Picture Perfect

May 01, 2004 9:30 PM  By

THE GRAPHIC ARTS INDUSTRY has come a long way since the 15th century, when Johannes Gutenberg’s printing press printed the first edition of the Bible. Today, sophisticated prepress software manipulates pictures and text in preparation for the printing presses, and paper cutting, folding, or stapling machines add final touches to products, whether they be magazines or toothpaste boxes.

Heidelberg is a leading manufacturer and retailer of these types of graphic arts tools and machinery. During its 150 years in business, the company has moved far beyond the tiny German town that originally gave it its name and has grown into a $5 billion corporation with nearly 25,000 employees in over 170 countries. Heidelberg’s American subsidiary, Heidelberg USA, is located in the Atlanta suburb of Kennesaw and serves some 40,000 customers ranging from small local print shops to massive printing factories.

Because each Heidelberg customer becomes a parts customer at some point in time — and because a tiny $100 spare part can cause down time for a $1 million piece of equipment — quickly locating and shipping the right part to customers is a crucial part of the business. U.S. customers order their parts directly from Heidelberg USA, and the complexity of identifying spare parts leads most of those customers to place orders by speaking with a customer service rep. Ninety percent of parts orders are placed through Heidelberg USA’s 24-hour call center; 9% come by fax, and only 1% over the Internet.

ANCIENT HISTORY

Fifteen miles of shelving in the 40,000-sq.-ft. Kennesaw warehouse hold everything from nuts and bolts to massive press engines, with a total of 45,000 parts SKUs. This number is enough to fulfill close to 90% of all U.S. parts orders. The remaining 10%, however, have to be fulfilled elsewhere.

“In the past, if we didn’t have a part in stock in Kennesaw, it became a backorder and kind of disappeared into a black hole,” says Per Rasmussen, director of parts sales and customer support at Heidelberg USA. “But our customers have gotten more and more demanding, wanting more information and parts more quickly.”

In the old days, if a part was unavailable in Kennesaw, a back-order was faxed to the Heidelberg factory in Germany, and all Heidelberg USA could do was sit and wait for the part to arrive. Once the part arrived, it was unlabeled, unidentified, and mixed in with all kinds of other stock and products. “When we got shipments of about 5,000 or 10,000 pounds with hundreds or thousands of parts, it could take our warehouse staff several days to work their way through it all,” recalls Rasmussen. It could be one or two weeks later by the time customers would finally receive the part. Also, if the part was not in stock in Germany, the process could be even longer. “And through all of this, we were just not good at giving our customers a lot of information on when they would receive the spare parts,” says Rasmussen. “We were not being proactive in terms of getting the parts out.”

GLOBAL REACH

Today, however, it’s a different story. Over the last five years, Heidelberg USA has worked at providing customers with parts and information in a timely manner. The company has scrapped old habits and technologies and implemented new shipping processes, as well as a system from SAP that has dramatically reduced lead times and, quite literally, moved Heidelberg USA beyond borders.

Heidelberg uses a broad range of SAP modules for sales, service, HR, accounting and controlling, purchasing, inventory control, and warehouse management. “At a click of a button our SAP system can reach into Heidelberg Canada’s SAP and check their inventory,” explains Rasmussen. “And we can do the same with Germany, France, the U.K., and five countries in the Far East.” Basically, customer service reps now have the world at their fingertips.

In addition to SAP, Heidelberg uses proprietary electronic parts books supplied by the parent company to provide drawings of parts, assembly breakdowns, and bill-of-material information for each machine serial number.

“Let’s say that [a customer calls us and needs] a spare part, and we don’t have it available in Kennesaw,” says Rasmussen. “Well, now our parts customer rep can tell the customer, ‘I am sorry, I don’t have the part in stock here, but let me check Canada.’ And while the customer is on the phone, he can check Canada’s inventory. If Canada has the part, he can say, ‘Yes, dear customer, you will have the spare tomorrow before noon.’ But if they don’t have the part there either, then he can instantly check Germany’s inventory. If the part is there, he can say ‘Yes, the part is in stock in Germany. Unfortunately, you can’t receive it tomorrow, Tuesday, but you will have it Wednesday morning.’”

MAP QUEST

An important change, according to Rasmussen, was to make the staff realize that it didn’t make sense to put a part in a big box with hundreds of other parts, ship it to Kennesaw, sort the parts, and then put each part in a separate FedEx box to be shipped to the customer. “All that extra handling and delays were just too expensive,” he says.

Instead, backordered parts are now drop shipped directly to U.S. customers without being detoured to Kennesaw. This has enabled parts to arrive at their destination in two business days — sometimes even sooner. If a customer places an order before 9 a.m., the spare part can arrive the following morning as an overnight shipment.

“Geographical distances are no longer equivalent to transit times,” says Rasmussen. “Just because a part is found in a Heidelberg location close to the customer doesn’t necessarily mean that the customer will receive it any sooner. Once FedEx has passed its cutoff time here in the U.S., for example, they won’t ship the package in two business days, and that is exactly the same time it may take to ship it out of Germany. So in many cases it becomes irrelevant for the U.S. customer whether the spare part is shipped from Kennesaw or Germany, Canada or the U.K.”

OLD AND NEW

Inside the Kennesaw warehouse, the atmosphere is calmer without the workers having to sort through massive crates for backordered spare parts. Here, things continue to be quite low-tech. The 30-odd full-time workers pick orders manually, and there are few bar codes on the picking end. This, says Rasmussen, is because most of the inventory is slow-moving. In a warehouse where 30-year-old parts are nestled next to new, shiny components from machinery released just one week ago, implementing a new warehouse system to speed things up would not create much of an ROI.

“On one hand, we are spending more on FedEx drop shipments from Germany and elsewhere,” says Rasmussen. “But on the other hand, we have been able to reduce our inventory here at Kennesaw, and that means big savings. Also, there is a huge increase in customer satisfaction, and you cannot put a value on that.”

Margareta Mildsommar has covered retail IT technology in the U.S. and abroad. She can be reached by e-mail at msommar@yahoo.com.

Express Lane

As part of its parts supply chain improvements, Heidelberg USA has launched an expediting group. This unit, says Per Rasmussen, director of parts sales and customer support, helps with “firefighting,” tracking all shipments and detecting problems before they arise. If, for example, a spare part is extremely hard to find, says Rasmussen, “the expediting group might work with our colleagues in Germany to have the part stripped from their production line. Or we might be able to strip it from equipment that we have in stock here.” To get a spare part to a U.S. customer quickly, the group can arrange shipments from Australia, New Zealand, or the Far East. In some cases, a customer needs a spare part that is available only in a whole machinery assembly. “Then we might ship the whole machinery assembly to the customer,” says Rasmussen. “And in a lot of these cases, the customer doesn’t even have an idea of all the hoops the expediting group has to go through.”
MM

HEIDELBERG

Headquarters: Heidelberg, Germany
Global sales: $5 billion
Total employees: 25,000

Countries of representation: 170
Heidelberg total parts SKUs: 200,000
Heidelberg USA parts SKUs: 45,000
Heidelberg USA spare parts shipments per day: 800
Heidelberg USA warehouse size: 40,000 sq. ft.
Kennesaw, GA, warehouse staff: 30
Shipping carriers: FedEx and UPS