What customers want and logistics does
MISUMI Europa GmbH
MISUMI Europa GmbH is the global manufacturer and leading supplier of mechanical components and indirect materials for special-purpose machine engineering and assembly automation. The company has commissioned SSI SCHAEFER to implement a new 10,000 m² large logistics center in Frankfurt/Main, customized for the company’s e-commerce strategy and future growth targets. By the first half of 2020, an automatic shuttle warehouse, a 4-story racking system, ergonomic work stations connected via conveyor technology as well as WAMAS® logistics software will be in place to primarily handle customized make-to-order (MTO) components from Asia based on the cross-docking principle. These components are consolidated into a single order immediately after their arrival with standard components in stock and then shipped to customers on the same day.
In the following interview, Jörg Gonnermann (General Manager Logistics Service Platform at MISUMI) talks about the challenges of business-to-business e-commerce, which, like many other sectors, is not immune to the pressure of shorter innovation cycles and high market demands.
SSI SCHAEFER: Good morning, Mr. Gonnermann. First of all, thank you for taking the time to do this interview on the topic of e-commerce.
JG: Good morning, absolutely. I am happy to answer your questions.
SSI SCHAEFER: Great! Let’s start then. Mr. Gonnermann, what role does e-commerce play for your company?
JG: The integration of development, production, ordering and delivery processes, especially in machine engineering (which is an overall objective in Industry 4.0) requires all parties involved to advance the digitization and networking of their business processes. In this sense, e-commerce, in all its forms, is an integral part of our strategy and crucial to a company’s survival in the market.
SSI SCHAEFER: Do you feel e-commerce is an essential market requirement in the industry? Which business model do you pursue?
The MISUMI concept is based on three pillars: As a manufacturer of mechanical engineering components, we focus particularly on configurable components from a batch size of one, primarily for special-purpose machine engineering. In addition, we are a distributor and supplier for our own and bought-in products (ex production or warehouse) with delivery times of one to no more than five days. And finally, we are also an e-commerce platform provider that supports its customers across all contact phases. This begins with the idea and design process, during which MISUMI offers several CAD formats (editor’s note: computer-aided design and work planning) and other digital design tools. We also support our customers with the digital handling of the ordering process, whether in the online shop or with customer-specific punch-out solutions. MISUMI facilitates the exchange of order and delivery data using EDI connections. After the order, the deliveries can be tracked online until they arrive at their ultimate destination.
SSI SCHAEFER: Digitization as well as e-commerce have always been subject to a certain dynamism. How do you perceive the development of this distribution channel and what are the challenges companies like MISUMI face?
JG: The shift away from traditional processes done by phone, on paper or by fax is progressing rapidly ahead. MISUMI has increased the “digital ratio”, i.e., the proportion of business transactions that are completed using electronic channels, to exceed 70% in recent years. There are standards that a market participant must master. In addition, custom products and services are playing an increasingly more important role in the market. Suppliers must be able to adapt quickly to the changing needs of their customers.
SSI SCHAEFER: These are very high market requirements. What do you think are the essential steps necessary to gain a foothold in e-commerce and to succeed?
JG: What’s important: "Getting the basics right first"! Data, processes and the organization must be digitalized today. Indispensable are robust, flexible and open system architectures, which are often only available in the “cloud”. Another key is the product data quality for creating good, relevant content, but also for transmitting the “digital twin”.
SSI SCHAEFER: Are there any other elementary success factors in e-commerce besides digitalization?
JG: Yes, definitely. Knowledge about existing customers, on the one hand, and the ability to reach potential, new customers and filling their needs, on the other hand, are the keys to success. Through a Voice of Customer Program, MISUMI receives this specific customer knowledge, ensuring that it offers innovative and simple solutions. What is important is the rapid (agile) implementation of such measures so perception in the market is positive.
SSI SCHAEFER: Mr. Gonnermann, where is the e-commerce journey heading?
JG: The integration of suppliers such as MISUMI into the supply and value chain will increase. To deliver products and services on the spot, such a digital integration must become standard in the future. It will not be enough to simply be present on the market. Instead, companies will be required to develop and implement new content and offers in a customer-specific manner, so they can stand out from the competition.
SSI SCHAEFER: An exciting topic! Let’s talk about e-commerce logistics: What do you think are the top three dos and don’ts?
JG: Must do: Customer-specific services as well as cross-channel and fast order processing. The don’ts also include the non-availability of goods, the deviation from indicated delivery times or even the delivery of wrong products.
SSI SCHAEFER: The new Frankfurt MISUMI distribution center has a capacity of around 450,000 items on an area of 10,000 m². What were the special requirements for this logistics center?
JG: From an e-commerce provider, customers expect availability of the offered products and a short delivery time. Products in the warehouse in Frankfurt can be delivered to our customers in Europe within one day. In addition to in-stock products, i.e., standard components from in-house and third-party production, our make-to-order (MTO) components also pass through the logistics center. MTO parts are primarily produced in Japan, China and Vietnam. However, for the customer the various procurement channels should not play a role. So, all goods are consolidated in the warehouse in Frankfurt for custom shipments, regardless of their origin.
SSI SCHAEFER: Automation certainly also played a role when planning your logistics concept. What do you think about the degree of automation in e-commerce logistics? Is automation a must?
JG: The innovation cycles in mechanical engineering will continue to become shorter. Accordingly, the amount of time our customers have to develop their products is being consistently reduced. Therefore, our motto is: "It’s all about time". At MISUMI, the high share of cross-docking business (more than 50%) requires a very individual procedure. To handle MTO components, we follow a very strict principle: Delivered products are brought to a consolidation area as soon as they arrive. There, they are picked individually for each customer along with items from the warehouse. Once an order is complete, all items are shipped to the customer on the same day.
With an anticipated number of items of approx. 450,000 SKUs in stock and 20,000 shipments every day, this complex process would be extremely difficult to implement without automation. Still, in general automation is not a must. We manage about 250,000 SKUs on a 4-story shelving system from SSI SCHAEFER, which we continue to do manually. However, this storage area is connected to the conveyor system on every level, so the goods are automatically transported to and from there.
SSI SCHAEFER: And what are the next steps in this project?
JG: The assembly work in the logistics center is progressing well. We use WAMAS® logistics software to handle the coordinated process control of the material flows. Generally, automation will be completed by the end of October. The test phase, commissioning and the go-live process for the entire system will be completed in March 2020.
SSI SCHAEFER: Thank you, Mr. Gonnermann, for the interesting insights.