Freudenberg + Celonis

Context: Business as usual is over

COVID-19 turned the manufacturing industry upside down. Companies around the world have had to adjust to more frequent and more severe supply chain disruptions and demand swings. Business as usual? Didn’t stand a chance.

Freudenberg Sealing Technologies experienced this first-hand. For over 100 years, the German manufacturer has produced high-tech sealing solutions that can be found in all industries and all environments, from outer space to the deep sea.

More than 20 million seal products roll off their assembly lines every day, with up to 18,000 raw materials going into their production.

Optimizing inventory and performance in supply chain management is therefore a top priority for Kai Führer, Director Supply Chain Measurements & Assessments at Freudenberg FST, and his team. 

Challenge: Lack of transparency into shortages complicates planning

During the heights of COVID-19, supply chain disruptions caused serious headaches for the manufacturer.

“We lacked the ability to quickly and easily get an overview of our end-to-end supply chain, to better cope with material shortages," said Führer during his keynote interview at Celonis World Tour 2023 in Munich. 

In the past, Führer's team primarily relied on SAP reports and Excel to generate transparency.

“To look at specific issues, pulling the right data was complex and it often took us several days to gather all the information.”

“We needed a tool that would show us exactly which of our suppliers couldn’t deliver, what inventory levels we had at what plant, and when these would reach critical levels - so we could inform customers in time and find solutions."

Solution: Supply chain transparency at the push of a button

That's why Freudenberg launched a co-innovation project with process mining vendor Celonis to track their material flows worldwide and ultimately better respond to shortages. The success has been groundbreaking.

At the touch of a button, Führer's team can now see how bills of materials depend on each other, analyze inventory levels and understand both quantities they can produce and which customers they can serve.

The secret behind this detailed view is the Celonis Network Explorer that visualizes complex process networks, bringing transparency into global supply chains.

Now, Freudenberg can not only see material shortages and their impact on downstream processes, such as production in real time, but also understand the indirect dependencies on Procurement and Sales. 

“Celonis is a huge game changer for us. For the very first time, we can see all information on raw materials in one dashboard – all current and historical sales orders, all inventory levels, all production orders,” said Führer.

“Celonis makes our bottleneck situation more transparent than ever and helps us make faster decisions and find better solutions.”

Armed with real-time data, the company can not only provide customers with more accurate information, but also significantly reduce liability risks, ultimately lowering costs.

“Celonis has also increased my team's expertise and influence,” said Führer. “And our colleagues show us a lot more appreciation.”

Führer isn't the only one impressed with the results. Freudenberg’s management board has been deeply involved in the project, too.

“Without Celonis, we would never have coped with the supply chain challenges in the pandemic as well as we did. That's not just me who’s saying that, it's our board, too. Which speaks volumes about Celonis’ strategic importance Celonis.”

One of the things Führer is still amazed by, is the collaboration with the Celonis team. “We were quickly aligned on our vision and enthusiasm for the project.“

Vision: “Dock-to-Dock” is next

The team is already working on the next innovation project: to further increase flexibility and efficiency in production, the team wants to analyze lead times across the end-to-end supply chain – starting at the receipt of raw materials to the moment the product arrives on their customer’s doorstep.

Freudenberg’s project dubbed “Dock to Dock” is powered by the End-to-End Lead Times App, a powerful Celonis app based on Object-Centric Process Mining, which allows companies to analyze a 3D image of their entire business and find hidden inefficiencies that live at the intersection points between processes.

Interested to learn more about Object-Centric Process Mining? Read our blog: How to prevent butterfly effects from disrupting your supply chain.→

As a result, Freudenberg hopes to reduce throughput times, optimize inventory, and ultimately free up working capital.

“At the moment, we need 50 to 60 days. Our goal is to reduce lead times by 10% in the first year.”

In the future, Führer hopes to integrate Freudenberg's Order-to-Cash and Procure-to-Pay processes, as well as production, into that 3D view. 

And Freudenberg is going one step further. “At the Celonis Hackathon, we looked at how we could connect the entire CO2 chain to dock-to-dock," Führer says. For instance, he hopes that the insights Celonis provides will help shorten production routes and times thus reducing Freudenberg’s carbon footprint.

The supply chain director also envisions using Celonis to support the transition to stricter EU regulations on raw materials. The European Union plans to ban 10,000 ‘forever chemicals’ (PFAS) suspected to cause cancer by 2027.

“For this, we need transparency and see which of our products are affected in order to adjust our production and supplier network accordingly.”

Kai Führer is certain that Freudenberg's motto “Innovating together” will also apply to their collaboration with Celonis in the years to come.

Intrigued? Find out why Celonis is the market leader in process mining.