Positive effects permanently confirmed
Source: LOGISTIK HEUTE 11/2015
Dr. Peter Pretzsch, Managing Director of VIKING, explains in a conversation with LOGISTIK HEUTE what the goals of this garden equipment producer were with the SCM optimization project “SCORE” and what roles people and technology play.
LOGISTIK HEUTE: Dr. Pretzsch, when you purchased a lawn mower the last time, how long did you have to wait for it?
Dr. Peter Pretzsch: Of course the last time I organized a lawn mower, it was a VIKING lawn mower. It was for a family member in the country. It was a special model that the dealer did not have available right on-site. However, the lawn mower was available one day later. That’s how we imagine things: being able to deliver even special models within one day or a maximum of two days, all across Europe.
How can the market on which you are active with VIKING be characterized?
Customers are – with right – not patient, and they have limited brand loyalty. Generally, need arises if the existing lawn mower is defective or breaks down for other reasons. The customer needs the new lawn mower quickly. Therefore, availability is very important; added to this is the fact that there are many lawn mower manufacturers. And there are many opportunities to sell lawn mowers in large outlets, for example in building supply centers. This distinguishes us considerably, because VIKING is only available through service dealers, generally together with products from our parent company, Stihl.
What are – in addition to the challenges named – the most important reasons that you began the extensive SCM optimization project “SCORE” and what does SCORE mean to you?
We consciously called the project SCORE! Because it stands not just for “supply chain optimization and realization,” but also for the imperative of “score points, score a goal.” We liked that. In recent years, the company has achieved significant growth, also in its product range.
There are many variants. There are many models. And added to this is the extremely seasonal nature of our business. And the fact is that we don’t have any special production depth and we order the components from the market. Therefore, goods and materials management plays a crucial role for us, while on the other hand there are the topics of seasonality and inventories and storage spaces. The third dimension is the promise of availability for customers.
Where was the company particularly under the gun?
Before the project start, there were a whole series of manual processes that had to be reorganized. And the IT procedures had reached their limits with the company’s growth. We were not always in a position to make very quick simulations, and as a result, the reactions to changes in our own demands were simply too slow. For we do not sell directly to end customers, but rather to the group’s sales companies and importers. Our business activities were influenced significantly by their planning. In short: We focused intensively on supply chain management in order to be faster and more effective when handling conditions and effects that were not always foreseeable.
When did you start your SCM optimization project SCORE?
In 2013, we started to think about this intensively. We made various preparations and defined the requirements for this large project. We also decided to seek an external partner to help us with the project, namely Wassermann AG of Munich.
What three main goals did you hope to achieve with the project?
Our three main goals were: to increase our ability to react to changes, to reduce inventories and costs – while maintaining market availability – and essentially to optimize the flows.
Can you, using one of the main goals, sketch one of the procedures in the project?
We always kept the focus on all three main goals because they are all related. You can achieve one goal perfectly and then cause collateral damage in the others. It was clear to us: this affects the IT, marketing, and planning, and all logistical processes after the end of the production line through to the end customer. So there are many partners along the way who must be measured using different key figures. We began to define the goals. An essential analysis point was the evaluation of the agility of the processes. We also examined time models and personnel flexibility. And the focus was on the classification of the components. One more thing was to define the responsibilities and name a supply chain manager, who reports directly to me and has the appropriate influence and reach.
How did the partners decide what is best for the company overall so that this can be achieved?
There was a multi-stage process; it was moderated by the named project manager, who came from material management, together with the Wassermann consultant. The cooperation worked well.
To what extent were you able to achieve the main goals? What are you especially proud of?
The start-up phase is still ongoing, we would like to complete it by the end of the year. We entered the productive phase in the summer. We needed more time than we originally thought. Very important is that we have increased awareness of this topic at VIKING. And that we have made progress on the variables on which we focused, namely improving timeliness and reducing inventories. However, it doesn’t make any sense to name figures now because business development is so dynamic. Something that the procedure also provided was greater transparency and also greater flexibility, a constant improvement, for example also in the course of internal planning. Now, with the appropriate tools, we have the opportunity to execute processes that previously took several days within one day. There is no reason to be proud at the moment; we have to consolidate the positive effects and confirm them for the long run.
You have mentioned the role of IT several times already. To what extent is it a decisive success factor and what’s the human component?
Naturally people are a decisive factor. It is only possible to create a good supply chain if everybody is with the program. As I said earlier, there are certainly topics where there are conflicting goals. The concern is to coordinate these as well as possible. I believe we are well set up in IT. We are working with SAP and we incorporated Wassermann’s “WayRTS” advanced planning and scheduling system into our IT environment as part of the project.
The project has been delayed. What would you do differently today?
Looking back, I would have to say that everybody underestimated the work required. The project was too ambitious at first. I believe that other people have had the same experience. Therefore, I would make the project planning more detailed and pursue the milestones more intensively. More important, however, is the end result.
What role did the seasonal nature of the business play?
In our very seasonal business, it was not smart to change running systems at the start of the high season. Therefore, we stretched out the main start-up phase to the end of the high season.
What would you say: Did you start an IT project that then became a change project?
No, it was clear from the very start that this would be a change project. However, naturally IT was an important factor. In the end, we installed a new software package, one that has to correspond to and harmonize with other systems. Therefore, this was a multi-faceted project, which resulted in progress in supply chain management at many points and created positive results.
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