The hub and spoke principle
Logistics
The hub & spoke principle
The high-bay warehouse in Vendenheim stands at a towering 12 metres. The logistics employees have their sights set far beyond this.
Hager Group is introducing a new logistics concept to help its products reach their destinations faster. This large-scale reorganisation of the flow of goods represents part of the group’s intensified focus on its most important success factor, the needs of its customers.
It may come as a surprise to discover that the popular Italian staple, spaghetti, has recently become something of an obsession for Detlev Röttger in his role as logistics manager at Hager Group. A symbolic handful of spaghetti to be precise, which represents the complex flow of goods in a global corporation such as Hager Group. A slide from a presentation by Director Logistics Europe, Detlev Röttger, illustrates these multi-link transportation routes, which, spread over a map of Europe, are reminiscent of a handful of uncooked pasta. These links lead from Hager Group’s 20 European production sites to thousands of customers across the continent who know and value the group’s solutions. While this may be pleasing to look at, it is also rather complicated, and much slower and less efficient than it could and, in future, should be.
According to Detlev Röttger and his manager Bénédicte Crosnier, the spaghetti principle will soon be a thing of the past. Bénédicte Crosnier, Hager Group’s Vice President Logistics & Supply Chain and Detlev Röttger, are currently planning a complete reorganisation of the distribution of goods. “With our new logistics platform, we will be able to supply wholesalers, electricians, large DIY stores and panel builders more directly, faster and more efficiently,” explains Bénédicte.
Instead of using many separate transportation channels to customers, Hager Group will, in future, supply all of its local distribution centres (and European customers) from a single central warehouse. On Detlev Röttger’s slides, this new logistics model is represented by the spokes of a wheel leading from the central hub to the various end points. “The hub and spoke are representative of our goal of always having the right product in the right place at the right time,” says Detlev. “This may sound obvious, but it’s anything but straightforward.”
With our new logistics platform, we will be able to deliver more directly, faster and more efficiently.
The challenges associated with achieving this ambition are currently in evidence in Vendenheim in Alsace. On the outskirts of the small town ten kilometres north of Strasbourg, construction work began in the summer of 2019 on a 27,500 m² warehouse complex which Hager Group took over at the end of 2020. The Vendenheim Logistics Hub, to give it its official name, will form the central axis of Hager Group’s logistics network. Many products and solutions from the company’s production network will be bundled here for shipping to local distribution centres, as well as to some direct customers in Europe. The company will also be setting up two conveniently located Local Distribution Centres in France and Germany, which will also be served by the Vendenheim Logistics Hub and deliver to the group’s two largest markets, plus Austria and the Netherlands.
When the Vendenheim Logistics Hub goes into full operation in autumn 2021, state-of-the-art technology, sustainable solutions and around 100 employees will be responsible for loading up to 40 trucks per day. “To stick with the metaphor, Vendenheim will serve our company as a fast-moving and highly efficient hub,” explains Detlev Röttger. All in service of the company’s ultimate goals: greater responsiveness, shorter lead times and maximum flexibility for customers.
Our European customers served via a central warehouse.
From a manufacturing focus to a customer focus
The rationale behind this fundamentally new approach to logistics is a desire to move away from the decentralised network established over the years (based around plants and production sites) towards a centralised model that is consistently aligned to the needs of customers and their projects. Besides making the company more customer centric, Hager Group’s Project 2030 also aims to intensify its project-based business. The Vendenheim Logistics Hub will therefore be one of the first tangible and measurable outcomes of Project 2030. It is also proof of the ambitious approach being taken by Hager Group as it looks to the future.
Vendenheim will serve as a highly efficient hub.
For large-scale projects, a great many products and solutions often have to be delivered to a construction site exactly as ordered. “With our old logistics model, this would have meant several trucks delivering to the construction site from different plants,” says Detlev Röttger, who managed logistics for a systems provider in the industry before joining Hager Group. “Obviously, this is suboptimal both for us and for our customers.”
The needs of customers today are as varied as their fields of business and their projects. Detlev and his colleagues receive first-hand information on these diverse requirements in their many conversations with customers and on customer visits, “…putting the pandemic to one side, we logistics managers and our sales colleagues visit dozens of customers every year. A face-to-face, on-site meeting is always more revealing than indirect communication.” On a visit to a panel builder a while ago, he saw for himself just how limited the on-site storage capacities and room for manoeuvre actually were. This explains why it is so important to such customers that the required components are delivered at exactly the right time. On the other hand, predictable delivery cycles are more important than flexible, just-in-time deliveries for many wholesalers, one of Hager Group’s major customer groups. In other words, each customer has its own preferences. “An important goal of the future Hager supply chain is to cater perfectly to the demands of each customer segment,” says Bénédicte Crosnier.
Robust processes that are flexible for the customer
Ideally, customers should receive their orders the very next day, – an ambitious goal that now looks realistic thanks to the planned Local Distribution Centres. Other customers, however, are in less of a hurry or prefer combined shipments on fixed dates, for which they can keep capacities free and plan storage space. What is important is that, in the future, every customer should receive the service they want and need to suit their individual processes.
To provide this, however, Hager Group’s logistics processes have to be extremely robust. This is why the revamping of the logistics network will be accompanied by comprehensive standardisation and automation. This is key to the timely and efficient delivery of the specific items from the group’s portfolio of around 200,000 products that a customer anywhere in Europe may need at any time. In 2021, the Vendenheim Logistics Hub will be equipped with a fully automated small parts warehouse that will automatically prepare the items in an order from 12-metre high-bay warehouses with the aid of conveyor belts and robots. A comprehensive track-and-trace system will allow customers to transparently keep an eye on their order and its arrival time. At the same time, logistics managers such as Bénédicte Crosnier and Detlev Röttger benefit from the fully digitised process that allows them to identify possible problems and potential for improvement.
What we have ahead of us is open-heart surgery. We will minimise the impact on our customers to as great an extent as possible through expert project and risk management.
Reconstruction during full operation is like open-heart surgery
There may be delays in the coming months and years. “What we have ahead of us is open-heart surgery,” says Detlev Röttger. “When you rebuild a logistics system of this size and operate an old and new system at the same time, you have to expect problems. We will, however, minimise the impact on our customers to as great an extent as possible through expert project and risk management.”
The logistics specialists expect the new distribution centres to be completely built, fitted out and up and running in around two years. Two years, then, in which adverse conditions and bottlenecks, initial system start-up and the training of new employees might bring one or two challenges. Yet there is no alternative to the comprehensive rebuild. “Customers of companies such as Amazon are used to seeing their orders fulfilled within 24 hours,” says Bénédicte Crosnier. “And expectations will only continue to rise. With our new logistics concept, we will be able to meet these expectations as far as possible.”
Hager Group’s new logistics concept will be fully operational by late 2023. By this point, conventional shipments according to the occasionally complex ‘spaghetti’ method will have made way for a functioning flow of goods according to the hub principle. In the ideal case scenario, Hager Group’s customers will remain largely unaware of this. Except, perhaps, when they notice Hager Group has very smooth delivery processes, just like a well-oiled wheel.
The expectations of our customers will only continue to rise. With our new logistics concept, we will be able to meet these expectations as far as possible.
