Annual report 2018
The global supply chain at Marel is responsible for procurement and manufacturing within the company and operates worldwide. We deliver standalone equipment, full-line solutions and service parts for the company’s fish, meat, and poultry food production industries.
A team of over 2,300 people in Marel’s global supply chain supports innovation and manufacturing with equipment and spare parts. Our experts make sure that all our production, whether for modernization and large greenfield projects, of stand-alone equipment, or spare parts, runs on schedule and that orders are delivered and serviced according to our customer’s requirements. To achieve this, we work closely with our distribution network and key suppliers of raw material and spare parts from around the world.
We now run 13 manufacturing sites for equipment and spare parts, together with four main distribution centers to support our extensive service platform.
Streamlined manufacturing, coupled with our co-location strategy introduced in 2017, allows us to share the production load across locations. This allows for greater flexibility to manage costs, mitigate global trade risks and ensure optimal lead-times.
Quality, responsiveness and efficiency are the cornerstones of this activity. Our approach is based on the simple objective of ensuring that all our solutions and spare parts are produced at the right cost and quality and delivered to the right place at the right time.
Marel’s unique scalability and skills matrix across its global supply chain is a major competitive advantage.
Today, our 13 manufacturing sites are strategically positioned around the world. We continue to benefit from our scalability worldwide and anticipate that future growth will occur primarily in our key manufacturing hubs in Brazil, Slovakia and China.
Optimizing the manufacturing footprint is always on our agenda. This year has been the first full year of running our Slovakia operation in a single facility. The integration of the two previous locations has been very successful. We already note a rise in output and expect production volume in Nitra to rise even further.
Standardization was also key theme in 2018. We aligned processes and capabilities across manufacturing, innovation and procurement. By the same token, we worked in partnership with key stakeholders to standardize components and the format of our supplier relationships.
At Marel, we operate a mother-site plus co-location strategy in manufacturing. The mother site is responsible for product life cycle management and how the product is manufactured. The co-location sites are focused on scale manufacturing, producing large volumes with the two-fold advantage of cost effectiveness and close proximity to the customer. This results in improved lead-time and lower costs.
In 2018, we continued implementing our co-location strategy, which enabled us to achieve close to 20% year-on-year growth in manufacturing output.
By improving the manufacturing process and strengthening the local organization by focusing on key positions, we boosted the output of our plant in Nitra, Slovakia, by 40% in 2018. In addition, we expanded our US co-location activities and are now able to manufacture key solutions for the US market close to our customers. In Brazil, we initiated co-location programs with two products. These co-location activities have contributed to higher volumes without expanding our manufacturing footprint.
Marel’s suppliers and their sub-suppliers are critical links in our supply chain. Without them, we would not be able to deliver high quality products reliably to our customers. Working effectively with our suppliers is no less essential than internal efficiency.
In 2018, we further strengthened our relations with key partners, which will support our US and European operations. This is part of our strategy of outsourcing non-core activities to optimize our internal resources. Leaner manufacturing operations allow for agility and better flexibility to meet changes in orders from customers. To give better focus to this part of our operation we adjusted our key performance indicators’ reporting accordingly. We also took steps to reduce the number of suppliers and shift our emphasis to partnerships with key suppliers of parts, assemblies and equipment.
We continued to strengthen our internal operations, improving processes and working procedures to optimize the way the supply chain is structured. Streamlined internal operations enable us to keep up with increasing demands from our customers and for new product development.
As investments in IT systems progress, products can more easily be manufactured at co-location sites. In coming years, we will increase the effectiveness of our global supply chain network by leveraging acquisitions as either mother or co-location sites.
With successful co-operation and a flexible production platform, the supply chain was able to contribute significantly to the success of new product launches.
SensorX has been in high demand from customers around the globe. As a result of the recently launched co-location strategy, the SensorX is now manufactured in two locations and is a prime illustration of how Marel has been able to deliver on orders received for this popular product. Co-location manufacturing of SensorX allows us to continuously optimize and innovate the product at the mother site in Iceland while having the volume flexibility at our Nitra location.
In addition to enabling growth, our co-locating of manufacturing towards best-cost countries has reduced not only the direct manufacturing cost, and the cost of material and components, but also the indirect management cost.
The manufacturing focus in Nitra will remain on standard equipment and the more mature product lines.
Our own factories are getting smarter as we contribute to the development and implementation of automation in the food processing industry.
We strengthened our global industrial engineering approach with greater standardization in processes and investments at all sites.
We have always been a high-tech company, leading the automation of our industry as we continue exploring the potential of Industry 4.0. Automation drove supply chain performance to high levels that were sustained throughout manufacturing and set a new benchmark for future projects.
Most of our sites benefit from 3D printing of plastic parts in the development process. Additive manufacturing has improved product design and reduced the lead-time for bringing new products to the market. We have started exploring the impact of additive manufacturing of steel parts and expect this technology to give us even greater freedom in the design and development process.
Modernization of our manufacturing sites continues. In the past few years, we have improved our manufacturing output and product quality by increasingly using robotics. Going forward, we will focus on digitalization of our assembly environment to take advantage of its potential to support growth and improve our productivity, for example by introducing digital assembly instructions.
We are committed to investing in our global supply chain to enable sustainable growth in the future.