Grundfos case study
Thore Bänsch, Senior Director, Operations Strategy at Grundfos gives his experience of working with IfM Education and Consultancy Services (IfM ECS) for over ten years, highlighting how the Institute for Manufacturing’s (IfM) approach to network design plays a fundamental part in their global manufacturing footprint strategy.
- Informed investments in global network configuration of between 30-50 m € targeting business benefits of 10-15 m €/yr
- Transferred knowledge and capabilities to Grundfos’ Operations Strategy team to use IfM tools and approaches independently
- Created a business case for reducing manufacturing of non-core generic components justifying outsourcing of all high pressure die casting.
"We have been implementing the strategy for a couple of years and are seeing the benefits - factories in the right locations, more regional centres of expertise, a consolidation of activities and ultimately value chains which are more responsive to customer needs.”
Thore Bänsch, Senior Director, Operations Strategy, Grundfos
Grundfos is a global leader in advanced pump solutions, employing more than 19,000 people globally. Annually the company produces more than 17 million pump units through a global network of 39 plants.
In 2006, Grundfos’ manufacturing footprint was becoming the focus of attention at board level. The organisation’s value network was dispersed throughout the world and a decentralised structure meant factories were empowered to respond to local demands. Grundfos was embarking on a significant period of growth and wanted
to bring more structure and consistency to decisions being made in relation to their global manufacturing footprint.
“It’s a long time ago now, when I was the Senior Project Manager – my boss came across a case study from the IfM about a project they were conducting with Caterpillar on their manufacturing footprint. Network configuration was a niche area of expertise and the IfM was leading research and progressing thinking around best practice. We were impressed by their approach and could see it was delivering results for organisations with similar challenges to ours.”
“The other attraction was that it wasn’t a typical consultancy model – we didn’t want a consultant to come in and tell us what we should do. Instead we favoured IfM ECS’ approach as a guiding hand, using frameworks, workshops and complementary expertise to build internal capability and reach decisions based on consensus.”
The first project focused on one of Grundfos’ largest product lines – UP circulatory pumps - designed for the circulation of liquids in heating and air-conditioning systems. One of the outcomes of the initial project was the creation of a business case for a low-cost platform for UP pumps, which directly led to an investment in a new specialised facility in Serbia.
“We initially wanted to start small, gain buy-in and tailor the approach to fit with our needs. Dr Christodoulou, our IfM ECS Industrial Associate, put effort into understanding our unique culture and values which are extremely important to us. I think this played a significant part in the success of the first engagement and laid the path for further projects and the approach to be embedded in our organisation.”
Tailoring IfM tools and approaches
Activities have expanded beyond product streams and IfM ECS has been supporting Grundfos with regional configurations of factories, make vs buy analysis and a global configuration of their value network. One make vs buy project supported the business case for reducing manufacturing of non-core generic components justifying outsourcing of all high pressure die casting.
Thore explains “IfM ECS’s approach to transferring knowledge and capability has been of significant benefit to us. We have tailored the IfM’s manufacturing footprint approach and use it to bring together key stakeholders across our organisation to make decisions about operations. We used to do this based on limited data and the right feeling in our stomach - now we create a business case for each project based on data, evidence and facts. It gives us far more legitimacy with the board and we have high levels of confidence in the recommendations and strategy we propose.”
Thore now leads the Operations Strategy department which has a specific focus on Grundfos’ manufacturing footprint activities, forming a core part of the organisation’s strategic activity.
“We’re investing between 30-50 m € in our global transformation strategy and are expecting to see business benefits of between 10-15 m €/yr. We have been implementing the strategy for a couple of years and are seeing the benefits - factories in the right locations, more regional centres of expertise, a consolidation of activities and ultimately value chains which are more responsive to customer needs.”