Hand in hand

Mr Friedmann, when was the last time you experienced a significant supply chain problem at the Würth Group?

Friedmann: We often experience shortages of various materials, especially plastics and metals. For us, the key question is what’s causing them. The problem as we see it is that many companies are cutting capacity too quickly and too early. This was particularly so during the coronavirus pandemic, when many of our suppliers slammed on the brakes and slashed their inventories. The problem came afterwards, when it took three years to recover from such severe cutbacks. So, bottlenecks persisted well beyond the crisis that caused them.

How did you respond to the Covid crisis and the resulting market collapse?

Friedmann: At the time, we took advice from an economist who basically told us, “This lockdown won’t last forever. Hang in there!” Holding out like that wasn’t practicable in every case, but our general ambition was to stick it out for the longest time possible. Which paid off in the end. We made it through the crisis in good shape because we maintained product availability for customers. Although it needs saying that as a family-owned business, we have the financial strength necessary for such staying power.

Mr Altendorf, how does a company like Endress+Hauser brace itself for supply chain problems?

Altendorf: Some events are near-impossible to prepare for. Think of a pandemic closing Chinese ports, or a container ship getting stuck in the Suez Canal. But still, there are measures you can take to minimize risks and thus add resiliency to your supply chain. For instance, with upstream products we don’t just rely on one supplier but have several spread across different economic areas. Then there’s warehousing: here we don’t seek to optimize from a purely financial perspective, but rather from our customers’ point of view. And I agree here with Mr Friedmann that family-owned businesses do have certain advantages over publicly listed corporations.

Friedmann: As I see it, crises aren’t likely to occur any less frequently in the coming years. We have to get used to the disruptions caused by political acts, wars, natural disasters and pandemics.

What does ‘get used to’ mean, exactly?

Friedmann: It means positioning ourselves to effectively handle potential disruptions. Which is far from easy to do, as supply chain management makes plain. The people who work on our supply chain have particularly challenging jobs.

One driver of the transformation is digitalization, where Endress+Hauser is heavily invested. So how are digital solutions changing supply chains?

Altendorf: As a good example, take our Global Logistics Operations Center in Ireland. There we can digitally track every package leaving an Endress+Hauser facility. And that’s not all: We can steer packages around, correcting their route when necessary. This is an effective tool, especially in times of volatile goods transport chains.

At the Reinhold Würth Innovation Center CURIO, you are working on customized AI solutions to increase logistics flexibility. How far have you gotten with this?

Friedmann: All sorts of wonderful applications exist in theory. We’re looking for applications that can help us right now. We’ve already had some successes: We can now use AI systems for more accurate prediction of customer behavior or to optimize the route a salesperson takes to visit their customers. Our planning team is also benefiting from the possibilities of AI. Logistics used to be a department that just dealt with existing systems. Today, the logistics people are also exploring the potential of machine learning. A lot has happened here.

Altendorf: Job profiles in all areas of logistics have changed significantly and will continue to do so. I firmly believe that digitalization will not cost any jobs in the long run, but it will change almost every profession.

Around 44,000 people in the Würth Group worldwide work in sales. How important is the human factor in sales?

Friedmann: We still see our salespeople as crucially important; they are the ones who establish and maintain contact between the customers and us. For us it’s only natural that sales has a big say on issues such as product availability and quality.

Altendorf: Selling is an emotional process, so friendliness naturally counts among Endress+Hauser’s defining values, along with sustainability, commitment and excellence. Contact with customers via our sales force matters because that is our only means to discovering their motivations, where they use our products, how their business is developing and what they are trying to achieve. This makes our salespeople trusted confidants and advisors. For customers, they are the reassurance that what we sell actually works.

Friedmann: Our segment deals with a lot of craftspeople, who tend to like the human touch. Although these days it’s essential to make use of digitalization, automation and AI, ultimately, the business we do is always between people.