Rainer Bürkert von der Würth Industrie Service im warenausgang.com Podcast

Well, I am the managing director of Würth Industrie Service and also responsible for the industry division within the Würth Group. This is a constantly growing network of 56 companies that supply manufacturing companies and provide services. Last year, these companies generated a worldwide turnover of nearly 1.5 billion euros. Combined they have about 3,500 employees. So it is a large, medium-sized conglomerate within a group. Each individual company is a medium-sized business, but together they are in the upper medium-sized range.

As with many things in life, it was driven by chance. I started in group auditing and then worked on annual financial statements, consolidation, and mergers and acquisitions. One day, I was asked to look after the industry division of Adolf Würth GmbH & Co. KG during my auditing activities, because previous attempts had only been below average successful. From that work came the question of whether I would fully take over, and everything else developed from there. Now, Würth Industrie Service in Mergentheim grew to 504 million euros in sales last year and employs about 1,500 people.

We have to go back 25 years. When we started in 1993/1994 to deal with the topic, the industry division of Adolf Würth GmbH & Co. KG behaved like a normal trader—selling goods through price. It quickly became clear that the market didn't need another normal trader. So we thought about what the customer actually needed and tried to extrapolate the future. A few key points were clear: one, our customers would face a demographic problem—the way they had been purchasing, with many buyers handling a few screws, would not continue. We didn't have digitalization in mind then, but it later accelerated massively. Another point: small C-parts would no longer come from thousands of different suppliers—it costs money to manage them. The total cost of ownership concept was already known in some areas. The last point was that many parts have high technical requirements, not commodities. Over 50% of parts come with a drawing or special surface, requiring deep technical know-how. From these three points, it was clear the customer needed a service provider that combines logistics, purchasing, technical, and organizational services under one roof—like standardizing surfaces. We developed the concept, it worked, and we won first customers. That quickly made it clear that fulfilling a single order with 1,000 items had nothing to do with classic trade. Würth AG handles many packages of 3-5 items; we came with 1,000-item orders, which overwhelmed the system. So management decided to spin off the concept outside of Bad and Würth KG. We found a location in Bad Mergentheim and founded the company. That took some time to answer your question, but through this service concept and development, it became a success story: we started here 20 years ago with 80 people, now we have 1,500 here and 300,000 worldwide.

Yes, that hits the core. Good screws are available from our competitors too—that's not a differentiator. The differentiator for our customers is service: complete delivery of all standard and special parts, and if necessary, we also handle manufacturer-bound parts in logistics. They get all-inclusive logistics: we take care of their shelves, stock them, clean them, install modern technology like RFID-based systems so data transmission is seamless. These many interfaces in the classic purchasing and logistics process had many error sources with media breaks, data entry issues, etc. This complete service includes data transmission, capture, and processing. Then there's organization: the customer used to have external service providers or many people in receiving to handle thousands of packages from many suppliers. We take over all that—disposition, receiving, quality assurance, replenishment. So they can focus on core tasks.

You know the saying that data is the oil of the 21st century. For us, it's more like the sand that holds the building together. Data is very important, especially consistency. We often see customers who after 10–15 years have a drawing that shows what they used to build their product, but there is a massive difference between what's on the drawing and what's actually installed in the factory. That's because maintaining data became too cumbersome and wasn't updated. We ensure data consistency, provide data sets in any format the customer needs, and develop them further. Otherwise, if the data is wrong, it can cause major problems: changing suppliers might get a part made exactly to the wrong drawing, leading to production downtime or even recalls if safety classes or coatings change. That's why data is the backbone of our business.

Today, about 85% of our order items come electronically, whether through systems or direct EDI with many interfaces. The remaining paper/fax business declines by a few percent each year and will approach zero. As for platforms, their reach is mainly limited to Europe and not in production areas. It remains to be seen which approaches prevail. For us, it's not just about moving a data set from left to right; we need to control processes. Take the classic glove example: which glove is the right one, for the right safety class? There are 5,500 EU safety classes for gloves. Someone ordering on a platform without local knowledge could make a dangerous mistake. Then where should it be delivered, how many used, by which authorized employees? We have systems with chip cards and controls. This goes far beyond simplifying the order process.

The system is a facet of the overall offering. What interests the customer is the whole package. For example, if you imagine a large excavator and explode it, you get 2,500 to 3,500 individual parts depending on the model. For our large excavator producers, we supply an average of 1,800 to 2,000 of those 3,000 parts—two-thirds of all parts, but only 2-3% of procurement volume. If just one of those 3,000 parts is missing, the excavator doesn't leave the yard. So the customer has a huge interest in having those 3,000 parts at the right time, right place, right quantity, with minimal packaging and sustainably. They want to buy the whole package, which includes logistics services, technical services, etc. In the end, it's like Lego: we go to the customer, analyze their needs, and then assemble the required services from our modular service kit to produce a tailored solution for each plant. This avoids buying blind services they don't need. Each customer gets a system, but most systems are different—like a tailored suit.

Once a customer is large enough, they get their own team. Large customers have their own language, even for technical and IT terms. If you don't understand that, you can't communicate in their 'corporate Chinese.' So we need employees who know that very well and can communicate seamlessly. They become like part of the customer, working in the customer's plants. Otherwise, you can't handle details like security briefings, driving forklifts, etc. You can't just send a different person each day. This close integration builds transparency: the customer sees exactly what they are paying for and what they get. So it's not sales anymore; it's ongoing customer management. Teams range from 2-3 people in startup phase to 30-40 people in large accounts.

The basic building blocks came from brainstorming: how would I want to be treated as a customer? Another part came directly from customer demands. We are audited between 90 and 200 times a year by our customers. Their auditors review everything, which teaches us a lot because they bring experiences from their own companies and suggest improvements. We analyze these audits and requirements and extract new building blocks. If something works for one customer, we see if it could work for others and how to make it a standard module without complexity. The third area is technology: we have a clear innovation management system that involves employees through improvement processes and cross-company innovation teams that look at future needs. Maybe 3 out of 10 ideas bring something, but we need that to stay attractive.

I am not entirely sure, because many customers haven't even started. Some have only touched the surface in our portfolio, e.g., only in standard fasteners but not special parts. We delivered 1,043,000 different products to our customers last year. I don't know if it'll level off at 15 or 20 million due to regulation effects. Fact is, C-parts management is just at the beginning. Many customers still do these services themselves, even though they know it's no longer modern and they can't make the leap because they are too busy with digitalization of their core business. So there is a huge market ahead for such services. And then there is a third development: changing technology. We haven't talked about 3D printing of parts, which will change things. We already prototype for many customers. But that only makes sense if you have the technical know-how to understand what the customer wants. So the market is only 1-5% optimized. Technology like 3D printing is almost established now, but you have to figure out what will be relevant in five years. We are already dealing with those topics, even if it costs money now, because if we don't, we'll be too late.