14 September 2010 Commercial

Heidelberg adopts the third way to win business

Marcel Kiessling has returned from running Heidelberg in the US to take charge of the services division, a key component in the supplier’s future strategy as the press manufacturer seeks to even out cash flows across the economic cycle and to make it less dependent on sales of new presses


Marcel Kiessling has returned from Heidelberg in the States and is leading the plan to build a new revenue area.

Marcel Kiessling has returned from Heidelberg in the States and is leading the plan to build a new revenue area.

THESE ARE TESTING TIMES FOR HEIDELBERG. The economic crisis has taken the company to the edge of the abyss and it has peered over. In the last 12 months, there have been consolidation talks with Manroland, negotiated loans backed by government guarantees and the unexpected departure of sales director and main board director Jurgen Rautert. The board meetings in the last year must have been long as questions of strategy were discussed.

For all manufacturers this is new territory. For the market leader the challenge has been traumatic. In previous recessions one market might be deep in recession, another slowing down while a third part of the world would be on the road to recovery. Not this time. All markets froze simultaneously. Only China has provided some respite, though not for employees at the main factory at Wiesloch. German government action has underwritten short term working deals until demand can pick up again. But the sales figures remain resolutely low with sales down about 20% for the financial year. The second half of the year showed some improvement, but nothing like enough.

HOWEVER, HEIDELBERG CANNOT WAIT FOR PRESS ORDERS TO RETURN to former levels. Indeed it is not really expecting them to. The outcome of the fraught board meetings is a commitment to cutting costs, meaning across the board redundancies; a new board of directors and a renewed interest in compensating for the decline in equipment sales by building revenue from service, from consumables and from consultancy, what might elsewhere be called ‘the intangibles’.

Heidelberg already supplies consumables under the Saphira brand and these already account for more than 25% of Heidelberg's total income.

Heidelberg already supplies consumables under the Saphira brand and these already account for more than 25% of Heidelberg's total income.

CEO Bernhard Schreier has said the future for Heidelberg rests on three pillars: equipment sales, finance and services.
In charge of this third pillar is Marcel Kiessling, brought back from heading Heidelberg USA and now board member for this third revenue stream. Thanks to Saphira consumables revenues already account for more than 25% of Heidelberg’s total income, much of this because of the collapse in capital equipment sales. The continuing consumables business brings in the cash when capital equipment has stopped. But the new direction is about more than maximising sales of plates, inks and founts under the Saphira brand.

Kiessling has no target figure for how far his division can go in contributing to Heidelberg’s revenues, nor over what timescale. Consumable sales are naturally dependent on prior press sales, but Kiessling’s division is also responsible for ensuring that printers stay in business long enough to be buying new presses in the future. “Technology alone is no longer sufficient to be successful over the long term,” says Kiessling. “The latest machinery no longer makes a company successful automatically: Printers need more specialisation, they need lean processes throughout their company. Our task is to help the printer get the best from the technology and find his position in the market.

“PRINTERS ARE BEING SQUEEZED BY PRICES and increased raw material costs which is causing a lot of margin pressure and printers need to position themselves in the context of a media mix where print is only one option that a customer has. “Our responsibility as market leader is to help the industry as a whole, not just to survive, but to be successful and thrive."

There are twin antecedents for what Heidelberg is doing. First is the Print Media Academy which Heidelberg set up to help provide print shop owners with the management skills needed to run their businesses; second is the network of service engineers and the increasing use of IT that can provide unprecedented access to data about the performance of presses and other machines. Today more than 10,000 presses, platesetters, stitchers and the like around the world are part of the service network are involved in 50,000 online sessions a year. Heidelberg can begin to collect data to measure the performance of thousands of print companies and, in future, perhaps come up with the benchmarks for a company to understand where it is positioned vis-à-vis its local and international competitors and be used to encourage improvements.

This sort of lean management technique is definitely on the agenda, driven by the success of Vision in Print in the UK. Its drive to eliminate waste was picked up by Heidelberg UK and in turn that has piqued the interest of head office.

Service and support come under the wing of the new division. The network of service engineers and the increasing use of IT can provide unprecedented access to data about the performance of presses and other machines.

Service and support come under the wing of the new division. The network of service engineers and the increasing use of IT can provide unprecedented access to data about the performance of presses and other machines.

Kiessling explains: “What we can do is help the operators and managers find out what is going on in the business and to develop a skills programme or machine related changes, to check that settings are correct for example, or to ensure that an operator is confident about running a press at 18,000 sheets an hour.

“THEN IF A PRINTER WANTS TO BECOME INVOLVED IN LEAN MANAGEMENT, we can bring in the experts to identify the bottlenecks which impact on efficiency from the start to finish of a job. We can judge if the waste ratio is too high, using Overall Equipment Efficiency as the productivity measurement tool. We can calculate waste as a percentage of available machine time. We might use our colour management expertise to introduce standardisation, ensure the press is set up accurately and the link the processes around the press, which will reduce make ready times and reduce waste.”

The figures for OEE in the industry are not good. Something over 80% is considered world class. The printing industry average is below 50%, not a good figure Kiessling agrees. “The starting point is less important than that it is measured and that you try to improve it and there is a lot of room for improvement.”

The company carried out a survey on production efficiency in the US last year. This found that a press would be printing only one third of its available time. One third of the time was spent on make ready or short time stoppages, associated with make readies. One third of the time was spent on longer interruptions, of more than three minutes. “Most of the issues in the third group are process related,” says Kiessling. “That could be waiting for an OK from a supervisor, waiting for materials or better information. All of which means there is potential for improvement.”

Kiessling's position is a main board one within Heidelberg, indicating the importance of the role.

Kiessling's position is a main board one within Heidelberg, indicating the importance of the role.

IN THE OLD DAYS THERE MIGHT BE A TACIT ACCEPTANCE that this was the way things were and that when a company needed more capacity, capital expenditure was the way to do this to the benefit of Heidelberg and other suppliers. Now the press order may not be forthcoming, instead Heidelberg needs to ensure that return on investment on the existing equipment can be be demonstrated first. However efficiency audits may equally show that the best way forward is to replace a number of older largely manual presses with fewer highly automated machines. “We can show that you can do the same volume of work with two or three presses rather than four or five,” Kiessling explains. That aspect of retooling if carried out across the industry will boost orders for Heidelberg’s factories, but it needs a new approach to selling.

“Different skill sets are required. We need people who understand the whole process, and also specialists who understand the solutions that we can offer. Selling consumables means having daily contact with customers, understanding lean management is something else. We are in the process of training all our staff in these new services and these different directions,” he explains. There will be partnerships with outside suppliers, MIS in particular as Heidelberg moves more towards open connectivity. Ultimately this can lead to fully networked print organisations. In the last 18 months Kiessling says that Heidelberg has been involved with 100 of these across the world. “In the next four years there will be 1,000,” he adds. Small steps towards integration can be effective for a business on its way to a cross-business implementation.

“Some of the trends are apparent today and we can extend them into the future. We know that in ten years there will still be companies that are printing, but there will be fewer of them and they will be highly efficient and using all available technologies. Printers have to embrace the internet, to attract new business and to make the interface between the customer and the printer more efficient, so making it easier for print buyers to do business.”

This is a considerable distance from explaining the technical advantages of a gripper system or a new stitching head. It is a changed world and Heidelberg knows that it has to change to remain part of it. It is not going to be an overnight change. At Ipex the company will continue to emphasise the technical advantages of its new Speedmaster CX model for example. But behind the scenes change is most definitely taking place. Kiessling knows that what Heidelberg’s services pillar is offering is becoming more and more important to the group’s overall future. “Without these services the equipment will not provide the maximum value or maximum performance it can provide,” he says.

MARCH 2010

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Heidelberg already supplies consumables under the Saphira brand and these already account for more than 25% of Heidelberg's total income.

Heidelberg already supplies consumables under the Saphira brand and these already account for more than 25% of Heidelberg's total income.

Story 1 of 4

Marcel Kiessling has returned from Heidelberg in the States and is leading the plan to build a new revenue area.

Marcel Kiessling has returned from Heidelberg in the States and is leading the plan to build a new revenue area.

Story 2 of 4

Kiessling's position is a main board one within Heidelberg, indicating the importance of the role.

Kiessling's position is a main board one within Heidelberg, indicating the importance of the role.

Story 3 of 4

Service and support come under the wing of the new division. The network of service engineers and the increasing use of IT can provide unprecedented access to data about the performance of presses and other machines.

Service and support come under the wing of the new division. The network of service engineers and the increasing use of IT can provide unprecedented access to data about the performance of presses and other machines.

Story 4 of 4

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