Pumps and pump systems · Global programme 2019–2020
20% less inventory.In one year.
Wilo released working capital across 12 manufacturing sites in 7 countries while moving production and switching brands. Then it kept going through the pandemic, without sacrificing sales or customer service.
The client and the brief
The Wilo Group is a global leader in pumps and pump systems for building services, water management and industry. Its board wanted to free up working capital, but not at the expense of sales or customer service.
- 12
- manufacturing sites
- 7
- countries in Europe and Asia
- 80%
- of Group inventory in scope
- 2
- years of measured results
Programme footprint
Twelve sites. Seven countries. One programme.
Year one focused on the largest manufacturing sites in Europe and Asia, which together held 80% of the Group’s inventory. Each site owned its target, with the programme steered centrally.
- Germany
- Dortmund, Hof, Oschersleben
- France
- Laval, Aubigny
- Turkey
- Istanbul
- Russia
- Noginsk
- India
- Pune, Kolhapur
- China
- Beijing, Qinhuangdao
- South Korea
- Busan
Locations are Wilo’s primary production sites as listed in the WILO Annual Report 2019. Outside the programme: Cedarburg (USA), Collierville (USA), Bari (Italy), Dubai (UAE).
The challenge
Three reasons inventory wanted to go up.
None could be postponed, so all three were built into the targets from day one rather than used as reasons to miss them.
A production move in Germany
Production was shifting to a new facility. Lines had to stop, so extra stock was built before the move—inventory heading up just as the programme asked for it to come down.
A brand switch at a major site
At one of the largest manufacturing sites, old brand stock had to run down while new brand stock ramped up, without leaving obsolete stock or empty shelves behind.
A supply base still recovering
Supplier disruption the year before had caused shortages, and safety stocks had been built in response. A high share of raw materials came from Asia, on average lead times of three months.
The operating model
Owned by the sites. Steered as one programme.
The first year focused on the largest sites, covering 80% of global inventory. Targets were set for 2019 with the aim of going further in 2020.
Local supply chain leads
Each site owned its target and was responsible for finding and implementing the actions to hit it.
Central SAP and supply chain resources
Programme management was coordinated centrally, with targets set for the Group and for every site, and standardised reporting.
Analytics, steering and site support
nVentic evaluated every site from raw SAP data, supported global steering and put extra people into the sites with the biggest targets or the hardest challenges.
Where the evidence came from
nVentic evaluated every site in scope from raw SAP data, giving Wilo fast insight and a clear focus. Then nVentic worked alongside local teams so they understood the findings and could act on them.
The levers
No single fix. Each site pulled its biggest levers.
The evaluations showed where each site’s greatest opportunities sat, and each site focused its effort there.
Stock
- Obsolete and excess stock reduction
- Consignment stock
- Safety stock pooling
Planning
- Updated MRP strategies
- Forecast decoupling
Supply
- Shorter lead times
- Smaller lot sizes
- Higher order frequency
- More local sourcing
Demand
- Sales boosts and promotions
The analytics behind it
Planners could see six months ahead.
All the data planners needed was already in SAP. They just couldn’t extract and work with it fast enough. Giving them forward visibility had perhaps the biggest impact of anything in the programme.
- 01
Forward stock prediction
A weekly report predicted stock levels for the next six months from standard SAP stock reports, purchase order lists and forecasts. Planners layered on what SAP could not know, and could see shortages and overstock coming.
- 02
Forecasts decoupled where history misled
For around two thirds of items, past demand was a poor guide and sales forecasts carried a systematic bias. Deterministic planning had been turning those forecasts into fixed orders before planners could react.
- 03
Safety stock where the risk was real
Suppliers were segmented so extra safety stock went only to those that genuinely represented risk. Sensitivity analysis tested supplier failure and longer lead times, and key lead times were corrected in SAP.
- 04
Shorter order cycles, better MRP types
Order cadence had been set by planner bandwidth. Shorter cycles for selected items cut cycle stock and smoothed demand to suppliers, and wider use of the right MRP types automated the simple items.
Year one · 2019
Flat until May. Down every month after.
The programme started from a standing start in January 2019. Long inbound lead times meant the first actions took months to reach the balance sheet. From June, inventory fell month after month and closed the year 20% lower.
- 20%
- lower inventories in scope End of 2019 against 1 January
- June
- when the reduction took hold Despite long inbound lead times
- Higher
- fill rates while stock fell From a service baseline in the high 90s
Year two · 2020
Then the pandemic tested it.
At the end of 2019 every site had committed to a further 15% net reduction for 2020, with action plans behind it. Early in 2020 the plan met a very different supply chain.
- Demand softened
- Delivery concerns at critical suppliers
- Production stoppages in several countries
The hardest part early on was keeping transparency. Supply issues and falling demand arrived together, so the risks had to be understood and ranked before stock was added anywhere.
As soon as the impact was anticipated, critical suppliers were identified and strategic buffers were planned and built where needed. nVentic calculated what those buffers would cost against the annual target and the plans were updated. The second quarter was about protecting supply. By mid-year the picture was clear, and improvements were driven through in the second half.
Service levels stayed at their high baseline. No more sales were lost through lack of inventory than before the programme began in 2019.
- 2019−20%inventories in scopeFill rates improved
- 2020−12%further net reductionThrough the pandemic
- 2021Plannedfurther reductionsThe programme continued
In Wilo’s words
“The results are exceptional and have made a major difference to our cash flow.”
“nVentic brought drive and persistence to the project. Without them we would not have hit our targets.”
“The programme brought a wide range of process issues into sharp focus, with an impact much broader than just inventory.”