A chain is only as strong as its weakest link. So if a supplier starts having problems with quality and reliability, it hurts the entire production chain. Siemens has launched a program that can help struggling suppliers to get back on solid footing.
Customers such as Clemens Schmees and his team are delighted with the results of recommendations from the Siemens Production System program, which include improvements in operating procedures and fabrication.
Green Prescription for Suppliers
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Casting with heart and soul. That’s the motto of Edelstahlwerke Schmees GmbH, a German company that was established in 1961 and quickly became a large, successful foundry. In 1993 the company moved its headquarters from the state of North Rhine-Westphalia to the state of Saxony. Order volume was healthy — especially for cast stainlesssteel parts for pumps and turbines. And in 2008 the company, which at the time had a work force of 360, invested about €10 million in new manufacturing halls in Langenfeld (near Düsseldorf) and Pirna (near Dresden).
But the boom years of 2007 and 2008 also brought problems. Because of the increased number of orders, the company found it was becoming more difficult to meet deadlines. And product quality began to suffer. “Our performance wasn’t ideal,” owner Clemens Schmees freely admits. Siemens was concerned as well, because Schmees GmbH is an important strategic partner that supplies up to seven metric tons of heavy castings for gas turbines, in addition to being a price leader in its field. Schmees GmbH is the sole supplier for some Siemens projects, and since Siemens is interested in long-term, sustainable supplier partnerships, it knew it had to do something.
Barbara Kux, Head of Supply Chain Management, and the member of the Siemens Managing Board who is responsible for global procurement, was determined to resolve the problem. “We rank among the best companies in the market, and we want to keep improving our competitive advantage in the future,” says Kux, who is originally from Switzerland. “We can only achieve that goal with a flexible and effective supply chain. That means all of our partners have to continually strive to improve their performance and optimize the supply process as a whole.”
Streamlined Suppliers. Siemens therefore decided to apply its in-house Siemens Production System (SPS) at one of its suppliers for the first time. For years, Siemens has been using the system to improve the performance of its own plants. SPS focuses on streamlined production, which calls for each production step to be organized with maximum efficiency. Periods in which a product is not being processed or isn’t moving forward in the production process are considered wasteful, because no value is being added to the product at such times. This happens when there are long delays before parts are processed further, for instance, or when parts have to be moved long distances to the next production step.
The proposal from Siemens was well received in Pirna. “We agreed right away,” says Schmees. “We knew we could improve, so an offer like this could only do us good.” The steel plant responded to the project in a very positive way, agrees Dr. Bernd Müssig, who coordinated the process in his role as Head of Siemens Operations Development.
In August 2010, SPS experts traveled to Pirna, analyzed the production process there, and made recommendations for optimizing it. “We only offer advice,” explains Müssig. “The supplier company is responsible for putting the ideas into practice.” Employees at the plant were also enthusiastic and participated with a strong sense of motivation.
Based on Siemens’ recommendations, Schmees GmbH introduced elements of the kanban system, a concept that focuses on the last step of the production process. This process unit notifies the preceding unit that further supplies are needed when it falls below a previously defined minimum level. That means that all of the preceding units produce only as much as can actually be manufactured in the last step. Workpieces are delivered to special buffer stations and picked up very quickly for further processing. As a result of the implementation of this system, there are no longer any unfinished castings piled up at Schmees GmbH. Production is efficient, and throughput times have become much faster.
In addition, the bottlenecks that workers sometimes encountered with tools were eliminated, and machine control was optimized. The outdoor area previously used for parts storage was also cleaned up.
By May 2011 a turnaround was in full swing. “The reliability value for the company’s order fulfillment rose to over 80 percent,” says Müssig. And according to Schmees, customer complaints have dropped significantly. “Because of the faster throughput, we can now accept more orders while also increasing sales,” he adds. The partnership with Siemens has thus been put on a secure footing too. “We’d like to improve the reliability of supplies to over 90 percent,” says Müssig. “If the price benefit doesn’t change, then the purchasing volume from Siemens could rise significantly as well.”
In view of these positive results, Siemens has launched an entire program called SPS@Suppliers and intends to extend it to other partners in the supply chain. Over the long term, SPS@Suppliers is expected to become an established element of the supplier development process. And Schmees GmbH isn’t resting on its laurels either — the company hopes to become Europe’s best steel foundry by 2020.