First Choice in Technology and Service is KHS’ claim for its customers. It was only a logical decision that KHS consider and plan an alternate solution when its existing high-bay warehouse at its headquarters in Dortmund simply became too small and the technology used there was no longer state of the art. KHS had grown too quickly in recent years to meet the increasing customer demand for comprehensive and rapid service and the latest in new machine technology.
These plans resulted in a partnership with DB Schenker Logistics, the transport and logistics provider for Deutsche Bahn, the German railroad company. DB Schenker now handles the worldwide parts logistics and the production supply on behalf of KHS for the plant in Dortmund from the new KHS World Logistics Center (WLC) located just three kilometers from the company’s headquarters in Dortmund. A good choice considering that with its nearly 2,000 international sites on all continents this logistics partner provides a global network oriented towards customer service, sustainability, efficiency, and quality. With a workforce of approximately 96,000 employees in more than 130 countries the company holds a prominent position in land, air, and ocean freight.
For KHS customers, this means optimized delivery services within a shorter time. This has been made possible by
- concentrating the previously four storage locations at the Dortmund location in a logistically optimally designed distribution center
- larger and also year-round truck loading facilities regardless of the weather conditions
- flexible expansion of the capacity to almost twice the previous daily capacity
- more flexible workforce planning in order to improve the response to fluctuations in the workload
- capabilities for receiving sample materials and materials from customers in the WLC for acceptance tests and delivering the correct quantities to the plants for assembly on time and as required.
With more than 40,000 items stored on up to 20,000 square meters of space (roughly equivalent to four soccer fields), warehousing and logistics software plays a decisive role of course as the backbone of the logistics center. And it was exactly here that a snag was hit during the startup of the new mega-warehouse. Details of the partner’s SAP systems did not coincide with all interfaces. Due to the complexity of the processes and structures, annoying errors and brief delays occurred that even the proven experts had not identified despite extensive testing in advance.
It should be noted that a warm-up similar to that KHS which always runs on its customers’ lines, was hardly possible for a WLC project of this size. The result: despite detailed project planning and intensive integration and mass testing, the launch of the WLC did not work out to the satisfaction of DB Schenker and KHS, and unfortunately some customers had to wait considerably longer than usual for their orders. Marc Hartmann, COO of KHS GmbH, sees it this way, “We sincerely regret the situation but we took all necessary measures as soon as possible in order to minimize the negative affects as much as all possible. In the meantime, everything is running smoothly – in accordance to our First Choice claim.” (See ’Five questions for ...’). The customers involved indicated their understanding and even a little sympathy, but at the same time their confidence in us. “We all have already completed major projects of this kind and know the challenge that can result, especially if the SAP system is not functioning properly. It is good that you informed us clearly and precisely how and when you will solve the problems and when you would be back on the right track again,” says Rik Coelman, global procurement investment projects category leader at HEINEKEN International.
Indeed, internal statistics show that the availability of spare parts is already significantly higher than before and that the delivery dates have developed to the benefit of the customer as planned. KHS is also now able to optimize new product stock keeping and improve the supply to production facilities in Germany, the United States, Brazil, India, and China. The same applies to the supply to what is known as KHS storage hubs in key locations around the world such as Shanghai, Lagos, and Nigeria. First Choice in Technology and Service – no more, no less!
“After a difficult start, we are now on track and the WLC is now operating as successfully as expected.”
Five questions for …
Mr Hartmann, why the cooperation with DB Schenker Logistics?
KHS has grown sustainably internationally, and we focus on our core competencies – the development and manufacture of customer-specific filling and packing machines and equipment. For logistics support, we have therefore decided to have an experienced specialized service to handle global spare parts logistics and production supply. We’ve found a good partner in DB Schenker Logistics.
The start of the KHS World Logistics Center was a bit bumpy...
Yes, you might say that. But we also don’t want to gloss over or even hush up anything – KHS maintains and always will maintain a policy of full transparency toward its customers and partners. Indeed, things did not run smoothly at all in the beginning, due in particular to unforeseen technical IT problems. This lead to a considerable backlog of deliveries within only a short time. Transferring 40,000 to a largely newly designed system at another location within only a few days always involves running into stumbling blocks, unfortunately the stumbling blocks in this case were larger than expected.
How were customers affected?
Despite all the emergency measures on the part of KHS and DB Schenker, some companies experienced delays in delivery, which we sincerely regret. In these instances, we informed our customers as clearly and quickly as possible.
What steps were actually taken?
Regarding delays? In emergencies, parts were shipped to customers by air freight instead of by truck or ship. We naturally initiated WLC crisis management that developed priorities. DB Schenker nearly doubled its staff at times and consulted its top IT specialists. Experts from KHS additionally checked the quality of incoming and outgoing goods. They were strenuous weeks, but as a team we were able to tackle this huge task together. Extremes of this kind additionally showed that even unpleasant difficulties can be solved in an atmosphere of trust and partnership with the customer.
And what about the future of WLC?
The future has already begun (smiling). We have been completely on schedule during the past few months and can offer suppliers and above all our external and internal customers all the amenities and benefits of a functioning KHS World Logistics Center; namely, essentially the improved availability of spare parts, conversions, and new machines worldwide. And ultimately, that’s what matters.
This interview was held by Jürgen Jacobs, a financial journalist based in Cologne