BrazilIndustrial group ERIKS centralizes its European supply chain
As part of its new supply chain strategy, ERIKS asked Groenewout to analyze the options for a single, central European supply chain, including investment proposals. A complex project that certainly wasn’t without its challenges. “But the benefits definitely make it all worthwhile,” states Remco van Haastrecht, European Supply Chain Director at ERIKS.
One of the world’s biggest industrial service providers, ERIKS offers a wide range of technical products, co-engineering, customization solutions and related industrial services. Although ERIKS is active in 18 countries, the majority of its business comes from Europe, which roughly accounts for three quarters of the company’s revenues.
Across Europe, ERIKS has 20 logistics and production facilities, which combined serve 90,000 customers in a wide variety of industrial segments: from food processing and transport to energy and chemicals.
“Every country has autonomy; that’s one of the keys to our success,” says Van Haastrecht. “However, the flipside is that local autonomy may at times result in a degree of sub-optimization in the organization, and that can be challenging as you continue to grow.”
To this end, ERIKS asked Groenewout to revisit a study that the consulting firm had initially conducted back in 2016. Van Haastrecht: “We asked Groenewout to investigate the potential for a single European supply chain, based on consolidated stocks and fewer locations – which would of course then be optimized for their new functions.”
“Our gut instinct told us that the potential was there, but needless to say we wanted to know for sure before making any decisions.”
Retrofit studies
Groenewout analyzed all the relevant production and logistics data – from the number of SKUs and the inventory levels to the total amount of storage space, the goods flows and the stock turnover ratios. The conclusion was clear: it would definitely make sense to consolidate the European stocks into a single supply chain.
“So our gut feeling was right – just as it had been in 2016, but the organization wasn’t mature enough for it back then. We were now ready to push ahead with this idea,” continues Van Haastrecht.
From an investment perspective, ERIKS wanted to change as little of the existing infrastructure as possible. The company asked Groenewout to prepare an investment proposal and to conduct a number of retrofit studies, including for its facilities in Rijnmond, Capelle and Alkmaar.
Besides assessing the impact of a single central European supply chain for each location, the studies also examined the possibilities for improving the process efficiency, the available space, the layouts, possible automation options and the necessary level of investment. “In effect, for each location we looked at what exactly would be required for an efficient, future-proof operation,” says the supply chain director.
Local optimization
For example, Groenewout performed a feasibility study for the facility in Alkmaar taking account of new operational processes, volume growth and opportunities for logistics optimization. The consultancy firm analyzed existing goods flows, processes and data as the basis for preparing new logistics concepts, including various financial scenarios and an investment plan.
Van Haastrecht: “The analysis of our existing flows and figures provided tremendous insight into the operation. Then on top of that, overviews of various scenarios, what-ifs and cashflow situations gave us all the information we needed to make the right decisions.”
“Additionally, we now have a concrete calculation of how many square meters we require based on various product range and order profiles, including growth scenarios, plus we know precisely what the construction-related limitations are.”
On the back of the new logistics concept, ERIKS is ready for the planned SAP EWM implementation.
New European supply chain structure
The various retrofit studies formed the basis for preparing a business case per location. They were then combined to create a single master plan which was presented to the parent company, SHV, who reached the same conclusion and gave the green light for the business transformation.
ERIKS expects to be able to reduce its inventory by 15-25% thanks to the new European supply chain structure, while also improving its performance level from 80% to 95%. “That means more of our customers will receive their orders on time and in full,” Van Haastrecht explains. “Moreover, the logistics costs for our supply chain operations will decrease by 10-12%.”
Asked about the collaboration with Groenewout, Van Haastrecht says, “We wouldn’t have been able to do this without Groenewout. They took a very thorough and high-quality approach and have the right expertise. They more than lived up to their strong reputation.”
“It wouldn’t surprise me if we approach them again for help in the (near) future. After all, this is a project that takes several years, and all kinds of things can change in that time. Therefore, we will keep a close eye on the impact of our decisions and adjust our plans wherever necessary.”
