Stabilizing the supply chain to cope with a special large order
Customer interview with Andreas Kiel, Director Supply Chain Management, Mehler Protection
In this interview, Andreas Kiel, Director Supply Chain Management at Mehler Protection, reports on the challenges faced by purchasing and the supply chain due to a multiplication of the previous order volume. The supply chain had to be expanded and secured within a very short space of time. Read in this interview how the supplier of protective equipment is dealing with the enormous challenges and has successfully developed solutions together with Kloepfel Consulting.
What was the initial situation? What were the goals? How were they achieved?
Mehler Protection had received the largest order for protective vests in the company’s history. The order led to a multiplication of the usual delivery quantities over three years in one fell swoop. This presented us and our supply chain with major challenges. Mehler Protection belongs to the group of SMEs, i.e. small and medium-sized enterprises. It was immediately clear that our previous structures and processes in the supply chain were not sufficient for this large volume.
Due to these challenges, we decided to work with Kloepfel Consulting. The contract was awarded and signed by our customer at the end of April 2022 and the consultants from Kloepfel Consulting started work on the project just five days later at the beginning of May.
The aim was to expand and secure the supply chain in order to ensure the stable supply capability of the large number of protective vests. Among other things, this meant drawing up detailed delivery schedules for our suppliers and securing pre-financing. Appropriate risk protection, including a warehouse concept and possible second or multi-sourcing concepts, was important.
Specifically, improvements in contract management and price negotiations were on the agenda. The support of Kloepfel Consulting was crucial here. A team of Kloepfel consultants and Mehler’s strategic purchasing department conducted the supplier discussions. With their commitment, the consultants helped us in discussions with over 90 suppliers to secure the procurement of more than 240 raw material items. This involved in particular the formulation of framework and cooperation agreements, including pricing, as well as a risk analysis to secure the supply chain on the part of the respective supplier.
The consulting project was therefore characterized by a period of intensive negotiations with a focus on a robust supply chain for this crucial order. Potential risks for our company had to be minimized, as even one mistake could jeopardize the supply chain.
What challenges did you face when negotiating framework agreements?
The challenges in negotiating framework agreements were manifold. One of the biggest challenges was communicating with long-standing suppliers to convince them of the need for a framework agreement. These arose primarily from the presentation of our core interests and those of the suppliers as well as the coordination of different positions, for example with regard to the quality assurance agreement (QAA). To this end, the Kloepfel consultants, together with our strategic purchasing department, engaged in intensive dialog with the suppliers.
This coordination led to many discussions and delays. A similar process was used to negotiate delivery dates, prices and special logistical requirements as part of the various supply contracts.
How did you manage to get the employees on board for the project?
Internally, managing the large volume of work was a challenge. The major order placed a considerable strain on resources in strategic purchasing, as additional tasks had to be completed alongside regular day-to-day business. This led to a high level of stress for the employees. The employees were aware of the existential importance of the project for the company and were therefore highly motivated to complete the order successfully, despite frequent delays in negotiations and requests for changes from the suppliers.
The employees were involved in the project through transparent communication. The current challenges and the need for external support were explained openly and clearly. The purchasing team was involved right from the start, even during the briefing by Kloepfel Consulting.
Due to the high workload and time pressure, the purchasing team was also happy to receive any support. The consultants from Kloepfel Consulting were indeed a great help as temporary colleagues.
The physical presence of the Kloepfel consultants on site was extremely beneficial, as they were always available. This was particularly helpful in establishing a personal relationship. Incidentally, the consultants were not only with us as negotiators, but also as sparring partners and coaches who offered training and imparted knowledge.
I would also like to point out that our employees are all very committed and practice-oriented. Our entire management culture is characterized by a certain hands-on mentality. Even in exceptional situations such as this major order, we try to work together to find solutions.
How were the price negotiations prepared and implemented?
Preparation for the price negotiations began with detailed planning for the conduct of the talks. Kloepfel Consulting carried out a sparring session in which we thought together about negotiating arguments and counterclaims. As part of this, we created a template for the negotiation folders that contained all the relevant elements for an effective process, including the suppliers’ basic data, their goals and strategies, as well as our own goals and price expectations. Mehler’s purchasing department then conducted the supplier negotiations together with the Kloepfel consultants. Following the negotiations, we also received feedback from Kloepfel Consulting.
It was important for us to see the suppliers as partners and to convince them to support our goals and shape a common future. The partnership with the suppliers is fundamentally crucial in order to successfully implement an order of this magnitude. During the negotiations, we explained the respective delivery schedules and our requirements very transparently. This strengthened mutual trust.
The conditions for the project were demanded in line with volume increases and market conditions. In addition, the focus was on guaranteeing our ability to deliver. The negotiations took into account a comprehensive 360-degree view of the interests of all parties – supplier, Mehler Protection and customer.
How else did Kloepfel Consulting support you and your team in your purchasing activities?
Eight consultants from Kloepfel Consulting supported us in the negotiations. As already described, we received help with the preparation, implementation and follow-up of the negotiations. We set up an on-site project office with Kloepfel for this purpose.
In addition to the actual core area of material procurement, we also had the large area of capital goods purchasing. This involved the procurement of machinery, for example. For this alone, we had an employee from Kloepfel Consulting (full-time equivalent), who used his expertise and network to deal exclusively with machine procurement.
At this point, I would also like to point out that the good cooperation between Mehler Protection and Kloepfel Consulting to date has resulted in follow-up projects.
From 2023, we received support from Kloepfel Consulting with questions relating to the German Supply Chain Duty of Care Act (LkSG). Training was also provided for the scheduling team. In addition, our strategic buyers are currently receiving operational support from two employees from the Kloepfel Services employee pool.
There is currently a six-day cost-breakdown training course, which was developed according to our wishes.
Why would you recommend Kloepfel Consulting to others?
We can recommend Kloepfel Consulting for several reasons. The consultants’ technical expertise and access to their network were extremely useful for Mehler Protection. The consultants placed great emphasis on building the team, which improved relationships and project flow.
The active support of Kloepfel Consulting strengthened the confidence to work together on a project of this scale. We got to know Kloepfel Consulting as a partner who is open to criticism. The Kloepfel consultants can express criticism constructively and accept it very well.
The consultants’ coaching and sparring led to a strong transfer of knowledge and a steep learning curve for Mehler. The consultancy project has had a positive impact beyond its duration by helping us to prepare for future supplier negotiations and improve interdisciplinary teamwork.
About Mehler Protection
Mehler Protection, based in Fulda, Germany, offers solutions that are suitable for protecting people and various operational platforms. The products are aimed at security authorities and armed forces, among others.
Are you also facing major challenges in securing your supply chain and optimizing your purchasing? Then get in touch with Kloepfel Consulting!
Contact:
Kloepfel Group
Christopher Willson
Tel.: 0211 941 984 33 | Mail: rendite@kloepfel-consulting.com