How Sika Australia perfected the production and warehousing concept thanks to the Parex acquisition.
Increasing productivity is one of a manager’s basic tasks. But in this case, Adam Sharp’s remit was more challenging than usual: the General Manager of Sika Australia had not just been called on to optimize individual facilities. More precisely, in conjunction with the Parex acquisition, his job was to make the resultant larger mortar production structures throughout Australia more efficient and to streamline procedures. “That was particularly demanding since some of the facilities are thousands of kilometers apart. And because the raw materials we use when producing mortar vary depending on the region", points out Adam Sharp.
After the implementation of the efficiency enhancement program and the successful integration of Parex’s operations, one thing is certain: the Sika Australia team met and sometimes even exceeded their ambitious targets. Production costs are now 10% lower. This is a considerable improvement for a product that is produced in very large quantities. At the same time, the CO2 output per ton of mortar was reduced by 5% in the first year.
Completely New Procedures
Fundamental adjustments were necessary to bring about such major progress, increase efficiency, and improve the ecological footprint. “We reorganized all our activities from the ground up", is how Adam Sharp summarizes the approach adopted. “Today our production facilities are located right where our markets are, and with appropriate capacity.” In each of the four metropolises Brisbane, Sydney, Melbourne, and Perth, Sika now operates just one mortar factory. A new factory with production lines for specialty mortars and volume mortar was built in Sydney. On the other hand though, four facilities were discontinued. Furthermore, the number of warehouses was reduced to allow much more efficient material flows.
"Now our products are available precisely where our customers need them to be, at the right time, and in the correct quantity" Adam Sharp, General Manager Sika Australia
Increased Capacity Utilization, Reduced Energy Consumption
Concentrating operations at the optimum locations increased capacity utilization at the factories from 45% to 67% within a year, exceeding the original targets.
This had a direct positive knock-on effect on production costs. With Sika operating fewer factories, the individual facilities were able to raise production and reduce energy consumption per ton of mortar by 10%.
Significant commercial and ecological improvements were also made in another key area.
The volume of mortar transported between the different sites by truck, rail, or ship was cut by over 85%, clearly surpassing original expectations.
Today only a selected number of high-performance specialty mortars are still transported over longer distances. All other mortar products are produced by each of the four factories exclusively for the surrounding metropolitan areas.
Continuous Reduction of the Group's Operating Costs
Sika is promoting programs to increase operational efficiency in all regions. Operating costs are to be reduced by half a percentage point each year. The company is focusing on every link of the value chain, from procurement and product formulations via production and logistics to sales and administration. In the area of purchasing alone, worldwide Sika has identified over 1,700 projects with savings potential. When it comes to packaging design, for example, Sika relies on standardization and recycling to cut costs.
Sika specifically leverages the benefits of automation to speed up procedures and bring down costs. Robots are increasingly used in production and packaging, while autonomous vehicles shift goods in warehouses. This approach is being unwaveringly pursued at the Düdingen plant in Switzerland, the site of Sika’s most modern production facility, where high-performance adhesives are manufactured fully automatically. Making changes to product formulations also offers huge potential. Teams of experts across the globe are working to reduce the number of more than 20,000 formulations used based on different methods.
All these initiatives are key drivers of Sika’s efforts to continually improve productivity. The environment also profits from the resultant savings in energy, raw materials, and waste.
Best-Practice as Benchmark
Sika is improving operational efficiency Group-wide. Value chains at all sites are to be gradually optimized over the next few years. Sika Australia and the production facility in Düdingen, Switzerland, are best practice examples that serve as a benchmark for teams throughout the Group working to boost efficiency. Adam Sharp took away some valuable lessons from the project in Australia.
"You need to bring together people with the appropriate expertise and draw on all the available information to arrive at conclusions that have to be consistently translated into action. This can only be done with a highly motivated team." Adam Sharp, General Manager Sika Australia