Leadership AccomplishmentLeadership Accomplishment

ChallengeChallenge: The vice president of : The vice president of logistics for Hilti US approached me and logistics for Hilti US approached me and

indicated that our drywall screw line indicated that our drywall screw line occupied too much floor space in the occupied too much floor space in the

National Distribution Center. He National Distribution Center. He challenged me with significant reductions challenged me with significant reductions of product in Tulsa and improved service of product in Tulsa and improved service level to our customers. This task had not level to our customers. This task had not

been accomplished before at Hilti.been accomplished before at Hilti.

Safely reducing inventory without Safely reducing inventory without jeopardizing service could only be jeopardizing service could only be accomplished by:accomplished by:

Reducing Lead Time from Taiwan Reducing Lead Time from Taiwan Reducing transportation time to distributing Reducing transportation time to distributing

warehouseswarehouses Shifting inventory to increase stock at Hilti Shifting inventory to increase stock at Hilti

Distribution points while reducing stock held in Distribution points while reducing stock held in the National DCthe National DC

Increasing sales (temporary reduction)Increasing sales (temporary reduction)

Product arrived in the port at Long Product arrived in the port at Long Beach California. The containers were Beach California. The containers were loaded on to trucks, which were loaded on to trucks, which were delivered to Tulsa, Oklahoma. Product delivered to Tulsa, Oklahoma. Product was stocked in Tulsa until the was stocked in Tulsa until the distribution network needed it. distribution network needed it. Distribution Center stock was Distribution Center stock was replenished from this central location.replenished from this central location.

Click to illustrate shipping Scheme

Distribution Center locationsDistribution Center locations Visalia, CaliforniaVisalia, California Seattle, WashingtonSeattle, Washington Denver, ColoradoDenver, Colorado Dallas, TexasDallas, Texas Minneapolis, MinnesotaMinneapolis, Minnesota Albany, New YorkAlbany, New York Atlanta, GeorgiaAtlanta, Georgia Birmingham, AlabamaBirmingham, Alabama Jacksonville, FloridaJacksonville, Florida Frederick, MarylandFrederick, Maryland South Bend, IndianaSouth Bend, Indiana Plus three Canadian locationsPlus three Canadian locations

Research uncovered:Research uncovered: A California based vendor who was A California based vendor who was

willing to pool purchase volumes in willing to pool purchase volumes in order to take advantage of price order to take advantage of price discounts.discounts.

This vendor had a warehouse in Beuna This vendor had a warehouse in Beuna Park, California, a short distance from Park, California, a short distance from Long Beach, where this product docked.Long Beach, where this product docked.

The vendor had surplus warehouse The vendor had surplus warehouse space in his Buena Park Warehouse.space in his Buena Park Warehouse.

I negotiated a cross-dock program I negotiated a cross-dock program with the vendor where product would with the vendor where product would be delivered to the port, trucked to be delivered to the port, trucked to his warehouse, stored temporarily, his warehouse, stored temporarily, and then sent to nine of the twelve and then sent to nine of the twelve Hilti distribution points in the US.Hilti distribution points in the US.

Click to illustrate intermediate shipping Scheme

Additional research uncovered the vendor distributed Additional research uncovered the vendor distributed products throughout the US as well. I negotiated an products throughout the US as well. I negotiated an agreement where our product would be shipped rail agreement where our product would be shipped rail “piggyback” along with our vendors goods—saving “piggyback” along with our vendors goods—saving considerable freight costs.considerable freight costs.

Eventually, I negotiated a binding contract where our Eventually, I negotiated a binding contract where our product was stored in five of their warehouses Nationwide. product was stored in five of their warehouses Nationwide.

The vendor retained ownership of the product at his location The vendor retained ownership of the product at his location until a distribution point required additional product and I until a distribution point required additional product and I released a purchase order.released a purchase order.

This reduced our lead time from 90(+) days to within a week, This reduced our lead time from 90(+) days to within a week, allowing us to significantly reduce our safety stocks. This allowing us to significantly reduce our safety stocks. This reduction took place at not only the National Distribution reduction took place at not only the National Distribution Center, but also, the satellite distribution warehouses as well.Center, but also, the satellite distribution warehouses as well.

The vendor warehouses, distributing product were located in:The vendor warehouses, distributing product were located in: Fullerton, CaliforniaFullerton, California Houston, TexasHouston, Texas Atlanta, GeorgiaAtlanta, Georgia Chicago IllinoisChicago Illinois Houston, Texas Houston, Texas

Click to illustrate final shipping Scheme

The benefits, to Hilti, of this program:The benefits, to Hilti, of this program:

Reduced inventory at the National Distribution Center (the driver of Reduced inventory at the National Distribution Center (the driver of this project).this project).

Reduced inventory at all satellite distribution centersReduced inventory at all satellite distribution centers Reduced handling and administrative costs.Reduced handling and administrative costs. Freight cost reductionFreight cost reduction Lead times reduced from over 100 days to within one weeks.Lead times reduced from over 100 days to within one weeks. Lower carrying costs, calculated at cost of inventory * 1% per monthLower carrying costs, calculated at cost of inventory * 1% per month The net result saved Hilti over $150,000 annually, by reducing lead The net result saved Hilti over $150,000 annually, by reducing lead

times and therefore reduced inventory. This projected savings also times and therefore reduced inventory. This projected savings also incorporated components of savings due to warehouse space that was incorporated components of savings due to warehouse space that was not necessary to rent and additional manpower used to warehouse and not necessary to rent and additional manpower used to warehouse and ship the product. Transportation cost and product cost savings were ship the product. Transportation cost and product cost savings were not included in this calculation.not included in this calculation.

Increased Service level at the Distribution Center level, increasing from Increased Service level at the Distribution Center level, increasing from 82% to an average around 94-95%, eventually topping at 97%.82% to an average around 94-95%, eventually topping at 97%.

  Mon Fri Thu Wed Tue 5 dayRouted

w/ MTD

SFS-C10/31/20

0510/28/20

0510/27/20

0510/26/20

0510/25/20

05 Total Stock %

Primary

Count 275 207 230 270 286 1268 0

Line Count 288 218 256 289 299 1350

Primary % 95.49% 94.95% 89.84% 93.43% 95.65% 93.93% 93.82%

PGr

Sales Prim Manu

Item MaterialMaterial

Desc

Order Cust

On Hand

Safety Stock

INT QTYINT

DATEDocumen

t Plant Code Qty Order @ loc

U31 15183702 6110   10 10231

10-12 X 2 1/2 HWH TAPFAST 6,000     0    

U3151065848

9 6000 3 10 10263

Drywall screw

8X3/4 PTH S LATH 20,000 20,000 0 31,324    

Hilti Annual Leadership Finalist Hilti Annual Leadership Finalist Award, 2001Award, 2001