Interview with Head of Purchasing Ulrich Ludwigshausen
A conversation with Ulrich Ludwigshausen
Ulrich Ludwigshausen was born in Bremen, Germany, and would later go on to study Industrial Engineering at the University of Hamburg, the Hamburg University of Technology, and the Hamburg University of Applied Sciences simultaneously. After graduating in 1996, he started his first job at the Production Planning department at 3M’s Hamburg location, where he was quickly added to 3M’s young talent training program. This would be followed by his first position with managerial responsibilities as team leader at Production Planning. Then, in 1998, Ulrich Ludwigshausen became responsible for relocating parts of Production from Hamburg to Portugal, and would later become Head of Purchasing at the 3M Hamburg location and, finally, Head of Purchasing for the entire Electrical Business Unit in Europe. However, the plant in Hamburg ended up closing, giving Ulrich Ludwigshausen the opportunity to explore new avenues. In 2000, he assumed responsibility for Purchasing and Logistics at Lugato Chemie, the industry leader in construction chemicals for end users in Germany, and, among other things, was in charge of developing a new distribution center for Lugato. 2002 would then see him move back to the field of international operations at Orga Kartensysteme, where he was in charge of Purchasing and Materials Management. His international work there would play a crucial role in shaping him as a professional, and when the French Safran Group acquired Orga Kartensysteme, he moved on to B/E Aerospace (later Collins Aerospace), the largest supplier of aircraft cabin interiors for the civil aviation market. There, he was in charge of the global supply chain for oxygen systems. Finally, in 2018, he became Head of Purchasing at HYDRO, and has been with us since.
Ulrich Ludwigshausen is 53 years old, has two children (one daughter and one son), and lives with his wife in Freiburg, Germany.
What does your job as Head of Purchasing at HYDRO entail?
Well, my team and I are responsible for the HYDRO Group’s worldwide purchasing operations, and that involves a total of around 40 team members spread across all our locations, although most of them actually work at the company’s headquarters in Biberach. But if you were to ask me what my job entails specifically, this is how I’d put it briefly: Supporting my internal customers by ensuring that they get the raw materials, finished products, assemblies, and services they need in the quantity they need, at the exact time they need them, at the lowest possible cost, and, above all, with the right quality. And who are these internal customers? First and foremost, our production facilities worldwide, and primarily in Biberach, Germany, and Seattle, USA.
What kinds of different tasks and processes are there at Purchasing?
We basically draw a distinction between two key processes at Purchasing. One is our strategic process, which we also call “source to contract.” This includes essential strategic issues, such as “How should I set up my product line management system? Which suppliers and which procurement strategies should I use for that?”, and, based on that, a number of additional aspects such as “How many suppliers do I need or want?”, “What should my criteria be for selecting suppliers?”, “What does my risk management strategy look like?”, “Which form of contract do we need?, and “How can I build up my supplier network and my commodity management system?” In fact, we have a team that is exclusively dedicated to tackling these issues.
The second key process is what we call “procure to pay” or “order to deliver.” Basically put, the teams responsible for it make sure that all orders are placed as required and delivered on schedule. Within this context, we draw a distinction between catalog goods, drawing parts, and complete assemblies such as the ones used at our Engine Tooling business unit, as this is essential in ensuring that we’ll be able to meet all relevant customer requirements concerning the end-to-end process.
How do you manage to coordinate the demand for such a huge variety of products at our production facilities throughout the world?
You know, I firmly believe that the entire process is actually crucial to our success – or failure – in the industry. It’s a question of how to coordinate hundreds of different products, most of which have a batch size of 1, that need to be simultaneously prepared for our production operations at various locations.
As far as we’re concerned, one of the key solutions here is visualization. In 2018, we started visualizing our entire value stream, from the actual beginning to the actual end, that is, all the way to delivery. We – and I mean a bunch of people from various disciplines company-wide – get together and go through everything line by line and talk about how things are going. What kinds of offerings are out there? What kinds of new things are we getting? Which orders came in the day before? Do we have a confirmed delivery date from our customer? From our supplier? What’s the current delivery status? And so on. And to be honest with you, this strategy took very little time to start paying huge dividends. As for the factor behind that success, I’d say it’s primarily this visualization in combination with our interdisciplinary teams. We basically have fellow team members from various business units and various supporting processes sit together and visualize existing problems so that we can discuss and solve them together.
„The topic of quality is crucial when it comes to ensuring that we’ll be consistently able to keep one step ahead of the game as a company.“
Head of Purchasing
How do you make sure that our suppliers consistently deliver the quality we need?
Needless to say, the topic of quality is crucial when it comes to ensuring that we’ll be consistently able to keep one step ahead of the game as a company. That’s why we’ve introduced supplier quality engineers worldwide. So what exactly do these engineers do? Well, their job is to get involved with our suppliers when there are deviations so as to discuss and understand these deviations, define corrective measures, take suitable action, and ensure that the results are maintained in the long term. And what we really want to do is to improve the complaint rate for our products – which is already very good, I might add – even further. Why? Because every single complaint has an immediate impact on our customers. In other words, every time there’s a deviation or complaint, we have to increase our lead times and, ultimately, our costs. And more than anything, that means that we have waste in our system and that our customers suffer as a result because they get the goods they bought later than they were supposed to.
And that’s the monumental task that our international team of supplier quality engineers, who are geographically assigned to our various suppliers, is tackling every day. They conduct audits on-site at our suppliers’ facilities, prepare complaint reports, and agree on corrective measures. That is to say, they make sure to keep a very effective dialog going so that both our suppliers and we as a company are able to learn.
What does our supply chain look like?
Our supply chain is international, and although it does have a focus on Europe and Asia right now, we’re aiming to further expand our global footprint. Now, if you were to ask me what the difference is between our suppliers and our competitors’ suppliers, I’d say that it resides in our specific suppliers, who are our partners, and in our processes. The way we select our suppliers is really based on whether we have a shared outlook in terms of how our relationship will evolve so that we’ll be able to work together long term in a manner that is characterized by trust. And it also depends on whether we’re able to integrate those suppliers into our processes. Basically, and as far as we’re concerned, a supplier doesn’t just provide goods – they are an important driver of innovation that feeds into our company. And if we’d failed to grasp this, we’d be losing out on an enormous amount of potential. That’s why we don’t really talk about “suppliers,” but rather about “partners.” For me, that’s vital to our success in being able to deliver on the “quality first” strategy that our customers expect from us.
„Suppliers don’t just provide goods – they are an important driver of innovation that feeds into our company. And if we’d failed to grasp this, we’d be losing out on an enormous amount of potential. “
Head of Purchasing
How do you manage the more than 500 direct suppliers in our supply chain?
We use what’s called a “supplier scorecard.” And what that means is that we’re continuously measuring our suppliers’ performance. Now, the things that get evaluated include certain criteria that you’d traditionally expect, such as punctuality, reliability, and, of course, quality, but other factors play a role as well, with a couple of examples being how our suppliers fare in terms of price and what the risk associated with them is. These scorecards are sent to suppliers on a monthly basis, and we also discuss the results with them once a month, although it’s important to mention that we don’t actually do this for every single one of our suppliers – just for our major suppliers.
Now, within the context of our ratings for major suppliers, one thing that is essential is their performance. This includes things such as how quickly they’re ready to submit quotations and how quickly they respond to requests, all of which ultimately becomes part of a supplier rating. And once we have that, we can move on to the next step: If there’s a problem with a supplier, what needs to be done to get back to the performance level that we expect from them? And in addition to that, we also conduct a risk assessment. Now, I think it’s important to actually mention that these measures are solidified by a series of contractual agreements.
What’s a “milk run” in purchasing lingo?
We’ve been working with our suppliers for a while now on implementing kanban and, especially, the “milk run” tool within the context of value creation. Basically put, a milk run means that we agree on a fixed delivery rhythm – say, showing up every Tuesday and picking up goods, provided that we need them. It’s like a milkman who only brings milk when there’s an empty bottle in front of the door. And what we want with this is to move away from a push strategy, or to put it another way, to no longer have suppliers send us goods when they’re ready. Instead, we want to shift to a pull strategy so that our suppliers start following the cycle we have in our value streams instead. That means that the goal for us is to get our goods when they’re needed, which will enable us to effectively lower inventory levels and use our resources in a much more efficient way.
Have you contemplated shifting to suppliers in low-cost countries at all?
In my experience, the quality you get from low-cost countries is the same as the one you get from European suppliers. In other words, you can’t just assume that you’ll get better quality if you rely exclusively on European suppliers.
A supplier needs support and guidance. Just like our customers support us, we need to do the same for our suppliers, and that means that we need to have the right organization in place and be there on-site. You can’t, for example, provide support and guidance to a supplier in Africa remotely from Germany only and expect for things to work. When we select suppliers in low-cost countries, we choose them very carefully, and we make absolutely sure that we’ll be able to provide them with appropriate on-site support. With our supply quality engineers, for example. Basically put, there will always be a problem that requires for you to be there physically in order to see what’s going on. Trying to do that on the phone just doesn’t work.
CLOSE-UP WITH ULRICH LUDWIGSHAUSEN
A good day at work starts with…
A smile and, needless to say, “good morning!”
I earned my first money…
A seller at a bakery.
If I could chose my seat neighbor on an aircraft…
It’d be my wife without a shadow of a doubt.
I lose track of time…
When reading a good book and when doing sports.
The so far most expensive purchase in my life…
My house.
I have always…
Attached a lot of importance to being independent.
I have never…
Run the Hamburg Marathon.
Those aiming for a career at HYDRO…
You need to show commitment and really want to change things while remaining authentic above all.
When I was 18, I wanted to…
Get my driver’s license.
Home for me means…
Where my family and my friends are.