Sandvik Mining are able to make the right decisions with Pagero
A service-oriented and global organisation
Sandvik Mining is a business area within the Sandvik Group and a leading global supplier of equipment and tools, service and technical solutions for the mining industry. Every product is preceded by extensive R&D and backed with application expertise and a worldwide service network offering on-site service, training and round-the-clock support.
Sandvik Mining have a tradition of localisation and a conviction that there can be no substitute for direct service and direct contact with the customers. Their service-oriented, global organisation is well-developed and have service technicians located strategically around the world, working for the customers.
“We had previously worked in fairly isolated fashion on shipping matters, using many different business processes and routines, depending on where we were shipping the goods from.”
With operations in 130 countries, the logistics function at Sandvik Mining (SMC Logistics) has a tough job – managing 170 000 shipments per year at a freight cost of roughly € 60 million. High delivery precision and fast shipments are key competitive assets in SMC’s important aftermarket.
As a result, the company’s efforts to develop and centralise its shipping logistics with the help of Pagero are highly strategic from a business standpoint. A central Control Tower is established in Dublin, with regional control towers in Europe, US, Australia, South Africa and Canada. Pagero Freight Solutions is used to plan, book and consolidate freight loads. In addition, invoice control is used to reconcile invoices against contracts and orders.
In order to create the right basis for decisions, Pagero Performance Tool is used for delivery precision and cost follow-up. With a goal of +95 % delivery precision and dramatically improved cost control, Sandvik Mining’s logistics function, SMC Logistics was facing a tough challenge.
“We had previously worked in fairly isolated fashion on shipping matters, using many different business processes and routines, depending on where we were shipping the goods from,” says Patrik Nygren, Program Manager Global Freight. “Cost control, management and quality follow-up were suffering, and we had a hard time seeing the whole picture, an ability that is an important factor in our efforts to constantly improve our shipping and logistics.”
“The pilot project gave us the answers we were looking for, and was so successful that we decided to move forward and build the next step in our logistics vision - the control tower in Dublin.”
If you can’t measure it, you can’t manage it
The unsuccessful or delayed shipment of a spare part can leave machines standing idle, which can result in heavy costs due to lost production. As a result, high availability and delivery precision are important competitive assets for SMC.
Several years of rapid growth had increased the need for better control over freight costs and delivery quality. That is why the management level decision was made to centralise the shipping logistics function. The goal was to achieve better logistics flow, and to create tools to enable better internal and external follow-up.
The watchword for the effort was “If you can’t measure it, you can’t manage it.” However, SMC Logistics lacked a system tool that could provide an overall picture of the logistics flow. In addition to information about shipping routes, invoices and delivery statuses, SMC needed an analysis tool to monitor whether, for instance, its freight costs were reasonable and in accordance with current agreements.
A system tool for overall picture
The company sought total control over its shipping logistics, which made follow-up tools and functions to support decision-making extremely important. The company also wanted to automate its shipping flows to the greatest possible extent, to save on administrative costs and minimise the risk of errors.
Sandvik Mining chose the Pagero platform, which offers advanced reporting and analysis functions. Pagero and Sandvik Mining began a partnership in 2006, with the purpose to establish a global Control Tower to manage and follow up on Sandvik’s global flow. The implementation started with an organisational change, establishing a central control tower in Dublin, Ireland.
“We started a pilot project for our Sandviken warehouse, implementing Pagero on a local basis. The function handled load planning, bookings, complaints and supplier follow-up,” says Nygren. “The pilot project gave us the answers we were looking for, and was so successful that we decided to move forward and build the next step in our logistics vision – the control tower in Dublin.”
The idea behind the control tower was to create a logistics centre to manage Sandvik Mining shipping operations centrally and serve as a sort of cockpit for SMC Logistics. Working in cooperation with Pagero, SMC Logistics built the framework for how the operations of the control tower would be conducted, and the function it would have.
This included developing processes and roles in the control tower. The information structure and areas of responsibility for the control tower were divided into four different levels, covering everything from load/shipment planning and deviation management to financial follow-up and strategic/ tactical planning.
Managing different data sources
Access to a host of different data sources was essential to the control tower’s ability to meet its information requirements at every level. Pagero gained access to all the relevant order information from SMC’s own ERP management system. Fifteen shipping companies were linked to the system via EDI, giving Pagero access to information on shipment statuses, invoices, deviations, and actual delivery dates. The distribution centre in Eindhoven, which handles the distribution of goods mainly in the EMEA region, could then be tied into Pagero. The Control Tower was now ready to conduct large scale testing of the system functionality in earnest.
The Control Tower in Dublin went live in February 2008. Today, the bulk of the shipping logistics for SMC Logistics within the EMEA region is managed by a group of eleven people, all working with Pagero. The main task is to provide logistics support and services for the EMEA region and its associated business segments, and to identify and provide logistics synergies to SMC globally.
Pagero now enables SMC’s regions and segments to follow the entire logistics flow and access shipment status information using a web browser. “With all the information sources (more than 100 external parties) linked to Pagero, we are now managing the daily operational shipping logistics, and can also make advanced cost, quality and follow-up calculations,” says Nygren. “The ability to break down shipping costs and delivery quality by supplier, product or destination is opening up new opportunities for us to streamline our operations.”
“Having complete and reliable information optimises our ability to make the right decisions, ones that result in higher quality and more cost savings.”
Automated invoice control
Invoice control has also been automated and brought to the fore. It is now being managed via Pagero TMS, thereby enabling both the logistics function and the financial depart¬ment to save time and money. Following the introduction of Pagero and the Control Tower, SMC Logistics has achieved better visibility both internally and externally, as well as a higher proportion of automated processes and improved cost follow-up.
The way forward
After quickly demonstrating its benefits, the control tower project has aroused great curiosity within the Sandvik Mining business area. “With more distribution centres linked to Pagero, we are able to do advanced follow-ups. Having complete and reliable information optimises our ability to make the right decisions, ones that result in higher quality and more cost savings,” says Nygren. “As an environmentally aware company, we are also following up and documenting the impact of our shipments on the climate. Here again, Pagero will play a key role.”
Facts and information
The control tower’s responsibilities and information structure are divided into four different levels:
Operational execution – management of load and shipment planning. Complaints, direct dialogue with SMC companies, deviation management, customer service and general problem solving are also handled at this level.
Operational backoffice – responsible for invoice control, contract administration, timetables, service level agreements, supplier and customer follow-up, and quality control.
Tactical planning and realisation – an integral part of SMC’s total shipment management apparatus for managing processes, supplier choices, key figure formulation and guidelines for the rest of the logistics operations.
Strategic design and follow-up – processing of requirement specifications from the management, plus follow-up of customer requirements, CO2 and budgets.
Sandvik Mining is a business area within the Sandvik Group and a leading global supplier of equipment and tools, service and technical solutions for the mining industry. The offering covers rock drilling, rock cutting, rock crushing, loading and hauling and materials handling. In 2012, sales amounted to about 37,800 MSEK, with approximately 14,000 employees.