PMC Hydraulics on the challenge in changing their warehouse setup.
The importance of having facts and data was in focus when Terho Lind, COO at PMC Hydraulics, spoke on Optilon’s Supply Chain Conference. He spoke about decision-making and PMC’s process to reduce costs through a different warehouse setup – while preserving or improving customer service.
– To analyse what would be the best solution, we initially took in several consultants which resulted in our choice of Optilon. Optilon then helped us with tools and ideas to model and simulate different scenarios.
Analysing the facts and effects of different scenarios gave some surprising results that were different from what they had assumed. The analysis showed that a change to one central warehouse would not have the expected effect on inventory levels due to smaller overlap in assortment; and a risk for lower service levels to customers, in relation to the cost reduction.
– We concluded that customer service was so important for us, so we decided to work with one warehouse per country. It was very interesting to see that with the right tools and challenging facts, we got a lot of help in the presentation to the board, to make them understand why we ended up with a solution that didn’t have the lowest cost, says Terho Lind.
PMC Hydraulics is one example of a smaller company taking a big step in transforming to a more digital approach, and Terho Lind is convinced that digitalization opens new opportunities for companies of all sizes.
– New software takes digitalization to another level for a relatively low cost, which means that we have a lot to gain, especially within supply chain with its big material flows. We had a fantastic opportunity to work with Optilon and their expertise, and experience in what analysing tools to use where, says Terho Lind.
Terho Lind’s advice to small industrial companies thinking about digital transformation is to have an open mind, dare to challenge your beliefs and gather facts to lean on in the decision-making.
– With today’s speed, many decisions are taken on gut feeling, assumptions or old beliefs which has become the truth. But facts are very important, not least to be able to present a strong case and get approval from top management. The culture is also very important. You have to engage people in the process of change and communicate it to both internal and external stakeholders, says Terho Lind.
PMC Hydraulics has also changed their organization from country-based to more process-oriented functions, which has speeded up the decision-making and given the company an overall perspective they didn’t have before.
– It was difficult to have a ”helicopter view” before, and at the same time to get the change process to progress. Now we have a better control and overview of all our sites and where to go, which is important when we take on new challenges and improvements.
See PMC Hydraulics presentation from the Supply Chain Conference 2017 in the post Competitiveness through supply chain design.