Electronically connecting maintenance: a step towards the vision of Industry 4.0
Christian Hoffmeister, a communication scientist and successful author, boldly states that “German companies are barely scratching the surface when it comes to the potential of digitalisation”, justifying his statement by pointing out that companies concern themselves less with the fundamental change and its possibilities. Considering this topic, he makes significant reference to product development, to making changes to existing products so as to make them fit for the future, and to the development of brand-new products and services.
In contrast, the purchasing experts René Schumann and Tim Romswinkel of Kerkhoff Negotiate & Contract GmbH, who were involved in the creation of this article, state that “companies should develop a vision on the one hand, but not expect too much of it on the other.” “Every day, we see more evidence that Purchasing often isn’t strategically positioned for maintenance, that the processes are not standardised enough, and that electronic catalogues aren’t used. But the path towards predictive maintenance is sometimes more like the Way of St. James when it comes to faith and length.”
The use of electronic catalogues is the first and significant step towards an integrated digitalisation strategy. Many purchasing managers are aware that this is necessary for indirect product groups such as office supplies, C-parts or IT hardware, and progress has already been made in this regard. The somewhat loosely worded heading suggests that, despite this, there is often no digitalisation strategy for maintenance.
Users make purchases without involving Purchasing, and when errors occur a desperate search is launched for the right contacts, documents are painstakingly compiled, and orders are frantically allocated. Automatic system control is the prime example in this regard for using Industry 4.0 solutions – and if you take this line of thought further, maintenance of these machines and systems is too. It is a topic which immediately belongs on the digital agenda.
The first step: using electronic catalogues
But we’re not getting up to full speed straight away. A significant step and a solid foundation for turning a comprehensive vision of digitalisation into a reality is electronic cataloguing, and therefore the digitalisation of purchasing processes, as employees of many corporate groups which already order their pencils or PCs through the internal electronic catalogue will be familiar with. In this regard, we must bear in mind that the process costs for offline orders are, on average, 70% higher than the cost of a fully automated order. The goal of cataloguing and digitalising parts and services for maintaining internal systems and machines forces companies to deal comprehensively with their own processes and needs.
The main features of everything are being scrutinised – which is salutary and an important basis for the successful development of a digitalisation vision for machine and systems control in the new age. It will become even more significant if a cross-site approach is required. “The company’s very own production sites and service centres order goods and services from different suppliers, even through their needs and specifications are the same. This much has been illustrated by experience from everyday business,” explains the consultant.
Putting everything to the test
Professional optimisation of purchasing must therefore provide a variety of machines and different tools and take them into consideration. Service and maintenance intervals are being scrutinised, just like the relevant contracts, service providers and spare parts suppliers. “You can do everything, but you don’t have to” is the motto for the manufacturer services – depending on whether services and prices are proven to be in line with market requirements.
The initial optimisation can already save an average of 13.5% of the annual maintenance costs and creates scope for investment in further digitalisation. If you consider that the average process of consolidating suppliers goes hand in hand with a key figure of around 76%, additional savings on internal process costs and improvement due to a compliance-friendly allocation process become considerable.
The three partners’ cooperation model
But what are the exact steps you have to take towards creating a digital maintenance catalogue? It is useful to begin by firstly consolidating one maintenance product sub-group, with a view to gradually addressing the entire product group. Maintenance for large tools, for CNC milling, for example, are perfect as a sub-area for this. Maintenance, wear parts and repair parts are less complex than entire production systems. Learning lessons is important if employees are to be involved in the changed way of thinking in the age of digitalisation. It is uncharted territory for all companies and decision-makers. You have to understand possibilities and relationships to develop ideas, improve your own processes first of all and, when a greater level of maturity has been reached, even think of product innovations. It is still pioneering work which will be worthwhile, but you should ensure that you are not overtaken by the competition at the same time. The actual analysis in this regard serves to evaluate the basics by processing data, facts and figures in a structured manner. Transparency with respect to needs, suppliers and processes creates the springboard for deriving suitable measures. The goal of each optimisation in the field of maintenance is to develop a cross-site product group structure. Light must be shed on opportunities and risks to distribute the resources and priorities within project work in a restrained manner.
A cooperation model where users, Purchasing and suppliers are closely interlinked with one another should be developed. The needs have to be standardised and consolidated to achieve these goals. For Purchasing, this means that, first of all, the product diversity of the different tools and related operating supplies must be reduced to the greatest extent possible, which leads to a greater degree of standardisation and thus to lower unit costs per item due to volume bundling. Needs have to be clustered in a meaningful way and bundled across sites.
Standardising and consolidating needs
The use of manufacturer-independent white-label products where the likes of spare parts prices can be reduced considerably while maintaining a consistent or sometimes better level of quality, is a particular lever. But not only do products need to be standardised; the standardisation and clustering of services is crucially important. This opens the door for affordable, manufacturer-independent service providers if necessary.
Standardising and clustering services
Due to the clustering achieved in the third phase, standardisation and volume bundling will enable redefinition of the supplier base during the fourth phase.
The goal is to reduce the number of suppliers, which leads to Purchasing having greater bargaining power. Each existing supplier is questioned, and an optimised supplier base is defined in a suitable way for the needs cluster defined previously. The goal must be to conclude standardised framework agreements with the now defined suppliers, and compliance with the same should be ensured by means of cross-functional performance monitoring by Purchasing and users.
All of these steps have the aim of subsequently purchasing all services and spare parts through an electronic catalogue at the click of a button. If drafted in a meaningful way, even individual special maintenance measures and repairs can be processed through a catalogue system.
This results in a consistent, transparent and contractual, as well as complete and automated, purchasing process. In this regard, the e-procurement rate for all needs will be 91% after six months and 98% after 12 months. The burden on Purchasing is relieved, and it can devote its energies to strategic tasks such as expanding this vibrant catalogue system. It monitors compliance and supplier performance. The electronic catalogue solution is therefore an important and highly efficient step towards digitalisation and forms a solid foundation for a company to develop its own Industry 4.0 vision. Then Anglicisms such as “smart maintenance” and “predictive maintenance” will not only be significant in institutes and universities; they will have a successful shot at moving into SMEs’ production halls. It will subsequently be high time for networked machines to report and execute their orders in a fully automated manner.
Purchasing managers and entire Purchasing departments should summon up the courage and self-image to take on a leading role as process and value drivers with a view to proactively helping to shape the digital agenda. Dare to believe in the Gallic Village. It’s worth it!
About the dialogue partners
René Schumann and Tim Romswinkel are strategic buyers for maintenance at Kerkhoff Negotiate & Contract GmbH. Their job is to professionalise and increase performance in indirect purchasing. The Düsseldorf-based purchasing consultants offer pre-negotiated contracts and thus a strategic and permanent purchasing function for selected indirect needs. They support companies with respect to the digitalisation of procurement through establishing an electronic catalogue connection and process automation.