“Today, SSI manages storerooms in-person and virtually … moreover, becoming a leading force in the MRO management area,” the company says.

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When Radnor, Pa.-based Storeroom Solutions Inc. (SSI) was founded in 1987, it proposed a deal that most clients could not refuse: to procure, stock, monitor and staff their storerooms so the customers could focus all of their energy on their core competencies. This would, in turn, “help companies reduce indirect material procurement costs, streamline operations in plant storerooms and standardize managerial practices across divisions,” SSI says.

After it became a Day & Zimmermann subsidiary in 1989, SSI broadened its client base and developed Storeroom On Site software, a “core component” of its MRO software suite. Then, in 1996, a group of former former Day & Zimmermann executives acquired the company’s assets.

“Today, SSI manages storerooms in-person and virtually … moreover, becoming a leading force in the MRO management area,” the company says. It has more than 100 locations, and purchases more than a million storeroom products annually, which are supplied to clients and managed through customized on-site procedures. It operates in the United States and Canada and plans to open a site in Puerto Rico within the first quarter of 2008. “We go where our clients ask us to go,” says Robert DePaolo, senior vice president of business development.

‘Astronomical Advancements’
The integrated supply industry has come a long way from its early ’70s inception, DePaolo says. “The advancements in the systems capabilities from then to now are astronomical,” he declares. “When it first started, you had little three-by-five index cards. You would take something off the shelf and write it on the card. When the box is empty, you throw the card in the box and somebody would order more. That’s it in its purest form.

“Today, we have systems that calculate how much inventory you need, how fast it’s turning and your lead time,” he continues. “Technology will give you a history of every time you used that item, what machine you used it on and what work order it goes to. We pride ourselves on our ability to manage inventory and product availability at an unbelievably high level. But there are still companies who use the three-by-five card theory. Our version of integrated supply is not as widespread as we’d like it to be; it’s still gaining momentum, and I don’t know if it’s been any better than it is right now.”

Ironically, he adds, the industry seems to do well when other industries struggle financially. “We’re almost in a reverse cycle,” DePaolo notes. “When times get hard and people need to save money, they must look for optimum cost reductions. Clients are looking at places they never thought to look at before because it was too hard to manage at the time. Now, companies are wringing every penny that they possibly can out of the process, and there are people like us who know how to make it easy for them.

“And, when times are prosperous and everybody is wildly profitable, then they don’t want to entertain our services quite as much. It’s a challenge to convince them to implement a new program and change management. But we’re not there to show people what they can do better; we’re there to show them different tools, educate them and help them understand that we’re the next step in the evolution of indirect materials management.”

Case in Point
SSI serves industries ranging from automobile parts manufacturers and newspapers to chemical materials producers and pharmaceutical companies.

The company points to several cases where it helped to educate potential clients about the benefits of outsourcing direct materials management. In one instance, a well-known Pennsylvania newspaper merged into a substantial media group in the early 1990s and was placed in a division that included other newspapers of a comparable size.

Due to a “soft economic climate and consolidation among major advertisers,” the company says, revenue decreased 9 percent from 2004 to 2006. “In the same way the newspaper industry has moved toward consolidation, Storeroom Solutions determined that consolidation was the best methodology for managing plant storerooms for our client,” SSI says. “Storeroom Solutions centralized procurement for nine facilities, lowering purchasing costs by 18 percent.”

“Don’t be too proud to outsource,” DePaolo advises other companies. “There are people like us who are experts; we do what we do, and it’s all that we do … we know how to produce value from efficient on-site MRO operations. [Companies] should understand that distributing MRO parts internally is not their business; it is a cost that is not recoverable in their manufacturing process and should be eliminated. [Firms] that find their way out of the parts distribution business also find considerable contributions to their bottom line and end up being very successful.”