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Krefeld-based thyssenkrupp Materials Processing Europe GmbH operates as a processing specialist for steel and aluminum, including as a supplier to the automotive industry. It is therefore subject to demand fluctuations and high price pressure. To leverage efficiency potential, the company implemented the cloud solution SAP IBP for integrated, partially automated sales, purchasing and materials planning with support from valantic.
Head of SCM, thyssenkrupp Materials Processing Europe GmbH
”My recommendation to other companies when it comes to integrated planning: just do it. “
Head of SCM, thyssenkrupp Materials Processing Europe GmbH
”Good planning of sales and requirements, as well as their optimized distribution across delivery quotas are decisive for our ability to deliver and costs and thus for our competitive situation.“
This article appeared in the issue of Logistik Heute 6/2020, pp. 36-37
Author: Therese Meitinger
Demand fluctuations and high price pressure characterize the business of thyssenkrupp Materials Processing Europe. The cloud solution SAP IBP, which valantic implemented, was supposed to exploit potential efficiencies in sales, purchasing, and availability planning.
Project start in summer 2019 and handling the planning for the fiscal year 2020 in Germany in the IT solution SAP IBP – those were the time specifications for the implementation project at thyssenkrupp Materials Processing Europe.
The company orders steel rings, called coils, from its parent company, processes these, and supplies them to Tier1 and Tier2 suppliers in the automobile industry. “We are a purchaser for our parent company as well as an important player in the automobile supply sector,” explains Sascha Marzini, Director Supply Chain Management at thyssenkrupp in the Krefeld location. “Good planning of sales and requirements, as well as their optimized distribution across delivery quotas are decisive for our ability to deliver and costs and thus for our competitive situation.” In this context, the company wanted to optimize purchasing and disposition and replace decentralized Excel lists and templates with transparent, integrated planning. “Where APO was too complex, SAP IBP won us over – also because we believe the future is in the cloud,” continues Marzini.
From Excel and template-based planning directly to the cloud – and this in just a short while. The steel processor selected a team from the IT provider valantic as its partner. valantic’s experts were already assisting the company with SAP ERP. An initial special feature in the project organization: The thyssenkrupp project team only included representatives from the departmental and business side. thyssenkrupp only consulted an IT expert from time to time to ensure IT governance. For the implementation, the valantic team led by Fabian Stocker selected primarily agile methods: “SAP is constructed in modular fashion and offers a giant toolbox of functionalities. Therefore, you sooner need to configure it than develop it. That’s why agile or hybrid methods are appropriate.” With the modules S&OP and Supply, IBP forms the central link between strategic business planning and operative implementation and disposition. “The transparency that can be achieved with this integrated planning offers the company enormous advantages – in this project on through to the automated creation of cost-optimized quota suggestions,” continue Stocker.
As “Sales planning excellence,” the sales planning process was implemented in a series of “sprints.” Here, the sales employees provide their forecasts on a rolling basis. These forecasts are entered in templates, compared to specifications, prepared with statistical forecasts, and transformed into KPIs. With reports, alert functions, and dashboards, SAP IBP increases transparency without additional effort. “Here we expected more comprehension and acceptance topics because transparency with regard to work in sales is very high,” reports Sascha Marzini. “But the ease and speed of entry and evaluation were compelling.” The SAP IBP-led sales and requirements planning introduced in fall 2019 was the basis for the planning in 2020.
In a second sprint, the team worked on tactical purchasing planning. The goal was to break down the planned requirements for purchased parts and transform them into quotas for suppliers, materials, and material goods. For this, SAP IBU uses an automatic optimizer, which proposes cost-optimized quota requests taking into consideration procurement prices and supplier quotas. These quotas are then adjusted internally and finalized in negotiations with the suppliers. Reporting in SAP IBP allows quota tracing including visualization of degrees of fulfillment, deviations, and exception reports.
“Anyone looking to optimize automatically has to transfer employees’ informal knowledge to algorithms. That’s always a critical step in projects,” explains Fabian Stocker. If “incorrect results” are obtained, “the system” is not responsible, but rather insufficient or incomplete communication or mapping of the optimization rules. However, in the time crunch of a project, this can’t always be formulated so openly. Stocker continues: “The enormous gains with regard to speed and flexibility in planning are worth some effort for the customer and for us.” The weekly rolling disposition with time horizons of less than six months rely on tactical purchasing planning at thyssenkrupp Material Processing Europe, with a horizon of three to twelve months. Here, rough planning is refined in clusters through the disposition of materials with concrete specifications.
The processes in this area were also analyzed, optimized, and implemented in SAP IBP in the project. An optimizer formulates the procurement suggestions and concrete requirements automatically from target, minimum, and maximum inventories and plans them according to the quotas. KPIs, reports, alerts, and exception reports assist the scheduler’s work and improve transparency. In just a few months, the planning at thyssenkrupp Materials Processing Europe shifted from a variant supported primarily by on-board tools to integrated, cloud-based, partially automated sales, purchasing and disposition planning. The project was very complex and demanding for the project team, not just with respect to scheduling and training of the employees, it was also full of innovations – technologically with agile methods in the project organization. “It’s possible that given today’s perspective, we would do some things differently. Distribute time and money budgets differently, take a little more time at one point or another. But my recommendation to other companies when it comes to integrated planning: just do it. Don’t do it without a Proof of Concept, but do it,” says Sascha Marzini, the responsible Supply Chain Manager, in hindsight. The gains with respect to transparency and flexibility in the supply chain are immense. And Fabian Stocker of valantic adds: “Our customer made a big leap in a short time.” And this was the first SAP IBP project at the thyssenkrupp group. “The project shows what is possible in S&OP with SAP IBP with just the standard – even for smaller companies, for a step-by-step implementation of processes and as entry into the cloud or SAP.”