Parker Hannifin, remodelling the logistics supply chain

In 2006, to gain an understanding of the future of logistics, Parker Hannifin completed their first centre of gravity study in Europe. Since that time, Parker Hannifin has seen tremendous growth through acquisitions, adding approximately 50% more locations, says Dirk Falkenreck, EMEA Distribution & Value Add Center  Manager at Parker Hannifin.

The increased organisational complexity drove Parker Hannifin to create a vision for 2025 and identify areas for improvement. With over 60 Finished Goods (FG) warehouses in Europe and a need to simplify, Parker wanted to better understand innovation, optimisation, and how they could leverage robotics to increase efficiencies and improve customer service.

“We wanted to create a better customer experience and explore the future for our footprint in Europe,” said Falkenreck.

That was when Miebach Consulting Group jumped on board. “We structured the project into three phases. The first phase consisted mainly of data crunching and assessment of Parker’s complex network. The second phase dug into network alternatives to identify potential areas for cost, risk, resilience, sustainability, and network improvements. Last but not least, the third phase consisted of establishing the business case,” explained Falkenreck.

“In the end, Parker looked at over 800 scenarios to evaluate all the possibilities in the Parker Hannifin network to capture and commingle all the different possible network alternatives into one final recommendation.”  Miebach interviewed stakeholders to identify supply chain requirements, and after a great amount of analysis, Parker Hannifin reached a final solution.

Falkenreck continued, “There was a very professional approach which I really appreciated. The atmosphere of the project team was just amazing. There was always a willingness to react to demands or changes in the project. As we all know, the journey is never straightforward, there can be surprises, and we get input from here and there. The flexibility Miebach showed enabled us to achieve the results that we did.”

After running the centre of gravity study, Parker Hannifin set the objective of streamlining its EMEA warehouse structure, presenting the need to significantly consolidate logistics activities into centres. This drove a need for warehouse excellence and increasing efficiencies within the facilities. 

All together, Parker Hannifin ended up with more than 20 football fields worth of common warehouse activities, which could be reduced by 30 to 40 per cent and increase the manufacturing footprint. 

“Stabilizing the network also allowed us to better service customers in an uncertain world – for example, with changes such as Brexit. It has been proven that the stable network we developed enabled us to mitigate potential risks, ensuring they didn’t impact our final customer. In the end, we realised a reduction in transportation activities and lowered transportation costs while increasing reliability,” said Falkenreck.

Parker Hannifin expects that reducing the complexity of the overall network will help them to streamline and simplify workflows across the organisation and further improve customer service.

Falkenreck says that Miebach’s valuable support and guidance were key to Parker Hannifin achieving the results they did.  Miebach played a key role in helping Parker Hannifin to manage and align stakeholders, communicating objectives and getting buy-in so they would be open to working collaboratively on new ideas and approaches. This allowed for a quick kick-off and fast and effective deployment of tactics. 

Looking forward, Falkenreck explains the results of the centre of gravity study and the vision for 2025. “It’s a map for our organisation to achieve, consisting of multiple layers of dimensions we have to deal with, such as the workforce, innovation, mobile infrastructure and the systems landscape and the rest of the IT world, which plays a key role. And then, of course, the deployment of the centre of gravity study, so there are multiple layers we have to consider and accomplish in the next couple of years.”