Beck/Arnley's Anne Coffin spoke about IPO technology and how it can serve businesses by reducing inventory but still allowing them to offer a vast number of parts through the system.

Internal Parts Ordering (IPO) technology can be a great way to reduce the amount of inventory a reseller has to carry while still offering a wider range of products, according to IT expert Anne Coffin of Beck/Arnley. Coffin, an IT professional with over 25 years of experience, led an information session on Wednesday, November 04, at the SEMA show in Las Vegas. She spoke of her experience with IPO, which is something she started working closely with in 2005 shortly after joining Beck/Arnley.

Coffin covered the basics and some more intermediate aspects of IPO during the session. She explained that IPO can also be called a virtual inventory, because that’s basically what it is.

“It’s electronic parts ordering, real time – a conversation between buyer and seller,” she said.

This is a system that can be used by buyers, sellers, or even companies that serve both roles. It can allow your business to have more inventory without having to store it, it can speed up the supply chain, and if your company sells online you will not need to buy the product until you sell it. Coffin explained that the previous business model used to be based on the 20/80 rule – 20 percent of the parts make up 80 percent of the sales. The problem is that it’s difficult to follow this rule because there are way too many parts and options available to customers because of the abundance of parts on the market, and businesses can’t simply stock 20 percent of the parts and still offer what customers will want.
Coffin argues that IPO might be the solution, because it’s faster, cheaper and sometimes easier.

“You don’t have to waste time on the phone, on e-mail or fax seeing if it’s available,” she said. “You can order in clear, concise terms, but have the flexibility in the specs for additional information so you can get the right part every time.”

There are a number of types of companies that can implement IPO, but Coffin outlines that anyone involved in either end of a special order, “emergency” order, factory order or custom order can use the system. One of the examples given was of a small/medium installer Coffin works with who has a shop in California with three bays. He carries the most common parts that uses for installation or sells in the shop, but for service appointments he books them in advance and uses IPO to order any special or additional parts needed and he receives them the next morning to perform the job. Beck/Arnley is able to become another location with inventory for the shop owner to use with no cost to him.

Another example Coffin used was where her company was the buyer rather than the seller. Beck/Arnley has a manufacturer that supplies them with components they use for an OE customer. Her company can get real-time information as to how many parts they can make to order based upon what this manufacturer has available. This essentially provided her with “instant inventory” that doesn’t require the stock to take up space, require a staff to stock and manage it, yet you can find instant knowledge about availability and price of the parts.

“Whether you’re on the buying end of the selling end, you can be part of using the same inventory with less stock out and higher fill rate,” Coffin said.

Coffin noted that she was kind of forced into IPO by a customer, and that she struggled setting up the first one but was able to get it done on her own.

“When I say I set the first one up, I do mean me,” she said. “I made phone calls, asked questions, but at the end of the day, I set it up. I’m not that bright, so how hard can it be?”

The end result for Coffin was that her company’s way of doing business became real time. Coffin noted the difference between IPO and EDI (electronic data interchange). Essentially the system doesn’t work as quickly and only two percent of businesses worldwide use the system. EDI is document based and works off a different system that isn’t “real time” like IPO is – a real-time conversation between buyer and seller where decisions can be make on the spot.

Coffin went over some of the setup of the system, but noted that if this it too overwhelming, it can be done with partial assistance with an outside company helping set up some of the technical pieces, or there are third-party companies that will do all of the work for you. For partial assistance, Data National Corporation is a company out of Michigan that Coffin has worked with, and she also noted a software solution through Partnership Network.