Logistics underpins Tegral’s 

customer service

Kennedy joined Tegral as logistics manager three years ago. He was part of a new management intake covering plant, logistics and sales who were appointed at around the same time to replace a number of long-serving managers who had reached retirement. This changing of the guard brought in a new team and Kennedy was given the responsibility of creating a logistics discipline.

The logistics department consists of a team of buyer/planners for raw materials, maintenance/parts, traded goods and intergroup buying; a warehouse manager (with 10 staff), a production planner and a transport planner.

“Prior to my joining,” he says, “Tegral had a purchasing manager, who responsibilities covered only procurement. The warehouse reported to the plant manager, elements of transport and transport purchasing came under sales. Part of the product portfolio was handed by finance. So, the logistics functions were dispersed. I became responsible for the total supply chain -- from materials purchasing to the time the finished goods in the warehouse were delivered to the customer. It was a matter of putting people from all these different places under one umbrella.

“It was a major challenge because the concept of logistics was new to Tegral and it amounted to a huge culture change right through the company. Tegral is a long established company but it’s very progressive in its approach, so I had the full support of management in introducing an integrated logistics function.”

Tegral in Ireland operates autonomously but it makes use of the Group’s combined purchasing and negotiating power. “One of the benefits of being part of a group like Etex is that much of the raw material is bought at Group level. We deal locally with with local suppliers but prices still have to remain competitive in the Eurpoean context. we look to partners across the Group for other raw materials purchasing. I attend regular Group logistics and purchasing meetings in Brussels .”

Aside from intergroup trading, Tegral deals with about 40 main suppliers – about half in the maintenance area. “We have a mutual loyalty with our suppliers,” says Kennedy. “ We have an open book philosophy and we have been doing business with most of the same suppliers for years. We believe in working with our suppliers, negotiating the best deals, without trying to squeeze margins unrealistically. We treat our suppliers well. We know that suppliers, like us, need to make a fair profit to stay in business.  However, we never put ourselves in a position where we are wholly dependent on any one supplier; we always have a back-up supplier. “

Kennedy affirms that he is always open to new suppliers. “We are prepared to give them a try – if their price is in the ballpark, we’ll look at samples, give a small order and if price, quality and range are within what we’re looking for, we’re prepared to give them business. Of course, we then give existing suppliers an opportunity to review their prices.  They are well aware that we keep contracts under review. We have a very good knowledge of what other companies are paying both here in Ireland and across Europe .”

A big plus for Kennedy was that his arrival at Tegral coincided with a decision by Etex to establish a Group logistics department to achieve synergies across the group. It had begun the process of working with companies in the Group to develop logistics management. There is now a logistics manager in each company in the Group.

At about the same time, Etex commenced the implementation of SAP across the Group. “This was a huge development and it was, of course, an absolutely fundamental factor in establishing an integrated logistics function.  SAP has transformed the company in terms of the data now available to us. Using SAP, we know what we need to order, manufacture, stock and deliver based on real time information that was not previously available to us.

“Tegral was a manufacturing-driven company, highly automated, and everyone was focused on the production end and on production costs. But the broader logistics area – procurement, warehousing and transport – needed focus and a strong emphasis on the importance of the whole logistics function. Today, logistics underpins our customer service. We have a bulky product and moving that around is expensive. Logistics has a huge bearing on service levels to customers. We have 98% product availability for customers at all times.

“SAP was a challenge to implement. We were the second company in the Group to go live and it is still in the course of implementation across the Group. Our aim was to achieve efficiencies without in any way affecting service to customers. Initially we had some problems but this was kept in-house: the customer wasn’t affected. That was the crucial thing. Shipments still flowed out of here. We have a good backup. The Etex Group put in a very large team selected from all departments in all factories in who knew the business and helped implement SAP in each country. As a result, we had no need to bring in SAP consultants here. Our SAP implementation team went to Belgium and trained for a year before we set it up.”

“We now have Key Performance Indicators covering stock levels, slow moving stock, cost per tonne for finished goods, average tonnage per load. Etex audits our SAP implementation to see how we perform in comparison with the rest of the Group – and we are the top performing company over recent years.

“SAP has given us information that we never had before. Across the Group, we are able to see how other Etex companies are performing. When we source products from, say France , we can access their systems and determine the best time to order and see our order progress through their systems, from order to delivery. It has been a tremendous plus for us in recent years, as we have grown.”

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(c) Purchasing and Supply Solutions