Procurement ­optimization at Bernard Krone

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Digitalization and the resulting acceleration of market dynamics continue to advance. Today, efficient and forward-looking logistics and procurement processes are essential for remaining competitive.

Bernard Krone Machinery recognized this need for action early on. In its search for a suitable partner to optimize materials planning, the medium-sized agricultural machinery manufacturer decided to partner with EMPORIAS.

Procedure

1. Analysis of inventory structures:
   Initially, inventory structures were reviewed for consumption, safety stock levels, inventory turnover rates, and MRP master data using an SAP data query. A comparison of the inventory levels with the configured MRP procedures and parameters provided insight into the material control and safety stock logic of the MRP system. In addition, the time frames in the supply chain—i.e., planned delivery times from suppliers and in-house production—were compared with the internal planning horizons (rough-cut and variant planning as well as the frozen period).
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2. ‍Linking analysis results with insights from day-to-day operations:
   The results of the preliminary data analysis were then compared and verified in workshops with the day-to-day experiences of the planning staff to obtain a comprehensive picture of the current situation. This 360° perspective made it possible to identify suitable starting points and practical requirements for the future material class concept.
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3. ‍Development of the material class concept within the core team:
   The data was then cross-checked and verified against the experience of the MRP staff. This enabled the MRP team to define differentiated MRP procedures based on the ABC/XYZ classification of the material portfolio and the internal planning horizons. Subsequently, supplier lead times and on-time delivery rates were used to determine the relevant SAP safety parameters for ensuring material availability.
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4. Proof-of-Concept and regular communication to the entire department:
   To review the developed content and ensure its functionality in day-to-day operations, the material class concept was implemented in SAP by the core team and tested for its impact on planning. Throughout the project, the entire Planning department was regularly informed about the status of the work and the results of the pilot to ensure acceptance within the department.
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5. ‍System-wide Implementation:
   Following the approval of the material class concept by the entire department, adjustments were made to the relevant IT-based MRP procedures and MRP master data via bulk changes in the SAP system. This ensured rapid implementation and minimized manual effort in the MRP area.
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6. Training:
   This was followed by in-depth training sessions with the MRP planners in small groups on the future work processes in materials planning. With the help of IT integration into SAP as well as into the SAP-integrated modules “Operations” and “Controlling” from our partner ifm business solutions GmbH, the new material class concept for planning control was finally put into live operation, ensuring automated maintenance and adaptation for future changes.

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The challenge

Given the company’s planned growth trajectory, Krone faced a number of challenges. These included long lead times in the procurement markets, ever-increasing customer demands, undifferentiated planning procedures, high manual planning costs, and missing parts despite high inventory levels. The implementation of a material class concept was intended to help optimize the company’s procurement processes. The goals included reducing complexity in the face of future increases in volume and variants, introducing standardized work procedures, ensuring a consistent level of knowledge among MRP staff, and exploring automation opportunities within the SAP system.

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“It was important to us that sophisticated material control procedures, tailored to the characteristics of the parts and suppliers, ensure high availability and flexibility. At the same time, we wanted to avoid excess inventory and slow-moving items,”

says Lukas Zumstrull, Head of Process Management at Krone.

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Result

By implementing the new material class concept, Krone was able to achieve a wide range of optimizations: for example, it reduced the need for firefighting efforts and ensured smoother day-to-day operations. Other results included increased material availability, production-synchronized supply controls for A-parts, and the expansion of automation in order processing and master data maintenance. This not only led to increased inventory turnover rates but also to a reduction in inventory levels of over ten percent.

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