Small, fast pilots: The secret of Henkel’s supply chain success

Small, fast pilots: The secret of Henkel’s supply chain success

Internet of Business speaks to Wolfgang Weber, a speaker at its Internet of Supply Chain conference to be held in Amsterdam on 17 & 18 May 2017, to get a sneak preview of just some of the IoT lessons he’ll be passing on to attendees.

Henkel – the German manufacturer of well-known brands including Persil washing detergent, Pritt glue sticks and Schwarzkopf shampoos – takes a great deal of pride in its sustainability credentials. 

And independent assessors who rate and rank companies on their sustainability seem to agree that some satisfaction here is warranted, with the company starting 2017 as the recipient of no fewer than four recognitions for its ‘greenness’.

Toronto-based Global Knights placed Henkel in fifteenth place on its Global 100 Index. Sustainalytics, meanwhile, rated it a leader in its ‘household and personal products’ category, coming first out of 40 companies assessed in this sector. Henkel is also recognized in RobecoSAM’s Sustainability Yearbook 2017 and has appeared on the FTSE4Good ethical index series for sixteen consecutive years.

As a result, it’s little surprise that much of the company’s IoT work, as part of its wider digital transformation journey, focuses on boosting sustainability levels even further. “Sustainability is where we started with IoT in the supply chain,” Wolfgang Weber, head of strategy, governance and M&A for supply chain within the laundry & home care category at Henkel tells Internet of Business.

“We stuffed the whole manufacturing area with approximately 3,000 sensors tracking real-time energy consumption, which we then relate to manufacturing volumes, in order to get good visibility into the specific rates of energy consumption per unit manufactured. We track that globally and have strong benchmarks in place, and have already seen a payback in double-digit millions of Euros,” he says.

In his presentation at the Internet of Supply Chain conference, to be held in April 2017 in Amsterdam, Weber plans to focus on some of the lessons that Henkel has learnt along the way and which continue to inform newer IoT projects. In particular, he’ll look at the role of experimentation and pilot programs in achieving that success. The main thing, he says, is not to fear failure. Not every pilot will work out, but every pilot should teach you something that you can take into the next program.

“Define your pilots, start small and fast. If it turns out you were wrong, then fail small and fast, too, and revise your decision on that basis,” he says. “Where you meet with success, ramp up those successes quickly.”

Another piece of advice: spread your net wide. Bright ideas can spring from all sorts of areas of the business. “Allow for smaller pilots to be seen on the radar, whether those ideas were developed at the corporate, international level or from a small, local organisational unit.”

It’s a very different process from traditional corporate R&D, which tends to focus on large working teams, long-term strategies and multi-year deployments of technology.

“That, we see as inappropriate in the context of digitalization, because the world is changing so fast and opportunities cross your path on a quarterly basis,” he says. The challenge is to identify those opportunities early and build a governance model that allows you to keep good control of all the pilots you run.”

Read more: The voice of the warehouse worker

At the same time, supply chain leaders must pay close attention to their big data strategies, he says, if they are to see IoT have a big impact on their key performance indicators (KPIs), in areas such as asset and workforce utilization, service levels and process quality.

“IoT in your supply chain involves a big change in terms of real-time data availability and accessibility,” he says. “The volumes are huge, but so are the opportunities. What counts here is presenting very up-to-date data to people, right at the time that they need to make a decision quickly. Time delays that are seen with monthly reporting cycles are not a good fit for business today. This is the biggest challenge and biggest opportunity for supply chain organizations.”

As a result, the sensors with which Henkel’s supply chain has already been “stuffed” in many cases feed into the operational ERP [enterprise resource planning] environment, in Henkel’s case is based on software from a fellow German company, SAP. There’s a lot of work needed to achieve that kind of integration, Weber says, but it’s worth it when it gives people working in the supply chain new perspectives on current conditions in that chain, as well as potential bottlenecks.

“Above all,” says Weber, “our strategy is never to go for something just because it’s fancy or modern. There is a lot you can do with IoT and digitalization in the supply chain, but we screen the landscape very carefully for those opportunities that make good business sense, because they deliver a benefit that plays directly to our company-wide KPIs.”

And that, he adds, is how you sell a bright, innovative idea to cautious senior leadership, however risky or disruptive it might initially appear.

Read more: HPE’s ‘proof of concept’ approach to future supply chain improvements

Internet of Supply Chain is the only event bringing together Supply Chain executives representing the retailers, manufacturers and logistics operators to share best practices and inspire new revenue opportunities.
The two-day forum will offer as yet unheard case studies on how the total lifecycle of a product can be monitored in real-time and be delivered on time without any compromise in quality.
Key themes will include using IoT to improve end-to-end visibility, modernizing a legacy supply chain process and marrying manufacturing and supply chain. Click the below logo for further details…