Muehlhan: Fewer product variants for more efficiency
 |
“By means of its very systematic approach and good internal communications, the ARAIA project team achieved significant cost savings within the specified time frame of five months. In addition, the team got involved in the company in such a way that everyone could perceive it as part of the organisation at all times. We will recommend ARAIA to others!” Carsten Ennemann, Chief Financial Officer, Muehlhan |
- The challenge
Muehlhan is an international specialist for maritime and industrial surface protection with 27 locations worldwide. For its services Muehlhan makes use of a large number of durable goods as well as consumable materials and supplies – to an annual procurement volume of several million euros. In the past procurement took place on a decentralised basis at the locations. The companies optimised their portfolio of articles and suppliers as well as product qualities independently of each other.
ARAIA was faced with the job of creating a uniform product portfolio out of about 1,400 different articles for the nine companies with the strongest sales, spread all over Europe. Furthermore, it targeted a drastic reduction in the total number of 57 suppliers. Muehlhan’s goal was also to carry out future procurement in a coordinated manner via an IT solution.
- The solution
In the first step ARAIA managed to create transparency in procurement using the lever “reduction in product variants”. ARAIA’s consultants were able to cluster requirements for the first time and reduce the portfolio of articles by 84 percent in joint workshops. In doing so, the consultants defined standardised product qualities and divided the consumable goods into twelve homogeneous sub-product groups.
An additional starting point for ARAIA was the structure of the supplier portfolio:
- New generalists were identified, qualified and integrated into the supplier portfolio using the lever “sourcing“.
- The lever “redistribution” was applied to ensure that the respective strengths of specialists are taken into account when awarding contracts.
- A significantly reduced portfolio was achieved by means of the lever “bundling“: seven international generalists and three specialists now share the procurement volume.
In addition to process simplification, the impact of the levers also manifested itself in the subsequent supplier negotiations. Our consultants were able to lower procurement costs by an impressive 25 percent there.
ARAIA introduced considerable improvements in the ordering system, too. After an analysis of diverse IT systems Muehlhan decided in favour of an individual Webshop solution. To guarantee rapid and smooth introduction of the system, ARAIA prepared a manual describing rules, responsibilities and procurement processes in detail. ARAIA also provided for appropriate staff training.
- The result
- Lowered procurement costs by 25 percent
- Reduced number of suppliers from 57 to 10
- Decreased number of variants from 1,400 to 383
- Selected and implemented IT tools for management and ordering
- Optimised procurement processes, coordinated and standardised them in the form of a procurement manual
