ValuePoint Material Solutions: Optimizing Indirect Material Procurement for Clients

ValuePoint Material Solutions can help customers improve material programs and better focus on their core competencies.
By Eric Slack

Founded in 1998 in Flint, Mich., ValuePoint Material Solutions came into being based on a market need for an independent indirect material service provider not owned by or affiliated with a distributor. Today, the company has more than 6,000 active distributor and manufacturer relationships in every indirect material category. These relationships range from simple procurement only arrangements all the way to service-oriented commodity management partnerships in support of customers.

“As a pure integrator, we have no affiliations or preference for supplier, product type or brand unless the customer specifies otherwise,” CEO Eric Larson says. “We are only a provider of integrator services with 100 percent of all material procured for our clients done so at pass-thru pricing from our distributor partners.”

Focus on Performance

ValuePoint provides four primary indirect/MRO services, which are storeroom/warehouse management, inventory management, procurement and consulting in these key areas. The core of its business has been complete integrator solutions where ValuePoint has provided the labor and technology to manage clients’ indirect material programs all the way from their initial material requests through vendor payables.

“ValuePoint is not distracted by the desire to sell more product, increase rebates or improve margins,” Larson says. “With what is typically a fixed fee pricing structure our total focus is on the services provided and our success is measured by the performance metrics that surround inventory, delivery and cost savings. Success in these areas is achieved by being very process and procedure oriented and combining that focus with outstanding customer service.”

From a product pricing standpoint, ValuePoint is only as good as its suppliers and supplier relationships. “The vast majority of our suppliers have been a part of ValuePoint’s client support base since the launch in 1998,” Larson says. “We understand the importance of working with a strong group of manufacturers and distributors dedicated to their commodities and personnel. We are always looking for new partner opportunities and regularly add new distributors based on price opportunity or service improvements.”

Customers come to ValuePoint for reasons such as the desire to have a focused professional that does indirect material come in and improve their current situation. Those improvements may be in material availability, cleanliness and presentation, inventory reductions and cost improvements. ValuePoint’s customers are not just looking for an opportunity to outsource for the sake of headcount reductions. They do it because they are struggling with one or more of these aspects of performance within their indirect spend and see an opportunity to improve the support to their manufacturing operation, thereby improving production as well as saving money.

“Because indirect material is what we do, we are focused on getting the job done and are not constantly getting pulled away by the core needs that our customers have in a manufacturing environment when indirect material simply is not what they need to be focused on,” Larson says.

Ongoing Improvements

ValuePoint says its clients’ bottom lines are its top priority. Last year, it averaged 12.3 percent cost savings for all clients as measured by the clients. The challenge managed by ValuePoint is that price cannot always be the driving factor but it must be a focus. Beyond price, it is always looking for opportunities that may be presented by supply partners and distributors, activities like customer approved product conversions, approved substitutions, presenting alternatives and most importantly trying to avoid the buy in the first place.

As ValuePoint looks to make improvements to its own operations, it starts by considering its customers’ most pressing issues as its own. Depending on the environment, those concerns may be making sure equipment is running for a manufacturer or that building services are functional for a university or municipality. Regardless of the final need, from an indirect standpoint it’s all about making sure they have or get what they need, when they need it.

“We know the importance of getting to know a client before suggesting services,” Larson says. “Organizations are all very different in their approach, culture, environment and function. We strive up front to learn all we can about their organization and then pay them an observatory visit, talk to their decision makers and associates, and fully review available options. Our clients can expect helpful feedback and financial proposals that result in a clear return on their investment.”

The company’s biggest investment is always into people. As a service organization, its success is measured first in its people followed by how it supports them and the supply base it uses. The last few years have seen significant investment in its internal approach to its associates, focused on areas such as improved HR systems, benefit options and recognitions.

“While it’s always a work in progress, our turnover is low and positive feedback from our customers on our staff members is at an all-time high,” Larson says. “Beyond the need to support our team, we have made investments in new software, vending solutions and a number of other areas either to improve or increase our service offerings or to improve efficiencies and thereby reduce the cost of our programs.”

ValuePoint knows that the targeted, accurate spend of indirect dollars is more important now than ever. Even in the face of a tough economic environment in the U.S., the company has stayed focused on what it does best, and it will continue to focus on optimizing its clients’ indirect spend.

“Our plan for growth is simply to continue to provide the best possible service and support for our clients, and continue to expand our client base by telling our story and providing factual documentation for discussion on how we could best help them save profit dollars,” Larson says.