HÖVELER HOLZMANN CONSULTING’s consultants interlink technical know-how with deep insights into the mechanical and plant engineering industry, and they support you in finding just the right balance between costs and quality.
Our analysis of the mechanical and plant engineering industry
Mechanical and plant engineering plays a pivotal role in Germany because its products form a significant part of Germany’s industrial performance. The industry is strongly characterized by medium-sized businesses – around two thirds of the companies in the industry have less than 100 employees. Even so, the industry is at the very forefront in terms of employment figures and sales.
With an export rate of more than 75 percent, mechanical and plant engineering is highly involved in the German export surplus, whereby Europe is the most important sales market with a market share of just over 50 percent. At the same time, growth in the industry is strongly dependent on global economic developments.
The issue of supply chain management in the mechanical and plant engineering industry is usually more complex than it is in other industries. This is because machines are often produced in small series, and in accordance with exact customer specifications (engineer-to-order principle). This results in the production of small series with a low number of pieces, and brings major challenges for many companies. Accordingly, a perfect balance between procurement and production and an efficient production logistics is of great importance.
As a strong partner in this sector, HÖVELER HOLZMANN CONSULTING can enhance the processes of your supply chain.
Cost optimization is often the central issue of the discussion, too. Based on our experience, a significant amount of procurement costs can be saved with the approach of partnership-driven cost optimization by achieving improvements in procurement, production or logistics together with the suppliers.
Partnership-driven cost optimization in a mechanical engineering company
Our customer was faced with the challenge of realizing savings in this product group despite lower supplier density in the market for industrial fans.
HÖVELER HOLZMANN CONSULTING introduced the solution to achieve further savings through partnership-driven cost optimization (PCO) with a key supplier of the product group. Within the framework of the project, specific optimization approaches with savings potential should be jointly developed and realized with the participation of representatives of the central purchasing department, sales as well as both technical and development departments.
Levers for the project’s success:
- Agreement on a shared goal: sustainable increase in the competitiveness of both companies and forging of a strategic partnership
- No generation of savings at the expense of the partner, but rather offering incentives for both partners to realize savings potential
- Development of deeper understanding of the value-added process of the supplier’s fans
- Target costing through cost structure analyses and benchmarking in order to quantify target costs and savings potential
- Joint detailed analysis of all components (e.g. housing, engine, flange, etc.) along the whole value chain (e.g. development, technology, sales, purchasing, etc.) and creation of optimization approaches
- Optimization approaches for implementation were broken down according to level of savings potential and duration of implementation
- Optimization approaches with the highest savings potential and short to medium term implementation periods were prioritized and implemented
Results of the project:
- Identification of savings potential in a two-digit percentage range for a purchasing volume in a single-digit million range thanks to material re-specifications, for example, by adjustments to the fan housing and for the engine performance
- Identification of organizational optimization potential with suppliers by benchmarking the cost structure
- Building up/strengthening the strategic partnership of both companies
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