Managing Director of Supply Chain Services in an interview

Creative procurement solutions that add value

Demand for innovative procurement and supply chain solutions are growing apace as supply chain complexity intensifies. Simon Hegele Supply Chain Services GmbH & Co. KG has evolved in line with the needs of its customers from a mere logistics provider into a specialist partner for solutions covering the entire procurement supply chain. With its reliable and efficient service, more and more companies are choosing to place their procurement needs in its practiced hands.

Simon Hegele Supply Chain Services was founded in 2007 as a subsidiary of Simon Hegele GmbH. The idea behind the new company was to offer procurement and stock management services to complement its existing logistics offering.

'The new service took off quickly,' says Managing Director Mike Schimke. 'The volume of stock that we were handling on behalf of our clients grew steadily as we converted more and more of our parent company’s customers to our complementary service.'

Today, Simon Hegele SCS generates turnover of 50 million EUR and manages procurement volumes worth between 30 and 50 million EUR. The company is still relatively small, with just 25 employees compared with 2,500 for the group. However, with access to the group’s network of 27 offices worldwide, global support is guaranteed.

The company’s core activity is the furnishing of operative procurement chain services. 'The client still takes all the strategic decisions regarding what is purchased and from whom, but we then put these decisions into action and ensure that the purchased items are delivered where and when they are required,' explains Mr. Schimke. 'The advantages for clients are greater efficiency throughout the procurement supply chain and associated cost savings.'

The benefit to clients of the service lies in centralized process coordination and outsourced purchasing functions that allow the client to focus on their core competence.

Simon Hegele SCS still sees itself as a work in progress and is currently looking into taking its service a step further to encompass strategic decision making.

'When we started out, logistics services focused on material flows and answering questions such as ‘where are the goods now?’ and ‘who is responsible for them?’,' explains Mr. Schimke. 'Today, we are active in a much broader field and have more opportunities to create value for our customers. Now we deal with cash flows revolving around who owns the goods. This is a completely different set of questions. We are the pioneers in this particular field and unique in our approach.'

This approach now extends from assuming responsibility for the management of the existing inventory through to the performance of operative procurement tasks, logistics and financing. By removing the customer’s inventory from the balance sheet, these solutions benefit the customer’s rating and cash flow.

'So that we can achieve the maximum benefit for our customers, the minimum stock value must be at least three million EUR, logistics must be provided by the Simon Hegele Group, and the company in question must be rated BBB+ or higher,' says Mr. Schimke. As a result, the client list is dominated by large companies such as Siemens Energy or wheelchair and medical aids manufacturer Bischof + Bischof.

'We work with clients in all sectors of industry with the exception of the food and gas sectors,” says Mr. Schimke. 'It is important that we fully understand the customer’s business and internal processes, which can be highly complex. It is difficult to find young people with the necessary experience, so we invest heavily in in-house training and skills transfer.'

Having successfully pioneered its own approach to supply chain solutions, Simon Hegele SCS hopes to expand the scope of its involvement in its customers’ supply chains in the future.

'We can envisage providing a financing solution that covers the entire value chain,' describes Mr. Schimke. 'The value chain typically involves several different companies and adds financing costs of between 15 and 30% to the final product price. Our model is designed to reduce these costs and improve our customers’ competitiveness. That is where we see the future of the sector, and we are happy to lead the way.'