The big companies may get most of the credit and notoriety for developing and implementing new purchasing and supply chain strategies, but their smaller cousins are reaping the benefits by adapting those same ideas at their own businesses. In fact, often those smaller companies can redesign, implement and optimize the strategies much quicker than their Fortune 500 counterparts.

Warren Industries is a game and adult puzzle maker (adult defined as puzzles of 500 pieces or more) with 150-170 employees depending on the time of year. The privately held company has revenues under $50 million and an estimated annual spend of $11 million, more than half of which consists of paper and printing costs. There are currently three full-time purchasing staffers including one manager and two purchasing agents, all based at the company headquarters in Lafayette, Ind.

For much of its 90-year history, Warren bought its materials in a more traditional model, with its buyers sending out orders for parts as needed. But when John Clauson, purchasing manager, came to Warren Industries two years ago, after five years at German giant Siemens, things started to change. Clauson says that while Warren may have a small bottom line compared to his previous employer, there are definite reasons and benefits to thinking like a larger company.

Warren's business is very seasonal. It spends much of the year manufacturing and building inventory leading up to its holiday shipping rush, which means a heavy reliance on inventory. To get Warren thinking more like a bigger company, Clauson began reviewing the procurement and inventory management strategies of some major manufacturing firms in various sectors.

One of the strategies that resulted from the project was consigning inventory to its suppliers. Rather than continuously buying materials and putting them into inventory to feed the manufacturing process, Warren decided to start having its suppliers hold the inventory on site until it was going to be used in manufacturing. The idea dated back to Clauson's days at Siemens, but he never had the opportunity to test the program at Siemens because of the approvals required to pilot such a program at a larger company.

"At a smaller company, it was easier to just take one supplier with one component and try the consignment idea," he says.

The most difficult part of the consignment project is deciding how much stock to consign, especially for a long leadtime item from Europe that may take six to seven weeks to receive.

"There's a lot more tracking that is involved at the receiving level. It's much easier to go talk to the people doing the work when you're in a smaller organization. You catch them in the break room. In a larger corporation you don't get that feedback. It tends to build up and then explode. If you get the feedback more quickly, you can tackle problems better."

The move to consigned inventory may not have produced what many companies would consider huge savings, but the 7% savings Warren realized is substantial to any company. And Clauson says the effects are seen more directly on the bottom line at a smaller firm like Warren, which has seen a drop in its inventories on hand.

Warren is also consolidating its supplier base to gain more leverage with its existing suppliers, focusing on distributors that offer added value.

Clauson still leverages his contacts at Siemens as well as his membership in the Institute for Supply Management to get information on new strategies. Warren is also active in the Lafayette-based Wabash Valley Lean Manufacturing Association where a group of local manufacturing companies meet on a monthly basis to share ideas. Among those sharing ideas are the local Isuzu, Caterpillar and Toyota plants.