Comfort for Construction Customers

x|periences from 29.11.2011
Comfort for Construction Customers
x|vise and Jungheinrich develop a forward-thinking convenience concept for the building
materials wholesaler Sochor.
At Vienna’s reputed building materials wholesaler, Sochor, logistics activities have recently been running a little
differently. A completely new distribution centre with a logistics concept, which is designed to specifically meet
customers’ needs, ensures a comprehensive service for building companies and contractors. And x|vise played a
pivotal role in its realisation.
The consulting firm created the framework for the workflow at Sochor and in this regard was responsible not only for
the IT background, but also worked with Jungheinrich Austria on the technical requirements for the project and took
part in every implementation stage from beginning to end.
The goods-to-customer system
The aim of Sochor’s major order was to significantly improve service quality and increase efficiency with regard to
warehouse logistics. This was mainly achieved through the introduction of a goods-to-customer system. Customers
no longer have to serve themselves in the warehouse, instead commissioning starts the moment that the order is
placed.
Electronic processing means that the system allocates the customer with a loading point, which is situated at the end
of a distance-optimised commissioning sequence. A sophisticated control and transportation system guides the
customer and his vehicle through the logistics centre and releases him at the end with his ordered goods on the lorry.
The reorganisation of the logistics processes means that on the one hand the customer is served faster and on the
other hand stock turnover at Sochor is significantly accelerated.
Instrumental in the implementation of the exemplary logistics concept
„The logistics solution at Sochor is unique in the construction materials industry. This groundbreaking concept was
the first of its kind encompassing service aspects, processes and following all the way through to the storage and
conveying technology. We are proud that we played a deciding role in the successful implementation of the
processes and created a significant competitive advantage for the Sochor Group in the construction materials
industry ” explains Gregor Gluttig, Head of Region East at x|vise.

x|periences from 29.11.2011
Logistics as Leverage for Liquidity and Profitability
Increased pressure on margins, disappointing cash-flow development in times of crisis or lack of
capital for growth investment. These issues are more topical than ever. With a comprehensive
working capital management program, as a logistics specialist you can significantly improve the
financial clout of your company and equip yourself for future growth.
Let us first take a look at the text books! If we add the days of inventory outstanding to the days of sales outstanding
and subtract the days of payables outstanding, the result is the so-called duration of capital tie-up (see diagram). If
we take this formula into consideration, then the relation between financial management and logistics becomes clear.
If finance primarily manages the payment periods, then the days of inventory outstanding is predominantly the
responsibility of the logistics specialist. If both of them pull together, then capital can be released or liquidity created.
Working Capital along Supply Chain
Feedstock
purchase
Feedstock
delievery
and
payment
DPO 1)
Pay
feedstock
payment
Customer
order
Start
fabrication
Inventory outstanding (DIO 3) )
1) DPO = Days payables outstanding
2) DSO = Days sales outstanding
3) DIO = Days inventory outstanding
Source: Schulz & Partner „Rentabilitäts- und Working Capital Analyse 2011“
Finish
fabrication
Delivery and
invoice
Expected
incoming
payment
Customer
pay the bill
Customer (debtors; DSO 2) )
Capital commitment = DIO + DSO - DPO
Really
incoming
payment

x|periences from 29.11.2011
In this context, it is worth taking a look at Roland Berger and Creditreform’s current study „Cash 4 Growth“, which
shows significant differences in the duration of capital tie-up depending on the size of the company and type of
industry. Hence, larger companies have a significantly shorter duration of capital tie-up. Some of the reasons for this
are that larger companies have more success in negotiating their payment terms compared with smaller companies.
Furthermore, the target of low working capital has a higher weighting in larger companies and is more highly sought
after. Thus companies with a turnover of up to €10m register a duration of capital tie-up of approx. 60 days. Large
companies, however, with a turnover exceeding €200m have tie-ups of less than 45 days.
More important for logistics specialists is the consideration of the results of the study according to the type of
industry. The best working capital performance can be found in telecommunications (19 days), trade (43 days) and
IT. Industries in which capital is tied-up for the longest periods are textiles (90 days), pharmaceuticals and
engineering (79 days). The difference here is mainly with regard to stocks.
Levers for a reduction of stocks or inventories can be found, for example, in production optimisation in order to
minimise throughput times and buffer stock. Further potential can be seen in warehousing where safety stocks can
be scrutinised and slow-movers can be cleared, or by redesigning the warehousing concept, for example through a
VMI concept, direct deliveries or order-related production. The standardisation of parts and processes also provides
further leverage for improving stock management.
Another important aspect is the improvement of networking in the supply chain with the aim of reducing the build up
of inventories in terms of the whiplash effect. Therefore, communication between suppliers, manufacturers, logistics
service providers and customers needs to be improved. Catchword ECR: it is no coincidence that trade is the topranking
industry with regard to duration of capital tie-up. In addition to IT integration and harmonisation, joint ventures
and partnerships can also help to improve networking and thus communication throughout the supply chain.
Working capital is one of the main levers for improving liquidity. With strict management of your working capital you
can overcome the diverse challenges yourself, without the need for expensive external finance from banks. Only
those who have all the parameters in place can secure liquidity and profitability, thus ensuring the long-term success
of the company!