Microscope: LSI streamlines supply chain with European hub
Author: Paul Kunert
Storage connectivity vendor LSI has created a European hub that has dramatically slashed the lead times for kit and cut supply chain costs by more than halving the amount of inventory that distributors and integrators were required to hold locally.
The logistics centre based at London Heathrow was set up in August 2008 to ease the flow of SAAS and SATA products, and has since cut stock levels among distributors Hammer and Bell Micro by 66% and UK delivery times to 24 hours.
Previously, distributors held up to six weeks worth of stock and when parts were sold out, resellers and integrators could wait in excess of three weeks for deliveries to come from Hong Kong, said Mike Rees, LSI channel director for EMEA.
“What we can do here is ring fence $1m worth of [volume] at the hub for our distribution partners to take into the channel,” he said, adding LSI will replenish this every fortnight.
This will increase LSI inventory turns in distribution from eight or nine times a year to around 25, allowing them to get a better return on capital employed and reduce the level of cash tied to stock.
It was difficult to guarantee supply for partners when shipping from the Far East, said Rees because of unforeseen issues such as Customs bureaucracy. But he claimed LSI had “eradicated” this issue and could give assurance to integrators involved in bids.
This was the latest step LSI has undertaken to fine tune relationships with partners, having revised its RMA procedure in Q3 2007 by offering next day replacements, and it created a co-marketing programme with distributors last year.
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