News
Tuesday 05. July 2011
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| End of the Bottleneck |
| Bottlenecks in components supply had jeopardized Baumüller's supply capabilities. To minimize this external risk, the automation specialist decided on a special project to secure supplies. Now, Baumüller can guarantee faithfulness to deadlines or supplies even in case of steep increases in demand. |
| The economy is recovering, and purchasing as well as ordering activities show a very positive development compared with the previous year. Yet, the partly rapidly increasing incoming orders bring about considerable problems in materials supply. During the crisis, production capacities had been significantly reduced and inventories cut down at the same time. Due to the rebounding market, many companies have been faced, for months already, with the problem of having to build up production capacities again just as fast. Supply bottlenecks are the result in parts. Baumüller Nürnberg GmbH – a specialist for drive and automation technology – is a medium-sized company which had also been affected by external supply bottlenecks. In past months, the company's supply situation had been critical, especially for active and passive electronic components. Baumüller here had to react to market realities and the considerably increased delivery periods for bought-in parts whereas the company usually had served its customers with much shorter supply periods; as a result, customer loyalty was jeopardized. Additionally, there were volatilities, theoretical demand volumes and fluctuations in forecasting which caused the classical whiplash effect in the supply chain. At the same time, sharp rises in incoming orders were recorded. Due to these two counteracting market conditions, a significant risk potential was detected for the company. The challenge thus consisted in securing the components supply since bottlenecks were looming. To minimize this external risk, Baumüller decided to initiate a special project to secure supplies – in collaboration with Kerkhoff Consulting, the consultancy specialized in purchasing and supply chain management. TRANSPARENCY OF PROCESSES AND RATIOS Its increase accordingly was the most vital objective of a comprehensive, holistic supply & demand chain management. This required screening the entire internal supply chain from end customers' orders via production planning all the way to materials requirements. To this end, ratios were recorded such as the missing parts quota or potentially blocked sales. In a second step, the consultants and Baumüller ascertained critical orders and prioritized them according to the set ratios. The identification of bottleneck parts in combination with customer sales here presented the central element to adjust production plans and accordingly assign priorities to them. After that, medium-term planning and volume safeguarding were effected by agreement of delivery schedules. Original delivery schedules were modified by the orientation on actual demand volumes in production. Until now, Baumüller had partly ordered the entire monthly demand on one single target date. Due to allocation problems, the supplier had been unable to fulfill this order which is why the monthly order was subdivided into several smaller individual orders. Although transport costs actually increased short-term due to the individual deliveries, the supply chain could at least be restored, orders carried out, and sales thus generated. CROSS-FUNCTIONAL TEAMS from the production, purchasing, sales and controlling departments were an important measure. It was implemented not only in purchasing but also in sales. Henceforth, the teams reported directly to general management. In workshops and meetings, the teams took over their core duty: Safeguarding production and liquidity. Baumüller's buyers increasingly worked off operative measures to procure the corresponding parts: They had regular telephone calls with suppliers, adjusted delivery schedules, searched for alternative parts and conducted price negotiations. At the same time, the consultancy built up alternative suppliers as an "emergency plan". This multi-sourcing strategy provided Baumüller with more flexibility. This strategy is becoming ever more important – also and especially in view of the increasing number of supplier oligopolies. For technical components, companies frequently do not designate any alternatives for their customary suppliers and thus acutely jeopardize the security of supplies. Especially if shortages are looming. MORE SUPPLY CONTINUITY was achieved by the company's adjusted delivery schedules. Particularly critical for supplies are special components which deviate from standard and/or serial products and can be obtained from only a few suppliers or from just one supplier. That was also the case at Baumüller: The combination of supply problems with a special foil which is used in resistors, and a special and customized type of construction resulted in much prolonged delivery periods. This extreme situation had not been foreseeable by either Baumüller or the supplier which was identified by the project analysis. The cross-functional collaboration of sales, production, purchasing and controlling resulted in a transparent prioritization of production in case of the product groups affected by allocation. To make processes run parallel, semi-finished parts were first manufactured for it. Components were completed as far as possible and then put into intermediate storage. As soon as the missing parts were delivered, the products could be finished and delivered. Thus, Baumüller has been successful in making on-time deliveries to its customers. |
