OrganizationThyssenKrupp is a manufactuer with approximately 188,000 employees in more than 80 countries.

The ChallengeThe company needed to formalize procurement processes, define purchas-ing-related objectives across multiple operating units, and accurately measure progress towards strategic goals.

The StrategyA purchasing initiative was launched to strengthen related activities throughout all business units.

The ResultsGreater visibility into purchasing opera-tions. It not not only increased purchasing productivity and accountability across all the company’s entities, it also helped ThyssenKrupp achieve economies of scale through consolidation and other cost-cutting measures.

Information Builders SolutionWebFOCUS, Developer Studio, Performance Management Framework, SAP Adapter, WebFOCUS Enable for Adobe Flex, and ReportCaster.

Snapshot

Customer Profile

ThyssenKrupp

With several hundred different companies operating in a variety of industrial sectors, it is crucial for ThyssenKrupp’s corporate headquarters to provide local organizational units with a standard operating methodology.

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Performance Management Improves Purchasing Operations at ThyssenKruppTransparency Ensures Greater Efficiency for Steel Giant

ThyssenKrupp, the result of the 2000 merger of Thyssen and Krupp, is one of the world’s largest steel producers. The Germany-based company recently reorganized its departments into eight business units within two main divisions – Materials and Technologies – with corporate headquarters overseeing strategic management functions.

Soon after its creation, the Materials division embarked on a crucial purchasing initiative, designed to strengthen related activities across the business on an ongoing basis. The company wanted to standardize and optimize processes as well as create formal structures for purchasing-related reporting across the entire group to enhance the techniques and metrics already in place.

ThyssenKrupp implemented the WebFOCUS Performance Management Framework (PMF) to meet its purchasing reporting requirements. Strategic objectives and related

performance indicators were defined and recorded, then summarized and made accessible via a Web-based scorecard. With the new purchasing reporting infrastructure in place, ThyssenKrupp’s business units can increase purchasing efficiencies, uncover consolidation opportunities, and better measure performance through improved transparency into related processes.

Maintaining Consistency Across a Diverse Business LandscapeBecause ThyssenKrupp consists of several hundred different companies operating in a variety of industrial sectors, it is crucial for corporate headquarters to provide local organizational units with a standard operating methodology. This helps when modeling and implementing their individual strategies without conflicting with central company goals and objectives. The company aimed to provide individual units with some leeway and flexibility within an overall strategic framework.

Using WebFOCUS, the individual companies were able to define strategic objectives and indicators that focused on core purchasing activities. Measuring achievement in those objectives is done at the touch of a button. WebFOCUS also ensures adherence to standardized procedures across the individual units to ensure synergies and optimize the use of suppliers and other resources.

After choosing WebFOCUS, ThyssenKrupp began outlining key performance indicators (KPIs) used in the purchasing reporting process to assess the productivity and effectiveness of critical activities. It deployed a forward-looking conceptual design for a company scorecard and value-based management environment. Information about financials, suppliers, processes, customers, and employees can now be measured and analyzed from multiple different perspectives, via cause-and-effect relationships, indicators, standards, and measures.

For example, some of the scorecard indicators used in the purchasing process aim to improve the way strategic suppliers are managed. Users can measure the number of suppliers, the results of supplier evaluations, systematic supplier development, the intensity with which electronic purchasing processes are used, as well as sales volumes and potential sales growth.

At the start of the project, twelve company-wide KPIs were defined. “One of the key elements of a scorecard is the cause-effect diagram. It links the company’s strategy with the perspectives within the scorecard,” explains Andre Müller, head of Purchasing and Logistic Controlling Team in the Corporate Center for Materials Management at ThyssenKrupp AG in Düsseldorf. “Once the strategic content has been determined, the scorecard indicators enable target figures to be compared with actual figures in the day-to-day business, which is a vitally important function for the value-based management of purchasing processes.”

Implementing a Value-Based Management SystemAfter ThyssenKrupp identified specifications and requirements, it needed to choose a BI solution. First, it had to reproduce the indicators for controlling and reporting and, second, it needed to provide the necessary process transparency. A project group, consisting of staff from the corporate center materials management department as well as purchasing and IT teams from the steel, stainless, elevator, and services segments, was formed to draw up a request for proposal (RFP), evaluate options, and make a choice. Key users from one company per segment, who would be implementing the application in the initial phase, were also present.

After looking into 30 potential suppliers, the company sent a request for basic information to twelve vendors. Based on the details collected, the team then sent the RFP to three providers. It asked for thorough descriptions of their solutions and inquired specifically about technically sophisticated functionality, such as integration with the various SAP systems implemented within the company, as well as the inclusion of SQL databases and the use of Web services.

There were additional considerations, such as the visual display of metrics, graphics options, and flexible reporting tools, as well as a cost monitor.

Each supplier was also given one week to use their products and solutions to implement an actual task based on ThyssenKrupp specifications. Requirements to be considered included report creation, standard reporting, ad hoc reporting, management cockpits with graphical presentation of data options, straightforward and intuitive operation, and the implementation of strategy maps (graphic representations of cause-effect diagrams of a company scorecard).

The more than 20-member project team then assessed the applications created. The team closely evaluated such key factors as intuitive operation and drill-down functions. As a result of the comprehensive selection procedure that lasted several months, Information Builders won the bid with its WebFOCUS BI platform for reporting and WebFOCUS PMF for controlling applications and monitoring strategic indicators. Having considered all quantitative and qualitative selection criteria and the full end-to-end process, Information Builders provided the most convincing solution for our requirements, according to the entire project team. One important aspect was the smooth, seamless integration of the heterogeneous databases typical for diverse, multi-company entities like ThyssenKrupp.

Rollout Across Five Pilot CompaniesActual implementation began at the start of 2009 with the five pilot companies as well as an installation in the Corporate Center Materials Management division. This phase was largely completed by the end of May 2009. WebFOCUS was installed centrally on a Windows server, which was fully accessible to purchasing specialists numbering well into the mid-double figures in five domestic and foreign ThyssenKrupp pilot companies. The solution can be used by everyone around the world – in one case as far away as Brazil – with no adverse impact on performance. The BI platform is also integrated seamlessly into the existing IT security infrastructure, thereby satisfying demanding security requirements.

“We see performance management as a closed loop. It incorporates a continuous improvement process in the areas of planning and strategy, performance measurement, and performance analysis including the alignment of results and developments with strategic objectives,” explains Müller.

Performance Management Framework (PMF) WebFOCUS PMF provides enterprise metrics management and BI that measures and tracks business strategies, and automatically links business owners to their objectives.

The Future of Purchasing at ThyssenKruppBy the end of 2009, the purchasing, reporting, and controlling solution was available as a shared service for all ThyssenKrupp companies based in Germany. By 2010, a worldwide rollout was underway. The project team considers the vital benefits of value-based management to be transparency, flexibility, and accuracy in all purchasing procedures. These benefits make it easier to focus on the key points outlined in the business strategy and systematically monitor those KPIs that are relevant to the transparency and management of those indicators.

The contribution that purchasing makes to the success of the company is now clearly measurable and can be traced back to the resource level. As a result, individual companies also have access to strategically relevant indicators of success, which help them to see their financial impact on the company’s bottom line. Consequently, they have the option to adopt specifications from the strategy map and include them in day-to-day business operations, undertake target/actual comparisons, and feed the results back into the strategic plan. Strategy and reporting becomes a closed loop, inextricably linked with one another.

Group companies that implement WebFOCUS also see another significant advantage. In many cases, reports have to be generated on a regular basis. This involved a lot of time and effort. But now, these reports are available at the push of a button and require no involvement from IT experts.

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