Palfinger

"We lift tons with our cranes - with clevercure the level in global procurement."

Thomas Petran, Head of Global Supply Chain Management

How Palfinger benefits from faster ordering processes

They are a familiar sight from everyday technical life: trucks on construction sites, whose drivers use the remote control to hoist heavy loads down from the loading area using the permanently mounted lifting crane. As a rule, the hydraulic loading cranes with the characteristic knuckle boom are painted red and bear the Palfinger manufacturer's logo. This is because the specialist for lifting solutions, which emerged from a locksmith's workshop in Schärding almost 85 years ago, is the world market leader with around 150 models and a market share of 35 percent.

As a global weight-lifting champion, Palfinger AG has long been a global player with branches in all major markets: in addition to the core European market, for example in China, Russia, the USA, India, Brazil and South Africa. Palfinger systems are now also at home on the world's oceans, where they are used on the decks of transport ships and for oil and gas drilling.

Ambitious goals

In order to handle its global business even more smoothly and productively, the listed company decided back in 2009 to optimize its procurement through an electronic supplier connection. The SRM solution to be developed had to be able to do many things. On the one hand, the transmission of forecasts, orders and specifications to suppliers via an SRM web platform should be possible without media discontinuity. On the customer side, they wanted order confirmations, country of origin declarations and the respective shipping notification to be imported directly into the Palfinger SAP. The changeover to Vendor Managed Inventory - VMI for short - was to go hand in hand with this.

A thick specification sheet

This was an ambitious project, in which Thomas Petran, Head of Global Supply Chain Management at Palfinger, and his team were particularly challenged. The first task was to articulate the requirements in a specification sheet - and to find the right partner and the right software. These were found in 2010 with curecomp and clevercure. In September 2011, the first test balloon was launched: the introduction of clevercure at a Palfinger plant with three suppliers went so well that Palfinger gave the go-ahead for the global installation. Priority level 1 in the rollout sequence was given to other suppliers, level 2 to additional plants and, last but not least, the VMI. In 2013, the project team was able to toast the connection of the 100th supplier. SCM Manager Thomas Petran talks about the present and future.

Where does Palfinger stand in procurement today?

Thomas Petran: We currently have 15 Palfinger plants and 145 suppliers in 15 countries connected via clevercure. We also see the connection with suppliers in particular as a form of partnership. Today, 80 percent of our order items are a case for clevercure.

How are you doing with VMI?

In 2015, we launched an offensive under the slogan "restart!", which has now brought us a ten percent VMI rate.

Have you achieved what you set out to do in 2010?

Yes, not only on the whole, but also in detail. The media disruptions are history, the electronic transfer of our data directly into the supplier ERP works quickly and securely. We not only send forecasts and orders, but also the corresponding specifications and standards. We now receive order confirmations from our suppliers directly in our in-house SAP system - including country of origin declaration and delivery notification. The process and data entry effort is now really minimal, as desired. All standard orders run automatically. The procurement teams in the plants can now concentrate on the procurement tasks that really need their attention.

What have you benefited from in particular?

We have achieved enormous time savings in the operational management of supplier processes. In 2011, my team was still responsible for an entire plant. Today, it looks after three plants without us having to expand. And with all of this, we have also improved quality. Significantly improved! Whereas in the past we often had problems meeting delivery deadlines, we now know very early on whether delivery dates have been confirmed as binding. The solution monitors this. In the event of a problem, we now know weeks in advance that we have to find alternatives. 80 percent of procurement is automated via clevercure in the background - and my highly specialized team only has to get involved where its expertise is really needed.

How did you get there?

It was certainly associated with unexpected challenges and - I'll be frank - of course also with resistance. As the project progressed, we became increasingly aware that we were dealing with a veritable change project and not just the implementation of software.

What were you confronted with?

Some of our suppliers were already using SRM systems from other partners, in some cases no less than seven different ones. Large suppliers have their own customized systems, and by "large" I mean the corporate level. So very often the enthusiasm for our proposal was not very high at first. I can understand that: Change is always work at first, and as rational beings, we humans usually shy away from any avoidable effort. Homo economicus also shies away from costs. And some suppliers also wanted to save themselves any expenses for a dispoengine as an interface to us.

How has the project been received at Palfinger itself?

In our own IT department, the priorities are SAP. Sometimes it was not so easy to free up resources for our project. Our colleagues in strategic purchasing clearly have a strong focus on potential savings, so the fear of possible price increases was often at the back of their minds when talking to suppliers. In procurement logistics, there was also fear for their own jobs in view of VMI.

What helps in such circumstances?

In our case, constant persuasion worked. We raised the issue at every possible opportunity and always played our cards close to our chests. You can only reduce fears and resistance through transparency. By anchoring it in target agreements, we have also created a strong positive incentive.

Why did you choose clevercure?

According to our specifications, clevercure was the winner in terms of points, which also recommended itself with the widest market distribution and the greatest acceptance among suppliers.

What happens now?

Our next step is to introduce the transportation management module cleverspend.