The Würth Group sells fasteners and mounting material throughout the world. If it’s about screws, screw fittings, screw anchors, technical chemical products, furniture and construction fittings, installation materials, and much more in relation to mounting techniques, Würth is the right partner for the job.
For software, Würth banks on SAP and other suppliers. The national offices of the group operate 16 SAP logistics solutions and more than 40 SAP R/3 systems for financials. The presence of various release levels, however, made using the software expensive. Up until now, a common, cross-company enhancement of the SAP landscape and uniform support for SAP solutions was impossible. To exploit opportunities for rationalization better, the company decided to create a template for technical wholesale processes with the SAP Template Adjustment and Realization (STAR) project.
In the template, Würth unites similar processes from its various national offices to harmonize them, thus reducing the operating costs for its SAP solutions. The template created a foundation for the functions required by all the national offices that are involved in the project. To enhance the standard SAP system, Würth added various supplemental, wholesale-specific solutions (such as its own systems for quotation processing and optimized warehouse control) to the template. The group also wanted the template to handle a large quantity of data. After all, Würth sells its products in 90 locations in Germany and in 293 subsidiaries in 80 countries across the globe. Some 40,000 employees are involved in meeting the wishes of Würth’s customers.
Optimizing Processes, Reducing Costs
The traditionally decentralized structure of the Würth Group with its legally independent subsidiaries resulted in a heterogeneous structure for SAP solutions. For the Würth companies involved in the project – eight national companies in Austria, Finland, Norway, and Denmark, with a total of 80 locations – the decentralized and individually tailored SAP solutions with numerous process variants and modifications demanded a great deal of maintenance effort, which was expensive. “We desperately needed more efficient processes to survive future competition,” explains Reinhold Würth, chair of Würth’s advisory board. “Our strategic goal was to reduce the costs of goods to customers, the costs per delivery, and so on to secure contracts.” Reinhold Würth knows what he’s talking about. In 1954, he took over the two-man operation from his father and made it the screw dealer into a mountings specialist that now offers 48,000 products for trades and industry.
Ever since the implementation of SAP R/3 Financials in 1993, the Würth Group has counted on SAP software to support many of its processes. Its companies use SAP R/3 for sales and distribution and materials management and SAP Logistics Execution System (SAP LES) in production. With the STAR project, Würth decided to continue banking on SAP software. Investment security and continuous development by SAP helped the company make the decision. SAP’s global presence was also an important factor for the group, as was the ability to easily link new components (such as data warehousing) to the existing solution.
Seamless Conversion – Everything Under Control
Employees of the national offices, SAP AG, and Würth IT International (the IT services provider for the group) constituted the project team. To develop the template, the team installed a central development system based upon SAP R/3 4.6C at Würth IT International. The local production systems continued to operate in individual national offices. In collaboration with local IT departments, Würth IT International set up a support organization to help lower additional costs for software maintenance and support.
The project was accomplished in four phases. In the first phase, which began in September 2000, the project team analyzed the existing business processes and functions in all the participating national offices. Based upon the analyses, the team defined the best-practice processes. The team then created a to-be concept based upon this business blueprint.
Basic and Supplemental Functions Realized in the Template
In the second phase of system setup, the team transferred the core wholesale processes and functions defined in the to-be concept into the template. Doing so required comprehensive customizing and a great deal of development work. In addition, Würth had to deal with wholesale-specific requirements that standard SAP software did not map or could only partially map. Würth converted these requirements into supplemental developments that offer Würth new functions for processing quotations, goods receipt and issue, and for cancellations and returns. Backorder processing increased customer satisfaction because backordered items could be delivered by request as soon as possible in light of process costs. The distribution control station thereby optimized productivity in the warehouse. SAP Workflow is used to accelerate and automate distribution processes. And SAP Business Information Warehouse allows Würth to analyze data and generate reports.
The project also had to convert huge amounts of transaction and master data that existed in heterogeneous structures because of the different systems involved. Between 130 and 190 data records were involved at each national office.
In 2002, the template was first rolled out to the Finnish national office and its locations. This third phase continued with the rollouts in Demark at the end of 2002 and the beginning of 2003. Austria followed in March 2003, and the last three offices in Norway went live at the beginning of August 2003.
Quality Ahead of Time
The 13-month window for a total of eight rollouts was a particular challenge, but the advantages of a central development system were worth the effort. Even the second rollout in Denmark benefited from optimizations worked out in the first implementation. The effort required to test existing processes and to implement missing process flows was reduced at each national office, which enabled faster rollouts. New requirements could be developed centrally with efficient use of resources. Yet even with time pressures, the quality of the implementation was always the primary concern.
“The template was introduced into productive operations without interruption. The project team’s toil was worth it. The level of service never fell below 98.5%, and the systems ran almost without any problems whatsoever,” says Alfred Wurmbrand, Würth Austria CEO. During the first implementation in Finland, the national office was able to process almost 30,000 order line items on the day after going live.
The new processes were used and the systems optimized further in the fourth and last phase. The varying mindsets and languages in the various national offices made professional change management indispensable for preparing users to work with the new processes and software solutions. In the process, users learned how to work with the applications more easily and quickly. The experience gained here became part of further development so other national offices could profit from it.
Common Development, Common Support
The national offices not only work with the common template more smoothly, but they have also lowered their process and IT costs because of faster throughput times for orders and optimized goods receipt. Additional cost advantages have been derived from common support, one-time upgrade efforts, and common development.
The project team developed a template that satisfied the entire scope of needs in the company’s wholesale efforts. It can be implemented quickly and flexibly adjusted to handle future developments with quick upgrades. “In the last 12 years, I have not experienced a project of this magnitude that was handled with this kind of precision and professionalism,” concludes Wurmbrand with satisfaction.