Optimizing purchasing and logistics at Kühlerbau Freiberg (KF)

Today known as Behr Industry Freiberg GmbH, Kühlerbau Freiberg traces its origins back to the company that began building radiators for engine diesels in 1935. The enterprise now manufactures predominantly oil and water radiators for diesel railway vehicles, large engines and marine applications, as well as gas and liquid radiators for various industry sectors.

The Purchasing and Logistics departments were beset with lengthy cycle times, excess inventory, a lack of process orientation, and insufficient transparency throughout the order handling process.

Following a two-week analysis, the team identified and assessed potential and improvement opportunities all along the value-add chain. An appropriate strategy soon jelled, and optimizing purchasing and logistics was deemed a top priority.

One of the first steps was to gain insight into suppliers / consumption / requirements / costs / materials. To this end, Agamus Consult employed a customized supplier survey in combination with a product/material survey. They were first applied to A suppliers and A parts, respectively.

Then we launched a supplier initiative focusing on delivery times, quality, flexibility, price/performance, logistical accessibility, data accessibility (processes, EDI) and requirements bundling (volume purchasing).

A detailed purchasing cost analysis served to gauge processing and cycle time according to activity, catalog the employed information media, and pinpoint complexity drivers and weak points. On the basis of this information, we were able to systematically optimize individual process steps and develop scenarios as to how A parts or C parts are to be procured.  

These insights sparked the development of a concept for C part management wherein parts are classified according to their precise parameters and restrictions. As a result, C part management was adapted to enable different procurement options. For instance, tools are procured via an electronic market place, while classic consumables (screws, panes, plugs) are delivered directly to defined spaces on the floor by way of supplier kanbans.

The strict separation of procurement and purchasing was another strategy that afforded both Purchasing and Logistics considerable optimization potential.

This process-oriented approach also resulted in the implementation of a KF order processing center tasked with the responsibility for sales, procurement and production scheduling. This provided the underpinning required to develop a transparent, optimized order handling process, to intensify the focus on the customer’s order (from demand to satisfied demand) and to align all measures to the “pull” principle. Moreover, establishing an order processing center also ensured sustainability with respect to responsibilities and interfaces.

Just six months after the main project’s launch, the subordinate effort to optimize purchasing and logistics yielded the following results:

• Materials costs were reduced by about six percent.
• Delivery times (A items) dropped by roughly 40 percent.
• Cycle time for end products was reduced by approx. 45 percent.
• Procurement and process costs for A parts decreased 32 percent.
• Procurement and process costs for C parts decreased some 64 percent.
• Inventory was reduced by approx. 15 percent.

Employees were engaged early on with all their experiences and knowledge. This success in involving personnel provided fertile ground in which an improvement-focused mindset could take root in day-to-day, on-the-job performance, and grow strong to yield sustained benefits.
 

Katharina Tandler, Agamus Consult