KUKA - Case Study
Evolving Sales Planning into Integrated S&OP
Headquartered in Germany, KUKA is a leading manufacturer of industrial robots and automation solutions. Its products are designed to improve the entire production chain, assisting with processes such as welding, laser cutting, painting, and packing. These versatile machines have found their way into many industries including food factories, plastics production, metalworking, foundries, electronics, medical technology, and entertainment.
KUKA achieved sales revenues of around €3.2 billion in 2019 and employs over 14,000 people.
The Challenge: Creating a company-wide, rolling planning process to aid growth
Staying on a growth trajectory requires innovative product developments but also a sound planning process, and this is where KUKA saw the potential to optimize. Axel Flechtenmacher, Global Director for Planning & Logistics at KUKA, explains:
"We want to control our growth and that requires very precise expansion management, based on continuous and thorough planning that covers all the necessary departments and subsidiaries. With this in mind, our goal was to establish a company-wide, continuous, monthly planning process on a rolling basis."
KUKA also wanted to restructure its planning organization by decentralizing future planning into the counter-flow process and introducing workflows and approval hierarchies.
Prior to the project, KUKA's various departments conducted their planning activities separately using spreadsheets.
"Each department would submit an Excel spreadsheet with its own data, then Planning would spend hours patching it all together without any legitimate, consolidated database," says Axel.
Sebastian Brand, Head of Sales and Service Controlling at KUKA, discusses the company's requirements for an alternative, more controlled solution:
"With the aim of having an integrated Sales & Operations Planning process we wanted to introduce a system that visualized the entire process – from strategic planning to finance and sales to production planning. The aim was to provide a structured, common database for Controlling, Sales, and Supply along with the relevant input and reporting functions to cover each department's planning and analysis requirements."
The KUKA Controlling department was to use the new solution to create its annual year-end forecasts, a rolling monthly quarterly forecast, and to introduce a three-year budget.
"We wanted local management to be able to corroborate the entries within their own companies – to depict, for example, how incoming orders and revenue expectations developed compared with previous years, or how prices changed by product range and industry," explains Sebastian.
The Sales and Supply Chain Management teams were to use the S&OP system to generate a demand and master plan for the next 12-18 months, based on their sales planning. Christina Stark, Global Demand Manager at KUKA, explains the challenges the company was facing with its existing systems:
"We used the SAP ERP planning solution before now, but it just wasn’t modern enough for us and was more of a hindrance than a help. The entry and reporting options were too time-consuming and complicated. One of the things we wanted to do was to check the plausibility of Sales and Demand Planning with regard to key customers, scheduled product mix, and more."
The company also wanted to integrate production resources and past figures into its planning process.
The Solution: A unified approach to planning and analysis
"Looking for the right tools and partners we pretty much evaluated every standardized planning solution on the market. We quickly realized that our standard planning requirements were too specific because we placed such a great emphasis on analytic functions. It eventually became clear that our requirements could only really be met by a business intelligence tool that includes planning features," says Axel.
This realization led the business to the Board decision-making platform, from vendor Board International, which unifies Business Intelligence, Planning, and Predictive Analytics in a single interface. Axel stresses that KUKA's choice of solution was more than just a question of functionality:
"The partner supporting us was also important. That's where Board really won us over - they quickly developed a solution for the cases in our brief. Within a very short time, Board developed what we found to be the best solution and presented it very professionally. They also demonstrated that they absolutely wanted to do this project for us."
The Benefits: Increased standardization, control, accuracy, and collaboration
Axel explains that once the project began, Board had ample opportunity to demonstrate not only their willingness but also their ability, in relation to a short deadline for the initial project requirements:
"The project started in June 2012. By the fall we wanted to be able to use the new tool to activate our budget planning – surely the most challenging planning for any business."
The budget planning went live as scheduled, to the tangible benefit of the Controlling team, as Sebastian confirms:
"Before, we were all sending different versions of Excel spreadsheets around the world – the problem being that these versions were no longer up-to-date and difficult to merge. Now the figures are just there – all in one system, all in one format. For the first time ever we have a proper workflow."
Together with the planning data input screen, KUKA's sales companies are now provided with predefined reports which they can use to check the plausibility of their data entries instantly and easily match the planning figures against the stored historical data. This gives the Controlling team the ability to track the planning status at every approval stage and to check which stage the planning is currently at. Controlling can also view and analyze scheduled planning objects as soon as they are entered into the system.
The demand and master plan was implemented in a further step. Sales planning can be applied after the demand planning figures are verified. At this stage, the data is planned in more detail, allocated to a production plant, and matched against the available production resources. This results in a 'master plan' upon which material procurement and resource planning are based.
Downstream, an integrated financial plan and human resources plan are generated as part of subprojects.
"We now have a standardized and resource-saving planning process which is in line with the corporate strategy. With the globally standard Board-based workflow, we can check the status of the planning results at any time and identify where we are in the planning stage. The planning quality, accuracy, and transparency have significantly increased, while the amount of work has reduced – especially for Controlling. Corrections can be done in the system itself and are automatically applied. Even updates to the various reports are automated. Not least due to the challenges stirred up by the latest developments in the automotive industry, this flexibility is priceless," explains Axel.
"Sales Managers in the sales units now have the chance to lead their employees through effective processes and tools. We can also visualize our sales planning in much more detail," adds Sebastian.
With Board, KUKA also benefits from a standard, company-wide database which avoids the various departments sending multiple queries to the subsidiaries. There is also another positive side-effect: the way the various departments cooperated in putting together the planning screens fostered an organic and intensive mutual exchange of ideas and close collaboration.
"This is a huge step forward for us," stresses Axel. "In the past, planning was an activity that was separate in every way. It has since blossomed into true teamwork."
KUKA continues to optimize its reporting system and Board usage in everyday operations. The planning tool is now used in all 30 sales companies of KUKA Robotics in Germany, Europe, and Asia as well as North and South America.