One small change for Balluff transforms customer relations, with help from SAP and IBM

Published on 19-Feb-2010

Validated on 03 Dec 2013

"IBM Global Business Services was able to understand the challenge at both the technical and the business levels, and provide the expertise to architect and implement an excellent solution." - Ralf Grasmann, Vice President Stategic Sales and Support, Balluff

Customer:
Balluff

Industry:
Consumer Products, Electronics, Industrial Products

Deployment country:
Germany

Solution:
Business Integration, Enterprise Resource Planning, Optimizing IT, Optimizing IT, Supply Chain Management

IBM Business Partner:
SAP

Overview

Founded in 1921, Balluff has grown from a simple mechanical repair shop for cycles, motorbikes and sewing machines into a global corporation specializing in advanced sensor devices. The company, privately held, employs some 1,800 people in 53 locations on all five continents.

Business need:
Balluff’s product identification system generated very long order codes containing 30 or more characters. Each manufacturing site issued its own identifiers (material numbers) for the same products, making global price maintenance a time-consuming, manual process. Customer-specific product configurations could not be assigned an order code, and the configuration details were lost once the order had been completed, making re-orders difficult to re-create.

Solution:
IBM Global Business Services and Balluff created a unified, drastically simplified single new order code, managed from within its core SAP applications. The new codes represent a unique identifier for a Balluff product with defined technical characteristics, and are independent from the manufacturing site and the actual technology used. A special SAP-based workbench was designed to support the process to apply the changes in item data, drawings and other product-related documentation.

Benefits:
Customers experience a simplified ordering process that reduces order error rates. Customers can re-order specific configurations using the same seven-character order codes without having to re-specify the original product, cutting both their and Balluff’s cost of doing business. Balluff is now experiencing a drastic decrease in the effort taken to maintain sales prices across all sales offices world-wide.

Case Study

To read a German version of this case study, please click here.

Founded in 1921, Balluff has grown from a simple mechanical repair shop for cycles, motorbikes and sewing machines into a global corporation specializing in advanced sensor devices. The company, privately held, employs some 1,800 people in 53 locations on all five continents.

With more than 40 years of experience in the field of sensor technology, Balluff is one of the most capable manufacturers in this area today. Balluff components contribute to thousands of domestic, commercial and industrial products, helping to control manufacturing processes and machinery. Invisible actuators, optical sensors and electronic detectors contribute to almost every aspect of modern, instrumented systems.

Long codes create extended problems
Every Balluff product was assigned an alphanumeric order code, containing up to to 30 characters, such as M12EG1-PSC60Z-S04G-S11 and M08EB-NOC40F-S49G. The order code was attached to the material number issued by the particular manufacturing site, in Germany, Hungary or China. The codes contained useful information for Balluff and customers, but were a permanent source of typos, misspellings and incorrect shipments. It was all too easy to introduce copying or keying errors when placing orders, and many EDI and Web ordering systems could not manage such long identifiers.

Additionally, Balluff would frequently shift manufacturing of a particular product to the most cost-effective location. In this case, because each manufacturing site issued its own material numbers, bills of materials and routing documentation, the product order code would have to be re-matched to the new material number. With thousands of products sold globally, maintaining valid price lists with the correct coding was a huge project, requiring intense manual effort on a daily basis.

For many customers ordering specific product configurations, Balluff did not have the ability to issue a unique order code. Once the order had been completed, the configuration details were lost. To place a re-order, customer and Balluff staff would have to find the original configuration details – not an easy task when faced with thousands of products that function reliably for many years.

Ralf Grasmann, Vice President Stategic Sales and Support, comments, “The industry as a whole was switching away from legacy coding systems, and moving to much more compact identifiers. Our challenge was to migrate from the old to the new standard with no loss of business information and transparency, with no interruption to production, and to introduce an easy, quick and reliable process for customers.

“Not only did the legacy coding system cause us internal reporting, control and cost difficulties, it presented a poor image to our customers.”

Small change brings big results
To address the situation, Balluff engaged IBM Global Business Services to design a more compact order coding solution. A key element would be that an order code would remain unchanged even if the product manufacturing site varied or the underlying technology of the product changed.

By itself, this small change would produce big results. In particular, it would avoid the need to distribute new order codes and price lists to the global offices, eliminating a complex and largely manual process from the IT department workload. Additionally, short codes would reduce error rates and enable EDI and Web order catalogs to integrate easily with the Balluff systems.

In the first place, IBM tested and prototyped the idea to help build the business case, reviewing the likely benefits of the proposal and the affect it would have on Balluff. Order codes are used in almost every department in the company, such as manufacturing, marketing, sales, distribution, web catalog and EDI. Making this fundamental change would require an intensive internal transformation program, too.

Having established the feasibility and developed the business case with projected cost savings, IBM Global Business Services turned to the practical implementation.

IBM Global Business Services designed seven-character product codes, stored in the European Article Numbers or Universal Product Codes (EAN/UPC) field contained within the SAP materials management component. The new codes are structured to contain basic information about the products, and are linked through SAP to the underlying material numbers from each manufacturing site and to the longer Balluff codes, preserving the connection between the customer-facing identifiers and the 30-character internal system.

Brevity delivers elegant simplicity
The new codes are not only easier and more customer-friendly, customers no longer see, or need to use, the former 30-place order codes. IBM Global Business Services designed a generation schema that ensures that the new codes do not contain characters that could be confused, particularly important where orders are faxed in countries where Western alphabets and numerals are not in common use. The codes are brief enough to be included on every Balluff product, and engineers completing work at remote locations find the seven characters easy to use when identifying components and placing orders.

By using the SAP EAN/UPC field to store the code, IBM Global Business Services was able to create an unalterable automated connection to the manufacturing site’s material number. If Balluff chose to shift production from, say, Hungary to China, the new Chinese material number was automatically attached to the existing product code. New and re-orders would therefore correctly identify the same product, and there was no need to send updated price tables and order catalogs to all the Balluff sales offices.

Ralf Grasmann, Vice President Stategic Sales and Support, comments, “IBM Global Business Services was able to understand the challenge at both technical and the business levels, and provide the expertise to architect and implement an excellent solution. The use of the existing EAN/UPC field helped us avoid unnecessary development work, and provided a comprehensive solution that works beautifully for Balluff.”

Additionally, IBM Global Business Services realized that a product ordered to a specific configuration could also be assigned a code, which could be linked both to the material and to the configuration. With the new solution, the system assigns a unique short code to the configurable characteristics, and the code then remains with the item. Customers re-ordering such configured products would no longer have to find the details and re-specify the complete order: the single, new, product code would regenerate the original configuration.

The consequence is not only that customers experience an easier and more accurate process, their re-orders, order histories, volumes and prices are fully preserved by Balluff. This helps the company analyze and understand its production, logistics, sales and customers in greater detail: who is buying what, which products and configurations sell well, and what margins are sustained for each variation.

Reducing errors improves service
Balluff has introduced the short order codes across all its sites, sharing the same code for the same item. This simple step has removed the manual price maintenance process, saving significant administration costs on a catalog that contains several tens of thousands of items.

With standardized short codes, order process error rates have declined with reduced incorrect or incomplete fulfillment, and a consequent reduction in customer complaints. The introduction of short codes means that there is no longer a need for work-around for customers using EDI or online ordering systems, which helps to reduce errors and improve the perception of Balluff as a customer-friendly, modern organization.

Florian Hermle, General Manager – Sales, comments, “The expected benefits have become reality. The introduction of the short codes solution can be seen as a very technical adjustment to Balluff’s operations, yet the IBM Global Business Services team understood that it is much more than that.”

Ralf Grasmann comments, “IBM Global Business Services provided the creative insight to design the solution, the technical skills to deliver the implementation, and the business understanding necessary to ensure the worldwide transformation of our processes. By using the flexibility and power of our existing SAP investments, Balluff has been able to made a significant change with just seven small characters. We could not have made this change without IBM Global Business Services.

“Balluff carries a high reputation for innovation and excellence, and the short codes ensure that our business administration services are seen to be as reliable, efficient and advanced as our sensor products themselves.”

Products and services used

IBM products and services that were used in this case study.

Service:
IBM-SAP Alliance, IBM Global Business Services

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