Decoupling point analysis & LEAN enable spectacular delivery time reduction
The ebm-papst company in Mulfingen specializes in products in the following areas
Ventilation, refrigeration and air conditioning technology. Whether in an industrial or private environment, everyone comes into contact with a large number of ebm-papst products every day – usually without realizing it. A typical German household contains up to 20 ebm-papst products.
Alexander Käss, Anna Kraft, Dirk Ungerechts, Dr. Bernd Reineke*
Achieve competitive advantages by drastically reducing delivery times
As the market for ventilation and air conditioning units is highly competitive, the management of ebm-papst in Mulfingen had a clear vision:
- Achieve a significant competitive advantage with drastically reduced delivery times
- Increase efficiency in the long term and sustainably
- Avoid missing parts and reduce excessive stocks
The first step was the introduction of various LEAN methods in production: Waste was consistently eliminated and waiting times were reduced. Despite all efforts, however, incorrect parts regularly occurred during final assembly. Where material was lacking on the one hand, those responsible assessed the stocks of available components as too high on the other. Delivery performance varied and product availability was not at the desired level.
Automatic decoupling point analysis leads to the elimination of superfluous inventory levels
In order to realize the mission to reduce lead time and delivery time, ebm-papst, together with SCM consultants Abels & Kemmner, took a close “digital look” at the availability problems at component level.
In this case, the “digital magnifying glass” is a digital twin from ERP data, with which a decoupling point analysis for ebm-papst was made possible in a short time. The desired delivery times of end devices to the customer were simulated. As a result, it became clear which components must be kept in stock based on their in-house production time or delivery time. On the other hand, this provided the right information on when order-related components must be available.
Another result of the decoupling point analysis was the elimination of various storage stages in the course of process optimization. In addition, it became clear at which storage levels ebm-papst would have to reduce delivery times or in-house production times by 1 – 2 working days in order to streamline processes.
Correctly dimension and dynamically adjust safety stocks
For components that were classified as “in stock” after the decoupling point analysis, the quality of the forecasts also had to be improved. This is against the background of sensibly dimensioning the safety stocks at these levels in order to guarantee the targeted product availability.
Initial calculations showed that the measures could reduce component stocks by a total of around 28%. At the same time, the availability of components could be increased from the current 89% to a target value of around 98.5%.
Due to the obvious high potential for a sustainable reduction in inventories and the fact that consumption changes dynamically, ebm-papst was convinced that this type of calculation should be carried out regularly and that planning and forecasting parameters should be continuously adapted to the current market situation. It was therefore decided to continue using the A&K simulation software on a trial basis after the project had been completed and to integrate it into the existing ebm-papst ERP landscape.
Abels & Kemmner makes SAP more intelligent
At ebm-papst, the operational processing of production orders, purchase orders and customer orders is carried out using an ERP system from SAP. After checking the forecast values and the planning and scheduling parameters provided by the simulation system, ebm-papst decided to synchronize the optimized parameter settings directly with the SAP system.
The existing planning runs and operational processing are thus supplied with “smarter data” and the SAP system is thus “automated and more intelligent”. As is usual in this ERP performance management system, data is exchanged on a daily basis, allowing changes and deviations to be detected automatically.
Shifting flows of goods across plants present extra challenges
The consultants from Abels & Kemmner recommended a centralized approach to inventory management. This is due to the fact that consumption shifts within the Group and between plant locations. The purpose of this centralized approach is to consolidate all material movements via a “virtual master plant”.
As a result, the calculations and simulations deliver optimized safety stocks for all materials in all plants. Both internal delivery times for stock transfers and the ratio of a plant’s consumption to the total consumption of a material are taken into account. This means that all data per plant and month is automatically “up-to-date”.
Adapt KPIs to new way of working
Together with ebm-papst, the team of consultants developed new, suitable key figures with which the quality of the processes could be made transparent and measurable. The key figures should also make it clear where it is worth working more “on the process rather than in the process”.
As the focus at ebm-papst had shifted towards ensuring the availability of components, ebm-papst consequently abandoned traditional key figures such as “turnover rate”.
Today, “availability” is used as a new key performance indicator. For this purpose, a daily calculation is made to determine which part of the requirements due for a component is covered by inventories. To ensure smooth production, availability and delivery reliability should be in the region of 99% or higher. Despite this ambitious target, these values are generally achieved today thanks to the early identification of gaps in supply and the timely introduction of suitable measures.
Conclusion – after a successful pilot phase at the stage destination
With the help of a decoupling point analysis and a successful pilot phase, the simulated and calculated improvements in product availability and inventories were achieved in the double-digit percentage range.
Reason enough for ebm-papst to strive for further progress with the “intelligent planning logic” and the newly gained transparency. Those responsible at ebm-papst are now able to do this largely on their own, thanks to a dedicated project team that has internalized the concepts and procedures for correctly setting up the systems and solutions used.
Abels & Kemmner is constantly making a valuable contribution to cooperation beyond the project by exchanging experiences. With the implemented tools, ebm-papst can now test and implement logistical ideas and concepts almost independently.
*Alexander Käss is Head of Coordination SAP Production Processes Global at ebm-papst Mulfingen GmbH & Co. KG
Anna Kraft is a project member and KEY user Global SAP ERP and DISKOVER at ebm-papst Mulfingen GmbH & Co. KG
Dirk Ungerechts is Managing Director of Abels & Kemmner GmbH Supply Chain Engineers
Dr.-Ing. Bernd Reineke is Managing Director at Abels & Kemmner GmbH
