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WIND SERVICE COMING OF AGE 
Case Study – Spare Parts Improvement 
Projects at Nordex 
Stockholm 
Feb 2013
CONTENT 
1. The Spare Parts Landscape 
2. Nordex and Nordex Service 
3. Spare Parts Challenges 2010 
4. Spare Parts Achievements 2012 
5. Key Lessons in Brief 
6. Making it Work 2013 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 2
SPARE PARTS MANAGEMENT THROUGH LIFETIME OF WTG 
Cross-functional processes, interfaces & tools 
Enable Plan 
Sales Development Dismounting 
Plan Spare Parts Management 
Obsolescence Management, Major Components, Vital Parts, Performance Requirements 
Plan Supply Chain 
Forecast, Network, Assortment, Delivery 
Identify Order Sell 
Source Make Deliver 
Replace 
Return 
Spare Parts Mgmt 
Supply Chain 
Production 
Purchasing 
Enable Spare Parts Management 
Central Engineering 
Service Engineering 
Purchasing, PLM 
BOM (as-built, as-running, spare parts), Material Master Data (0rder Process, Purchasing, Logistics) 
Parts Classification, SAP Processes, Parts Identification Tool, Parts Support 
PM Field Ops 
Service Field Ops 
Service After Sales 
Return 
Execute 
Design 
Assembly/ 
Erection 
Service 
Operations 
Sales CE Purchasing Production 
Supply 
Chain 
PLM PM Service 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 3
CONTENT 
1. The Spare Parts Landscape 
2. Nordex and Nordex Service 
3. Spare Parts Challenges 2010 
4. Spare Parts Achievements 2012 
5. Key Lessons in Brief 
6. Making it Work 2013 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 4
NORDEX IS CAPABLE TO COVER THE ENTIRE VALUE CHAIN 
OF THE WINDPOWER BUSINESS 
5 
Core Business 
Wind Farm 
System 
Planning 
Production and 
Technical 
Implementation 
Wind Farm 
Operations 
Service and 
Maintenance 
Project 
Development 
• Review 
customer micro - 
site planning 
• Support 
customers 
(co-develop-ment) 
receiving 
approvals and 
optimising park 
layouts 
• Assemble wind 
turbines 
• Produce selec-ted 
components 
• Install onsite 
• Carry out initial 
operation 
• Around 2,700 
turbines 
currently under 
Nordex service 
• Full service 
contract 
offerings up to 
12 years 
• More than 10 
years experience 
in developing 
wind farms in 
France 
Further project 
development 
activities started 
in Poland, 
Sweden and USA 
• Offer additional 
services: 
increased 
demand due to 
new wind farm 
investors (e.g. 
insurance com-panies 
like 
Allianz group) 
interested in 
stable cash 
flows 
• 
• Spare parts 
supply 
Focus of case study 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
NORDEX GLOBAL FOOTPRINT: 8,180 MW WORLDWIDE 
5,175 turbines installed, 2/3 in Nordex Service 
America 
5% 
By 
region 
Germany 
27% 
Other 
Europe 
59% 
Asia 
9% 
Nordex at a Glance 
 Global manufacturer of wind energy 
systems with a particular focus on 
turbines in the 2.5 MW class 
 Most extensive and consistent use of 
platform technology in the industry; 
turbines for different wind and climate 
conditions 
 Worldwide presence with branch offices 
and subsidiaries in 22 countries 
 Headquartered in Hamburg, Chicago 
and Beijing 
 Key Figures as of 12/2011: 
- Revenues: EUR 927 mn 
- EBIT: EUR -30 mn 
- Employees: 2,200 
 Total installed capacity as of 1/2013: 
 8,180 MW 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 6
NORDEX SERVICE 
Nordex turbines have reached 
98% Availability! 
In the last twelve months our 
customers with an extended or 
premium service contract enjoyed 
the highest availability ever. 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 7
A STRONG GLOBAL SERVICE NETWORK 
We are close to our customers – so need to be our parts 
Decentralized supply of spare parts and local presence for fast response times. 
Headquarters/ 
Performance Management Center 
Service Areas 
• Germany/BeNeLux/Poland 
• France 
• UK  Ireland 
• Scandinavia  Baltic 
• Italy/Greece 
• Iberica 
• Turkey 
Customer Service Offices 
Service Points 
Spare Parts Logistics: 
Central Warehouse in Rostock, 
Regional Warehouses in US and CN 
Direct shipments to Service Points 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 8
SERVICE WILL DELIVER ABOVE AVERAGE GROWTH 
Market driven by sophisticated customers 
Market Trends 
Global Service market for onshore WTGs (€bn) 
+18% 
27 
2020 
13 
2015 
5 
2010 
CAGR 2010-2020 
RoW n.a. 
42% 
24% 
19% 
11% 
2 
South America 
Asia-Pac. 
North America 
1 
Europe 
2000 
2005 
Total European Wind Turbine and Service market: 
Turnover and share of profit in 2010 and 2020 
Service 
WTG Sales 
Sales Profit share 
100% 
42% 
58% 
2020 
100% 
26% 
74% 
2010 
Service 
WTG sales 
100% 
75% 
25% 
2020 
100% 
26% 
74% 
2010 
 Long term fixed price full 
service contracts (risk 
transfer to OEM) 
 Focus on energy production; 
shift towards direct electricity 
sales to the market 
(predictability  reliability) 
 Growing importance of Health 
and Safety 
 Increasing demand for 
repairs, retrofits and 
upgrades (aging fleet) 
 Customers increasingly select 
component suppliers 
(performance matters) 
1)  2) Source: Oliver Wyman study: ‘Windenergie 2020: Boom-Markt Service’ ; Dec. 2010 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 9
CONTENT 
1. The Spare Parts Landscape 
2. Nordex and Nordex Service 
3. Spare Parts Challenges 2010 
4. Spare Parts Achievements 2012 
5. Key Lessons in Brief 
6. Making it Work 2013 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 10
UNMANAGED  INTRANSPARENT PARTS OPERATIONS 
Complex root causes across all functions and processes 
BOM: Bill of material, MGMT: Management, SP: Service point, SPT: Spare part, CW: Central warehouse 
High service 
inventory 
High logistics 
costs 
No logistics 
promise to 
customer 
Productivity loss 
for technicians 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 11
CONTENT 
1. The Spare Parts Landscape 
2. Nordex and Nordex Service 
3. Spare Parts Challenges 2010 
4. Spare Parts Achievements 2012 
5. Key Lessons in Brief 
6. Making it Work 2013 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 12
PARTSXCHANGE PROJECT SCOPE 
Looking at the full process – identification, order, inventory, shipment 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 13
EARLY WIN - FROM EXPRESS TO CALENDAR SHIPMENTS 
Simplified and streamlined logistics 
Spain Portugal 
Monday 
Tuesday 
Wednes-day 
Thurs-day 
Friday 
Mo-Fr 
Germany 
Denmark 
Norway 
Italy 
Shut- Sweden 
down 
France 
UK 
Turkey 
Ireland 
Material 
Forecast 
 Planning 
Ireland 
Portugal 
UK 
Germany 
Turkey 
Italy 
France 
Spain 
Norway 
Sweden 
Denmark 
Short-term orders only, 
daily express shipments 
Majority of standard orders, 
scheduled groupage shipments 
Monday 
Tuesday 
Wednes-day 
Thurs-day 
Friday 
BeNeLux 
BeNeLux 
Greece 
Greece 
Germany 
Poland 
Poland 
Fault 
Implementation of delivery schedule has reduced logistics costs by 20% 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 14
100% 
90% 
80% 
70% 
60% 
50% 
40% 
30% 
20% 
10% 
0% 
CALENDAR SHIPMENTS (BUNDLING) 
Early Win – 30% Productivity Gain 
100% 
90% 
80% 
70% 
60% 
50% 
40% 
30% 
20% 
10% 
0% 
Mrz. 10 Jun. 10 Sep. 10 Dez. 10 Mrz. 11 Jun. 11 Sep. 11 Dez. 11 Mrz. 12 Jun. 12 Sep. 12 Dez. 12 
Historical - No Split Express Groupage Main Comp. Order Lines Shipped 
 Clearly visible 
shift from 
express to 
groupage  
negotiated 
rates 
 Tendering and 
go-live in May 
2012 
 2012 cost still 
below 2010, 
with +30% 
Service 
turnover, # of 
WTG, order 
lines 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 15
NORDEX PARTS CATALOG: IMPROVED PARTS IDENTIFICATION 
All Service-relevant SAP material data at your fingertips 
Language 
Selection 
http://partscatalog/template/index.php “PartsCatalog“ 
Supplier 
information 
Relevant 
Material Data 
Service  PM 
Catalog with 
Consumptions 
WTG 
Type/Platform 
Catalog 
As-planned 
WTG Catalog 
Intelligent 
Search 
Assembly Area 
Favorites 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 16
MAJOR PROJECT - RE-DESIGNED SAP ORDER PROCESS 
Parts availability is predictable for service operations 
 Efficiency 
increase for 
technicians 
 Efficiency 
increase for 
back-offices 
 Optimized parts 
assortment 
 Optimized 
transportation 
costs 
 Transparency 
 SAP process 
integration 
SAP CS order incl. components checks local 
material stock and orders fully automatically 
material if necessary 
SAP Safety stock levels and MRP areas for each 
Service Point storage location ensures automatic 
reordering if stock level falls below min. level 
Order priorization ensures different handling 
and logistics processes (1. Turbine shutdown, 
2. Turbine fault, 3. Stock refill) 
Order scheduling considers urgency needs 
and cost optimized transports (1. 24 hours, 
2. 1-3 days, 3. calendar delivery) 
Automatic goods receipt booking simplifies 
internal organization and guarantees quick stock 
updates 
1 
2 
3 
4 
5 
CS: SAP Customer Service, MRP: Material Requirements Planning 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 17
MRP1 AREAS FOR SERVICE POINTS AND SAFETY STOCKS 
Ensuring high availability of spare parts 
• represents an organizational unit for which MRP is carried out independently in order to 
ensure automatic material availability by considering current stock, future material demand 
and supply for each Service Point 
• in this MRP area are different MRP parameters defined, such as safety stock levels, lot 
sizes and replenishment times for materials 
•SAP orders automatically new materials if a stock of a specific material falls below a 
defined re-order stock level or demand exceeds available inventory 
MRP AREA = Service Point (SP) Autom. Reordering For A Defined Part of SP 8 
SP1 
SP6 
SP2 SP9 
SP8 
SAP Service Plant, 
e.g. 7000 (France) 
SP4 SP5 
SP7 
MRP Area Definiton 
1 MRP = Material requirements planning; 2 ATP = available to promise 
40 
Safety 
stock = 
reorder 
level 
Time 
Stock 
Lot size 
Automatic 
reorder 
point 
Replenishment time 
0 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 18
ORDER SCHEDULING  STANDARD DELIVERY TIMES 
Nordex Central Warehouse Nordex Service Points 
Order scheduling including picking times, delivery calendar and transport 
delivery times; individually defined for each Service Point; e.g. 7 days for France 
• Automatic loading date creation for CWH1 Rostock 
• Reliable delivery schedule for Service Ops, if material is in stock at CWH2 
• Delivery schedule enables priority settings of purchase and service orders 
1 CWH = Central Warehouse Rostock; 2 Delivery times from suppliers to CWH cannot be considered in SAP yet 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 19
HOW URGENT IS IT? 
Schedule your order priority in SAP! 
Purchase and Service Orders can be related to 3 kind of priorities which will 
result in different logistics handling and transports. For instance, a shut-down 
is specially tracked by CWH1. It automatically creates a picking list on a 
Turbine is not running anymore. Material must be delivered as soon 
as possible.if not available in local stock. Target delivery time 24h – 
48h! 
Turbine is still running, but it has a serious damage which will result 
in a shutdown. Material must be delivered within 3 days if part is not 
available in stock. 
Material is designated for maintenance, regular repair or stock 
refills. Material can be delivered according to regular delivery 
calendar (once a week). 
Shut-down 
Fault 
Main-tenance, 
Refill 
dedicated shut-down printer in CWH. 
1 CWH = Central Warehouse Rostock; 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 20
SPARE PARTS MANAGEMENT ORGANISATION 
Knowledge Transfer Into Line Function: Parts Planning 
Bundling Spare Parts Related SCM, PM and Service Functions 
Warehouse 
Operations 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 
Spare Parts 
Management 
PM  Service 
Tools 
Parts 
Logistics 
Parts 
Planning 
Service Country Ops 
PM Site Mgmt 
• Regional Field 
Operations 
Parts Management 
• Regional Order 
Management  
Monitoring 
• 1st level support SAP 
MM for Field Ops 
• Monitor regional 
inventory  safety 
stock 
• Manage storage 
locations  
responsible staff 
• PM Operational 
Parts Management 
• Placing parts orders 
• Planning / Priority 
• Storage Location 
• 5s 
• Monitor Inventory 
• Booking quality 
• Roll-out partsXchange 
• Spare parts 
definition, 
classification, BOMs 
• Spare parts catalog 
• Spare parts strategy 
and projects 
• Inventory 
management 
• Master Data 
Management 
• SAP key user MM 
service 
• Additional Ressources 
Configuration  Spare 
Parts Support in 2013 
• Management order 
book 
• Work prep. 
warehouse 
• Shipment 
• Customs preparation 
• Management 
bottleneck parts 
• Ident / Order Parts 
for PM 
• Material booking 
goods issue 
• Major Components 
planning  logistics 
(gbx, new 2012: 
blades) 
• Manage shipping 
comp. / cost 
controlling 
• Parts order 
clarification, 
escalation, field 
support 
• Track and escalate 
inbound material 
orders 
• Warehouse 
operations 
• HSE 
• Goods picking, 
packaging 
• Goods 
receiving,unpacking, 
storage, booking 
• Quarantine storage 
• Provide, maintain, 
refurbish certified PM 
installation tools 
• Provide  maintain 
commissioning tool 
sets 
• Provide, maintain, 
refurbish certified 
Service gbx exchange 
tools 
• Manage assets in SAP 
• Provide and certify 
PSE for 
commissioning teams 
*SAB = Rostock Central Warehouse; HH = Headquarter Hamburg 
21 
Claims 
New in 2013
WHAT HAS BEEN DONE? 
As-is analysis and potentials Strategy, concept  implementation 
2 3 4 
Evaluation of 
performance and cost 
potentials 
Definition of 
action fields 
1 
Analyses of processes, 
structures and 
systems 
Detailed concept and 
implementation 
4 
Calendar Shipments 
Spare Parts Catalog 
Order Process Design (e.g. priorities, safety stocks, delivery calendar, 
transparency etc.) 
Order Process Implementation SAP (programming, customizing, 
testing, debugging etc.) 
Master Data Clean-Up  Master Data Clean-Up  Master Data Clean-Up 
Country Roll-Outs  Support (e.g. German/English documentation, SAP 
live trainings etc.) 
Communications (e.g. NIC reports, SAM/FOM/MasterTech 
presentations, local information meetings etc.) 
Organisational development – one Spare Parts Mgmt function, global 
team 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 22
COUNTRY FEEDBACK – IT WORKS 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 23
EBIT POTENTIAL ACROSS THE BOARD 
Payback period maximum 2 years 
250% 
200% 
150% 
100% 
50% 
0% 
2011 2012 2013 
PM savings spare parts 
Stock depreciation red. 
Transport cost reduction 
Inventory reduction 
Staff productivity 
Total Cost 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 24
CONTENT 
1. The Spare Parts Landscape 
2. Nordex and Nordex Service 
3. Spare Parts Challenges 2010 
4. Spare Parts Achievements 2012 
5. Key Lessons in Brief 
6. Making it Work 2013 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 25
LESSONS LEARNED 
Parts is a People Business, You Need to Win Them Over 
Getting Master Data Right is Like Fighting The Living Dead 
Change Management 
 Material management focus is 
shifting from manually 
operated tasks to planning 
and controlling functions 
 European-wide roll-out of 
improved order process and 
inventory management within 
decentralized organization 
needs clear global and 
regional management buy-in, 
a lot of attention, training and 
local support during 
implementation phase 
Material Master Data 
Management 
Service 
Purchas-ing 
Project Management  SAP 
Knowledge Transfer 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 26 
Engi-neering 
Pro-duction 
SCM 
Sales 
HSE 
Material 
Master 
Data 
“Can we please switch off 
the SAP MRP run?“ 
(Local Material Manager) 
 Master data management 
becomes crucial for automatic 
SAP managed inventory 
 Cross-functional by default 
 Tough internal sell, most un-sexy 
topic on earth 
 It doesn‘ t go away 
 SAP projects are a tough call 
and don’t come cheap 
 Doesn‘t work without PM 
skills  dedicated ressources 
– project management 101, 
anchoring in top management 
are a must 
 Good dedicated SAP inhouse 
consultants save money from 
day 1 
 Starting with external know-how, 
transferring to internal 
PM and team; and finally – 
with the same people - 
establishing line function 
proved to very successful
PARTSXCHANGE STAGING 
Pilot 1 – Pilot 2 – Big Bang – Now covering all 17 European NX Countries 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 27
CHANGE MANAGEMENT IS KEY 
Careful staging of clean-up, training, go-live, ramp-up, support 
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 
On-going 
France, 
Portugal, 
Italy 
GER, B, 
NL, ESP, 
NOR, 
POL, GR 
ROM, 
EST, 
DK, SWE 
UK, 
Ireland, 
Turkey 
2012 2013 
Team Region 1 + 
Customizing 
Continuous inventory planning 
Clean-up SAP 
Training  
live testing 
Maintenance Planning in SAP 
After Go-Live support + continuous order tracking 
Go-live 
Internal 
SAP 
testing 
Prepare 
SAP 
Safety stocks 
implemented 
Re-locate 
Stock planning 
Clean-up SAP 
Training  
live testing 
Prepare 
SAP 
Maintenance Planning in SAP 
After Go-Live support + continuous order tracking 
Go-live 
Safety stocks 
implemented 
Stock planning Re-locate 
Continuous 
inventory planning 
Com 
Com 
Delivery 
schedule 
Implemented 
Delivery 
schedule 
Implemented, 
POL, DK, SWE only 
Implemented 
Delivery 
schedule 
Internal SAP 
test 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 
Stocktaking 
SAP Customizing (plant split) 
Re-work 
tbd 
Decision on 
UK 
Decision on 
Turkey 
Decide on 
Turkey 
Region 1 is fully 
implemented 
Region 2 is fully 
implemented 
Team 
set-up 
Team is 
set-up 
Com 
Internal SAP 
test 
F+I 
Test 
Go-Live? 
SC SC SC 
Decide on 
UK 
28 
SC SC
SPARE PARTS MANAGEMENT THROUGH LIFETIME OF WTG 
Cross-functional processes, interfaces  tools 
Enable Plan 
Sales Development Dismounting 
 
 
Plan Spare Parts Management 
Obsolescence Management, Major Components, Vital Parts, Performance Requirements 
Plan Supply Chain 
Forecast, Network, Assortment, Delivery 
  
Identify Order Sell 
 
Source Make Deliver 
Replace 
Return 
Spare Parts Mgmt 
Supply Chain 
Production 
Purchasing 
Enable Spare Parts Management 
Central Engineering 
Service Engineering 
Purchasing, PLM 
 
BOM (as-built, as-running, spare parts), Material Master Data (0rder Process, Purchasing, Logistics) 
Parts Classification, SAP Processes, Parts Identification Tool, Parts Support 
PM Field Ops 
Service Field Ops 
Service After Sales 
Return 
Execute 
Design 
Assembly/ 
Erection 
Service 
Operations 
Sales CE Purchasing Production 
Supply 
Chain 
PLM PM Service 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 29
CONTENT 
1. The Spare Parts Landscape 
2. Nordex and Nordex Service 
3. Spare Parts Challenges 2010 
4. Spare Parts Achievements 2012 
5. Key Lessons in Brief 
6. Making it Work 2013 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 30
EXTERNAL BENCHMARKS 
• OEMs carry on average 10% of 
annual sales as spares 
− Nordex 5 – 6 % 
• Inventory turns one to two times 
annually are common 
− Nordex 0,5 
• 23% of parts become obsolete 
every year 
− Nordex overall risk est 30% of current 
inventory 
• Provide real-time updates of parts 
usage from service technician trunk 
stock and include in scheduling 
criteria 
− NX: partsXchange ramp-up ongoing with SAP 
and inventory planning tool - done 
• Integrate parts forecasting, 
procurement and logistics under 
service oversight 
− NX: Forecasting and logstics integrated; no 
integration of procurement – painful 
• Incentive field technicians and 
regional service depots on timely 
return/transfer of parts to repair 
− Upwind return  repair project well under 
way (roll-out 2013) 
„Winning in the Aftermarket“ 
Harvard Business Review 2006* 
Recommendations for 
Best in Class (Aberdeen, 2011) 
* Source: Cohen et al, Winning in the Aftermarket, Harvard Business Review, May 2006 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 31
SPARE PARTS MANAGEMENT THROUGH LIFETIME OF WTG 
Cross-functional processes, interfaces  tools 
Enable Plan 
Sales Development Dismounting 
Plan Spare Parts Management 
Obsolescence Management, Major Components, Vital Parts, Performance Requirements 
Plan Supply Chain 
Forecast, Network, Assortment, Delivery 
Identify Order Sell 
Source Make Deliver 
Replace 
Return 
Spare Parts Mgmt 
Supply Chain 
Production 
Purchasing 
Enable Spare Parts Management 
Central Engineering 
Service Engineering 
Purchasing, PLM 
BOM (as-built, as-running, spare parts), Material Master Data (0rder Process, Purchasing, Logistics) 
Parts Classification, SAP Processes, Parts Identification Tool, Parts Support 
PM Field Ops 
Service Field Ops 
Service After Sales 
Return 
Execute 
Design 
Assembly/ 
Erection 
Service 
Operations 
Sales CE Purchasing Production 
Supply 
Chain 
PLM PM Service 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 32
REVERSE LOGISTICS 
Again from Unmanaged to Managed - Roll-out Q2 2013 
33 
Results HQ Quarantine Repair Decision Tree 
Optimization 
 Focus on ‘high-value’ parts 
 Scrap everything else on site 
Defined Process 
 HQ Quarantine Repair Decision Tree 
 Focus: 
 Selected ‘Minor’ parts 
 All ‘Major’ parts 
 Scalable 
 Using SAP standard order process 
Easy On-Site Process 
 ‘Master Return Guideline’ 
QA/Warranty/Tech 
Analysis? 
Obsolete? 
Bottleneck? 
New less than 
€400? 
Less than €10k a 
year? 
Repair cost less 
than 50%? 
SCRAP 
REPAIR 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
COUNTRIES ARE HELD ACCOUNTABLE 
Inventory per WTG Benchmark  Materials Responsibility 
Inventory WTG under contract Inventory / WTG Benchmarks Inv per WTG 
Sep 11 Aug 12 Sep 11 Aug 12 Sep 11 Aug 12 
• internal benchmarking – inventory per WTG 
− XX clear champion, decreasing inventory while increasing WTG in service 
today at X000 €/WTG 
− YY out of bounds by factor of 6 against XX, and increasing 
− ZZ out of bounds by factor of 6 against XX, but improving 
• Central Warehouse managed, maintaining stable inventory level while increasing 
number of WTG 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 
% increase 
YoY 
% of best 
Aug 12 (UK) 
Added 
StorLoc 
% major 
comp 
UK 1.790.345 € 1.583.325 € 303 362 5.909 € 4 .374 € -26% 100% 
Italy 975.118 € 1.141.134 € 180 198 5.417 € 5 .763 € 6% 132% 1 
Germany 5.739.757 € 6.779.719 € 963 951 5.960 € 7 .129 € 20% 163% 
Scandinavia 1 .109.558 € 1.362.530 € 170 187 6.527 € 7 .286 € 12% 167% 1 
France 2.506.494 € 3.132.249 € 392 420 6.394 € 7 .458 € 17% 171% 
Iberica 1.627.424 € 2.009.013 € 245 229 6.643 € 8 .773 € 32% 201% 
USA 5.324.152 € 7.841.555 € 122 285 43.641 € 27.514 € -37% 629% 4 23% 
Turkey 2.903.324 € 5.318.475 € 141 189 20.591 € 28.140 € 37% 643% 4 28% 
Total in Service Pts 21.976.171 € 29.167.999 € 2516 2821 8.735 € 10.340 € 18% 236% 10 
Central Warehouse 12.632.273 € 12.831.388 € 2516 2821 5.021 € 4 .549 € -9% 
Blades/Gearboxes 8.829.570 € 8.584.736 € 2516 2821 3.509 € 3 .043 € -13% 
China Service 1 .325.770 € 1.222.866 € 
China Project 3 .552.020 € 3.171.041 € 
US Project 104.895 € 270.022 € 
Total Inventory 48.420.698 € 55.248.053 € 2516 2821 19.245 € 19.585 € 2% 
% of Total in Srvc Pts 45% 53% 
34
ATTACKING LEGACY SERVICE INVENTORY 
Past Sins Show – Materials Taken Over From Production 
Preliminary Analysis of Inventory Coverage 
54,4 
Years of inventory currently on stock (based on past 12 months consumption) 
5,7 
/ Non Movers 
2,9 0,6 1,0 
30,5 
4,8 
100,0 
100 
90 
80 
70 
60 
50 
40 
30 
20 
10 
0 
Total 
Inventory 
 2 years  2 years  4 years  6 years  8 years  10 years Defective 
% of Total Inventory 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 35
SERVICE LEVEL IMPROVEMENT SLOW – BUT “LESS LATE” 
But overall performance improvement clearly felt in field 
Service Level 
% order line items fully shipped before customer delivery date 
(Target 2012: 80%) 
100% 
90% 
80% 
70% 
60% 
50% 
15 
10 
5 
0 
-5 
-10 
-15 
days early / order line shipped 
days late / order line shipped 
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 
jan 10 apr 10 jul 10 okt 10 jan 11 apr 11 jul 11 okt 11 jan 12 apr 12 jul 12 okt 12 
Service level shows upward trend but currently hits ceiling at 70% - needs further 
improvement. Kept stable although including installations spares 
(early in lifecycle, most difficult) 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 36
PROCUREMENT - CLASH OF CULTURES 
Production procurement falls short on unplanned  urgent requests 
Parameter 
Manufacturing 
Supply Chain 
After-Sales Services 
Supply Chain 
Nature of demand Predictable, can be forecast Always unpredictable, sporadic 
Required response Standard, can be scheduled ASAP (same day or next day) 
Number of SKUs 
Limited 15 to 20 times more 
(unique SAP#) 
Product portfolio Largely homogeneous Always heterogeneous 
Delivery network 
Depends on nature of product, 
multiple networks necessary 
Single network, capable of 
delivering different service 
products 
Inventory 
management aim 
Maximize velocity of resources Pre-position resources 
Reverse logistics Doesn‘t handle 
Handles return, repair, and 
disposal of failed components 
Performance 
metric 
Fill rate Product availability (uptime) 
Inventory turns Six to 50 a year One to four a year 
* Source: Cohen et al, Winning in the Aftermarket, Harvard Business Review, May 2006 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 37
SUPPLIER PERFORMANCE IS CRITICAL FOR SERVICE 
Quality, 24/7 Global Express, Documentation, Obsolescence Mgmt 
Performance 
•Parts quality 
hard KPI: failure 
rates 
•Delivery quality 
global 24/7 express 
delivery, on time, 
complete, accurate; 
local inventory; 
flexible support 
•Spare parts 
documentation 
continuously 
updated electronic 
spare parts BOM, 
spec  drawings, 
catalog 
•Obsolescence 
management 
active management 
of parts ramp-down 
and development of 
follow-up parts 
World Class Logistics 
Spain Portugal 
Benelux 
Greece Germany 
Scope of supply 
Tuesday 
Germany 
•Technical support 
24/7 remote and on 
site support 
•Training 
troubleshooting and 
repairs, certified 
•Repairs 
repair cycle incl. 
upgrades 
•Full service 
agreements 
risk sharing  5 
years, active 
support 
•Delivery 
commitment 20 
years 
active mgmt of 20 
year obligation 
Co-operation 
•Channel to 
market 
Best-Price for 
Nordex, preferred 
channel to market, 
exclusive premium 
products 
SAP 
material 
status 
Design 
original part 
Design 
Production Service 
Production 
Design Service Obsolete 
Obsolesc 
Obsolescent 
Service 
ent Obsolete 
exchange 
part 
Dismounting 
Obsolete 
Denmark 
Original part 
 exchange part life-cycle 
Product 
life-cycle 
Start of 
production 
End of 
production 
End of 
Service 
Monday 
Wednes-day 
Thurs-day 
Material 
Forecast 
 Planning 
Friday 
24/7 
Norway 
Italy 
Poland 
Ireland 
Shut- Sweden 
down 
France 
UK 
Turkey 
Fault 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 38
BILL OF MATERIAL CHALLENGE 
Product Data Management All The Way Down to Service 
Overview 
Concept Correct, complete and current Bill of Material 
through Enginneering, Production, 
Installation, Service - parts classification – 
understanding of „correct and complete“ 
changes through process, e.g. service parts 
not relevant before hand over to service 
Visualization 
Concept relations 
Data basis / back end for 
spare parts catalogue, 
inventory planning, failure 
analysis, retrofit planning, 
engineering change 
management 
As-constructed 
Assembly 1 
Part 1.1 S 
Part 1.2 
Part 1.3 
Part 1.4 
Part 1.5 
Part 1.6 W 
Assembly 2 
Part 2.1 
Part 2.2 S 
Part 2.3 C 
Part 2.4 
Part 2.5 
Part 2.6 
WTG specific 
parts and 
components 
Configuration 
for specific wind 
park 
As-planned 
Assembly 1 
Part 1.1 S Part 1.1 S Part 1.1 S 
Part 1.2 
Part 1.3 
Part 1.4 
Part 1.5 
Part 1.6 W 
Assembly 2 
Part 2.1 
Part 2.2 S 
Part 2.3 C 
Part 2.4 
Part 2.5 
Part 2.6 
Unplanned 
changed of 
parts or 
components 
Production and 
erection 
As-built 
Assembly 1 
Part 1.2 
Part 1.3 
Part 1.4 
Part 1.5 
Part 1.6 W 
Assembly 2 
Part 2.1 
Part 2.2 S 
Part 2.3 C 
Part 2.4 
Part 2.5 
Part 2.6 
Exchanges of 
parts or 
components, 
retrofits 
Operation / 
repair / 
maintenance 
change 
addition 
As-running 
Assembly 1 
Part 1.2 
Part 1.3 
Part 1.4 
Part 1.5 
Part 1.6 W 
Assembly 2 
Part 2.1 
Part 2.2 S 
Part 2.3 C 
Part 2.4 
Part 2.5 
Part 2.6 
Retrofit 1 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 39
SPARE PARTS MANAGEMENT THROUGH LIFETIME OF WTG 
Cross-functional processes, interfaces  tools 
Enable Plan 
Sales Development Dismounting 
Plan Spare Parts Management 
Obsolescence Management, Major Components, Vital Parts, Performance Requirements 
Plan Supply Chain 
Forecast, Network, Assortment, Delivery 
Identify Order Sell 
Source Make Deliver 
Replace 
Return 
Spare Parts Mgmt 
Supply Chain 
Production 
Purchasing 
Enable Spare Parts Management 
Central Engineering 
Service Engineering 
Purchasing, PLM 
BOM (as-built, as-running, spare parts), Material Master Data (0rder Process, Purchasing, Logistics) 
Parts Classification, SAP Processes, Parts Identification Tool, Parts Support 
PM Field Ops 
Service Field Ops 
Service After Sales 
Return 
Execute 
Design 
Assembly/ 
Erection 
Service 
Operations 
Sales CE Purchasing Production 
Supply 
Chain 
PLM PM Service 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 40
CREDITS 
Michael Dorn 
Project Manager (majority of slides) 
Nordex SAP Inhouse Consulting 
Nordex Trainee Team 
Return  Repair Project Team 
4flow (Berlin) 
External Consulting, Analysis  
First Roll-Out 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 41
MANY THANKS FOR YOUR ATTENTION. 
Nordex SE 
Langenhorner Chaussee 600, 22419 Hamburg, Germany 
Telephone +49 (40) 30030 1000 
Fax +49 (40) 30030 1101 
E-Mail info@nordex-online.com 
Axel Bühler 
Spare Parts Management 
abuehler@nordex-online.com, +49 (40) 30030-1611 
Michael Dorn 
Spare Parts Planning 
mdorn@nordex-online.com, +49 (40) 30030-1472 
Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 42

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Axel Bühler, Nordex presenatation at Spare Parts 2013

  • 1. WIND SERVICE COMING OF AGE Case Study – Spare Parts Improvement Projects at Nordex Stockholm Feb 2013
  • 2. CONTENT 1. The Spare Parts Landscape 2. Nordex and Nordex Service 3. Spare Parts Challenges 2010 4. Spare Parts Achievements 2012 5. Key Lessons in Brief 6. Making it Work 2013 Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 2
  • 3. SPARE PARTS MANAGEMENT THROUGH LIFETIME OF WTG Cross-functional processes, interfaces & tools Enable Plan Sales Development Dismounting Plan Spare Parts Management Obsolescence Management, Major Components, Vital Parts, Performance Requirements Plan Supply Chain Forecast, Network, Assortment, Delivery Identify Order Sell Source Make Deliver Replace Return Spare Parts Mgmt Supply Chain Production Purchasing Enable Spare Parts Management Central Engineering Service Engineering Purchasing, PLM BOM (as-built, as-running, spare parts), Material Master Data (0rder Process, Purchasing, Logistics) Parts Classification, SAP Processes, Parts Identification Tool, Parts Support PM Field Ops Service Field Ops Service After Sales Return Execute Design Assembly/ Erection Service Operations Sales CE Purchasing Production Supply Chain PLM PM Service Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 3
  • 4. CONTENT 1. The Spare Parts Landscape 2. Nordex and Nordex Service 3. Spare Parts Challenges 2010 4. Spare Parts Achievements 2012 5. Key Lessons in Brief 6. Making it Work 2013 Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 4
  • 5. NORDEX IS CAPABLE TO COVER THE ENTIRE VALUE CHAIN OF THE WINDPOWER BUSINESS 5 Core Business Wind Farm System Planning Production and Technical Implementation Wind Farm Operations Service and Maintenance Project Development • Review customer micro - site planning • Support customers (co-develop-ment) receiving approvals and optimising park layouts • Assemble wind turbines • Produce selec-ted components • Install onsite • Carry out initial operation • Around 2,700 turbines currently under Nordex service • Full service contract offerings up to 12 years • More than 10 years experience in developing wind farms in France Further project development activities started in Poland, Sweden and USA • Offer additional services: increased demand due to new wind farm investors (e.g. insurance com-panies like Allianz group) interested in stable cash flows • • Spare parts supply Focus of case study Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
  • 6. NORDEX GLOBAL FOOTPRINT: 8,180 MW WORLDWIDE 5,175 turbines installed, 2/3 in Nordex Service America 5% By region Germany 27% Other Europe 59% Asia 9% Nordex at a Glance Global manufacturer of wind energy systems with a particular focus on turbines in the 2.5 MW class Most extensive and consistent use of platform technology in the industry; turbines for different wind and climate conditions Worldwide presence with branch offices and subsidiaries in 22 countries Headquartered in Hamburg, Chicago and Beijing Key Figures as of 12/2011: - Revenues: EUR 927 mn - EBIT: EUR -30 mn - Employees: 2,200 Total installed capacity as of 1/2013: 8,180 MW Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 6
  • 7. NORDEX SERVICE Nordex turbines have reached 98% Availability! In the last twelve months our customers with an extended or premium service contract enjoyed the highest availability ever. Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 7
  • 8. A STRONG GLOBAL SERVICE NETWORK We are close to our customers – so need to be our parts Decentralized supply of spare parts and local presence for fast response times. Headquarters/ Performance Management Center Service Areas • Germany/BeNeLux/Poland • France • UK Ireland • Scandinavia Baltic • Italy/Greece • Iberica • Turkey Customer Service Offices Service Points Spare Parts Logistics: Central Warehouse in Rostock, Regional Warehouses in US and CN Direct shipments to Service Points Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 8
  • 9. SERVICE WILL DELIVER ABOVE AVERAGE GROWTH Market driven by sophisticated customers Market Trends Global Service market for onshore WTGs (€bn) +18% 27 2020 13 2015 5 2010 CAGR 2010-2020 RoW n.a. 42% 24% 19% 11% 2 South America Asia-Pac. North America 1 Europe 2000 2005 Total European Wind Turbine and Service market: Turnover and share of profit in 2010 and 2020 Service WTG Sales Sales Profit share 100% 42% 58% 2020 100% 26% 74% 2010 Service WTG sales 100% 75% 25% 2020 100% 26% 74% 2010 Long term fixed price full service contracts (risk transfer to OEM) Focus on energy production; shift towards direct electricity sales to the market (predictability reliability) Growing importance of Health and Safety Increasing demand for repairs, retrofits and upgrades (aging fleet) Customers increasingly select component suppliers (performance matters) 1) 2) Source: Oliver Wyman study: ‘Windenergie 2020: Boom-Markt Service’ ; Dec. 2010 Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 9
  • 10. CONTENT 1. The Spare Parts Landscape 2. Nordex and Nordex Service 3. Spare Parts Challenges 2010 4. Spare Parts Achievements 2012 5. Key Lessons in Brief 6. Making it Work 2013 Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 10
  • 11. UNMANAGED INTRANSPARENT PARTS OPERATIONS Complex root causes across all functions and processes BOM: Bill of material, MGMT: Management, SP: Service point, SPT: Spare part, CW: Central warehouse High service inventory High logistics costs No logistics promise to customer Productivity loss for technicians Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 11
  • 12. CONTENT 1. The Spare Parts Landscape 2. Nordex and Nordex Service 3. Spare Parts Challenges 2010 4. Spare Parts Achievements 2012 5. Key Lessons in Brief 6. Making it Work 2013 Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 12
  • 13. PARTSXCHANGE PROJECT SCOPE Looking at the full process – identification, order, inventory, shipment Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 13
  • 14. EARLY WIN - FROM EXPRESS TO CALENDAR SHIPMENTS Simplified and streamlined logistics Spain Portugal Monday Tuesday Wednes-day Thurs-day Friday Mo-Fr Germany Denmark Norway Italy Shut- Sweden down France UK Turkey Ireland Material Forecast Planning Ireland Portugal UK Germany Turkey Italy France Spain Norway Sweden Denmark Short-term orders only, daily express shipments Majority of standard orders, scheduled groupage shipments Monday Tuesday Wednes-day Thurs-day Friday BeNeLux BeNeLux Greece Greece Germany Poland Poland Fault Implementation of delivery schedule has reduced logistics costs by 20% Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 14
  • 15. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% CALENDAR SHIPMENTS (BUNDLING) Early Win – 30% Productivity Gain 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Mrz. 10 Jun. 10 Sep. 10 Dez. 10 Mrz. 11 Jun. 11 Sep. 11 Dez. 11 Mrz. 12 Jun. 12 Sep. 12 Dez. 12 Historical - No Split Express Groupage Main Comp. Order Lines Shipped Clearly visible shift from express to groupage negotiated rates Tendering and go-live in May 2012 2012 cost still below 2010, with +30% Service turnover, # of WTG, order lines Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 15
  • 16. NORDEX PARTS CATALOG: IMPROVED PARTS IDENTIFICATION All Service-relevant SAP material data at your fingertips Language Selection http://partscatalog/template/index.php “PartsCatalog“ Supplier information Relevant Material Data Service PM Catalog with Consumptions WTG Type/Platform Catalog As-planned WTG Catalog Intelligent Search Assembly Area Favorites Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 16
  • 17. MAJOR PROJECT - RE-DESIGNED SAP ORDER PROCESS Parts availability is predictable for service operations Efficiency increase for technicians Efficiency increase for back-offices Optimized parts assortment Optimized transportation costs Transparency SAP process integration SAP CS order incl. components checks local material stock and orders fully automatically material if necessary SAP Safety stock levels and MRP areas for each Service Point storage location ensures automatic reordering if stock level falls below min. level Order priorization ensures different handling and logistics processes (1. Turbine shutdown, 2. Turbine fault, 3. Stock refill) Order scheduling considers urgency needs and cost optimized transports (1. 24 hours, 2. 1-3 days, 3. calendar delivery) Automatic goods receipt booking simplifies internal organization and guarantees quick stock updates 1 2 3 4 5 CS: SAP Customer Service, MRP: Material Requirements Planning Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 17
  • 18. MRP1 AREAS FOR SERVICE POINTS AND SAFETY STOCKS Ensuring high availability of spare parts • represents an organizational unit for which MRP is carried out independently in order to ensure automatic material availability by considering current stock, future material demand and supply for each Service Point • in this MRP area are different MRP parameters defined, such as safety stock levels, lot sizes and replenishment times for materials •SAP orders automatically new materials if a stock of a specific material falls below a defined re-order stock level or demand exceeds available inventory MRP AREA = Service Point (SP) Autom. Reordering For A Defined Part of SP 8 SP1 SP6 SP2 SP9 SP8 SAP Service Plant, e.g. 7000 (France) SP4 SP5 SP7 MRP Area Definiton 1 MRP = Material requirements planning; 2 ATP = available to promise 40 Safety stock = reorder level Time Stock Lot size Automatic reorder point Replenishment time 0 Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 18
  • 19. ORDER SCHEDULING STANDARD DELIVERY TIMES Nordex Central Warehouse Nordex Service Points Order scheduling including picking times, delivery calendar and transport delivery times; individually defined for each Service Point; e.g. 7 days for France • Automatic loading date creation for CWH1 Rostock • Reliable delivery schedule for Service Ops, if material is in stock at CWH2 • Delivery schedule enables priority settings of purchase and service orders 1 CWH = Central Warehouse Rostock; 2 Delivery times from suppliers to CWH cannot be considered in SAP yet Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 19
  • 20. HOW URGENT IS IT? Schedule your order priority in SAP! Purchase and Service Orders can be related to 3 kind of priorities which will result in different logistics handling and transports. For instance, a shut-down is specially tracked by CWH1. It automatically creates a picking list on a Turbine is not running anymore. Material must be delivered as soon as possible.if not available in local stock. Target delivery time 24h – 48h! Turbine is still running, but it has a serious damage which will result in a shutdown. Material must be delivered within 3 days if part is not available in stock. Material is designated for maintenance, regular repair or stock refills. Material can be delivered according to regular delivery calendar (once a week). Shut-down Fault Main-tenance, Refill dedicated shut-down printer in CWH. 1 CWH = Central Warehouse Rostock; Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 20
  • 21. SPARE PARTS MANAGEMENT ORGANISATION Knowledge Transfer Into Line Function: Parts Planning Bundling Spare Parts Related SCM, PM and Service Functions Warehouse Operations Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 Spare Parts Management PM Service Tools Parts Logistics Parts Planning Service Country Ops PM Site Mgmt • Regional Field Operations Parts Management • Regional Order Management Monitoring • 1st level support SAP MM for Field Ops • Monitor regional inventory safety stock • Manage storage locations responsible staff • PM Operational Parts Management • Placing parts orders • Planning / Priority • Storage Location • 5s • Monitor Inventory • Booking quality • Roll-out partsXchange • Spare parts definition, classification, BOMs • Spare parts catalog • Spare parts strategy and projects • Inventory management • Master Data Management • SAP key user MM service • Additional Ressources Configuration Spare Parts Support in 2013 • Management order book • Work prep. warehouse • Shipment • Customs preparation • Management bottleneck parts • Ident / Order Parts for PM • Material booking goods issue • Major Components planning logistics (gbx, new 2012: blades) • Manage shipping comp. / cost controlling • Parts order clarification, escalation, field support • Track and escalate inbound material orders • Warehouse operations • HSE • Goods picking, packaging • Goods receiving,unpacking, storage, booking • Quarantine storage • Provide, maintain, refurbish certified PM installation tools • Provide maintain commissioning tool sets • Provide, maintain, refurbish certified Service gbx exchange tools • Manage assets in SAP • Provide and certify PSE for commissioning teams *SAB = Rostock Central Warehouse; HH = Headquarter Hamburg 21 Claims New in 2013
  • 22. WHAT HAS BEEN DONE? As-is analysis and potentials Strategy, concept implementation 2 3 4 Evaluation of performance and cost potentials Definition of action fields 1 Analyses of processes, structures and systems Detailed concept and implementation 4 Calendar Shipments Spare Parts Catalog Order Process Design (e.g. priorities, safety stocks, delivery calendar, transparency etc.) Order Process Implementation SAP (programming, customizing, testing, debugging etc.) Master Data Clean-Up Master Data Clean-Up Master Data Clean-Up Country Roll-Outs Support (e.g. German/English documentation, SAP live trainings etc.) Communications (e.g. NIC reports, SAM/FOM/MasterTech presentations, local information meetings etc.) Organisational development – one Spare Parts Mgmt function, global team Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 22
  • 23. COUNTRY FEEDBACK – IT WORKS Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 23
  • 24. EBIT POTENTIAL ACROSS THE BOARD Payback period maximum 2 years 250% 200% 150% 100% 50% 0% 2011 2012 2013 PM savings spare parts Stock depreciation red. Transport cost reduction Inventory reduction Staff productivity Total Cost Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 24
  • 25. CONTENT 1. The Spare Parts Landscape 2. Nordex and Nordex Service 3. Spare Parts Challenges 2010 4. Spare Parts Achievements 2012 5. Key Lessons in Brief 6. Making it Work 2013 Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 25
  • 26. LESSONS LEARNED Parts is a People Business, You Need to Win Them Over Getting Master Data Right is Like Fighting The Living Dead Change Management Material management focus is shifting from manually operated tasks to planning and controlling functions European-wide roll-out of improved order process and inventory management within decentralized organization needs clear global and regional management buy-in, a lot of attention, training and local support during implementation phase Material Master Data Management Service Purchas-ing Project Management SAP Knowledge Transfer Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 26 Engi-neering Pro-duction SCM Sales HSE Material Master Data “Can we please switch off the SAP MRP run?“ (Local Material Manager) Master data management becomes crucial for automatic SAP managed inventory Cross-functional by default Tough internal sell, most un-sexy topic on earth It doesn‘ t go away SAP projects are a tough call and don’t come cheap Doesn‘t work without PM skills dedicated ressources – project management 101, anchoring in top management are a must Good dedicated SAP inhouse consultants save money from day 1 Starting with external know-how, transferring to internal PM and team; and finally – with the same people - establishing line function proved to very successful
  • 27. PARTSXCHANGE STAGING Pilot 1 – Pilot 2 – Big Bang – Now covering all 17 European NX Countries Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 27
  • 28. CHANGE MANAGEMENT IS KEY Careful staging of clean-up, training, go-live, ramp-up, support Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb On-going France, Portugal, Italy GER, B, NL, ESP, NOR, POL, GR ROM, EST, DK, SWE UK, Ireland, Turkey 2012 2013 Team Region 1 + Customizing Continuous inventory planning Clean-up SAP Training live testing Maintenance Planning in SAP After Go-Live support + continuous order tracking Go-live Internal SAP testing Prepare SAP Safety stocks implemented Re-locate Stock planning Clean-up SAP Training live testing Prepare SAP Maintenance Planning in SAP After Go-Live support + continuous order tracking Go-live Safety stocks implemented Stock planning Re-locate Continuous inventory planning Com Com Delivery schedule Implemented Delivery schedule Implemented, POL, DK, SWE only Implemented Delivery schedule Internal SAP test Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 Stocktaking SAP Customizing (plant split) Re-work tbd Decision on UK Decision on Turkey Decide on Turkey Region 1 is fully implemented Region 2 is fully implemented Team set-up Team is set-up Com Internal SAP test F+I Test Go-Live? SC SC SC Decide on UK 28 SC SC
  • 29. SPARE PARTS MANAGEMENT THROUGH LIFETIME OF WTG Cross-functional processes, interfaces tools Enable Plan Sales Development Dismounting Plan Spare Parts Management Obsolescence Management, Major Components, Vital Parts, Performance Requirements Plan Supply Chain Forecast, Network, Assortment, Delivery Identify Order Sell Source Make Deliver Replace Return Spare Parts Mgmt Supply Chain Production Purchasing Enable Spare Parts Management Central Engineering Service Engineering Purchasing, PLM BOM (as-built, as-running, spare parts), Material Master Data (0rder Process, Purchasing, Logistics) Parts Classification, SAP Processes, Parts Identification Tool, Parts Support PM Field Ops Service Field Ops Service After Sales Return Execute Design Assembly/ Erection Service Operations Sales CE Purchasing Production Supply Chain PLM PM Service Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 29
  • 30. CONTENT 1. The Spare Parts Landscape 2. Nordex and Nordex Service 3. Spare Parts Challenges 2010 4. Spare Parts Achievements 2012 5. Key Lessons in Brief 6. Making it Work 2013 Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 30
  • 31. EXTERNAL BENCHMARKS • OEMs carry on average 10% of annual sales as spares − Nordex 5 – 6 % • Inventory turns one to two times annually are common − Nordex 0,5 • 23% of parts become obsolete every year − Nordex overall risk est 30% of current inventory • Provide real-time updates of parts usage from service technician trunk stock and include in scheduling criteria − NX: partsXchange ramp-up ongoing with SAP and inventory planning tool - done • Integrate parts forecasting, procurement and logistics under service oversight − NX: Forecasting and logstics integrated; no integration of procurement – painful • Incentive field technicians and regional service depots on timely return/transfer of parts to repair − Upwind return repair project well under way (roll-out 2013) „Winning in the Aftermarket“ Harvard Business Review 2006* Recommendations for Best in Class (Aberdeen, 2011) * Source: Cohen et al, Winning in the Aftermarket, Harvard Business Review, May 2006 Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 31
  • 32. SPARE PARTS MANAGEMENT THROUGH LIFETIME OF WTG Cross-functional processes, interfaces tools Enable Plan Sales Development Dismounting Plan Spare Parts Management Obsolescence Management, Major Components, Vital Parts, Performance Requirements Plan Supply Chain Forecast, Network, Assortment, Delivery Identify Order Sell Source Make Deliver Replace Return Spare Parts Mgmt Supply Chain Production Purchasing Enable Spare Parts Management Central Engineering Service Engineering Purchasing, PLM BOM (as-built, as-running, spare parts), Material Master Data (0rder Process, Purchasing, Logistics) Parts Classification, SAP Processes, Parts Identification Tool, Parts Support PM Field Ops Service Field Ops Service After Sales Return Execute Design Assembly/ Erection Service Operations Sales CE Purchasing Production Supply Chain PLM PM Service Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 32
  • 33. REVERSE LOGISTICS Again from Unmanaged to Managed - Roll-out Q2 2013 33 Results HQ Quarantine Repair Decision Tree Optimization Focus on ‘high-value’ parts Scrap everything else on site Defined Process HQ Quarantine Repair Decision Tree Focus: Selected ‘Minor’ parts All ‘Major’ parts Scalable Using SAP standard order process Easy On-Site Process ‘Master Return Guideline’ QA/Warranty/Tech Analysis? Obsolete? Bottleneck? New less than €400? Less than €10k a year? Repair cost less than 50%? SCRAP REPAIR Nordex | Spare Parts Business Platform | Stockholm | Feb 2013
  • 34. COUNTRIES ARE HELD ACCOUNTABLE Inventory per WTG Benchmark Materials Responsibility Inventory WTG under contract Inventory / WTG Benchmarks Inv per WTG Sep 11 Aug 12 Sep 11 Aug 12 Sep 11 Aug 12 • internal benchmarking – inventory per WTG − XX clear champion, decreasing inventory while increasing WTG in service today at X000 €/WTG − YY out of bounds by factor of 6 against XX, and increasing − ZZ out of bounds by factor of 6 against XX, but improving • Central Warehouse managed, maintaining stable inventory level while increasing number of WTG Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 % increase YoY % of best Aug 12 (UK) Added StorLoc % major comp UK 1.790.345 € 1.583.325 € 303 362 5.909 € 4 .374 € -26% 100% Italy 975.118 € 1.141.134 € 180 198 5.417 € 5 .763 € 6% 132% 1 Germany 5.739.757 € 6.779.719 € 963 951 5.960 € 7 .129 € 20% 163% Scandinavia 1 .109.558 € 1.362.530 € 170 187 6.527 € 7 .286 € 12% 167% 1 France 2.506.494 € 3.132.249 € 392 420 6.394 € 7 .458 € 17% 171% Iberica 1.627.424 € 2.009.013 € 245 229 6.643 € 8 .773 € 32% 201% USA 5.324.152 € 7.841.555 € 122 285 43.641 € 27.514 € -37% 629% 4 23% Turkey 2.903.324 € 5.318.475 € 141 189 20.591 € 28.140 € 37% 643% 4 28% Total in Service Pts 21.976.171 € 29.167.999 € 2516 2821 8.735 € 10.340 € 18% 236% 10 Central Warehouse 12.632.273 € 12.831.388 € 2516 2821 5.021 € 4 .549 € -9% Blades/Gearboxes 8.829.570 € 8.584.736 € 2516 2821 3.509 € 3 .043 € -13% China Service 1 .325.770 € 1.222.866 € China Project 3 .552.020 € 3.171.041 € US Project 104.895 € 270.022 € Total Inventory 48.420.698 € 55.248.053 € 2516 2821 19.245 € 19.585 € 2% % of Total in Srvc Pts 45% 53% 34
  • 35. ATTACKING LEGACY SERVICE INVENTORY Past Sins Show – Materials Taken Over From Production Preliminary Analysis of Inventory Coverage 54,4 Years of inventory currently on stock (based on past 12 months consumption) 5,7 / Non Movers 2,9 0,6 1,0 30,5 4,8 100,0 100 90 80 70 60 50 40 30 20 10 0 Total Inventory 2 years 2 years 4 years 6 years 8 years 10 years Defective % of Total Inventory Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 35
  • 36. SERVICE LEVEL IMPROVEMENT SLOW – BUT “LESS LATE” But overall performance improvement clearly felt in field Service Level % order line items fully shipped before customer delivery date (Target 2012: 80%) 100% 90% 80% 70% 60% 50% 15 10 5 0 -5 -10 -15 days early / order line shipped days late / order line shipped Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec jan 10 apr 10 jul 10 okt 10 jan 11 apr 11 jul 11 okt 11 jan 12 apr 12 jul 12 okt 12 Service level shows upward trend but currently hits ceiling at 70% - needs further improvement. Kept stable although including installations spares (early in lifecycle, most difficult) Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 36
  • 37. PROCUREMENT - CLASH OF CULTURES Production procurement falls short on unplanned urgent requests Parameter Manufacturing Supply Chain After-Sales Services Supply Chain Nature of demand Predictable, can be forecast Always unpredictable, sporadic Required response Standard, can be scheduled ASAP (same day or next day) Number of SKUs Limited 15 to 20 times more (unique SAP#) Product portfolio Largely homogeneous Always heterogeneous Delivery network Depends on nature of product, multiple networks necessary Single network, capable of delivering different service products Inventory management aim Maximize velocity of resources Pre-position resources Reverse logistics Doesn‘t handle Handles return, repair, and disposal of failed components Performance metric Fill rate Product availability (uptime) Inventory turns Six to 50 a year One to four a year * Source: Cohen et al, Winning in the Aftermarket, Harvard Business Review, May 2006 Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 37
  • 38. SUPPLIER PERFORMANCE IS CRITICAL FOR SERVICE Quality, 24/7 Global Express, Documentation, Obsolescence Mgmt Performance •Parts quality hard KPI: failure rates •Delivery quality global 24/7 express delivery, on time, complete, accurate; local inventory; flexible support •Spare parts documentation continuously updated electronic spare parts BOM, spec drawings, catalog •Obsolescence management active management of parts ramp-down and development of follow-up parts World Class Logistics Spain Portugal Benelux Greece Germany Scope of supply Tuesday Germany •Technical support 24/7 remote and on site support •Training troubleshooting and repairs, certified •Repairs repair cycle incl. upgrades •Full service agreements risk sharing 5 years, active support •Delivery commitment 20 years active mgmt of 20 year obligation Co-operation •Channel to market Best-Price for Nordex, preferred channel to market, exclusive premium products SAP material status Design original part Design Production Service Production Design Service Obsolete Obsolesc Obsolescent Service ent Obsolete exchange part Dismounting Obsolete Denmark Original part exchange part life-cycle Product life-cycle Start of production End of production End of Service Monday Wednes-day Thurs-day Material Forecast Planning Friday 24/7 Norway Italy Poland Ireland Shut- Sweden down France UK Turkey Fault Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 38
  • 39. BILL OF MATERIAL CHALLENGE Product Data Management All The Way Down to Service Overview Concept Correct, complete and current Bill of Material through Enginneering, Production, Installation, Service - parts classification – understanding of „correct and complete“ changes through process, e.g. service parts not relevant before hand over to service Visualization Concept relations Data basis / back end for spare parts catalogue, inventory planning, failure analysis, retrofit planning, engineering change management As-constructed Assembly 1 Part 1.1 S Part 1.2 Part 1.3 Part 1.4 Part 1.5 Part 1.6 W Assembly 2 Part 2.1 Part 2.2 S Part 2.3 C Part 2.4 Part 2.5 Part 2.6 WTG specific parts and components Configuration for specific wind park As-planned Assembly 1 Part 1.1 S Part 1.1 S Part 1.1 S Part 1.2 Part 1.3 Part 1.4 Part 1.5 Part 1.6 W Assembly 2 Part 2.1 Part 2.2 S Part 2.3 C Part 2.4 Part 2.5 Part 2.6 Unplanned changed of parts or components Production and erection As-built Assembly 1 Part 1.2 Part 1.3 Part 1.4 Part 1.5 Part 1.6 W Assembly 2 Part 2.1 Part 2.2 S Part 2.3 C Part 2.4 Part 2.5 Part 2.6 Exchanges of parts or components, retrofits Operation / repair / maintenance change addition As-running Assembly 1 Part 1.2 Part 1.3 Part 1.4 Part 1.5 Part 1.6 W Assembly 2 Part 2.1 Part 2.2 S Part 2.3 C Part 2.4 Part 2.5 Part 2.6 Retrofit 1 Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 39
  • 40. SPARE PARTS MANAGEMENT THROUGH LIFETIME OF WTG Cross-functional processes, interfaces tools Enable Plan Sales Development Dismounting Plan Spare Parts Management Obsolescence Management, Major Components, Vital Parts, Performance Requirements Plan Supply Chain Forecast, Network, Assortment, Delivery Identify Order Sell Source Make Deliver Replace Return Spare Parts Mgmt Supply Chain Production Purchasing Enable Spare Parts Management Central Engineering Service Engineering Purchasing, PLM BOM (as-built, as-running, spare parts), Material Master Data (0rder Process, Purchasing, Logistics) Parts Classification, SAP Processes, Parts Identification Tool, Parts Support PM Field Ops Service Field Ops Service After Sales Return Execute Design Assembly/ Erection Service Operations Sales CE Purchasing Production Supply Chain PLM PM Service Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 40
  • 41. CREDITS Michael Dorn Project Manager (majority of slides) Nordex SAP Inhouse Consulting Nordex Trainee Team Return Repair Project Team 4flow (Berlin) External Consulting, Analysis First Roll-Out Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 41
  • 42. MANY THANKS FOR YOUR ATTENTION. Nordex SE Langenhorner Chaussee 600, 22419 Hamburg, Germany Telephone +49 (40) 30030 1000 Fax +49 (40) 30030 1101 E-Mail info@nordex-online.com Axel Bühler Spare Parts Management abuehler@nordex-online.com, +49 (40) 30030-1611 Michael Dorn Spare Parts Planning mdorn@nordex-online.com, +49 (40) 30030-1472 Nordex | Spare Parts Business Platform | Stockholm | Feb 2013 42