Fricke streamlines processes for global business with IBS supply chain software

Customer Story

Reliable next-day deliveries put high demands on the IT solution of a commercial business. But if that solution also supports international expansion, there are no limits to success as agricultural machinery trader Fricke discovered.

Every industry has its peculiarities, and the trade in agricultural machinery and corresponding spare parts is no exception to this rule. Wilhelm Fricke mbH & Co. KG, trading in agricultural machinery and commercial vehicles, must cope with a wide variety of specialized spare parts and components. More than 4.3 million items are available and many of the 3.500 daily orders have a high priority – especially if the continued usage of combine harvesters and other machinery for harvesting and planting depends on a prompt fulfilment of those orders.

Efficiency is key

“For us, the best solution lies in a consistent and paperless workflow that supports communication along the entire supply chain,” says managing director Hans-Peter Fricke. “In our company, an order must be completely processed within an hour.” Fricke wanted all processes to be integrated in one supply chain management software. The result should be a seamless chain of processes, from order entry all the way to shipment and invoicing.

Seamless integration was required for (1) an automated inventory control system that would be able to initiate a standardized replenishment process, (2) RF-supported picking with integrated dispatch logistics software and support of third-party logistics providers and (3) all the processes of an international financial management system.

Different regulations

Multi-language and multi-currency features were on the top of Fricke’s wish list. The company has its headquarters in Germany with subsidiaries in Belgium, Great Britain, Italy, the Netherlands, Poland and Ukraine. Since Fricke is aiming for expansion, future reliability and international presence of the software vendor were also a decisive factor.

“Multinational businesses need to keep in mind that each country they are trading with may have totally different accounting regulations,” Fricke points out. After the companywide implementation of IBS financial software Fricke can deal with such peculiarities as the Belgian VAT system which, according to Fricke is about 20 times as complex as the German one, or with ‘negative correction entries’ that Polish law requires for invoice credits. “Nowadays we write all our invoices in German and our financial software translates everything into the desired language and considers all the local requirements. This is where we see the strength of a financial system that is implemented in 40 countries and benefits from the experience of each individual user.”

All areas covered

Of the 520 full-time and 210 part-time employees at Fricke, 190 use IBS via PC and another 350 via other data entry devices. The IBS supply chain software covers all the core areas and has become “one of the most important, if not the most important key factor of all,” Fricke says. Considering this, the wide acceptance by the users - located across 20 subsidiaries in eight European countries - is very important to Fricke.

The entry of incoming orders (which are still received by phone or fax) initiates a workflow that takes care of quick and accurate fulfilment. From the central warehouse, products are distributed to customers all over Europe. Things are complicated by a wide variety of different machines, from combined harvesters and seeders to farmyard tractors. In contrast to the automotive industry, companies trading in agricultural machinery need to stock spare parts for older machines and devices as well.

Stock levels have been significantly reduced thanks to the inventory control software, with its dynamic demand forecasts and replenishment suggestions. Orders for non-stock items are automatically sent to the supplier that offers the lowest price. For items kept in stock, the IBS inventory software creates pick orders that are directly transferred to the pickers’ radio frequency scanners. With the help of barcode scanners, the required items are picked and prepared for distribution within a short period. Finally, loading lists are transmitted via EDI to the logistics providers that come to pick up the labelled packages ensuring quick and secure access to the loaded goods at the customer site.

20 percent growth rate

“With IBS we standardized and optimized our processes,” Fricke points out. “This helped us build a high-quality information management system that provides us with a solid basis for decision-making. That is one of the reasons why we have been able to proceed faster than expected with our European expansion.” In the ERP area, state-of-the-art technology has proven that faster deliveries and higher customer satisfaction rates can go hand in hand with a significantly reduced stock level.

The new supply chain software has contributed to the company’s 20 percent growth rate. Features such as integrated margin control and precise cost calculation make sure that more efficiently calculated prices lead directly to a competitive advantage. Fricke points out that the company’s international expansion would not have been achieved without the IBS supply chain management software, and gives a precise example of its economical benefits: In 2005, revenues went up by 22 percent, while the share of labor costs in the picking department has remained almost unchanged with its 3 percent increase.

Future co-operation firmly planned

Moreover, another increase in efficiency is just about to be achieved. Fricke is going to implement a multi-language e-shop based on IBS technology. This functionality allows for order entries without a media breach and enables customers to check stock levels and follow-up on order statuses. “In the call center area alone we expect to lower our employee level by 35%,“ Hans-Peter Fricke anticipates. “By reshuffling personnel we will in part be able to compensate for staff growth in other areas.” In 2005 alone the company hired 92 new employees.

Hans-Peter Fricke believes another expansion of the spare parts business by 20% annually is realistic. There is no doubt that IBS is an excellent partner for the company’s future development. “When we chose our SCM software, we did so with our future development in mind, and together with IBS we will continue to develop the SCM system.” In this respect, EDI integration is at the top of the agenda.

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