WIND SERVICE COMING OF AGE Case Study – Spare Parts Improvement Projects at Nordex
Stockholm
Feb 2013
1. The Spare Parts Landscape
2. Nordex and Nordex Service
3. Spare Parts Challenges 2010
4. Spare Parts Achievements 2012
5. Key Lessons in Brief
6. Making it Work 2013
CONTENT
2Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
Enable
Plan
SPARE PARTS MANAGEMENT THROUGH LIFETIME OF WTGCross-functional processes, interfaces & tools
Source Make Deliver
Replace
Return
SellIdentify Order
Plan Supply ChainForecast, Network, Assortment, Delivery
Plan Spare Parts ManagementObsolescence Management, Major Components, Vital Parts, Performance Requirements
Enable Spare Parts ManagementBOM (as-built, as-running, spare parts), Material Master Data (0rder Process, Purchasing, Logistics)
Parts Classification, SAP Processes, Parts Identification Tool, Parts Support
Spare Parts MgmtSupply ChainProductionPurchasing
PM Field OpsService Field OpsService After Sales
ReturnExecute
Design
Central EngineeringService EngineeringPurchasing, PLM
Assembly/ Erection
Service Operations
DismountingDevelopmentSales
CESales Purchasing ProductionSupplyChain
PM ServicePLM
3Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
1. The Spare Parts Landscape
2. Nordex and Nordex Service
3. Spare Parts Challenges 2010
4. Spare Parts Achievements 2012
5. Key Lessons in Brief
6. Making it Work 2013
CONTENT
4Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
NORDEX IS CAPABLE TO COVER THE ENTIRE VALUE CHAIN OF THE WINDPOWER BUSINESS
5
Core Business
Wind Farm
System
Planning
Production and
Technical
Implementation
Wind Farm
Operations
Service and
Maintenance
Project
Development
• Review
customer micro -
site planning
• Support
customers
(co-develop -
ment) receiving
approvals and
optimising park
layouts
• Assemble windturbines
• Produce selec-
ted components
• Install onsite
• Carry out initial
operation
• Around 2,700
turbines
currently under
Nordex service
• Full service
contract
offerings up to
12 years
• More than 10 years experience in developing wind farms in France
Further project development activities started in Poland, Sweden and USA
• Offer additional
services:
increased
demand due to
new wind farm
investors (e.g. insurance com-panies like Allianz group) interested in stable cash flows
•
• Spare parts
supply
Focus of case study
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
NORDEX GLOBAL FOOTPRINT: 8,180 MW WORLDWIDE
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 6
5,175 turbines installed, 2/3 in Nordex Service
By region
Germany27%
Other Europe59%
Asia9%
America5%
� Global manufacturer of wind energy
systems with a particular focus on
turbines in the 2.5 MW class
� Most extensive and consistent use of
platform technology in the industry;
turbines for different wind and climate
conditions
� Worldwide presence with branch offices
and subsidiaries in 22 countries
� Headquartered in Hamburg, Chicago
and Beijing
� Key Figures as of 12/2011:
- Revenues: EUR 927 mn
- EBIT: EUR -30 mn
- Employees: 2,200
� Total installed capacity as of 1/2013:
> 8,180 MW
Nordex at a Glance
NORDEX SERVICE
Nordex turbines have reached 98% Availability!
In the last twelve months our customers with an extended or premium service contract enjoyed the highest availability ever.
7Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
A STRONG GLOBAL SERVICE NETWORKWe are close to our customers – so need to be our parts
Decentralized supply of spare parts and local presence for fast response times.
Headquarters/ Performance Management Center
Service Areas
• Germany/BeNeLux/Poland
• France
• UK & Ireland
• Scandinavia & Baltic
• Italy/Greece
• Iberica
• Turkey
Customer Service Offices
Service Points
Spare Parts Logistics:Central Warehouse in Rostock, Regional Warehouses in US and CNDirect shipments to Service Points
8Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
SERVICE WILL DELIVER ABOVE AVERAGE GROWTHMarket driven by sophisticated customers
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 9
Market Trends
+18%
2020
27
2015
13
2010
5
2
2000
1
2005
Europe
North America
Asia-Pac.
South America
RoW n.a.
24%
19%
11%
42%
WTG Sales
Service
2020
100%
58%
42%
2010
100%
74%
26%
WTG sales
Service
2020
100%
25%
75%
2010
100%
74%
26%
Total European Wind Turbine and Service market:Turnover and share of profit in 2010 and 2020
Global Service market for onshore WTGs (€bn)
CAGR 2010-2020
1) & 2) Source: Oliver Wyman study: ‘Windenergie 2020: Boom-Markt Service’ ; Dec. 2010
Sales Profit share
� Long term fixed price full service contracts (risk transfer to OEM)
� Focus on energy production; shift towards direct electricity sales to the market (predictability & reliability)
� Growing importance of Health and Safety
� Increasing demand for repairs, retrofits and upgrades (aging fleet)
� Customers increasingly select component suppliers (performance matters)
1. The Spare Parts Landscape
2. Nordex and Nordex Service
3. Spare Parts Challenges 2010
4. Spare Parts Achievements 2012
5. Key Lessons in Brief
6. Making it Work 2013
CONTENT
10Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
UNMANAGED & INTRANSPARENT PARTS OPERATIONSComplex root causes across all functions and processes
BOM: Bill of material, MGMT: Management, SP: Service point, SPT: Spare part, CW: Central warehouse
11Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
High service inventory
High logistics costs
No logistics promise to customer
Productivity loss for technicians
1. The Spare Parts Landscape
2. Nordex and Nordex Service
3. Spare Parts Challenges 2010
4. Spare Parts Achievements 2012
5. Key Lessons in Brief
6. Making it Work 2013
CONTENT
12Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
PARTSXCHANGE PROJECT SCOPELooking at the full process – identification, order, inventory, shipment
13Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
EARLY WIN - FROM EXPRESS TO CALENDAR SHIPMENTSSimplified and streamlined logistics
Monday
Tuesday
Wednes-day
Thurs-day
Friday
Mo-Fr
Germany
France
UK
Turkey
SwedenShut-down
PortugalSpain
Ireland
Norway
Denmark
Italy
Material Forecast
& Planning
UK
Turkey
Ireland
Italy
Germany
France
Portugal
Spain
Sweden
Norway
Denmark
Short-term orders only, daily express shipments
Majority of standard orders, scheduled groupage shipments
Monday
Tuesday
Wednes-day
Thurs-day
Friday
BeNeLux
BeNeLux
Greece
Greece
Germany
Poland
Poland
Fault
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 14
Implementation of delivery schedule has reduced logistics costs by 20%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Mrz. 10 Jun. 10 Sep. 10 Dez. 10 Mrz. 11 Jun. 11 Sep. 11 Dez. 11 Mrz. 12 Jun. 12 Sep. 12 Dez. 12
Historical - No Split Express Groupage Main Comp. Order Lines Shipped
CALENDAR SHIPMENTS (BUNDLING)Early Win – 30% Productivity Gain
� Clearly visible shift from express to groupage & negotiated rates
� Tendering and go-live in May 2012
� 2012 cost still below 2010, with +30% Service turnover, # of WTG, order lines
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 15
NORDEX PARTS CATALOG: IMPROVED PARTS IDENTIFICATIONAll Service-relevant SAP material data at your fingertips
Language Selection
Relevant Material Data
Supplierinformation
Service & PM Catalog withConsumptions
WTG Type/Platform
Catalog
As-plannedWTG Catalog
Intelligent Search
http://partscatalog/template/index.php “PartsCatalog“
Assembly AreaFavorites
16Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
� Efficiency increase fortechnicians
� Efficiency increase forback-offices
� Optimized partsassortment
� Optimizedtransportationcosts
� Transparency
� SAP process integration
MAJOR PROJECT - RE-DESIGNED SAP ORDER PROCESSParts availability is predictable for service operations
SAP CS order incl. components checks local material stock and orders fully automatically material if necessary
SAP Safety stock levels and MRP areas for each Service Point storage location ensures automatic reordering if stock level falls below min. level
Order priorization ensures different handling and logistics processes (1. Turbine shutdown, 2. Turbine fault, 3. Stock refill)
Order scheduling considers urgency needs and cost optimized transports (1. 24 hours, 2. 1-3 days, 3. calendar delivery)
Automatic goods receipt booking simplifiesinternal organization and guarantees quick stock updates
1
CS: SAP Customer Service, MRP: Material Requirements Planning
2
3
4
5
17Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
MRP1 AREAS FOR SERVICE POINTS AND SAFETY STOCKSEnsuring high availability of spare parts
SP1
SP2 SP9
SP8
SP7
SP6
SP5SP4
SAP Service Plant, e.g. 7000 (France)
1 MRP = Material requirements planning; 2 ATP = available to promise
MRP Area Definiton
• represents an organizational unit for which MRP is carried out independently in order to ensure automatic material availability by considering current stock, future material demand and supply for each Service Point
• in this MRP area are different MRP parameters defined, such as safety stock levels, lot sizes and replenishment times for materials
•SAP orders automatically new materials if a stock of a specific material falls below a defined re-order stock level or demand exceeds available inventory
MRP AREA = Service Point (SP) Autom. Reordering For A Defined Part of SP 8
Safetystock = reorderlevel
Time
Stock
Automatic reorder
point
Replenishment time
Lot size
0
40
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 18
Order scheduling including picking times, delivery calendar and transport
delivery times; individually defined for each Service Point; e.g. 7 days for France
ORDER SCHEDULING & STANDARD DELIVERY TIMES
Nordex Central Warehouse Nordex Service Points
1 CWH = Central Warehouse Rostock; 2 Delivery times from suppliers to CWH cannot be considered in SAP yet
• Automatic loading date creation for CWH1 Rostock• Reliable delivery schedule for Service Ops, if material is in stock at CWH2
• Delivery schedule enables priority settings of purchase and service orders
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 19
HOW URGENT IS IT?Schedule your order priority in SAP!
Turbine is not running anymore. Material must be delivered as soon
as possible.if not available in local stock. Target delivery time 24h –
48h!
Turbine is still running, but it has a serious damage which will result
in a shutdown. Material must be delivered within 3 days if part is not
available in stock.
Material is designated for maintenance, regular repair or stock
refills. Material can be delivered according to regular delivery
calendar (once a week).
Shut-down
Fault
Main-tenance, Refill
Purchase and Service Orders can be related to 3 kind of priorities which will result in different logistics handling and transports. For instance, a shut-down
is specially tracked by CWH1. It automatically creates a picking list on a dedicated shut-down printer in CWH.
1 CWH = Central Warehouse Rostock;
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 20
SPARE PARTS MANAGEMENT ORGANISATIONKnowledge Transfer Into Line Function: Parts PlanningBundling Spare Parts Related SCM, PM and Service Functions
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
Warehouse Operations
Spare Parts Management PM & Service
ToolsParts
LogisticsParts
PlanningService Country Ops
PM Site Mgmt
• Regional Field Operations Parts Management
• Regional Order Management & Monitoring
• 1st level support SAP MM for Field Ops
• Monitor regional inventory & safety stock
• Manage storage locations & responsible staff
• PM Operational Parts Management
• Placing parts orders• Planning / Priority• Storage Location• 5s• Monitor Inventory• Booking quality
• Roll-out partsXchange• Spare parts
definition, classification, BOMs
• Spare parts catalog• Spare parts strategy
and projects• Inventory
management• Master Data
Management• SAP key user MM
service
• Additional Ressources Configuration & Spare Parts Support in 2013
• Management order book
• Work prep. warehouse
• Shipment• Customs preparation• Management
bottleneck parts• Ident / Order Parts
for PM• Material booking
goods issue• Major Components
planning & logistics (gbx, new 2012: blades)
• Manage shipping comp. / cost controlling
• Parts order clarification, escalation, field support
• Track and escalate inbound material orders
• Warehouse operations
• HSE• Goods picking,
packaging• Goods
receiving,unpacking, storage, booking
• Quarantine storage
• Provide, maintain, refurbish certified PM installation tools
• Provide & maintain commissioning tool sets
• Provide, maintain, refurbish certified Service gbx exchange tools
• Manage assets in SAP• Provide and certify PSE for commissioning teams
*SAB = Rostock Central Warehouse; HH = Headquarter Hamburg
21
ClaimsNew in 2013
�Calendar Shipments
�Spare Parts Catalog
�Order Process Design (e.g. priorities, safety stocks, delivery calendar, transparency etc.)
�Order Process Implementation SAP (programming, customizing, testing, debugging etc.)
�Master Data Clean-Up & Master Data Clean-Up & Master Data Clean-Up
�Country Roll-Outs & Support (e.g. German/English documentation, SAP live trainings etc.)
�Communications (e.g. NIC reports, SAM/FOM/MasterTechpresentations, local information meetings etc.)
�Organisational development – one Spare Parts Mgmt function, global team
WHAT HAS BEEN DONE?
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 22
As-is analysis and potentials Strategy, concept & implementation
Evaluation of
performance and cost
potentials
Definition of
action fields
2 3 4
Analyses of processes,
structures and
systems
1
Detailed concept and
implementation
4
COUNTRY FEEDBACK – IT WORKS
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 23
EBIT POTENTIAL ACROSS THE BOARDPayback period maximum 2 years
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 24
0%
50%
100%
150%
200%
250%
2011 2012 2013
PM savings spare parts
Stock depreciation red.
Transport cost reduction
Inventory reduction
Staff productivity
Total Cost
1. The Spare Parts Landscape
2. Nordex and Nordex Service
3. Spare Parts Challenges 2010
4. Spare Parts Achievements 2012
5. Key Lessons in Brief
6. Making it Work 2013
CONTENT
25Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
� Material management focus is
shifting from manually
operated tasks to planning
and controlling functions
� European-wide roll-out of
improved order process and
inventory management within
decentralized organization
needs clear global and
regional management buy-in,
a lot of attention, training and
local support during
implementation phase
LESSONS LEARNEDParts is a People Business, You Need to Win Them OverGetting Master Data Right is Like Fighting The Living Dead
26Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
Change Management
Service
Engi-neering
Pro-duction
SCM
Sales
Purchas-ing
HSE
Material Master
Data
“Can we please switch off
the SAP MRP run?“
(Local Material Manager)
� Master data management
becomes crucial for automatic
SAP managed inventory
� Cross-functional by default
� Tough internal sell, most un-
sexy topic on earth
� It doesn‘ t go away
Material Master Data Management
� SAP projects are a tough call
and don’t come cheap
� Doesn‘t work without PM
skills & dedicated ressources
– project management 101,
anchoring in top management
are a must
� Good dedicated SAP inhouse
consultants save money from
day 1
� Starting with external know-
how, transferring to internal
PM and team; and finally –
with the same people -
establishing line function
proved to very successful
Project Management & SAPKnowledge Transfer
PARTSXCHANGE STAGINGPilot 1 – Pilot 2 – Big Bang – Now covering all 17 European NX Countries
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 27
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan FebOn-
going
France,
Portugal,
Italy
GER, B,
NL, ESP,
NOR,
POL, GR
ROM,
EST,
DK, SWE
UK,
Ireland,
Turkey
CHANGE MANAGEMENT IS KEYCareful staging of clean-up, training, go-live, ramp-up, support
2012 2013
Continuous inventory planning
Go-live
Training & live testing
Internal SAP testing
Prepare SAP
Safety stocks implemented
Re-locate
Stock planning
After Go-Live support + continuous order tracking
Maintenance Planning in SAP
Clean-up SAP
Go-live
Prepare SAP
Safety stocks implemented
Re-locateStock planning
Maintenance Planning in SAP
Continuous inventory planning
After Go-Live support + continuous order tracking
Com
Com
Delivery schedule
Delivery schedule
Delivery schedule
Implemented
Implemented, POL, DK, SWE only
Implemented
Clean-up SAP
Internal SAPtest
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
Stocktaking
SAP Customizing (plant split)Re-
work
Training & live testing
tbd
Decision on UK
Decide on Turkey
Decision on Turkey
Region 1 is fully implemented
Region 2 is fully implemented
Teamset-up
Team is set-up
Com
Internal SAPtest
Team Region 1 + Customizing
F+I Test
Go-Live?
SCSC SC
Decide on UK
28
SC SC
Enable
Plan
SPARE PARTS MANAGEMENT THROUGH LIFETIME OF WTGCross-functional processes, interfaces & tools
Source Make Deliver
Replace
Return
SellIdentify Order
Plan Supply ChainForecast, Network, Assortment, Delivery
Plan Spare Parts ManagementObsolescence Management, Major Components, Vital Parts, Performance Requirements
Enable Spare Parts ManagementBOM (as-built, as-running, spare parts), Material Master Data (0rder Process, Purchasing, Logistics)
Parts Classification, SAP Processes, Parts Identification Tool, Parts Support
Spare Parts MgmtSupply ChainProductionPurchasing
PM Field OpsService Field OpsService After Sales
ReturnExecute
Design
Central EngineeringService EngineeringPurchasing, PLM
Assembly/ Erection
Service Operations
DismountingDevelopmentSales
CESales Purchasing ProductionSupplyChain
PM ServicePLM
29Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
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1. The Spare Parts Landscape
2. Nordex and Nordex Service
3. Spare Parts Challenges 2010
4. Spare Parts Achievements 2012
5. Key Lessons in Brief
6. Making it Work 2013
CONTENT
30Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
EXTERNAL BENCHMARKS
• OEMs carry on average 10% of annual sales as spares− Nordex 5 – 6 %
• Inventory turns one to two times annually are common− Nordex 0,5
• 23% of parts become obsolete every year− Nordex overall risk est 30% of current
inventory
• Provide real-time updates of parts usage from service technician trunk stock and include in scheduling criteria− NX: partsXchange ramp-up ongoing with SAP
and inventory planning tool - done
• Integrate parts forecasting, procurement and logistics under service oversight− NX: Forecasting and logstics integrated; no
integration of procurement – painful
• Incentive field technicians and regional service depots on timely return/transfer of parts to repair− Upwind return & repair project well under
way (roll-out 2013)
„Winning in the Aftermarket“Harvard Business Review 2006*
Recommendations for Best in Class (Aberdeen, 2011)
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 31
* Source: Cohen et al, Winning in the Aftermarket, Harvard Business Review, May 2006
Enable
Plan
SPARE PARTS MANAGEMENT THROUGH LIFETIME OF WTGCross-functional processes, interfaces & tools
Source Make Deliver
Replace
Return
SellIdentify Order
Plan Supply ChainForecast, Network, Assortment, Delivery
Plan Spare Parts ManagementObsolescence Management, Major Components, Vital Parts, Performance Requirements
Enable Spare Parts ManagementBOM (as-built, as-running, spare parts), Material Master Data (0rder Process, Purchasing, Logistics)
Parts Classification, SAP Processes, Parts Identification Tool, Parts Support
Spare Parts MgmtSupply ChainProductionPurchasing
PM Field OpsService Field OpsService After Sales
ReturnExecute
Design
Central EngineeringService EngineeringPurchasing, PLM
Assembly/ Erection
Service Operations
DismountingDevelopmentSales
CESales Purchasing ProductionSupplyChain
PM ServicePLM
32Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
REVERSE LOGISTICSAgain from Unmanaged to Managed - Roll-out Q2 2013
33
�Optimization
� Focus on ‘high-value’ parts
� Scrap everything else on site
�Defined Process
� HQ Quarantine Repair Decision Tree
� Focus:
� Selected ‘Minor’ parts
� All ‘Major’ parts
� Scalable
� Using SAP standard order process
�Easy On-Site Process
� ‘Master Return Guideline’
Results HQ Quarantine Repair Decision Tree
QA/Warranty/Tech Analysis?
Obsolete?
Bottleneck?
New less than €400?
Less than €10k a year?
Repair cost less than 50%?
SC
RA
P
RE
PA
IR
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
• internal benchmarking – inventory per WTG
− XX clear champion, decreasing inventory while increasing WTG in servicetoday at X000 €/WTG
− YY out of bounds by factor of 6 against XX, and increasing
− ZZ out of bounds by factor of 6 against XX, but improving
• Central Warehouse managed, maintaining stable inventory level while increasing number of WTG
COUNTRIES ARE HELD ACCOUNTABLEInventory per WTG Benchmark & Materials Responsibility
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
Inventory WTG under contract Inventory / WTG Benchmarks Inv per WTG
Sep 11 Aug 12 Sep 11 Aug 12 Sep 11 Aug 12
% increase
YoY
% of best
Aug 12 (UK)
Added
StorLoc
% major
comp
UK 1.790.345 € 1.583.325 € 303 362 5.909 € 4.374 € -26% 100%
Italy 975.118 € 1.141.134 € 180 198 5.417 € 5.763 € 6% 132% 1
Germany 5.739.757 € 6.779.719 € 963 951 5.960 € 7.129 € 20% 163%
Scandinavia 1.109.558 € 1.362.530 € 170 187 6.527 € 7.286 € 12% 167% 1
France 2.506.494 € 3.132.249 € 392 420 6.394 € 7.458 € 17% 171%
Iberica 1.627.424 € 2.009.013 € 245 229 6.643 € 8.773 € 32% 201%
USA 5.324.152 € 7.841.555 € 122 285 43.641 € 27.514 € -37% 629% 4 23%
Turkey 2.903.324 € 5.318.475 € 141 189 20.591 € 28.140 € 37% 643% 4 28%
Total in Service Pts 21.976.171 € 29.167.999 € 2516 2821 8.735 € 10.340 € 18% 236% 10
Central Warehouse 12.632.273 € 12.831.388 € 2516 2821 5.021 € 4.549 € -9%
Blades/Gearboxes 8.829.570 € 8.584.736 € 2516 2821 3.509 € 3.043 € -13%
China Service 1.325.770 € 1.222.866 €
China Project 3.552.020 € 3.171.041 €
US Project 104.895 € 270.022 €
Total Inventory 48.420.698 € 55.248.053 € 2516 2821 19.245 € 19.585 € 2%
% of Total in Srvc Pts 45% 53%
34
ATTACKING LEGACY SERVICE INVENTORY Past Sins Show – Materials Taken Over From Production
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 35
54,4
5,72,9 0,6 1,0
30,54,8
100,0
0
10
20
30
40
50
60
70
80
90
100
TotalInventory
< 2 years > 2 years > 4 years > 6 years > 8 years > 10 years Defective
% of Total Inventory
Preliminary Analysis of Inventory Coverage
/ Non Movers
Years of inventory currently on stock (based on past 12 months consumption)
SERVICE LEVEL IMPROVEMENT SLOW – BUT “LESS LATE”But overall performance improvement clearly felt in field
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 36
50%
60%
70%
80%
90%
100%
jan 10 apr 10 jul 10 okt 10 jan 11 apr 11 jul 11 okt 11 jan 12 apr 12 jul 12 okt 12
Service Level% order line items fully shipped before customer delivery date
(Target 2012: 80%)
Service level shows upward trend but currently hits ceiling at 70% - needs further improvement. Kept stable although including installations spares
(early in lifecycle, most difficult)
-15
-10
-5
0
5
10
15
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
days early / order line shipped
days late / order line shipped
ParameterManufacturingSupply Chain
After-Sales Services Supply Chain
Nature of demand Predictable, can be forecast Always unpredictable, sporadic
Required response Standard, can be scheduled ASAP (same day or next day)
Number of SKUs (unique SAP#)
Limited 15 to 20 times more
Product portfolio Largely homogeneous Always heterogeneous
Delivery networkDepends on nature of product, multiple networks necessary
Single network, capable of delivering different service products
Inventory management aim
Maximize velocity of resources Pre-position resources
Reverse logistics Doesn‘t handleHandles return, repair, and disposal of failed components
Performance metric
Fill rate Product availability (uptime)
Inventory turns Six to 50 a year One to four a year
PROCUREMENT - CLASH OF CULTURESProduction procurement falls short on unplanned & urgent requests
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 37
* Source: Cohen et al, Winning in the Aftermarket, Harvard Business Review, May 2006
Performance
•Parts qualityhard KPI: failure rates
•Delivery qualityglobal 24/7 express delivery, on time, complete, accurate; local inventory; flexible support
•Spare parts documentationcontinuously updated electronic spare parts BOM, spec & drawings, catalog
•Obsolescence managementactive management of parts ramp-down and development of follow-up parts
Scope of supply
•Technical support24/7 remote and on site support
•Trainingtroubleshooting and repairs, certified
•Repairsrepair cycle incl. upgrades
•Full service agreementsrisk sharing > 5 years, active support
•Delivery commitment 20 yearsactive mgmt of 20 year obligation
Co-operation
•Channel to marketBest-Price for Nordex, preferred channel to market, exclusive premium products
SUPPLIER PERFORMANCE IS CRITICAL FOR SERVICEQuality, 24/7 Global Express, Documentation, Obsolescence Mgmt
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 38
SAP material status
Design
Design
Production
Service
Dismounting
Obsolete
Obsolescent
Production ServiceObsolesc
ent Obsolete
Design Service Obsolete
Product
life-cycle
Original part
& exchange part life-cycle
exchange part
original part
Start of production
End of production
End of Service
Monday
Tuesday
Wednes-day
Thurs-day
Friday
24/7
Germany
France
UK
Turkey
SwedenShut-down
PortugalSpain
Ireland
Norway
Denmark
ItalyMaterial Forecast & Planning
World Class Logistics
Benelux
Greece Germany
Poland
Fault
BILL OF MATERIAL CHALLENGEProduct Data Management All The Way Down to Service
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 39
Concept Correct, complete and current Bill of Material through Enginneering, Production, Installation, Service - parts classification –understanding of „correct and complete“ changes through process, e.g. service parts not relevant before hand over to service
Visualization
Concept relations
Data basis / back end forspare parts catalogue, inventory planning, failure analysis, retrofit planning, engineering change management
Overview
As-constructed
Assembly 1
Part 1.2
Part 1.3
Part 1.4
Part 1.5
Part 1.6 W
Part 1.1 S
Assembly 2
Part 2.2 S
Part 2.3 C
Part 2.4
Part 2.5
Part 2.6
Part 2.1
Config
uratio
nforspecific
wind
park
WTG specificparts and
components
As-planned
Assembly 1
Part 1.2
Part 1.3
Part 1.4
Part 1.5
Part 1.6 W
Assembly 2
Part 2.4
Part 2.5
Part 2.6
Part 2.1
Productio
nand
erectio
n
Unplannedchanged of
parts orcomponents
As-built
Assembly 1
Part 1.2
Part 1.3
Part 1.4
Part 1.5
Part 1.6 W
Assembly 2
Part 2.2 S
Part 2.3 C
Part 2.4
Part 2.5
Part 2.6
Part 2.1
Operatio
n /
repair/
maintenance
Exchanges ofparts or
components, retrofits
As-running
Assembly 1
Part 1.2
Part 1.3
Part 1.4
Part 1.5
Part 1.6 W
Assembly 2
Part 2.2 S
Part 2.3 C
Part 2.4
Part 2.5
Part 2.6
Part 2.1
Retrofit 1
change
addition
Part 2.2 S
Part 2.3 C
Part 1.1 S Part 1.1 S Part 1.1 S
Enable
Plan
SPARE PARTS MANAGEMENT THROUGH LIFETIME OF WTGCross-functional processes, interfaces & tools
Source Make Deliver
Replace
Return
SellIdentify Order
Plan Supply ChainForecast, Network, Assortment, Delivery
Plan Spare Parts ManagementObsolescence Management, Major Components, Vital Parts, Performance Requirements
Enable Spare Parts ManagementBOM (as-built, as-running, spare parts), Material Master Data (0rder Process, Purchasing, Logistics)
Parts Classification, SAP Processes, Parts Identification Tool, Parts Support
Spare Parts MgmtSupply ChainProductionPurchasing
PM Field OpsService Field OpsService After Sales
ReturnExecute
Design
Central EngineeringService EngineeringPurchasing, PLM
Assembly/ Erection
Service Operations
DismountingDevelopmentSales
CESales Purchasing ProductionSupplyChain
PM ServicePLM
40Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
CREDITS
Michael Dorn
Project Manager (majority of slides)
Nordex SAP Inhouse Consulting
Nordex Trainee Team
Return & Repair Project Team
4flow (Berlin)
External Consulting, Analysis &First Roll-Out
41Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
MANY THANKS FOR YOUR ATTENTION.
Nordex SELangenhorner Chaussee 600, 22419 Hamburg, Germany
Telephone +49 (40) 30030 1000
Fax +49 (40) 30030 1101
E-Mail [email protected]
Axel Bühler
Spare Parts Management
[email protected], +49 (40) 30030-1611
Michael Dorn
Spare Parts Planning
[email protected], +49 (40) 30030-1472
42Nordex | Spare Parts Business Platform | Stockholm | Feb 2013