2025, Procurecon MRO. Panel_Trimming the Fat: Best Practices For Minimizing Excess Inventory

Michael Koontz, President – SimplSourcing (Moderator): Hello? Hello. There we go. We're in business. I hope you all had a wonderful lunch. Welcome to Track A and we are starting off with a great panel for you. This is Michael Kuntz. David Spence and Trey Clawson, and they are gonna be speaking to you today on minimizing excess inventory. Let's give them a nice round of applause.

Yeah, that works.

Trey Closson, Co-Founder & CEO – Amplio: I feel like everybody's over there and we're over here.

David Spence, Global Sourcing Manager – Dover Corporation: Perfect. Yeah. That works.

Trey Closson, Co-Founder & CEO – Amplio: Okay, so I have a tendency get in trouble a lot, so I figured I would go ahead and kick this session off by getting in trouble. It's feeling really weird with you all over there, and us over here. So if you are okay, we're just gonna come down here with you, if that's all right.

You can yell at me later. It's okay. So if as it fills in, we'll move around, but also

Announcer: we just can't do the mics too loud.

Trey Closson, Co-Founder & CEO – Amplio: Oh, keep them on more?

It's just not gonna, the sound isn't gonna be as loud.

Okay. Okay. So what we really wanna do today is have a interactive session. So what we really want is for people to talk about what you wanna talk about.

Now, if you fail to do that, I'm going to punish you and ask a bunch of boring questions. But that's not what we really want. What we really wanna do is figure out what you are dealing with, how we better manage inventory. It's the things that you all are dealing with. Every day and my esteem panelists behind me I'm gonna let them introduce themselves and you're gonna see why they're up here.

So I think it'll get more fun if you all have opinions, have questions about what we're talking about. It'll get a lot of fun. And we will we'll go with that. If there's not a lot, we've got a structure and we'll use that and use that to keep us going and then hopefully throughout it, feel free at any time.

Just to raise your hand. And do we need to use microphones? Are we okay just to. But we're not recording it, so it's okay if we don't, it's okay. Okay. Awesome. So let's start with introductions and then we'll go from there. My name's Michael Kunz and I am the president at a company called Simple Sourcing, which is a sourcing and procurement consulting company.

I've been in sourcing for. Probably more years than some of y'all have been alive. And I really hate saying that these days. But I started my career. I was at the old Wacovia Bank. How many of y'all even know what, who Wacovia Bank was? If y'all remember it? Okay. So it was around for a while and then it was merged with First Union and then it merged with Wells Fargo.

And then after that I moved on some other companies, including Lowe's and Nike. And then I was a CPO for American Tire distributors for about five years. So spent a lot of time in a lot of companies that we did have to deal with a lot of inventory as well. So with that, let me turn over. Do you guys introduce yourself?

Sure.

David Spence, Global Sourcing Manager – Dover Corporation: Alright. Hey everybody. I am David Spence. I'm a global sourcing manager with Dover Corporation. Been with Dover for about four years, the entire time within our strategic sourcing group. So I support a lot of our indirect products and facility services categories. Dover is a holding company for industrial manufacturers roughly about 8 billion in revenue.

We have 15 companies that are underneath our umbrella, and I'm part of the central procurement sourcing team that helps support our 200 plus or so different locations on sourcing strategies, cost savings projects, working capital improvement initiative.

Trey Closson, Co-Founder & CEO – Amplio: Awesome. Hey, I'm Trey Clawson, co-founder and CEO for Amplio based in Atlanta.

So Amplio has started from the premise that there's no Goldilocks inventory solution for manufacturers and distributors either have too much of what you don't need or too little of what you do need. And so we've built a marketplace that allows these organizations that have excess surplus decommissioned equipment.

Instead of trashing the inventory selling it through our marketplace, recouping value and resolving inventory, carrying costs. So I, my entire career has been across the industrial supply chain. Amply is about four years old, and we recently raised additional venture capital to, to continue expanding and growing work with a number of large enterprises around the world.

So excited to, to chat with y'all today. Awesome.

So now to you. So why are you here? What is it you wanted to get outta this session? So I'm not gonna put anyone on the spot yet. I may later, but I'll just have that as open question. Did anybody walk into this room going, okay, here's something I would like to know when I walk out.

Here's something that I would love to hear them talk about. Is there anything that's top of mind in for any of you

Audience: and to diffuse any potential embarrassment? Every single manufacturer I've ever spoken to has. Significant surplus inventory, excess assets, decommissioned equipment. So if you think that you're alone, I promise you that you're not alone.

So to, to diffuse any embarrassment if that's why you're here.

Trey Closson, Co-Founder & CEO – Amplio: Anyone? Okay. Let's talk about why is there excess inventory. As we know in today's world, there's a lot of stuff going on. There's weather like we've never seen in our life. There's tariffs, there's other things that we're all having to work through and prepare for, right?

When's the next COVID and what does it look like and what impact does it have? How does that affect us? So my question to you guys is what is causing that this excess inventory? Trey, you said it's there.

Audience: Yep.

Trey Closson, Co-Founder & CEO – Amplio: But that's not good enough. Inventory costs us a lot of money.

Why are we seeing.

Inventory out in the markets today?

Audience: Yeah I think there's some obvious explanations. So demand forecasts come in incorrectly. Like you said, there's disruptions across the supply chain. And so folks want to have more inventory available. I think the potentially non-obvious answer is that incentives are typically not aligned correctly with with maintenance teams in inventory positions.

So a maintenance team, their incentive is to have the inventory on site to be able to. Do maintenance to the machine as it goes down and they lose their incentives if if the equipment, if the machinery goes down and they don't have the parts available. And so they wanna hoard and collect as much inventory as possible to make sure that you can do the maintenance on the machine.

And then the incentive for the the corporate supply chain team is typically to have as little inventory as possible. So those two are competing against each other. And the plants typically win in that incentive Misaligned. End. And so what ends up happening is folks just collect inventory over multiple years.

And then oftentimes we've seen this with customers where they could write off inventory off the balance sheet, and then a maintenance person digs it out of the dumpster out back because they, they think that they may, might need a later on in in operation. And I would, the first time it happened I thought it was hilarious.

And then now I see it probably every single manufacturer that I go and visit. Yeah.

David Spence, Global Sourcing Manager – Dover Corporation: Yeah, and I definitely agree with the comments. I think, overall when we look at Dover specifically, we've created just a culture of ho hoarding and I think it's all the supply chain disruptions that we talked about earlier, starting with COVID on, you had these just in time inventory type programs that obviously was thrown out the window.

And then we started just trying to create as much inventory as we can, within our site. So we were never in a position where we were able to have a stock out and not be able to support our customer.

Trey Closson, Co-Founder & CEO – Amplio: Do we see this happen more on the direct side or the indirect? Trey, you're talking a lot on the indirect side and we're talking about parts and things that keep the factory running, but I'm also thinking we're seeing that on the direct side and making sure we have what we need for our customers.

Are we seeing any difference in how that's being managed?

Audience: Yeah, so I, I think that there is typically more oversight on inventory levels. With direct materials. There's more focus from a finance team. And so I think it what typically happens about 20 to 30% of Inmar inventory ends up as excess or surplus every year.

In large part because most folks within the organization aren't necessarily looking at those inventory levels. And then I think there's a paradox that we've started to recognize too that that about 50% of shortages happen even if an organization has incredibly lean inventory positions and incredibly lean practices.

They don't have the right parts in stock, so they could have significantly too much of parts that they don't need, but they don't have the parts that they do need. And so even if you're maintaining a trim inventory an inventory level 50% of stockouts are still occurring.

Because they just don't have, they don't know what the right parts are to have in stock.

David Spence, Global Sourcing Manager – Dover Corporation: Yeah. And I think adding to that too, with the MRO inventory, at least in our facilities, it's everywhere, right? So you have tool rooms, you have janitorial closet. It's just not as visible as what we typically see on the direct material side too.

So it's almost that outta sight outta mind, which leads to a lot of obsolescence at the end of the day.

Trey Closson, Co-Founder & CEO – Amplio: But most companies today, I know we have Fastenal here. We have Granger here, we have others. I order this stuff today and it shows up tomorrow. So why is there every inventory.

David Spence, Global Sourcing Manager – Dover Corporation: I think a lot of it just comes back to trust too, and it's like you are used to the disruption after disruption.

As Trey mentioned earlier, some of the misaligned incentives too with it's better to have the inventory to support the customer than it's to have a stock hour right now too. So trying to change that culture and shifting to that different mindset is always a challenge.

Trey Closson, Co-Founder & CEO – Amplio: Or you've seen an impact with tariffs.

Not at all. Tariffs. Are there tariffs?

Audience: Yeah.

David Spence, Global Sourcing Manager – Dover Corporation: I'll let you go first on that one.

Audience: Yeah, so I, I think there's significant impact with tariffs, which is like the most obvious statement probably of this entire panel. And it's not only cost, but it's also lead time extension as well. So cost is increased very dramatically.

And then it's also fluctuating on a daily basis based off of the whims of the current administration. And so tariffs are creating significant disruptions. Manufacturers are having to change supplier partners to try to mitigate the impact of tariffs, but then what happens there? I think David mentioned this earlier about trust.

You don't have a longstanding relationship with that distributor or that, that manufacturer. And so it, it just creates significant challenges. And then and then unfortunately a lot of manufacturers try to take an easy path with the duties and taxes. And then inventory is getting held up with customs as well.

And yeah we see a pretty significant impact with that. And unfortunately, one of the one of the pieces in the past in my career is I'm a licensed customs broker. And so I'm trying to keep up with what's going on with US customs, but it's changing yeah, it's changing on a daily basis.

Trey Closson, Co-Founder & CEO – Amplio: So what if we go back a little bit to that, that time COVID, I remember everybody during those events when we had events, and the first thing they would say is, I didn't worry about it. My suppliers love me. They're gonna do anything. I need to make sure I have what I need. COVID hit. Now.

That didn't happen. So where they thought just because they had a great relationship with the supplier, that meant they would never have inventory problems. They did,

Audience: yeah.

Trey Closson, Co-Founder & CEO – Amplio: And then all of a sudden, then they had more of what they needed. How are you seeing the impact still of those types of events having impacting the way people are managing their inventory today?

Audience: Yeah. Yeah, so I, I think that the research that we've done, the majority of shortages that were experienced during COVID could have been resolved by the surplus or excess inventory on other customer's balance sheets. But the challenge was that there was no visibility to what that surplus was, so there couldn't be trading within those organizations.

And the second piece, and it, I think it relates a little bit to to the tariffs as well, is that if you're buying inventory from a secondary source, pre-owned, typically still new in box you're taking a risk in the sense that you're not buying it brand new from Granger. You're not buying it brand new from Fastenal.

But if you have a quality, essentially a quality guarantee, buying it secondhand, you can get it significantly discounted compared to. Compared to buying it brand new. And then I think that the other piece too suppliers manufacturers, distributors. In the midst of COVID, essentially were able to take back power over, over the relationship.

They were not the receivers of orders, they were the ones that had the power because they had the inventory. And so non cancelable, non-returnable became a significant thing during COVID. And historically you could just send the inventory back to a distributor and there would be a stocking fee, but that's changed significantly now.

And so now the excess problem, you can't just return it back for a stocking fee. You have to figure out an outlet for that inventory.

David Spence, Global Sourcing Manager – Dover Corporation: Yeah, and I'd say it's resulted in better conversations with suppliers too, to start sharing, better updated forecasting, having more frequent conversations around it.

I know personally, before COVID you took for granted that your distributor would just have the inventory and it wasn't, as much of a conversation. It came up during the quarterly business reviews as you looked at your fill rates and things like that. But being able to identify high priority parts, having that conversation around, what's coming, what's your pipeline look like?

If you're seeing a disruption within your supply chain, we'd like to know about it earlier rather than later, so that way we can partner together and come up with different alternatives that we can still meet the business needs at the end of the day.

Audience: And I think that's a really fascinating piece that, I'm, I am operating a startup in the supply chain space, and so I do believe that technology can transform what's going on in the supply chain.

But there are a lot of tourists in the tech space that have no, no experience across the supply chain, no empathy. They've never done it before. And so I think that the best application of technology in the supply chain is where you marry experience with the best in class technology. And the relationships are absolutely critical.

There. Something goes wrong every single day across the supply chain. And so it's important that you have trusted relationships where you can have open communication that. Okay. I know that something's gonna happen. You just have to tell me so that I can update my plan and be able to respond accordingly.

Trey Closson, Co-Founder & CEO – Amplio: So I know all of us have dealt with situations where we didn't have enough inventory. Have any of y'all had that situation you had to deal with where you had too much, you're sitting on inventory, you're not sure what to do with it? And okay, you're nodding. I'm not gonna put you on the spot, but you're nodding.

Audience: It's a safe space. It's a safe space.

Trey Closson, Co-Founder & CEO – Amplio: Raise your hands. How many of you all have had to deal with that? Okay. Now, how many of you all. Would be willing to, like what caused it? Is it one of the things we just talked about or why do you see excess inventory happening, please? Lack of systemic approach.

Okay. Like of systemic approach. What else? For,

Audience: for our case, we had we use a lot of gloves, production and that.

Alternative, the we use a lot of nitro gloves at gen X Corporation where I work and during COVID it was pretty difficult to get some of these. And so we were testing a lot of alternatives. We also have a lot of facilities. We have 13 different buildings and one building was.

Getting samples and trialing, trialing from this supplier. The next facility was doing the same thing, but with a different supplier. And so we ended up with a lot of access inventory from that. We've also had situations where we work with the supplier and that part becomes obsolete.

Trey Closson, Co-Founder & CEO – Amplio: Yeah.

Audience: But they've manufactured all of this product for us.

Now we're just sitting on obsolete inventory.

Trey Closson, Co-Founder & CEO – Amplio: Okay. What else was it? Anybody else thought I heard a comment over here? There's a hand up, right? We can go here, then we'll go.

Michael Koontz, President – SimplSourcing (Moderator): Sorry, where was that? Hand

Trey Closson, Co-Founder & CEO – Amplio: back corner.

Okay.

Michael Koontz, President – SimplSourcing (Moderator): I'll get to everyone.

Trey Closson, Co-Founder & CEO – Amplio: Just, Trey Closson, Co-Founder & CEO – Amplio: we actually have instances where we order motors is our biggest challenge.

We ordered a motor. Apparently the vendor did not ship the correct motor, and we had two of 'em, and then we got a third one that was also wrong, but nobody bothered to say anything and they just kept it and we really couldn't use the motor. And then we're like. Looking at things and we, somebody pulled the motor out and we're like, oh, we got three of these.

We can't use them. What do we do? I said, can we, and they said, can we send them back? I'm like, come on. We ordered this in 2021. What are you thinking? No. So we have a lot of challenges like that in our inventory.

Okay. You, you brought, you gotta answer the question. What'd you do with them?

I sold them.

Okay.

Audience: I sold them for really cheap.

Trey Closson, Co-Founder & CEO – Amplio: Yeah. Yeah.

Audience: It made my heart hurt.

Trey Closson, Co-Founder & CEO – Amplio: Okay.

Audience: Yeah. 'cause it was probably like $14,000 worth of motors.

Trey Closson, Co-Founder & CEO – Amplio: Sure.

Audience: Yeah. I didn't get that much

Trey Closson, Co-Founder & CEO – Amplio: better point over here.

Audience: So I think it can go multiple different ways. And you guys already mentioned data quality. It goes across this industry, but one of the, it's actually a question that I was gonna ask. And your question came in a good timing. So how do you guys see the challenge? 'cause d duplicates or equivalency between items?

So the same item, they can do the same job, but they have two different codes. They have two different records on the system, but they essentially the same, just different maybe different manufacturers, and we do see that duplication. The second thing that I was gonna mention is at least a company that I work for, we were, we grew.

Based on acquisitions all over the place, right? So we have system duplication. So EER P is running independently. Sometimes you give too much autonomy to the plant to set up their inventory levels and et cetera. So you have the same item overstocked in both. In both cases. And the last one that I was gonna mention is reliability on supply chain, right?

So that automatically comes with the buoy effect, and you have people, oh, especially when it comes to MRO, like sometimes it's a cheap item. And they say, you know what, I'd rather I need 10, but I'd rather buy a hundred just for the sake of it. And it's not too expensive, but if I don't have it, it's gonna cost me more.

So the, all these three together, they pile up to me and that's what I see the fat going up and up on the inventory.

Yeah, I think that you hit on something that somebody touched on, I think Hector touched on earlier of the system, the data integrity. Even if a manufacturer is using the same ERP.

The way that each plant codes apart could be different, or when I say code is always different and so therefore it, it's impossible to know, act actually how much surplus you have across the organization. And it's also impossible if you want, if you have surplus in one plant. To then see can another plant use that.

And I'm not supposed to pitch Amplio, but to pitch Amplio we we are, we've developed AI agents that allow organizations to, to understand not only the same parts across the organization that can be reused, but also what you were mentioning of the equivalent parts as well.

Because I think that's. That's the most critical what we care about most is that inventory doesn't end up in a landfill. And the best way to re reuse the inventory is just reusing it internally. And the best way to do that is to have the visibility. But the way that MRO exists right now it's, yeah, damn near impossible to be able to do that effectively.

Trey Closson, Co-Founder & CEO – Amplio: David, have you found other best practices that you all have used from that inventory manager even whether not having more than you need or what to do once you, you do.

David Spence, Global Sourcing Manager – Dover Corporation: Yeah, no, exactly. And I think all the stories that were shared, hit close to home too, and especially the motors example as well.

One thing that we started working on was just implementing a better return to vendor policy and program and getting ahead of these as soon as we're aware that there's an issue, whether it's equality and over shipment or just the wrong shipment from suppliers. So that way we were able to get a team of engineering quality and finance all in a room together, meet quarterly and decide what do we wanna do with this inventory?

And is there a way that we can get this back to our supplier? Is there a way that we can rework it? That certainly has helped at some of our sites with decreasing the amount of inventory that we have. And then secondly, a lot of the times that our facilities, we don't discover. That we have so much inventory until we go to do a supplier transition too.

And that's when you know everything, comes outta the woodwork too, with how much we have And

Audience: the cockroaches are crawling out.

David Spence, Global Sourcing Manager – Dover Corporation: Exactly. And looking for ways that, wait, we have five years worth of inventory for this particular skew here. Yep. And just trying to find out any creative way that we have to use that up.

Trey Closson, Co-Founder & CEO – Amplio: We actually had a situation like that, my last company. And what we were doing was moving building. So it was amazing when that started. Things you didn't even know, boxes and cases of stuff sitting around that no one knew about. And I'm embarrassed to say it, but everything we could donate, we donated, but the dumpsters when we were done, were just full of stuff.

'cause by that point, you don't have the time either to handle it. For part of you that were talking about these issues, did you all come up with any best practices outside of, having a yard cell in front of your building

Audience: in prayer?

Trey Closson, Co-Founder & CEO – Amplio: In prayer? I had a question. Yeah.

Audience: Okay. Because

David Spence, Global Sourcing Manager – Dover Corporation: it come mostly

Trey Closson, Co-Founder & CEO – Amplio: please

Audience: question, but what is the metric that you guys usually mo use the most to define your inventory levels?

If you have too much like days of stock on hand? How do you set up those means and max this kind of stuff?

David Spence, Global Sourcing Manager – Dover Corporation: I'd say to our facilities days of inventory on hand is probably the number one metric. And I would say looking at our C-suite leadership, that is viewed more regularly than what productivity and cost savings are right now at the facility.

Audience: And how does the reliability, going back to my previous point, like how does the reliability. On the supply chain, on the vendors. So I know we picked Grange and Fastenal 'cause these guys are here, but how much the we, you guys factor in their reliability in the process? I think we can pick Amazon, they're here as well.

In terms of defining your safety stock and your cycles and et cetera.

David Spence, Global Sourcing Manager – Dover Corporation: Yeah, that's an area I would say that we have tried to make better strides at, and that's through just having the quarterly business reviews and the improvements with those suppliers. In the past, I would say we've been very reliant on the suppliers to tell us what we need, and we weren't the ones bringing data to the conversation around, here's what our updated forecasts are gonna be, here's where you should be adjusting, your MinMax levels, and then meeting quarterly to look at any of the excess and obsolete inventory reports.

So that way we're able to at least take advantage of it on a quarterly basis versus waiting until, year end or sometimes even two, three years where the dollar amount is just astronomical.

Audience: And I think one of the, one of the, one of the hidden pieces too the obvious one is the balance sheet becomes unclean.

You have significant inventory stocks in your balance sheet, but I think what's missed most often is the carrying cost of that inventory. If you're leasing a warehouse space, you're having to pay for the lease, the labor sometimes taxes annually on that inventory. And so on average, manufacturers paying 21% inventory carrying costs per year for each of the kus.

And so if you're holding the inventory for five years, you've not only paid to acquire the inventory, but you've also paid again to actually store the, at that inventory. So the longer that you hold onto it, not only is it degrading in value, but then you're also continuing to pay for that inventory.

And then if your warehouse is full, the marginal pallet you get is that next. Warehousing contract that you need to acquire. So the next pallet, instead of paying a thousand dollars for the inventory, you're potentially paying a million dollars because you have to get a brand new warehouse for that facility.

And so the biggest value that we create for our customers we do return a lot of cash to them, but it's actually clearing out the space in the warehouse and then also allowing them to get that inventory off their books so they don't have to do the inventory carrying cost piece as well.

Trey Closson, Co-Founder & CEO – Amplio: But Trey, people don't get fired for having this excess inventory very often.

Yeah. What people get fired for. Is when that customer needs something and they can't get it to 'em because they don't have the inventory or they need that equipment up and she sold their motor.

Audience: Yeah.

Trey Closson, Co-Founder & CEO – Amplio: Yeah. That's why people get fired.

Audience: Yeah.

Trey Closson, Co-Founder & CEO – Amplio: So when you think about that, how do you take that in account, right?

How do you make sure that it's not just about freeing up space and getting some free cash flow, but how do we manage that to make sure that. We're gonna always have what we need when we need to get it to our customer. Yeah. Because I think, me personally, that was always my biggest fear.

Audience: Yeah.

Trey Closson, Co-Founder & CEO – Amplio: I never wanted not to have something we needed.

Audience: Yeah. Totally. Completely agreed. And so I think there's two pieces. One is the most successful relationships we have with manufacturers. There's somebody in the leadership team that is essentially giving the blessing to the plants to get rid of inventory. They're absolving them of the sin of running out of that stock.

Announcer: Yeah.

Audience: Allowing them to do what, frankly, what's the right thing to do is getting rid of the access stock. But I think the other piece that's also just as practical is that. When we receive inventory from a customer we're also allowing them to claw back that inventory in the event that it becomes necessary for production later on to, to cap the downside of the risk that okay, we haven't used this in five, 10 years.

And then inevitably the next week they need to use it and they're able to pull it back so they don't run outta stock.

Trey Closson, Co-Founder & CEO – Amplio: Because I wanna go back to the point that was actually the question I was asked earlier. We've always used scorecards in the beginning. The scorecard actually would talk about things of how much of a commodity is it?

Is it something that fire run out? Gloves I could call. Or I could go to Fastener or I could go ranger, right? They're there. So you score that appropriately versus those unique motors that maybe only one supplier carries. And if you can't get those right it's more complicated and we use that scoring in a weighted level and then apply to that to determine amount of days on hand with a safety value with it.

That could range from. 5% to 20% more than whatever I think I'm gonna use for it. That's been a common way that I've done it before. What about you? Has any of you all used any models or technology or anything else to help you determine the right levels of inventory to, to carry at cell?

Audience: So basically, what is the supply depreciation? What's the consumption fluctuation? So you can have local, regional, or country level safety stocks, but

Yeah. And I, I think that with critical spares, even if you haven't used it in five years, you need to have a critical spare. Yeah. Yeah.

The item also.

Yeah.

Yeah. If

it's a critical cost, 10 bucks say, okay, I'm gonna keep it. Yeah. But if it cost a million, then.

Yeah.

Trey Closson, Co-Founder & CEO – Amplio: I think the other piece of that's also, how many locations do you have? Because what I've also seen is people have a tendency in each one of those to have excess capacity. So if you have 10 sites, when you take that excess capacity times 10, now you've got a lot more.

'cause let's face it, you get anything anywhere within two days now in the United States, right? So we've gotta take more of an aggregated view. Of inventory and not a location by location. And I still think people struggle sometimes within the MRO space for that. Other questions?

Audience: So based on your experience you guys are talking about, okay, like what are the potential factors that can cause the fat on the inventory levels, right? My question is, when, based on your experience, when you go to the companies and do you see that access as a systematic issue, or do you see that being more recurrent on, I don't know, lower value items because people don't care too much or maybe more on the indirect side because they don't care too much.

When it goes to higher value or direct items, you have a little bit more of control. Do you see any kind of trends on that spectrum? Take it.

Yeah I think that, so each manufacturer is different. But we do view it as a recurring problem. It, every manufacturer wants to get completely rid of excess and surplus, but I unfortunately believe that's impossible.

Just because you need to have surplus in order to like effectively run your supply chain. And then I think within that each manufacturer is different. Like it, it ranges. We could get a list of inventory. They have a million dollars of 10 cent bolts. Or they could have a million dollars of Alan Bradley PLCs like, it, it really depends.

And then it also depends on the cycle of upcycling their machinery as well. What the biggest challenge is that the engineering team doesn't talk to the maintenance team. They're planning to upcycle a machine. The maintenance team then buys a million dollars worth of spare parts, and then next year they become obsolete.

And so I think that the trend is that everybody has it and is effectively always gonna have it. And and that there's no way to completely get rid of it because that's not safe for the supply chain. The best thing to do is have a strategy, essentially a hedging strategy that when you do have too much inventory, how can you actually get out from underneath the bad position?

And and then recoup value for selling that inventory as well. And that's where we come in.

Trey Closson, Co-Founder & CEO – Amplio: So what are the top two or three items you all do see excess inventory in within the MRO space? I keep going back to the gloves 'cause I've heard that one a lot. What other items, are there any other particular items that you all have seen this happen?

Okay, let me ask you this question trace. So what are you seeing? So across your customer base. What is the item types of items that you all see most that when they come to you, they're like, help us. This is what we need to liquidate.

Audience: Yeah, so I think that the PPE example that I would say that every company during COVID bought millions of dollars of PPE, and so we, we get a lot of lists with PPE, but yeah, unless you want a million dollars of PPE, nobody wants it.

Okay,

Trey Closson, Co-Founder & CEO – Amplio: but who's buying it?

Audience: Yeah, nobody's buying it. That's the thing. So I think that, from there it's really engines, pumps, motors, valves automation controls. It really runs the gamut. We get most of the items that retain the most value on the secondary market are the automation control units and then engines and pumps and valves that going down from there.

But yeah, bearings as well. It's really the inventory items that that can retain value over time are value dense so they don't take up a significant amount of space. And, but yeah it really depends on the organization, but I would say that every, everybody has. More, more surplus than they know.

We went into a manufacturing location recently. They hadn't been to a part of the warehouse in years. We opened up the door to that warehouse and they had $10 million of MRO inventory that were off the books. That it was this, the space of the warehouse where the maintenance staff went to put the inventory after they, they wrote it off.

And there was $10 million of stuff just sitting there. And so it's, you'd find the craziest things.

David Spence, Global Sourcing Manager – Dover Corporation: Yeah, and I'd say on our side it's really the fastener and the packaging category is where we see a ton of excess inventory fasteners. I would say due to like design changes from engineers make, certain parts obsolete, they're small enough where they don't take up a ton of space within the facility and they pretty much just go on a shelf.

And, we recently acquired a business and we were doing an inventory count and they do an annual inventory count. And each year you get to put a different color sticker on it. And it's like these one bin of fasteners had three stickers on it. So it was showing after three years, it hadn't been touched one time, and this was replicated across the facility too.

So those are the categories that we see a ton of value in.

Trey Closson, Co-Founder & CEO – Amplio: Tre, I'm gonna be on the spot because you're not allowed to pitch, but I'm just really curious. I am I just, honestly, so I'll take the handcuffs off. You have something unique in the fact that someone calls you and says, I've got a lot of crap.

I need it out.

Audience: Yeah.

Trey Closson, Co-Founder & CEO – Amplio: What do you do? How long does it take to do it, and how long before they see the results of that? Yeah. What does that look like?

Audience: Yeah, totally. So I'm not a trained therapist, but we go first to therapy. And I say that tongue in cheek, but we the people that we're talking to most organizations, their core capability in the supply chain is buying.

It's not then selling what you bought potentially by mistake or you've just accumulated over time. And so it's the folks come to us and they're like I don't, I frankly don't know what to do here. And so we, we take a very consultative approach and we develop software that allows us to take a list of inventory.

We know that it's gonna be dirty. We know that the data's gonna be incorrect. And so we've built software that cleans up the data to be able to create a fair market value for that inventory. And then we create a disposition strategy. So we're then indicating. To the manufacturer, what's the best channel to sell this inventory to maximize the value?

And what timeframe will that, that then take? And and then the time to value it. If somebody says We need to have inventory out in a week. We can do that. And if they say, we have eternity to sell this, we just need the as much cash as possible. Possible, we'll do that as well. And so time to value just depends on, but

Trey Closson, Co-Founder & CEO – Amplio: do you take the inventory or do you keep it in their place?

You just provide the technology to sell it and then they ship it.

Audience: So that's where the valuation becomes really critical if. If we take it on, it's because we believe that we'll create we'll generate revenue from selling it. And in the MRO space, we will, we'll clear out a warehouse, we'll take the inventory on into one of our partner warehouses and then sell it over time.

So you resolve the inventory carrying cost, get it out of site, and then you just collect checks from us as we sell your, not checks. I don't sound send physical checks anymore. But you just, you get money from us as we're selling your inventory over time. And so it, it solves the problem and then creates pretty significant value for the organization.

And I would say the best in class organizations are then using that money to then buy buy inventory. So you're getting, it's like a piggy bank. Whatever you get by selling your surplus, you can then reduce your sourcing budget, buying through us or buying through one of our partners.

And using that cash that's found money. And then the last piece is that that if the money is retained within the Amplio ecosystem, you can use it to buy from Amplio and it mitigates any income taxes you have to pay on that cash as well.

Trey Closson, Co-Founder & CEO – Amplio: All right. Awesome questions. Any other comments from anyone?

Okay, let's do this. David, any kind of wrap up? Last comments, anything you wanna cover? We haven't.

David Spence, Global Sourcing Manager – Dover Corporation: No, I think we hit a lot of the key topics today too. So great conversation and great questions.

Trey Closson, Co-Founder & CEO – Amplio: Awesome. Trey?

Audience: Yeah I think if you have interest, if you were scared to share your experience we have an exhibitor booth over there.

You can come talk to us. Like I said, I'm not a trained therapist, but I've talked to a lot of people that have this challenge and so I would be happy to chat with you.

Trey Closson, Co-Founder & CEO – Amplio: Awesome. Thank you. And

Audience: thanks for coming.

Trey Closson, Co-Founder & CEO – Amplio: There's no other questions, no other comments. Thank you for your time. Thank you guys.

This has been great and hopefully we'll get to chat through the rest of our sessions today. So thank you.

Announcer: Thank.