forum Technische Mitteilungen ThyssenKrupp July 2001 English Edition

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1 Technische Mitteilungen ThyssenKrupp July 2001 English Edition TK

2 02 Published by ThyssenKrupp AG Corporate Technology August-Thyssen-Strasse Düsseldorf Postfach Düsseldorf Phone +49/2 11/ Fax +49/2 11/ Technische Mitteilungen ThyssenKrupp appears once or twice a year in German and English. Reprints with the permission of the publisher only. Photomechanical reproduction of individual papers permitted. Technische Mitteilungen ThyssenKrupp is distributed according to an address file maintained using an automated data processing system. ISSN Cover Electronic transactions and customer care via internet and intranet provide production and service companies with a platform from which to revolutionize their processes and business relations. Uses range from company internet presentations as a virtual shop window and the integration of purchasing activities with the suppliers e-commerce applications through to internet selling and special customer services. This issue of Technische Mitteilungen ThyssenKrupp presents net-based solutions and innovative services entered by our Group subsidiaries in this year s ThyssenKrupp Innovation Contest. The prizewinning entries were as follows: 1st prize: E-commerce as a success factor in future materials marketing at Thyssen Schulte Joint 2nd prize: SerKom the mobile communication solution for service engineers and The new modular steering column from Krupp Presta 3rd prize: Service product impact performance hydraulic hammer with integrated electronic evaluation unit for remote transmission of performance data. Please refer to the articles in this issue for further details.

3 03 Foreword Prof. Dr.-Ing. Ekkehard Schulz, Chairman of the Executive Board of ThyssenKrupp AG Dear Readers, Innovative services offering efficient, customized solutions are providing new ways of adding value. The internet and intranet can be used to simplify and speed up business processes, to enhance their flexibility and efficiency. With such a wealth of potential, the subject of this year s ThyssenKrupp Innovation Contest was Services and E-Business. The results of the contest are presented in this issue of Technische Mitteilungen ThyssenKrupp. With the development of a modular steering column, Krupp Presta provides its systems business as a service. Charging for the performance of its hydraulic hammers rather than selling the equipment outright is a completely new kind of service being provided by Krupp Berco Bautechnik. Online selling brings about benefits for suppliers and customers alike: selling costs are reduced and customers enjoy greater flexibility and responsiveness in purchasing. ThyssenKrupp Stahl has set up an e-commerce platform to sell steel from stocks and offer free rolling capacities via online auctions. Customers using Thyssen Schulte s TS-Online-Shop can access information on more than 120,000 different products and order them directly 24 hours a day. E-business solutions are also being used in other areas: providing product information at Krupp VDM and Hoesch Hohenlimburg, in the shock absorber aftermarket business at Krupp Bilstein, selling spare parts for cement plants at Krupp Polysius and for telematics-based transport management systems at Timtec Telematik. Many companies are also utilizing the advantages of the internet and intranet for e-procurement, e.g. placing internal and external purchase orders for consumables via electronic product catalogues and obtaining quotations via online bidding systems. These examples show that New Economy and Old Economy are not opposites, but can be used in tandem to greatly enhance customer value and business success. Yours, Ekkehard Schulz Prof. Dr.-Ing. Ekkehard Schulz, Chairman of the Executive Board of ThyssenKrupp AG

4 04 Contents Daphne Dorighi, MSS/ECC/E-Promotion Services, Dr.-Ing. Stefanie Wippermann, MSS/ECC/E-Promotion Services, Thyssen Krupp Stahl AG, Duisburg Page 9 Andre-Thorsten Hebel, Head of Materials Management, Dipl.-Kfm. Ralf Müller-Beckhoff, Head of Information Systems Applications, Thyssen Krupp Stahl AG, Duisburg Page 13 Ralf Jacke, Head of Materials Management, Dipl.-Kfm. Ralf Müller-Beckhoff, Head of Information Systems Applications, Thyssen Krupp Stahl AG, Duisburg Page 17 Online Sales at ThyssenKrupp Stahl E-purchasing at ThyssenKrupp Stahl via the internet-based W3AS online RFQ system E-procurement at ThyssenKrupp Stahl by means of electronic catalogues on the intranet and internet Early last year, ThyssenKrupp Stahl became the first carbon flat steel producer in Europe to offer steel via the internet with the launch of TKS Online Sales. Selling takes place in the form of auctions, with potential buyers submitting bids for the TKS materials or capacities on offer within a defined period of time. Once the deadline has passed, sales agents look through the bids, and generally the highest bid is accepted. TKS Online Sales allows customers to buy steel in an easier, more flexible and more efficient way from anywhere in the world. Currently, online auctions offer inventory materials from the entire range, hot-rolled strip from forthcoming production and Ia plate rolling capacities. The next step will be to introduce Offers to sell, which will permit specific customers to be targeted with specially tailored offers via the internet. Launched in late 2000, the TKS W3AS online RFQ system is designed so that it is basically possible to request quotes for any requirements regarding consumables, spare parts, tools and implements, production materials, machinery and equipment, furniture and fixtures, capital goods and associated services. Through integration in the SAP system, all actions of W3AS are represented automatically in SAP. A quote request generated by the buyer in the SAP system is transmitted to W3AS where it is released as an open, i.e. accessible to any interested suppliers, or closed request, i.e. accessible only to selected suppliers. Quotes submitted online are transmitted automatically from W3AS to the SAP system. After the submission deadline has passed, the buyer is given access to the quotes, which are automatically ranked. W3AS achieves savings by improving purchasing conditions as a result of borderless competition and by reducing process costs through lower administrative expense. In the future, the procurement of C-items at TKS will be done via direct calloffs from electronic product catalogues in the Materials Management e-shop on the company intranet. Call-offs can be generated by any incompany user for whom their cost center managers have arranged a budget. Extensive search functions allow the required items to be found quickly. Selected items are stored temporarily as a basket of commodities, on the basis of which the user makes a direct call-off from the supplier. Each authorized user can create his own baskets of commodities to which he has direct access at any time without any further catalogue search. All goods received are entered in the SAP system, triggering a credit memo. Noting and verification of invoices is unnecessary. The benefits of the materials management e-shop lie chiefly in the considerable streamlining of the procurement process for catalogue items significantly shortening the time for procuring articles kept in stock by the suppliers and the accompanying reduction of the corresponding process costs.

5 05 Contents Dipl.-Kfm. Klaus Hedding, Deputy Head of Marketing, Hoesch Hohenlimburg GmbH, Hagen Page 21 Uriel Batres, CENDI Promotion Coordinator, Carlos Hernandez, Commercial Director, Mexinox S.A. de C.V., San Luis Potosi, Mexico Page 27 Prof. Dr. Heinz Humberg, Dean of the Information and Communication Technology Faculty, Technical College Gelsenkirchen, Bocholt branch Dr.-Ing. habil. Ulrich Brill, Head of Development and Quality Management, Krupp VDM GmbH, Altena plant Page 31 Hohenlimburg CENDI an organization created to promote the development of the stainless steel market in Mexico WDISweb: Searching for the optimum material on the internet Hoesch Hohenlimburg has set up three e-business solutions providing online links to its purchasing, service and sales departments. E-procurement for C-materials was introduced to minimize the process costs and lead times of the large volume of purchase orders. The solution takes the form of an electronic catalogue accessible to all employees for office supplies, advertising materials and tools. Purchase orders are initiated directly and automatically transmitted to the vendor; delivered items are entered automatically in SAP R/3. The Narrow Strip Division set up its own website with the aim of creating a communication platform to exchange information with its customers. Customers are given insight into the production process and can monitor the progress of their orders on a daily basis. The goal of implementing a supply chain management system in the Special Profiles division was to enable an ongoing and transparent exchange of information between customers, the distributor GSP in the USA (joint venture partner) and Hoesch Hohenlimburg. Via the GSP database, customers can access up-to-date information to deal with a wide range of queries. CENDI (Centro Nacional para el Desarollo del Acero Inoxidable) was established by Mexinox and other companies to create a national center to promote stainless steel in Mexico. CENDI channels and coordinates the efforts of producers, distributors, processors and end users of stainless steel in the areas of research, training and promotion. CENDI has in-house training facilities where employees from Mexican companies can become qualified as specialized technicians in stainless steel. In addition, a special program is available for the sales staff of member companies with a view to demonstrating the benefits of stainless steel to existing and potential customers. To increase the level of interaction between its members and promote contacts with customers and other interested parties, CENDI has set up its own internet site to publish regular reports on its activities and the latest information on the subject of stainless steel. Accessible via internet and intranet, WDISweb is a system developed for communication with customers that guides them quickly to the most suitable materials for their requirements before any consultative meeting takes place. The data available in WDISweb are based on the test results from Krupp VDM s materials laboratory, which are constantly updated. The complete material data sheets are additionally filed and accessible via WDISweb. Materials can be sought via material number or designation, mechanical properties, medium and welding. The SISSY subsystem (welding information) provides information on material weldability, welding methods, filler materials and the amount of filler required, supported by specifications of welding procedures.

6 06 Contents Dr.-Ing. Kurt Orthmann, Head of E-Business, Krupp Bilstein GmbH, Ennepetal Page 36 Dr.-Ing. Dipl.-Wirt.-Ing. A. Birkert, Head of Forming Technology Division, Dipl.-Ing. Sven Leonhardt, Head of Hydroforming Methodology Team, Klaus Truetsch, Project Manager, Krupp Drauz GmbH, Heilbronn Dipl.-Ing. Ralf Sünkel, Sheet Metal Forming Technology Coordinator, Thyssen Krupp Automotive AG, Bochum Page 41 Edith Ludescher, Purchasing, Armin Baumann, Materials Management, Hans Giger, Purchasing, Peter Laukas, Purchasing, Ivo Solèr, SAP Application, Dieter Thelen, Head of Purchasing, Krupp Presta AG, Eschen, Liechtenstein Page 46 Bilstein shock absorbers via Hydroforming Knowledge Store Organized decentralized purchasing via the internet at Krupp Presta The aftermarket business for shock absorbers to replace worn units or enhance handling is an important element in Krupp Bilstein s strategy. To address the various target groups in this business more effectively, an e-business solution was developed with the aim of significantly improving both the company s presence with workshops/retailers and the quality of inquiry and order processing. The Krupp Bilstein website tailors its offerings exactly to the differing needs of its individual target groups, allowing them to access a specific platform to obtain the information they require. The workshop portal provides a fast, professional service for workshops. The aim of the Bilstein Club is to attract customers from the world of motorsport, present the information they are looking for clearly and offer them the opportunity to purchase online. The Bilstein Shop for staff in Ennepetal is the test ground for the website. New procedures and tools are tested here before being released for customers. Krupp Bilstein is pursuing a highly innovative website solution that addresses workshops, retailers and end customers without neglecting intermediate distributors. Hydroforming is a cost-effective alternative to conventional sheet metal forming processes. A lack of qualified personnel and absence of empirical knowledge is currently inhibiting its growth. With the Hydroforming Knowledge Store, Krupp Drauz has created a system which records and links empirical data from a wide variety of projects in databases a process database, a material database, a sales database and a literature database. The system software was programmed to optimize user friendliness so that new data and knowledge can be entered without difficulty. After completion the system will be made available via the intranet to all Group companies using the hydroforming process. In this way, the information stored in the system can be used by all participants in the development of new components. To ensure cost-optimized purchasing, Krupp Presta has divided the purchasing process into a non-specific strategic component with requests for bids, order award negotiations and fixing of terms and conditions, and an operating component under the responsibility of the individual consumer. The operating component takes in articles and materials which do not have to be ordered and managed within the existing SAP system (C parts). Suitable suppliers have been selected for each category of goods and the products of these suppliers combined in an overall catalogue. Online orders by consumers are sent to one provider, which places orders for direct delivery to KPR with the respective suppliers. The individual suppliers are billed by the provider, which in turn sends a monthly collective invoice to KPR, broken down by cost center. This allows a significant reduction of processing costs. The selected solution greatly reduces inventories while at the same time speeding up the order and delivery processes.

7 07 Contents Dipl.-Ing. ETH Siegfried Dejaco, Project Manager Steering Systems, Krupp Presta AG, Eschen, Liechtenstein Page 51 Dipl.-Ing. Jörg Schulz, Head of Sales and Service, Thyssen Aufzüge GmbH, Neuhausen Page 54 Dipl.-Ing. Lothar Jungemann, Head of Service/Spare Parts, Dipl.-Ing. Kurt Lemm, Head of Spare Parts Technology, Dipl.-Ing. Bernd Kripzak, Spare Parts Technology, Krupp Polysius AG, Beckum Page 58 The new modular steering column from Krupp Presta SerKom the mobile communication solution for service engineers B2B in industrial plant construction spare parts distribution for cement works The task was to develop a modular steering system suitable for vehicles from three different car manufacturers while maximizing the number of shared parts. The problem was solved by realizing a common inner column shaft for all vehicles and providing two different connections to the cockpit. A magnesium connection was designed for the performance-optimized vehicle segments, and a cost-optimized sheet steel connection for the other vehicles. The further development of the modular concept for use on other vehicle platforms resulted in a steering column adapted to assembly procedures at Ford, allowing them to be manufactured in-house and thus satisfying union agreements aimed at securing jobs. In the elevator business, the efficiency of customer service is a key success factor. To concentrate service to the customer and reduce activation and response times for service staff, Thyssen Aufzüge developed SerKom, a mobile e-commerce solution for service orders. This solution comprises a SerKom case containing a notebook, printer, mobile phone and software which can communicate with the company s SAP system. This enables service engineers to log onto the SAP system wherever they are, download order data from that day, process them and transmit them back to the system for further processing. Using the installed diagnostics software, service engineers can check the status of an elevator system on site; faults can be localized and eliminated quickly and reliably. Orders for spare parts and repairs can be placed directly with the service engineer. SerKom significantly speeds up data and information flows while at the same time minimizing administrative expense. This generates higher customer satisfaction and strengthens customer loyalty. B2B via online shops is now a common distribution medium. But the real challenge is in the underlying catalogue. For distributors and manufacturers of standard products, preparing catalogues entails only a change from paper to electronic media. But in general, for plant engineering companies catalogues are like their products custom-built. A distinction must be made here between general e-catalogues and tailormade e-catalogues. For distributors and manufacturers of standard products, the aim of an online shop is to disseminate product information as widely as possible so as to reach a large number of customers. At the same time, barriers to the purchasing of products by customers should be lowered. In plant engineering, customer ties generally already exist. Only customers already running a plant will require spare parts. For this reason, the objective of the online shop is to reduce process costs, as both manufacturer and operator often incur considerable expense for procuring spare parts. The only way to achieve this is to interlink the sales and procurement processes of both partners as closely as possible, with the tailor-made e-catalogue as today s communication medium.

8 08 Contents Dr.-Ing. Heinz-Jürgen Prokop, Director Technology, Dipl.-Ing. Thomas Deimel, Head of Development/Design, Krupp Berco Bautechnik GmbH, Essen Page 62 Dr. rer. pol. Claus Algenstaedt, Head of Central Marketing, Thyssen Schulte GmbH, Düsseldorf Page 67 Dr. Andreas Bastin, Managing Director, Axel Cebulla, Sales Manager, Timtec Telematik GmbH, Lünen Page 73 Service product impact performance hydraulic hammer with integrated electronic evaluation unit for remote transmission of performance data E-commerce as a success factor in future materials marketing at Thyssen Schulte E-business solution for the transport industry: Telematics-based fleet management using the internet and online planning Heavy-duty hydraulic hammers are being used increasingly to mine rock without blasting. In applications of this kind, operating costs depend on a number of factors and are difficult to quantify. Customers are therefore requesting to pay for performance rather than buying the equipment. To date there has been no suitable billing system for this kind of business. A newly developed impact counter provides operating data allowing information to be derived e.g. on duty hours, number of impacts, type of application and the way the operator uses the hammer. The data are communicated via an infrared interface and provide the basis for a completely new product idea in this market, the selling of impact performance under a full-service package. In online-based business concepts, traditional approaches to customer communication and marketing strategies are inadequate. Online customer care must be systematically aligned to the principles of one-to-one-marketing. This calls for greater personalization of customer information and the assurance that all customer contacts are used in a closed loop circuit. The use of digital agents based on CyberSmart technology is of central importance in developing such online structures. System and platform-independent, these software tools operate in neural networks and associated statistical structures. Digital software agents collect, store and manage data independently or according to rules predefined by the sales departments. Using recognition mechanisms, they are able to control and perform individualized information transfers for the company in real time, e.g. realtime quote control, presentation of alternative products, and feedback operations. In parallel, dynamically maintained customer databases are created without the need for manual processing and data management. The CyberSmart technology has now been developed to a stage where its use in the further development of TS Online appears promising. A multi-year test phase is planned. To stem rising costs, haulage companies must systematically utilize opportunities to make savings in their fleet and organization through the optimized deployment of personnel, vehicles and equipment. With the ATIS MT II system, Timtec Telematik has developed the first intelligent telematics system for intermodal transport which enables an automatic comparison of the planning data produced by the dispatch center with the actual data from transport operations. This creates significant cost-reduction potential. ATIS Trailer is a telematics-based fleet management system for operating and tracking semitrailers. It comprises the trailer box, the telematics system on the vehicle and the internet portal CargoView, which provides users with all the information they need. In addition to optimizing logistics processes (capacity utilization, cycle optimization, just-in-time monitoring and customer service), a major benefit lies in the monitoring of the vehicle s technical data thanks to the transfer of information from the chassis electronics.

9 09 Daphne Dorighi, Dr.-Ing. Stefanie Wippermann Online Sales at ThyssenKrupp Stahl Presentation of ThyssenKrupp Stahl s e-commerce activities at the Internet Cafe at Hanover Fair 2001 (Fig. 1)

10 10 Online Sales at ThyssenKrupp Stahl 1 Introduction Buying steel on the Internet with TKS Online Sales (Fig. 2) All too often steel producers are still labeled old economy. Greater efforts must be made to raise awareness of the fact that steel producers today are high-tech enterprises. ThyssenKrupp Stahl is taking an unconventional approach to this by adopting some of the best features of the new economy. In February 2000, TKS became the first carbon steel maker in Europe to allow customers to buy steel via the internet: e-commerce through TKS Online Sales. ThyssenKrupp Stahl is playing a pioneering role in the steel industry with TKS Online Sales. Within a very short space of time the company has built a unique selling position for itself. E-commerce is not just a passing fancy. It will have a major, if not revolutionary, influence on business in the future. Companies that fail to adapt will go under. The figures speak for themselves: According to a study by Deutsche Bank, in the year 2006 more than 50 percent of the world s steel production, projected to be over 800 million tons, will be sold on electronic marketplaces. The prime aim of the E-Sales&Service functionalities offered by ThyssenKrupp Stahl is to enhance service to customers. Buying steel via the internet gives customers a competitive edge through direct access to quality material combined with fast delivery. A central aspect for TKS now is process optimization. The large number of automated functions offered by e-commerce will make it possible to increase the efficiency of the selling process significantly. 2 Buying steel by mouse click worldwide After registering with E-Commerce Services, customers can take part in sales auctions using their user ID and password. In these sealed bid auctions customers submit bids within a defined period of time for material or capacities advertised by the sales department. These bids are viewable only by TKS internally. Once the deadline set for the auction has passed, the sales agents responsible look through the bids, and generally the highest bid is accepted. The materials are put together and placed on the website by staff in the TKS E-Competence Center using an editor. Prior to the auction, customers can obtain information on the site about how the auction will proceed. Between four and seven items of material are offered for sale per bid page. Customers have between four and six minutes to place bids for specific items or the full package, depending on what is on offer. To ensure optimum security, a bid becomes binding only after the customer has confirmed it with an individual transaction ID. In the Bids/Awards section customers can keep track of the materials or capacities they have already bid for. When the bidding period is over, the award procedure at TKS gets under way. The editor arranges the bids received per item of material in descending order, so that the highest bid always appears first. Just a short time after the auction, customers are able to see in the Bids/Awards section whether their bids have been accepted. They are also informed separately by about the outcome of their bids. Order confirmations are posted to successful bidders in the usual way. TKS Online Sales began in February

11 11 Online Sales at ThyssenKrupp Stahl Bidding page for material from upcoming production (Fig. 3) 2000 with auctions of inventory material every Wednesday. In June 2000 it was expanded to include auctions of hot strip rolling capacities every Monday. In November, the sale of plate rolling capacities began. Currently the event calendar looks like this: Mondays: 09:00-10:00 a.m. Rolling capacity for Prime Heavy Plates 10:00-10:30 a.m. Hot strip fresh off the production line Wednesdays: 10:00-12:30 a.m. Material from stock 3 Customer value TKS Online Sales allows customers to buy steel in an easier, more flexible and more efficient way from anywhere in the world. It provides access to an attractive range of hot- and cold-rolled products that is being continuously expanded. The TKS Online Sales service offers ease of use, rapid order processing and fast delivery. The web pages are clearly structured and simple to use. The fast decisions made by TKS enable customers to plan early. Short delivery times provide a clear competitive edge after all, time is money. Flexibility is another advantage: customers whose bids for non-pickled and pickled hot strip are accepted have a full day to specify the dimensions they require. In the case of bids for plate rolling capacities, customers can choose dimensions, quantity, certificate/type of acceptance, and desired mode of shipment. Bidding page for plate rolling capacity (Fig. 4)

12 12 Online Sales at ThyssenKrupp Stahl Awarding an order in TKS Online Sales (Fig. 5) 4 Process optimization Among the clear benefits of electronic selling are cost savings in marketing and distribution. However, these are not yet quantifiable at the present time. An important part of process optimization is the replacement of manual activities with automated functions. At the beginning of the process inventory materials or rolling capacities suitable for online selling are automatically transferred to the editor system from a central non-consigned stock. Once the auction has been put together, the details are relayed automatically from the editor to TKS Online Sales. When the bidding period is over, bids received are transferred automatically back to the editor. Successful bidders are notified by , again automatically. In the future, orders for materials sold online will be passed on automatically to the commercial order processing system (IAB). Additional potential lies in eliminating commissions and maximizing revenues through increased competition. Warehousing costs will also be reduced through faster turnover of goods. 5 Conclusion The online market is growing quickly, making it essential to actively shape developments and build know-how. TKS Online Sales is an important tool in strengthening the competitiveness of TKS and underpinning its growth strategy for the future. So far a significant six-figure tonnage has been successfully sold via TKS Online Sales. Already, 30% of hot strip inventory material is sold online. The next step is to introduce Offers to sell (OTS). This will allow the sales department to target specific customers with specially tailored offers, making it possible to meet individual customer needs even better.

13 13 Andre-Thorsten Hebel, Dipl.-Kfm. Ralf Müller-Beckhoff E-purchasing at ThyssenKrupp Stahl via the internet-based W3AS online RFQ system E-business portal of Thyssen Krupp Stahl AG (Fig. 1)

14 14 E-purchasing at ThyssenKrupp Stahl via the internet-based W3AS online RFQ system 1 General In view of the increasing globalization of markets and heightened international competition, an internet-based request for quotations system on the worldwide B2B network is extremely important, even indispensable, for industrial procurement activities. Enterprises can in some cases achieve significant savings on process costs, and even more on procurement costs (purchasing conditions), depending on degree of organization and price-performance levels already realized. It is also worth the while of interested prospective suppliers to offer their products and services via the internet. The internet-based W3AS online RFQ system, designed and meanwhile put into operation by the Materials Management and Information Systems Applications departments of Thyssen Krupp Stahl AG (TKS), enables any interested supplier around the world (internet-wide), in principle, to submit quotes online directly via a given input screen in response to requests System architecture of W3AS (Fig. 2) placed in the system. Once the submission deadline has passed, the quotes as well as a price/quote comparison prepared within the system are made available to the buyer for further processing including, if appropriate, a possible reverse auction. 2 Starting situation at Thyssen- Krupp Stahl When issuing requests for quotes, it has so far been necessary to generate a quotation request in the SAP system for each supplier that is to be invited to quote. The quotation requests are printed out individually, signed, and sent without or, as applicable, with specifications or documentation by normal mail to the supplier. Incoming quotes, which are also received in hardcopy form, are then entered by the buyer manually in the SAP system. Once the submission deadline has passed, a price comparison has to be made, on the basis of which basis negotiations take place. Following contract award negotiations, a purchase order is placed via the SAP system. ( The conventional procedure means limited, often regionally confined competition, long postal routes for quotation requests and quotes, and long processing times for the purchasing department and the supplier. 3 Internet-based W3AS RFQ system of Thyssen Krupp Stahl AG (TKS) 3.1 Conception Since September/October 2000, more and more requests for quotes have been issued via the W3AS online RFQ system, which was developed within a space of 5 months. The system is designed so that it is basically possible to request quotes for any requirements regarding consumables, spare parts, tools and implements, production materials, machinery and equipment, furniture and fixtures, capital goods (plant), and services. In case of services, a further development is in the process of realization for extensive bills of quantities/catalogues (completion scheduled for the end of June 2001). During the development of W3AS, importance was attached to the use of forward-looking technologies and interfacing with the SAP ERP system, as the system architecture (Fig. 1) shows. Through integration in the operative SAP system, all the actions and activities of W3AS, including the quotes submitted online, are represented automatically in the system. The additional saving of the transaction history ensures traceability. The functionality and user interface are realized in a scalable and internet-typical environment

15 15 E-purchasing at ThyssenKrupp Stahl via the internet-based W3AS online RFQ system Login page of the W3AS online RFQ system (Fig. 3) (SUN/Bea/JAVA/HTML). The system is available on the internet via the TKS portal (Fig. 2) or direct via (Fig. 3). 3.2 Functionalities The buyer generates a quote request in the SAP system which is transmitted with a click of the mouse to W3AS. There it is released throughout the internet as an open or closed request for quotations. Open requests are accessible to any interested suppliers, while closed requests are accessible only to the suppliers selected by the buyer for particular reasons. The general practice is to use open requests for quotations, while closed requests are made only in exceptional cases, e.g. because of the availability of special expertise on the part of the supplier or at TKS itself. The buyer can also allocate certain suppliers for open requests. The system is equipped with tracking functions whereby all pre-selected suppliers, whether in an open or a closed procedure, are automatically informed by about the requests for quotations that concern them. Interested suppliers can log in as registered users or as guests on the login page of the system (Fig. 3). Both are able to view the open requests, while only registered users have an insight into the closed requests, provided that the buyer has selected them for these from case to case. If a previously unknown supplier ( guest ) wishes to submit a quote in response to an open procedure, he first has to register. This involves filling out an online questionnaire that asks for details regard- ing the corporate profile. The details are sent to the buyer, who checks whether the applicant is a suitable business partner and, if so, arranges for the system administrator to create a master record for the supplier as well as user authorization by together with an ID number and a password. Only registered users/suppliers can submit quotes online. Suppliers are also able to save online quotes temporarily before expiry of the submission deadline so as to continue work on them later. Notes regarding each item, such as information on technical deviations or about qualitatively comparable yet less expensive alternatives, can be provided in a special box. Quotes submitted online are transmitted automatically from W3AS to the SAP system, making the entire procedure transparent and comprehensible in the ERP system. Only quotes submitted online are considered for the award of orders, unless the request is a request for information, in which case this can be indicated in the request. Once the submission deadline has passed, the buyer is given access via mouseclick to the online quotes and to the price/quote comparison generated automatically by the system at the same time. The price/quote comparison includes a method of ranking, whereby the most favorable quotes always appear first (Fig. 4). If certain conditions are met, essentially those concerning the clarity of the defined requirements, as well as identical underlying conditions for all the suppliers with regard to price, delivery time and warranty for a possible order, then the price/quote comparison can also serve as a basis for a reverse auction, which the W3AS is similarly designed to handle, involving for example the three most favorable suppliers.

16 16 E-purchasing at ThyssenKrupp Stahl via the internet-based W3AS online RFQ system 4 Implementation Trend in supplier hits (Fig. 5) 5 Impact The success of an internet-based RFQ system such as that of Thyssen Krupp Stahl AG depends mainly on its level of publicity. Given the plethora of information on the World Wide Web, it cannot be readily expected that prospective new business partners will immediately come across the required websites, even after initiating an intensive search. Against this background, Materials Management of TKS has conducted a targeted information campaign in parallel with the installation of W3AS, namely on the internet itself, in search engines, in special periodicals and in all purchase order letters since October All current suppliers accounting for an important purchasing volume were contacted again in February 2000 specifically to call on them to register as users with W3AS, as generally requests for quotes will be issued only via this route in future. In March requests for quotations were issued in W3AS ; in April 361 RFQs were made. Quotes submitted online in April totaled 1,300. Fig. 5 shows the trend in supplier hits. The impact of the Internet-based W3AS online RFQ system consists primarily in being able to achieve significant savings through improvement of the purchase conditions as a result of borderless competition, and secondarily, in the reduction of the process costs as a result of fully electronic handling instead of the hitherto largely manual paper-based procedure. Quantitative forecasts are difficult to make. Promoters, providers, profiteers as well as practitioners cite potential savings into the high two-digit percentage range. This is dubious exceptions apart particularly as savings depend on the price level and degree of organization already achieved. Average savings in the lower single-digit percentage range are certainly possible however, even for enterprises that already have good price and organization levels. In other words, the internet-based W3AS online RFQ system is an extremely worthwhile investment. Example of the price-quote-comparison in the German version, which will also be available in English if required (Fig. 4)

17 17 Ralf Jacke, Dipl.-Kfm. Ralf Müller-Beckhoff E-procurement at ThyssenKrupp Stahl by means of electronic catalogues on the intranet and internet Elements and functions of e-procurement in the Materials Management e-shop of ThyssenKrupp Stahl (Fig. 1)

18 18 E-procurement at ThyssenKrupp Stahl by means of electronic catalogues on the intranet and internet 1 General Procurement has for years been a priority area for business process reorganization, with the electronically aided procurement of goods and services being regarded as an important key to success. Besides internet-based tendering systems designed to make greater use of global competition, special importance is attached to the utilization of electronic product catalogues and their availability via intranets or on internet-based marketplaces. The term used by the strategists and promoters of e-business for this is e-procurement. E-procurement eliminates a number of steps occurring in the conventional procurement process. Approval procedures can be shortened considerably, for example. The search for suitable items and their rapid direct procurement by in-company users reduces often costly paperwork in the purchasing department. Enterprises using e-procurement solutions thus profit particularly from accelerated and more rational procurement processes. Additionally, the installation of a large number of product catalogues on the intranet or internet provides a better overview of products and prices. E-procurement in the sense of using electronic product catalogues is being introduced initially and primarily to meet the need for so-called C-items, as at Thyssen Krupp Stahl AG (TKS). 2 Starting situation at Thyssen- Krupp Stahl The conventional procurement of C-items at TKS is organized as follows: Materials and supplies inventories Articles that are kept in stock or delivered on a direct supply* basis by suppliers are reserved (= call off) by the requisitioners via SAP. Collective settlement agreements Non-stocked articles with an individual value < 100 can be called off from local contracted suppliers by means of materials requisitions via the purchasing department. Purchase requisition All other articles are procured on the basis of an SAP purchase requisition via the purchasing department. The process times for the procurement of C-items, from the occurrence or determination of the demand, to requisitioning, approval, internal postal communication, ordering, delivery, and goods receipt accounting, average 7 days in this form, except in cases of direct supply*. On top of this come invoice verification and payment. * Direct supply: Articles formerly kept in stock at TKS have, to a large extent, already been transferred to supplier storage. The requisitioner at TKS reserves his requirement in the usual way via SAP. The reservation is transmitted electronically to the supplier, who delivers the required article on a work day and subsequently receives a credit note. 3 E-procurement in the Materials Management e-shop of Thyssen Krupp Stahl AG (TKS) Screen for search functions (Fig. 2) In the future, procurement of C-items at TKS will take place more and more by the in-company requisitioners making direct electronic call-offs from the electronic product catalogues, whose prices have been negotiated and agreed upon with the purchasing department. For this purpose, Materials Management is concluding contracts and master agreements on terms and conditions for catalogue articles (or is making use of the agreements already largely existing), and provides the appropriate catalogues with binding prices to the requisitioners for call-off in a so-called Materials Management e-shop on the company

19 19 E-procurement at ThyssenKrupp Stahl by means of electronic catalogues on the intranet and internet Call-off from a supplier (Fig. 3) User-specific basket (Fig. 4) intranet and/or, as applicable, also on internet-based marketplaces (Fig. 1). The Materials Management e-shop, conceived by TKS central departments Materials Management and Information Systems Applications, is designed so that authorized users (= requisitioners within the company) are able to log in to the system via a standard internet browser and order required articles with a click of the mouse. The system menus are basically self-explanatory for the users, so that all-round training is not absolutely necessary. Extensive search functions (Fig. 2) enable the in-company users to find items or articles quickly. Besides looking for articles via the catalogue hierarchy, which is geared to the classification scheme, it is possible to search for articles also within one or several catalogues by means of complex search engines. The classic function of searching by text (full-text search) is supplemented by the possibility of searching by supplier, manufacturer and/or TKS article number as well as synonyms. The user can, upon request, have a picture of the search result (article) displayed to him on-screen. A detailed technical description also accompanies each article. All the selected articles are saved temporarily in a shopping basket, on the basis of which the user makes a direct call-off from the supplier (Fig. 3). The call-off has to be complemented by details of a valid cost center or an order account and the appropriate delivery point. The SAP general ledger account hangs invisibly for the user on the commodity group and is carried along automatically with it. When a call-off is made, the total order value and the budget currently still available to the incompany user are displayed. Each authorized user can define individual standard articles and create his own ( favored ) shopping basket (Fig. 4) to which he can have direct access at any time without any further catalogue search and generate a call-off. Only those in-company users for whom their cost center managers have arranged a budget may generate call-offs via the Materials Management e-shop, as long as that budget is not exceeded. As a means of self control, each authorized user (requisitioner) can display, on screen, the external call-offs and internal reservations which he/she has generated, evaluated by time period, catalogue, article, account and budget. The cost center manager is equally in a position at any time, at the push of a button, to see what, and by whom, the budgets he has arranged are being or have previously been used. He thereby has a monitoring instrument available to him that rationally replaces the time-consuming approval procedure hitherto used (signing of each individual requisition for goods that are to be procured externally or of each individual material order form for the articles in TKS s own stores or the items to be procured via collective settlement agreements). It also ensures that the budget he arranges cannot be exceeded without his permission. All goods received on the basis of calloffs from the Materials Management e-shop are recorded, as usual, in the SAP system. Goods receipt accounting triggers a credit note. The noting and verification of invoices can therefore be eliminated. At the push of a button, Materials Management is able to initiate an ABC analysis of all generated call-offs and reservations, for any catalogue or any material group (Figure 5). This gives it the possibility, among other things, to agree upon more differentiated and favorable (e.g. turnover-

20 20 E-procurement at ThyssenKrupp Stahl by means of electronic catalogues on the intranet and internet dependent) pricing with the suppliers. As each e-procurement solution is only as good as its integration in the existing ERP system, an important element of the TKS Materials Management e-shop is the interface with the existing SAP system. Each call-off automatically generates an order or, alternatively, a reservation in the SAP system if the required article is still stocked in the materials management system of TKS. It is thus unnecessary to jump between two systems. Besides external call-offs, the in-company user simultaneously has access to the articles stocked in the company s own material stores. With a click, the call-off is transmitted from the Materials Management e-shop system to the SAP system and entered. There the obligatory verification of the account assignment, goods recipient and, where applicable, TKS article number takes place. Following positive verification, the SAP system sends back an appropriate call-off number or, for goods with a TKS article number, a reservation number to the Materials Management e-shop. Immediately after that, the call-off is transmitted to the supplier either by in EDI, html, xml (e.g. opentrans, idoc etc.) format as a text with or without a data record structure or, optionally, via an internet-based marketplace. The system is, furthermore, designed for the possibility of accessing not only the catalogues available in the Materials Management e-shop of TKS but also catalogues at general or industry-specific internet marketplaces. The leading software producers refer to the techniques that make this possible as punch out or round trip, and have the vision of all materials and product descriptions being available via the internet in the future. 4 Implementation and use The system has long been tested and ready for service. However, utilization depends on the availability of catalogues. Measured against the time necessary to develop the system itself, however, the creation of catalogues by the suppliers is proving to be very time-consuming, in spite of orientation to existing standards. Even globally operating enterprises are having difficulties in making their catalogues available at short notice with the required data structure. The realization of this task by special providers (catalogue factories) is extremely expensive again measured against the time and effort taken to develop the system itself and is therefore to be avoided, if possible. TKS expects to have installed some 15 catalogues (of around 30) by the end of July Impact Screen for the management ABC analysis (Fig. 5) on-line RFQ system. Fully electronic handling allows the time for procuring articles kept in stock by the suppliers from determining the requirement through to receipt of the goods and the credit memo to be shortened to 2 days (instead of, previously, around 7 days + invoice verification). In an emergency it is possible for delivery to take place even on the day of call-off. It will, moreover, be possible to reduce capital employed by increasingly transferring in-house inventories to suppliers. Another aspect that is of great value for the purchasing side is the transparency of items, prices and costs, which will be available for the first time in this form for catalogue articles. The benefits offered by the Materials Management e-shop concept of Thyssen Krupp Stahl AG thus lie chiefly in the considerable streamlining of the procurement process for catalogue or C-items, extending as far as credit notes and the accompanying reduction of the corresponding process costs. All in all, it is an extremely cost-effective investment, as in the case of the W3AS

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