A leading German manufacturer of electrical household appliances with more than 60,000 employees worldwide was planning the strategic realignment of the group in order to improve its competitiveness through more growth and profitability. The current interim manager took on the task of restructuring the supply chain organization.
The project brief primarily involved fully integrating purchasing, logistics, supplier management and purchasing and logistics controlling into one organization on the basis of standardized processes and globally synchronized goals in order to increase agility and efficiency. The desired supply chain operating model was to ensure the operational performance of the entire organization. The requirements also included quickly implementing a cross-functional transformation with all interfaces.
Converting single-divisional purchasing into a cross-divisional organization
One of the tasks was to integrate various purchasing teams into an efficient cross-divisional purchasing organization based on strict total costs of ownership (TCO) and customer requirements. In addition to the formation of commodity teams (plastics, metals, electronics, etc.), corresponding material group and supplier strategies were developed and implemented.
Material costs reduced by 100 million euros in 4 years
In order to meet the ambitious Group targets, the interim manager developed a comprehensive material cost savings program. Over the course of 4 years, he was able to reduce material costs by a good 100 million euros. He achieved this goal by implementing second/multiple source strategies in low cost countries (LCC) and best cost countries (BCC), ratio measures and reducing complexity by consistently reducing the number of component variants. He also pursued a strict TCO approach. Indirect purchasing through advanced purchasing tactics such as online auctions made a further major contribution to sustainable cost containment.
Driving forward the development and expansion of strategic supplier management
The interim manager ensured sustainable savings successes by introducing strategic supplier management. This not only supported the sourcing activities, but also helped to ensure stable and crisis-proof supply chains.
In order to ensure the delivery capability of suppliers, the interim manager introduced a system based on key risk indicators for scouting, audits, development and supplier approval processes. He also set up a risk management system with elements such as supplier finance checks and bottleneck management.
Atypical "risky" suppliers were initially informed and asked to comment. If the ability to deliver did not improve, he agreed improvement measures with fair and binding deadlines.
Logistics network in the Middle East, Africa and Central Asia significantly expanded
In order to achieve the Group's growth targets and the expansion of new (Middle East) and emerging (Africa/Central Asia) markets, the network infrastructure had to be significantly expanded and optimized. After analyzing the current situation and drawing up business plans, it quickly became clear that the existing warehouse space in the plants and in the region would not be sufficient. The interim manager therefore initiated several projects:
- Logistics network: expansion of the warehouse network (central and regional warehouses) in the sales regions of Turkey and Russia and development of a distribution network with direct deliveries to new customers in Iran, Nigeria, Angola, Kenya and Kazakhstan.
- Doubling the equipment throughput: revised bulk structure in the warehouse and route-optimized store floor management for faster provision of equipment and increased loading speed
Despite a massive increase in sales, network expansion and rising energy costs, the interim manager managed to keep the increase in logistics costs disproportionately low.
In order to achieve the desired cost targets in the other areas as well, he ensured strict cost control on the one hand and cost optimization on the other. Optimization included switching truck and container transports from Turkey to Europe to rail transports. In addition, re-tendering by destination reduced transport costs by a further EUR 2 million p.a.
Clear customer focus through end-to-end optimized digital transformation
The interim manager led the introduction of Demand Driven Sales & Operation processes (DDS&OP) in order to develop customer-oriented planning processes based on pull principles and end-to-end optimization. On the sales side, he initiated IBP (Integrated Business Planning) and DDMRP (Demand Driven Material Requirement Planning), which he underpinned with appropriate product segmentation.
The interim manager upgraded the supply side, including production, with machine learning methods (Advanced Process Optimizer, APO) and production leveling. During his project activities, 5 Turkish plants served as pilot factories for the introduction of APO. The manager organized the introduction in 2 stages (APO 1 = prefabrication; APO 2 = assembly) within 2 years
