Interview: Bosch Rexroth Canada
Name: Joe Fletcher
Job Title: Inventory Analyst
Company: Bosch Rexroth Canada
How long have you worked for Bosch Rexroth Canada?
What does your company do?
Bosch Rexroth Canada provides drive and control solutions in the
major technology areas of Industrial Hydraulics, Electric Drives
and Controls, Linear Motion and Assembly Technologies, Pneumatics,
Service and Mobile Hydraulics. We distribute products to end users,
OEMs and resellers via a national distribution network that
services all areas of Canada. This includes an engineering and
fabrication group that works hand in hand with customers to
engineer, design and construct custom hydraulic power units to meet
their specific needs. We also provide in-house evaluation and
repair services for our components as well as service technicians
who are on the road to provide support to customers on site.
How long have you worked as an inventory analyst?
During your time in this field, what changes have you
Extended factory lead times; economic downturn in domestic
manufacturing; increased pressure from off-shore products
manufactured in developing countries.
Is it very different from when you first started out?
Yes. There are various negative market influences that we have
to contend with in our current business environment.
Our company supplies various markets that have experienced a
severe economic downturn in recent years. The most prominent of
these is the North American automotive sector, with the "Big Three"
US manufacturers posting annual losses, reducing workforces and
cutting back on capital expenditures. We supply these customers via
direct sales of components and spare parts for the various pieces
of manufacturing equipment that they have in their plants as well
as supplying the OEMs that build equipment for the automotive
industry. As these manufacturers of hydraulic presses, materials
handling equipment, machine tools etc. suffer as a result, so do we
experience the effects of this slowdown in the automotive sector
both through direct and indirect sales.
There are various other areas of the Canadian Manufacturing
industry that are in decline as indicated by industry losses of
nearly 100 000 jobs in 2005 and 60 000 jobs in 2006. While some of
this is related to the automotive sector there are other industries
that have been affected such as textiles, steel, forestry, lumber
mills, pulp and paper. We suffer as a result of this economic
downturn as we supply these industries as well as their
sub-suppliers--similar to our relationship with the automotive
industry. In the forestry sector, for instance, we supply some
major OEMs that manufacture forestry and tree harvesting equipment
as well as lumber mills and pulp and papers mills. As the demand
from the mills declines, so do the demands for wood and
consequently the demands for new forestry equipment. So the effect
of a slowdown in one area of the industry such as the mill which we
may supply directly may have further impact upon other areas of the
industry such as an equipment manufacturer who we also supply.
Part of the cause of this slowdown has been the rising value of
the Canadian dollar versus the US dollar. In January 2003, the
Canadian dollar was worth $0.63 US while today it is worth $0.94
which makes the Canadian market less attractive to foreign
investment. Numerous Canadian companies are subsidiaries of their
US parents and while they used to get more bang for their (US) buck
opening facilities in Canada, this economic advantage has
decreased. More and more companies are looking to invest in low
cost countries where their dollars go much further. This is
reflected in the economic explosion seen in China, India, Brazil
and other developing countries.
As these market conditions change, we must adapt as a result. We
continue to attempt to diversify our customer base into other
industries that we may not have been heavily involved in, as well
as try to increase sales to customers whose business remains
strong. In this case the oil and gas sector remains a very strong
industry particularly in the Alberta oil sands, and we hope to be
able to take advantage of this while other industries recover from
the problems that they have been experiencing. This is expected to
happen as the automotive industry's restructuring efforts are
completed and companies realize some of the dangers associated with
manufacturing in developing countries. These problems are evident
in the quality of some of the products that comes from these areas
and has been highlighted in the media recently with massive recalls
on products made in China.
How has your job changed as a result?
More importance is being placed on maintaining "leaner"
inventory levels versus past years when sales were high and surplus
product was less of a concern. We are now placing greater
importance on internal efficiencies such as lean inventory levels
in order to improve profitability in a difficult market
What is your opinion on the future of Supply Chain
With increased competition from developing markets it is
essential to improve domestic operations to remain competitive.
This involves decreasing inventory holdings and associated costs
and properly forecasting future usage in order to quickly respond
to customer demands by having product on the shelf available for
sale. If you are unable to supply your customer as they request,
they may go elsewhere for their products and it may be difficult to
get them back.
What personal challenges do you face on a day to day basis in
Raising awareness about the perils of carrying too much
inventory amongst individuals on the sales side of the business.
Their primary concern is sales and extensive stockholding makes it
easier to sell things as you can tell customers that you have a
wide array of product on the shelf. It is often the case that they
will agree to keep even more inventory for customers who say that
they are interested in certain other products. They sometimes don't
properly consider/make allowances for the fact that if a customer
isn't committed to purchase this inventory which they have agreed
to hold for them, we can get stuck with unusable stock. We refer to
this type of stocking as a "handshake agreement" and find that we
have been told to keep product for customers who never end up
How do you overcome these?
Monitoring stock levels and evaluating changing usage patterns.
We have also implemented agreements with customers that they are
responsible to purchase an agreed upon safety stock level that we
guarantee to maintain for them in the event that they change their
requirements or we see no usage over a 6 month period. Anything
above and beyond this level that we keep to maintain the proper
flow of product is our liability if they stop purchasing the
product but we at least share some responsibility with the customer
in relation to minimum levels. This helps us capture "handshake
agreements" and give us some recourse to dispense with this
inventory should the customer alter their requirements.
What software packages do you use to assist you with your
What is your hot tip to others who do a similar job to
Act early/act often to dispense with dead/unmoving inventory.
This can be done via product returns to vendors; conversion into
active products and/or sales promotions. If one waits too long to
act it may become an unmanageable task with products too old to
send back; too old to be able to utilize in other components or
simply undesirable in the market. This leaves little alternative
but to write off the products as scrap. Acting early will free up
more capital to invest in products that are active or expand the
product range which you keep in inventory. This will hopefully
increase customer service, expand the product ranges being sold to
existing customers and allow you to capture new customers.