another area in which the bearings distributor has invested in order to gain marketshare. Bearing Headquarters offers shop service at numerous locations for bearings, hydraulic components, drives, and circuit boards.
Lawrence points out that FAG has been able to reduce inventory through consignments with smsi. Operating costs also have been cut because needed MRO parts are readily available.
Bearing Headquarters Co. also has provided training courses for customers. Bearing trains customers' employees in the products they distribute, often at the customers' facilities. Courses are offered on topics such as bearings, power-transmission equipment, oil seals, chain drives, and hoses.
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