Grown from a one-man business into a global leader, STIHL Group develops, manufactures, and distributes power tools for professional forestry and agriculture, garden and landscape maintenance, the construction sector, and private garden owners. The product range is complemented by digital solutions and services. Products are distributed through authorized dealers and STIHL’s own online shops – which will be expanded internationally over the next few years – including 44 sales and marketing subsidiaries, about 120 importers, and more than 55,000 servicing dealers in over 160 countries.
Founded in 1926 and with headquarters in southern Germany, STIHL has been the world’s top-selling chain saw brand since 1971. With a workforce of almost 20,000 employees, the family-owned business generated 5.3 billion euros in revenue in 2023.
Siloed Supply Chain Planning Insufficient for Informed Decision-Making
In the past, STIHL’s subsidiaries and production companies relied on their own SAP ERP Central Component (SAP ECC) systems, deployed on premise, with a heterogenous landscape for supply chain planning processes across 35 sales and eight production companies that were tailored to the needs of each subsidiary.
“We lacked an end-to-end, consolidated view and overall transparency to improve decision-making for the company as a whole and not only for one subsidiary,” said Lena Domhan, global process owner for Integrated Planning at STIHL. “Previously, we spent a lot of time analyzing and verifying data and had no single source of truth. In addition, disconnected planning systems hindered collaboration and coordination between subsidiaries.”
Market Trends Drive Change
With the introduction of new product lines with integrated batteries, STIHL found itself in a new business, selling to end customers also. “This VUCA world required us to react even faster to volatility and changing demand,” explained Axel Erhard, senior vice president, global ONE STIHL program lead. “To optimize planning, we needed a better overview of the different production and sales companies.”
The company established the ONE STIHL program with the goal to consolidate all subsystems across all sales and production companies into one integrated SAP S/4HANA system. Moreover, STIHL aims to bring several solutions into one hybrid ecosystem, such as the SAP Integrated Business Planning for Supply Chain solution (SAP IBP) with the applications for sales and operations and response and supply, the SAP S/4HANA Manufacturing solution for planning and scheduling, and SAP Transportation Management. “One goal of the ONE STIHL project is to reduce fixed capital and get more transparency on different management levels. SAP IBP with SAP S/4HANA Manufacturing for planning and scheduling play crucial roles in this process, serving as the starting point for planning,” Erhard said.
Synchronized Planning Approach for Distribution Center Refills
“We were one of the first customers to introduce SAP IBP in combination with SAP S/4HANA Manufacturing for planning and scheduling and SAP Transportation Management,” explained Fabio Fender, interim global process owner for Integrated Planning at STIHL. “With real-time integration, our planners can quickly react. For example, when tackling issues on the planning or production side, they immediately see the impact on the distribution side and vice versa. That provides confidence and trust.”
Georg Fuchs, director of Integrated Planning and global solution architect, ONE STIHL project, added: “Order-based planning and real-time integration are the heartbeat of our production. For instance, in Austria, finished goods are produced and then shipped to distribution centers in Germany or the Czech Republic. The order-based planning process in SAP IBP is used to allocate, prioritize, and schedule the delivery of these goods. We are decoupling this from our production plan in SAP S/4HANA Manufacturing for planning and scheduling.”
With this synchronized planning approach, STIHL consolidates supply planning, distribution planning, and production planning into one seamless process, enabling a holistic workspace for planners. Detailed scheduling results from SAP S/4HANA Manufacturing for planning and scheduling are visible in SAP IBP in real time, helping to ensure maximum transparency. In addition, the integration of SAP Transportation Management allows for the creation of freight orders to ship STIHL’s finished products. “STIHL’s vertically integrated supply chain gives us the potential for end-to-end control,” Erhard said.
Higher Transparency Enables Accurate Planning
SAP IBP is live at two production sites in Austria and Switzerland and is used by several planners and others utilizing its reporting capabilities. “The integration with SAP S/4HANA Manufacturing for planning and scheduling and SAP Transportation Management was the most effective solution to meet our business needs,” Fuchs said.
STIHL already recognizes and anticipates a range of immediate and long-term benefits, including:
- Better visibility across subsidiaries, enabling accurate and feasible plans that can adapt to production constraints
- Increased efficiency with sales and production teams using the same system with one source of truth for all relevant data
- End-to end transparency for global planning processes with optimized planning for the network
- Time savings for planners who see real-time impact of changes and can instantly make better-informed decisions
- Creation of feasible production plans to meet customer demand
- Real-time integration with SAP S/4HANA Manufacturing for planning and scheduling ensures planners and production teams are using the same data for decision-making
- Logistics planners can efficiently plan truck load orders and promptly fulfill logistics requirements
- Improved customer service while reducing inventory costs through network planning
- Enhanced decision-making between quantity and revenue planning provides a crucial element to business processes and reporting
Future Plans and Leveraging AI
“We have four to five rollouts ahead of us on our journey. Over the next few years, we will integrate about 40 global subsidiaries into one network planning solution,” Domhan said.
In relation to the utilization of artificial intelligence (AI), Erhard said, “STIHL will invest in AI in the future. That is a clear focus of our owners.”
“We are starting to explore potential opportunities to determine what would benefit us. However, regarding SAP IBP, we are already fit for the future,” Fender concluded.
Karin Fent is senior director of global Customer Success Digital Supply Chain at SAP.
Top photo courtesy of STIHL