Rohde & Schwarz – a globally-leading electronics group based in Munich, Germany – has massively overhauled both its supply chain and manufacturing processes. Streamlining its ability to meet demand by placing the customer at the heart of its operations has not only enabled the company to achieve this goal, but has also created a completely new way of providing value for a range of sectors and markets.
Rohde & Schwarz utilises over 80 years of experience in high frequency technology to deliver products and services to a wide range of sectors, spread across a variety of markets. These comprise: wireless communications tests and measurement, secure communications, media operations, radio monitoring and radiolocation and IT security.
From a products perspective, the company provides universal test platforms for all wireless communications and wireless standards, oscilloscopes, army radio based SDR (software defined radio) technology, Ethernet encryption, TV transmitters and receivers for radio monitoring. Of the company’s 9,900 global employees, almost 6,000 are stationed in Germany, which not only greatly reinforces its position in the country, but the entirety of its European coverage.
Klaus Buchwald, Vice President of Corporate Supply Chain Management at Rohde & Schwarz adds how the sales channel is set up: “We rely on our own sales force who are experienced in our customers’ products because they are often very complex and specific. It is really helpful to have our own sales force to explain our customer's product and help them find the right hardware or software configuration and explain how to use it. On top of that, we established distributor channels for products that have less complexity and are more standardised.”
With its sales channels divided into channel partner and its own sales force. Rohde & Schwarz is able to serve its more than 93,000 different articles, with 17,000 new articles every year, to more than 40,000 customers, with a rise of up to 10 percent year on year
Having the ability to provide a range of sectors with so many services has ensured that Rohde & Schwarz is perfectly positioned to offer after-sales services across its entire range. Alongside more traditional offerings such as warranty extension, online service management and order tracking, the company can also offer more customised solutions. These include service request handling, service level agreements and obsolescence management.
Besides this, the company’s logistics requirements have changed dramatically since 2010. Rohde & Schwarz has experienced a reduction in delivery times and product lifecycle by 40 percent, a 100 percent increase in make-to-order, and a 60 percent increase in the number of assembled materials. Based on the KANO model of flexibility, agility and lead time, the company has been able to drive customer satisfaction and differentiation by a decisive competitive advantage through supply chain performance.
Markus Fischer, Director of Supply Chain Management at the company’s Memmingen plant explains the change process: “We started with the vision for one day turnaround time production and supply chain with a clear belief to invest in flexibility instead of a forecast process and to reduce logistics cost and cost of sale to increase EBIT.”
To bring the vision into real life and into the heart of all employees working in production and supply chain, Rohde & Schwarz developed a production system based on the LEAN philosophy with a three step approach. Having the end in mind “The one day plant” turnaround time was defined as the main driver.
In the first step “transparent production system” value streams were identified, lot sizes determined and the lead times stabilised. Based on that in the second step “synchronised production system” the value streams were connected with a KANBAN system and the turnaround times further minimised. This was the base for the third step “learning organisation” where throughput increased, lot sizes reduced and the ability to react boosted.
Buchwald explains how the changes were implemented across thousands of employees: “We initiated Change Management trainings for all levels of hierarchy and initiated a shop floor management initiative to make sure this could be communicated on a daily basis – we are always trying to support our staff and doing as much as we can to help them.”
Since implementing these fundamental changes, the company has been able to focus substantially on reducing lead times while increasing volume flexibility, which has had, amongst other things, a profound effect on its ability to exceed the demands of its customers.
Buchwald explains: “To be really prepared and to have different abilities to our competitors, we need to have all necessary parts before final assembly. With this concept, we really try to use the customer order as the consumption trigger and then, based on this order, we do an assembly on what the customer really needs - our customer then has the opportunity to choose between a large variety of hardware and software based options – and this combined with stable lead times whatever high the demand is.”
Supply chain agility through digitalisation
Adding various layers of value to its manufacturing processes necessitated the company’s adoption of an ERP system to manage the increased complexity of its operations – but technology extends far deeper than at merely a systems level.
Rohde & Schwarz used its SAP system to dimension and link the established value streams with KANBAN up to seven level of the value chain – from final assembly to PCB test and assembly, PCB production, noncutting and machining production to cable confection.
Fischer says: “Our company is really technology driven. We have been working with ERP and SAP systems. We need to understand what is happening on the shop floor and value streams. Of course, you can address SAP and how much we produce and in what configuration – we need to ensure that the data on the system corresponds what is going on in reality.
If we have a better understanding of the reality we can manage better value streams and clients. Our whole supply chain needs technology - we use data, systems and interfaces. We are also in the process of digitalising our supply chain. Because we are living in a global world, our customers use systems that we have to connect to ours.
Buchwald concludes: “With the successful LEAN transformation we reduced and mastered complexity but, more importantly, we laid the base for the Internet of Things. We established the ability to change and increase our resource efficiency and can bring concepts like collaborative robotics, digital operation with big data in production and new business models for maintenance via life cycle monitoring into real life.
“Here also the need for protection in all the big data and digital operation came into reality to reality and we can actively show the use cases of our latest found business division cybersecurity in our own operation.”
Rohde & Schwarz has shown through the diligent way it approaches its operations, manufacturing, and supply chain that it is a company strongly grounded in the current realities of modern electronics. The company does, however, have the foresight to appreciate the increasing importance of technology on its operations for the foreseeable future. Having revolutionised a major portion of its business and supported the changes with the LEAN philosophy, Rohde and Schwarz is now poised to dominate its space with the possibilities of the Internet of Things.