Special strategies for speciality products

Carbon black, magnesia, resins and surfactants, friction modifiers, colour additives and micropearls: The extensive product range at Hamburg-based Lehmann & Voss & Co. KG comprises over 11,000 chemical and mineral products. The firm uses a proportion of these raw materials to create a variety of tailored materials destined for a wide spectrum of applications, including pharmaceuticals, cosmetics, foodstuffs, automobiles and printing ink. As a result of this broad product portfolio, it is vital that Lehmann & Voss is able to react swiftly to fluctuations in sales. After all, the worldwide economic crisis has illustrated that a combination of dramatic decreases in orders and long delivery times quickly leads to high inventory levels – which in turn tie in precious capital. The trading firm therefore set about achieving lasting inventory reductions without jeopardising on-time delivery to its 8,000 clients.

Supported by J&M, Lehmann & Voss has used the SPIRIT (Sustained Process Improvement and Reduction of Inventory Targets) project to implement a process of continuous improvement and set up integrated planning in SAP ERP. An initial phase focused on the anchoring of 'supply chain spirit' in the minds of procurement managers, which involved moving away from a mentality of stocking up on materials available at cheap prices on the one hand, and adopting a demand-oriented inventory strategy on the other. So-called 'hot stock lists' were introduced in order to highlight the amount of capital tied in by so-called 'shelf-warmers' – materials which remain in the warehouse for lengthy periods.

In order to enable Lehmann & Voss to base future planning processes on a more solid foundation, the entire product portfolio offered by its ten business units was segmented according to sales volumes and demand fluctuation. J&M then defined segment-specific stock replenishment strategies which ensure a high level of ability to deliver coupled with a minimum of capital commitment. To give an example, Lehmann & Voss now not only orders stronger-selling articles on the basis of statistical prognoses, but also (in contrast with articles requested less frequently or in small volumes) sees to it that they are kept in stock. In addition, J&M calculated an optimum stock security and re-order levels for each product, and will continue to monitor and update these values throughout the project.
The flexible planning structure established delivers tangible advantages on a number of different levels, with standardised, integrated planning processes reducing costs and improving transparency along the entire logistics chain. The purchasing department is aware of the orders forecast by the sales department, and as a result is able to compile appropriate, target-oriented plans. Foreign subsidiaries draw on the parent company's inventory instead of procuring additional materials, and therefore contribute to reductions in capital commitment to it.

Substantial streamlining of planning effort has also been achieved. Trawling through long Excel lists is now a thing of the past, and planners are only ever a few mouse clicks away from a well-founded decision. The solution put in place with the support of J&M provides a cockpit where procurement managers have access to all the information they require for the drawing up of substantiated plans, for example sales forecasts, current inventory levels and coverage, sales histories and planned incoming orders. Semi-automatic distribution processes for standard materials ensure that plans for strategically important products have room to manoeuvre. Lehmann & Voss now uses continuous inventory monitoring to analyse and optimise its procurement parameters, with problem issues such as 'shelf-warmers' easily identified and remedied.

The results of the project thus far are more than presentable. Oliver Pfeiffer, Head of the Filtration Division at Lehmann & Voss, is certainly satisfied, and summarizes the situation as follows: 'Thanks to improved data quality and prognosis accuracy we are now in a position to move closer to the market in terms of our stock replenishment and product manufacturing strategies. We have already been able to achieve lasting reductions in inventory levels and capital commitment – without jeopardising our service quality.'