Purchasing 4.0. in plant engineering: global supplier management at Humboldt Wedag GmbH
Digitalization and process optimization in the supply chain: annual savings of over € 400,000 in purchasing at KHD’s plant engineering department
With over 160 years of experience in the cement industry, Humbold Wedag GmbH (KHD) is a global leader in the field of cement plant technology, equipment and services.
The project
At the end of 2019, KHD’s Strategic Purchasing department launched the “Purchasing 4.0.” project, which covers the areas of organization and processes, management and people, business models as well as technology and systems in plant engineering. One of the foundations for this is the digitalization of purchasing with a global supplier management system (LMS) based on the SC-Manager software solution from the German software manufacturer Simmeth System GmbH. The software is developed on a modular basis and could therefore be tailored precisely to KHD’s processes and requirements.
The central LMS now provides KHD Purchasing with all supplier information clearly and in real time. This includes, for example, their master data, articles, prices, orders, invoices, documents and their due dates. The SC Manager collects this information automatically from internal KHD sources such as SAP and document management, as well as from external sources such as the suppliers themselves or even from the Internet.
This is done via the integrated supplier portal, which is used to communicate directly with suppliers. Suppliers now enter all the necessary information themselves during the qualification process and upload the required documents. The purchasers only have to check the information and documents. The supplier now also receives and processes price inquiries and orders directly in the supplier portal. In the event of process deviations, such as expired documents or unconfirmed orders, the software warns the purchasing department and suppliers via email and traffic light signals.
Supplier performance is continuously recorded and evaluated via an integrated supplier evaluation . The results are transferred directly to an action management system, which in turn is processed by Purchasing and the suppliers concerned in the LMS or portal. The overall assessment of suppliers is supplemented by integrated risk management.
The successes
With SC-Manager, purchasing in plant engineering now not only has comprehensive strategic supplier management, but operational processes are also digitized, automated and thus significantly improved.
“The redesign of the ordering process alone reduced the costs per ordering process from € 238.16 in the first step to € 168.55. After the complete roll-out, these costs will fall to € 74.98, which means a cost saving of over € 400,000 per year,” says Tom Thönnessen, Strategic Purchasing Project Manager at KHD. And he continues: “Further savings will be realized through reliable control of the global supply chain in real time.
To this end, a new approval strategy and the transmission of orders with all associated documents via the LMS have been completely digitized. The supplier receives an info mail after triggering the order and then processes it directly in the supplier portal. They can download all relevant documents themselves, enter the confirmation date and upload the order confirmation. In turn, the purchasing department is automatically informed of the supplier’s confirmation and can view the information immediately in the LMS. The information and documents also flow automatically from the LMS back into SAP, enabling not only noticeable process improvements to be achieved in the first year of live operation, but also enormous, directly measurable savings to be demonstrated.
Conclusion and outlook
The roll-out of the SC Manager is continuing at KHD. On the one hand, the number of connected suppliers is being increased, and on the other, additional countries such as China, America and India are being connected. In addition, the functional scope and the number of employees involved are being expanded step by step.
“Thanks to the implementation, we can easily realize the strategic procurement goals and measure the key figures in real time globally at all locations,” says Alexander Kranz, Head of PE Execution.