Franziska Nothofer: My name is Franziska and I’ll be your host today. And I’m very excited to be joined by our two expert speakers who will dive deep into managing supplier risk and sharing risk visibility best practices. First we have Jakub Watemborski, director of Global Supplier Risk and Capacity Management at KION. He leads initiatives to get a complete picture of KION supplier Network, helping them stay ahead of global risks and optimize capacity. Joining him from the Everstream site is our very own Ulf Venne, VP of Enablement Solutions consulting and sales ops at Everstream Analytics and Ulf has decades of industry experience and supply chain risk management and will be guiding our session today Together they’ll explore how Kione has built end-to-end supply visibility, the tools and processes they have established and practical strategies you can apply to better anticipate risks and strengthen their operations. Now, a quick note before we get started, all attendee lines are currently on mute, but if you’d like to ask questions, we’d love to hear from you. Please drop them in the q and a box at the top of the GoToWebinar panel and we’ll get to as many as we can towards the end of today’s session. And with that Jakub, I’ll hand it over to you. Thank you.
Jakub Watemborski: Thank you Franziska, and welcome everyone. Thanks for having me. My name is Jakub Watemborski I joined KION over two years ago and I spent most of my career in the consulting industry when I was exploring the different topics related to procurement, digital supply chain, and also supply chain risk management. And that’s why I’m here. I’m happy to lead a global team of over 10 people responsible for risk management, capacity management, semiconductor management, but you will see more about this in the upcoming webinar. Before there maybe a couple of words about the company. We are a global player in the material handling industry. We produce forklifts. So you might see this in the background of mine. I’m not in the warehouse basically, but this is our key product. But next to that, we also do have an automated warehouse solutions under the Dematic brand. But the other brands like Linden Steel are also very well known globally.
We have over 10 million billion euro of revenue. We are, as I mentioned, present globally and our EBIT margin is over 8% for the last year. This is quite high if you compare it to the automotive industry, but we always strive more and we are more used to two digit margin numbers. And this is our plan for this and upcoming year we as a stock listed company. So this is not anything that cannot be disclosed with over 40,000 people and global footprint. Our supply chain is quite complex. And today I will show you a little bit more how we try to manage the complexity and different types of risks related to our suppliers. As I mentioned, I lead global team focused on global supply risk management, but also capacity management and the semiconductor management. This is everything under the more overarching umbrella of supplier performance management and generally the goal of my team, of the entire supplier performance management team. It is to go from reactive to preventive mode. We do this through those different work streams. I will show you way more related to risk management itself, but the other areas will also be present in my presentation. And last but not least, what is worth mentioning? We have also established the global suppliers car cut management to measure all key critical, most important KPIs and to manage the business through that. And this entire team exists since I joined KION and we established this basically from scratch. And to be honest, I think we’ve been quite successful within this quite short time period and I hope you will share this opinion After the presentation and speaking about the presentation for today, I would like to guide you through this journey that started two and a half year ago and even a little bit before. And I will show you how the thinking and how the implementation looked like at KION for different concepts and different state of the art concepts. And also establishing the partnership with the key providers of digital solutions like Everstream. So we will start with a purpose, then I will show you how we map our supply chain, which risks we identify, which partnerships with digital partners we have, and then how we make this and how it looks like in action in terms of quantifying, reporting, the risks, but also mitigating the risks according to an established process. And I hope that’s going to be that you’re going to enjoy this presentation quite a lot. And feel free to also ask some questions in the chat. Also ask some questions to me directly on LinkedIn after the presentation. Very happy to clarify to share the experience on that. And yeah, looking forward also to the discussion with you Ulf.
Ulf Venne: Yeah, thank you so much. So yeah, if we look at this, hi by the way, I’m all welcome from cloudy but now sunny cologne, so it’s very nice outside. Perfect. So what we want to do today from a format perspective going from here on out is we want to take this essentially seven steps that Jakub has pointed out. We want to take this as a part of a discussion, so I’m going to introduce the Everstream side of you on a more general level conceptual level, and then Yaku will show us how it is for KION in a very specific level. We hope that’s going to be a lot of fun for you. And yeah, let’s just get going frankly. So let’s start with number one, resiliency. Why do you actually start looking into resiliency? You said start with a purpose. For a lot of people, purpose can be okay because of supply chain disruptions, we were not able to grow as fast as we could. Others say, okay, we have supply shortages that essentially impact us in our ability to perform and that then can impact EBITDA performance, which is more important to us. And then others talk about the efficiency of workers. They don’t want to have workers standing around that all of these can cost a lot of money. In addition to that, it could just be that, yeah, you want to strive for excellence in your supply chain management. What were some of the key drivers for you, Jakub and KION, to get into supply chain risk management?
Jakub Watemborski: Yes, and those numbers are great. And I remember from my past consulting in the life, I also tried to quantify different types of risk and to show the value. But I think what worked very well, or maybe the opposite when it comes to spreading the idea of risk management was the COVID crisis. And basically many companies realized back then that it might hurt quite a lot if you don’t manage your risks. Many companies discovered that the complexity of their supply chain just by not having the goods that were supposed to arrive at specific time and location. And that was also the history and the main purpose for KION because our supply chains were broken, this is where we spent lots of time on firefighting task force management, which has been extremely successful. At the end of the day, the teams that put a lot of effort to mitigate the risks, they were able to do so and they made our trucks to get finished and delivered to our customers.
But of course it came with some costs. So that’s why the organization decided that we should be way more preventive. And that’s why the entire procurement team got reorganized. The teams like supplier performance management got established. And as a part of that, also the risk management team, and I think this is the story for quite many companies in the world, however, they were some pioneers of supply chain risk management, big global players that started many, many years ago and they are right now in a very different level than many companies of our size or even smaller that are starting. And I think those were the companies that looked at either record on investment in terms of business continuity or they had just the vision and ambition. I just thinking about the companies like Toyota or Zara or alike. And then last but not least, there are some movements that are forced by the regulators here. I’m just thinking about German supply chain diligence act, but there are all the other ones related to cyber risk management, like the news Cyber Resilience Act and all of that, forced companies to do some things. But I think what is extremely successful and effective to bring the companies to invest more is just get the fingers burned unfortunately.
Ulf Venne: Yeah, that’s correct. I think Daniel Kaman will talk about the affection bias where it’s like, okay, once you lift through something, it’s more easy for you to rationalize things with it. So in addition to that, because you mentioned a lot of the early adopters I guess were people with a very low buffer stock that have been impacted already quite a lot with ripple effects in the past. So automotive obviously being one of the forerunners in the art of supply chain risk management. But essentially at the start of a journey like implementing a program for supply chain risk management, one of the biggest issues, and you can see it here, is flying blind because you don’t necessarily know where is stuff where I might know the sales address, I might not know the supplier address where you produces. There’s a lot of complexity coming with that where you have eventually challenges but also have to build yourself up over time a little bit and grow with the task of mapping your supply chain. Do you want to talk about this a little bit?
Jakub Watemborski: Yes, of course. And that was also our setting point. Once the decision was made, okay, let’s invest into risk management. But we had to answer the question, what is our supply chain? Who are our suppliers, where they are located, how much business critical they are? What are the interdependencies between ’em? And of course the tools like Everstream, they have a lot to visualize, but there is a lot, lot of work that you need to put before you upload the data to understand this complexity. And my team, we don’t track every single supplier of KION in the world. We focus on the most business critical suppliers that we know that we have proof in a quantified way that those are the ones that if anything happens to them, it’ll hurt us a lot. And then we are slowly progressing with this visibility because it’s just maybe even just their visibility by adding more and more suppliers about suppliers to better and better understanding this complexity moving forward.
Ulf Venne: So in the way you do your scoping, I guess it’s not only spent, that’s important for you, right? Because you talked about you take the ones that really hurt.
Jakub Watemborski: Yeah, exactly. So we have developed, since my team is global, we have also developed a global approach that is localized in the implementation. We call this a business impact score is more or less something like supplier dependency. When we measure different factors, not only spend number of plans where those suppliers deliver to, do they deliver critical buyers, do they deliver to any internal plans of us? And then potential impact is spread across all the other plans, how many active projects they deliver to when we talk about thematic and the warehouses that we build for our clients and things of that nature. And in that way we are much better and we’re equipped with a much better effective knowledge about which supplier was really focused on. And we have many of risks that got materialized, but maybe they were much smaller suppliers than the others. And then we just put a lot of effort to prevent the risks for much bigger and more important suppliers to us. And then yes, they are a couple of quite small spend suppliers, but they are quite business critical to our operations.
Ulf Venne: That makes sense. And actually you delivered the perfect segue because you already talked again about risks. So let’s dive deep into the risks a little bit. As we can see here, that’s the Everstream risk wheel as we call it, that tries to put all the different risks into planning, sourcing, make deliver, which does mean it’s exclusive only to that because a lot of the thing natural disasters apply to everybody. But essentially if you look at the risk wheel, there’s a lot of different options on content that you can drive from Everstream, but also a lot of the other providers you have, what is your focus and how did you come to find that focus with your specific initiative?
Jakub Watemborski: And I think this is more or less the same approach. So we had an experience of the entire organization, more like a tribal knowledge of what were the major risks in the past, plus we also leveraged some leading practices from the world from the solutions like yours. So that’s why we identified first and foremost the geographical and geo politic risks because mainly of the climate change, very disruptive events that are increasing in the frequency and scale. This is where and why we are exploring suppliers, our suppliers, and trying to understand the complexity. This I explained very briefly couple of minutes ago as well as the business impact. So here we treat this as a potential risk because the more dependent we are in the supplier, there is a bigger Latin risk, potential risk for us. That’s why we should prioritize the supplier. But we also have a second parallel approach for the prioritization that we’ll show you this later because we also do quantify the risks.
Then there are some operational risks. So everything that is happening as of now or might happen in the future in terms of supply capacity, we have here some logistics, KPI, we have quality because those are often late indicators, but very true indicators. If something is going wrong with the suppliers, then we see this immediately through this. And what you see on the right hand side, those are basically the most frequent or the most impactful risks from the past in terms of financial risks. We also see this is growing, we’ll talk about this in couple of minutes, sustainability risks because of different regulations, because of reputational risk here. And by the way, K recently got the highest status from Ecova. So here we really put a lot of effort to manage the sustainability risks also related to our supplier base. And last but not least, there are cyber risks and we as an organization experienced a couple of serious cyber incidents from our suppliers that impacted our production lines. So that’s why we treated with a very high priority.
Ulf Venne: So obviously cyber risk is pretty huge, right? And it’s also important to manage all of these risks appropriately. For that you unfortunately not only need Everstream, which would be perfect for us, if you could say, okay, with Everstream we will solve all of your needs, but you will have to build an ecosystem of various software pieces in order to build the perfect solution for all risk scores. Because some of them, like cyber risk can go into a lot of details. We will report on alerts, but there is a lot of preventive action that needs to happen that we just can’t deliver. So integrating not only all the data into one place and then maybe outside into more operational systems like we often do for our clients is a key part. So how does your ecosystem of risk management look like?
Jakub Watemborski: Right? So as you mentioned, it’s not one single solution. However, we use and utilize everything quite a lot here because next to the external risk factor, we also built our internal risk factor. And basically for every risk dimension that you see here, we call it 360 degree risk score for every supplier that we have in scope, we combine different solutions to contribute to this one risk score. And this is what we upload to Everstream. Some of those partners, some of those tools are linked via API, some we use for risk evaluation internally. And then we produce a risk score for instance, for cyber, and then we upload this to Everstream. And through that we have it stored and documented for every supplier. But even when it comes to geographic and geo political risks, it’s not only Everstream, I mentioned here semiconductor management. And for that we just use the specialized tool, which is silicon expert, which gives us an extreme detailed visibility into the entire value chain of semiconductors.
But this is kind of nothing very common when it comes to the anterior visibility. In this case, this data is just available on the market through different tools. We just use this, we have some internal tools for business impact, for operational risks, we source this information internally or created it to calculate it internally. Then for financial risks, we recently established partnership with Moody’s and we just this week concluded the rollout global rollout to over 300 users globally for procurement. But next to that we also have a group of internal experts because KION sells not only trucks, we also sell the services and the financial services to finance the drug fleets to our clients. And we have a couple of extremely experienced people from Q financial services who support us on the most complex cases related to our supplier financial risks. And this has been a great partnership and one of the advice I can give you really utilize internal resources if not from your teams, but there are many potential collaboration partnerships from within the supply chain or even out of the supply chain with your companies and sustainability.
We have two leading solution and integrity next. However, it’s not my team who use them directly. We have a dedicated sustainability team. That’s why we’ve been so successful when it comes to getting the highest notes from Echo. The last but not least, we have those cyber risks and here we utilize security scorecard. It’s been for over a year. But next to that we also use our supplier management portal to make some entry surveys related to cyber risks. And then we make a deep dive for security. We also screen our suppliers 24 7 for any open vulnerabilities for cyber risks. So it’s quite a lot and it’s an ongoing effort. Every month, every quarter we report analyze quite a lot of risks and now we are working on to find some more automated solution how to combine those different pieces of information from different data sources.
Ulf Venne: And we’re going to help you work on that for sure, especially when it comes to risk scoring, right? You said you have this very comprehensive risk score built now and it is very in line with what we do in Everstream combining external risk from our side, the automated risks together with the internal risk that you can bring or partners can bring in and then combining it to one single score that makes it very easy to read. So what we are trying to do is get the traditional risk matrix into a single score so it’s easier for non-professional risk people that more focus on procurement to read it. I think you have a very similar approach, especially because you do a very sophisticated, you already are very sophisticated in waiting risks and understanding your risk appetite like this. So it’s a very important topic is risk appetite. So it would be great if you could maybe show a little bit how you work on waiting and what is your thought process behind that.
Jakub Watemborski: Yeah, exactly. And this waiting, and I think this is not the waiting itself but the entire pontification, I think this is right now the most complex thing that we do for our procurement organization and also for our entire supply chain organization because the way thing reflects just the importance of different risks. And I mentioned this a couple of minutes ago that we experienced a couple of supplier insolvencies that we experienced couple of supplier attacks. That’s why we put those two risks on the very top next to geo risks. So geographic geopolitical because we see this as also increasing in frequency and scale. And now and through that we are also putting most of the effort mitigation effort on those three next to the business impact that help us to understand, as I mentioned right, the dependency, we have operational risks as early indicators and sustainability risks, although it has the lowest way, as I mentioned, we have a full dedicated team that works on that daily basis.
So that’s why my team can focus more on other risks that might impact the availability of the materials much quicker and much more impactful than the sustainability risks themselves. But it comes to the risk quantification though right here is a quite tricky task. How to understand how to play a failure might impact your bottom line might impact your either revenue or profit. And here we built a complex model to understand based on the critical parts, based on the forecast and the production plans, and we do this for every single supplier in scope to see in that next 12 months, assuming that the supplier stops delivering, what would be the impact, how many trucks we would not be able to produce and to sell. And next to that we have couple of other factors in terms of relocation time, is it a single source supplier and so on and so forth.
And then last but not least, we have the likelihood and here we use external providers. We also use the likelihood of geo events from Everstream and unfortunately it’s not available for every single geo event, but for the most important events is or the likelihood of financial distress from Moody’s cyber events, from security cauca. And just to make it more clear and visible for the procurement which supplies would focus on, we just put those two things together. We calculate the expected risks, so the impact multiplied by the probability we see how it looks when it comes to risk score. And there we go. You have this priority metrics available here and what comes next is what is the most difficult, what should we do? What should we do with those suppliers, how can we mitigate them? How can we reduce either the impact or the likelihood in the short term medium and long term? And this is something I would like to talk a little bit today, too.
Ulf Venne: There we come into the great topic of people process because right now we all talked about technology, the underlying bottom, but now we’re going into people in process and I guess we want to start with people. And at Everstream what we do is we try to help our customers also with finding solutions for when they get started. And you’re obviously being very advanced in your maturity. And if you look at the setup that you provide in the organization of KION as a team, it reminds myself a lot on the blueprint we have for organizing around supply chain risk management, which we call the supply chain risk management center of excellence. And if you want to learn more about this, you can read a white paper. I’m not going to go in depth into this today, but it’s on our homepage. Go to the white paper, it’s good, but it’s important for you that it’s not only a central team that has to do the action, you are an enabler of taking action and managing risks. So I think looking forward at the slide that’s coming, I think you have a great way of integrating yourself into the business and building teams to work on specific risks. And yeah, I’m really looking forward to hear more about that.
Jakub Watemborski: Right, and just to complete the topic, right about the risk visibility, because this is basically what we talked about. Once we identify the risks, then yes, we do report them and we report them on regular daily operational basis, but we also have a much more dedicated forum for that. We have established the entire framework of quarterly meetings regionally because as I mentioned, my team is global and basically Keyon supply risk management team never sleeps because my risk manager from apac, EMEA and America, there’s always someone who is online, let me put it like that. And whatever they do on daily basis, then they report on a quarterly basis to their local leadership. And then I have this privilege then to report this quarterly to the global leadership. And by the way, I just finish this quarterly reporting meeting just before our webinar today. And I have to say it is been extremely important to gather senior leadership people to discuss the most important topics and the cases that require highest attention and highest mitigation effort. Not to mention that also people for corporate risk management join those meetings so that they can combine the information about the suppliers, about the supply chain with a much more broader view on all types of risks that QAN as an organization is facing. And also this quantification that you saw a couple of slides before, it is officially reported to the corporate risk management. So that’s why we have a very good audience where we can discuss on the one hand, hands-on experience from the field teams that deal with those suppliers on daily basis have a much more broader and strategic approach from the senior leadership. Good.
Ulf Venne: So we now talked about people, we talked about the frequency of engagement with the organization, the concept of the risk council. Let’s go to processes next. We talked about technology, we talked about people, let’s go to the process. Obviously in Everstream, if we talk about procurement, we often think about the supplier management process that essentially goes from onboarding to offboarding and we believe there is a good time to start scoring risks. That’s very early. Then you eventually go to monitoring to understand are there any implications with the supplier to then eventually even dive deep into the sub tiers. I think when I saw what you are doing at KION, it kind of reminded me of our imagery a little bit. So it’s great to see that great minds think alike. So maybe you take us through the details of that.
Jakub Watemborski: Yeah, sure. And still this process is again very much related to the people. We set it up, not ourselves. And this is a joint exercise of the entire procurement because this process and as you see here, it’s called supplier readiness and development and where the risk management is included into this process. So we don’t run risk management for ourselves, we do this for constantly improving our suppliers that go through this supply lifecycle process and that deliver daily to our plans that have some strategic assignments from our procurement and so forth. And I’ll not go through very details here, just wanted to mention that we start assessing our suppliers before the awarding right through the entire RFQ process. This is where we do first checks. There are also some obligatory gates to check basics, but then before making an award we make, if this is a big award, then we make even a more deep dive checks from different dimensions, but mainly cyber finance, geo risks.
And then after the award and even before start of the production, we continuously monitor those suppliers. And we do this from the risk management perspective. We do this from capacity semiconductor management perspective. But as you can see here, there is entire team that works on those suppliers on daily basis to prepare them for our production standards to continuously develop those suppliers and my team as a risk management team or entire global team related to those global functions. We manage this entire process through scorecard management. Maybe it’s not that clearly visible on this slide, but if you look at the left, there is a one big arrow from the bottom to the top because scorecard management, it encompasses all activities that we do and it works really well. And we have also maybe despite some early adoption issues with our suppliers that were not all of them were that very much used to having a client like KION or having KION so much strict and working in the preventive mode. But we learned from each other together. And right now we have really many success stories. When suppliers collaborate, they improve their key KPIs also related to the risks, they improve the cybersecurity posture. We help them also to mitigate their financial risks and so on and so forth for mutual success.
Ulf Venne: Yeah, perfect segway, mitigating risks. Yeah, this is where we’re going to go next and this is going to be more or less our final point of this webinar. And this is my last slide, so you will not hear me talk anymore from you and out except if you have a question from me later. So in the end, it’s all about mitigating risks and this will then eventually lead to the value that everybody wants, right? No matter if it’s a strategic risk mitigation or if it’s a tactical, hey supplier would’ve stopped delivering materials to us, I found a good solution and alternative, right? And here you see that we at Everest Dream really believe that before it was all about cost capital in procurement, about service, about quality. In the last couple of years it really has developed into enriching this triangle with more. Now it’s a hexagon essentially having resilience, agility and sustainability in there as well. And yeah, there are all the different value drivers and I think you’re driving a lot of value at KION in various different form of patients when you mitigate the risk. So it would be great if you could take us through that a little bit,
Jakub Watemborski: Right? And this is also the most difficult piece to get implemented, well established, and I think quite many if not the majority of companies are effective when it comes to the reaction to the risks that materialize so-called taskforce management. And here we are too because we have robust and checked many times processes related to specific cases be that any logistics issues, quality issues or if supplier goes bankrupt or has a cyber attack and this immediate response have been tested several times and has been proved to be very effective. On the other hand, we have this preventive mode, everything that we talked about today that we see that might happen with some likelihood. So it might not. And then it’s the matter of prioritization and a business decision if we do mitigate and how we mitigate and maybe sometimes we accept a certain risk, but at least we know about them.
And when we do make a decision that we mitigate then and how much do we like to reduce the likelihood or maybe the impact? The thing is you cannot have a second source for every component. You cannot relocate everything. You cannot increase the stock for everything. It’s always the matter of business decision and those stories that the resilience is competitive advantage or they can be faster than your competition. When a risk materialize, and this is all true, but this message is extremely hard to get delivered for the daily decisions or even for some strategic decisions that can be or must be made because there are plenty of different factors from strategic procurement, from operational procurement, from logistics, and everyone has its own KPIs and goals and so forth. So I think the biggest challenge here is just to find the balance between those different requirements and different goals and to mitigate as much as we can with the best cost as we can get. I know that it sounds quite superficial, but this is actually the nature of such decisions. And if I recall the supplier risk answers that I had, the decision, the meetings or the decisions that we are having together with the procurement, this is all about that, right? And sometimes we even do accept the risks that might be very painful if they materialize, but this is just a business decision, but at least this is what I’m very happy about. We know about them and they are very visible and they are reported and documented.
And now I can give you a couple of examples how it looks more in the practice and I hope you’re going to enjoy it. I mentioned for instance here the financial risks and this is a clear upward trend that we see setting from last year. We thought, okay, last year was quite bad actually, but this year it’s only getting worse when it comes to the financial stability of our suppliers. And we mentioned the mitigation, right? It’s never been so much important as it is now and that’s why we have established a process two years ago because we know what might be coming. We knew that we are establishing this visibility standards and then we had to answer ourselves a question, okay, we have high risk suppliers, what do we do with that? But then after two years we realized that this process is far from being perfect and we despite that experienced couple of another insolvency cases. So that’s why right now with the procurement teams we set together and try to develop an improved version of this, which is still under the discussion. So that’s why I was saying that it’s so difficult to get those things mitigated because there are different goals and requirements from different teams and then sometimes we are not able to prevent some risks going materializing even though we knew about them a couple of months before.
On the next slide, you can see though how we are mitigating the cyber risks. So that’s another example and this is the program that my team developed for every business here where we start with some risk visibility. And that’s the step number one when we try to screen suppliers quite generally all business critical suppliers globally and to understand how much likely they might have a cyber incident and if it happens, if it were to happen, then how well they are prepared to mitigate that. And based on that, if we see that some suppliers might have some room for improvement here, we help them, we offer them a remote audit opportunity to on the one hand understand better what is working, what is not working, and then also to help them to establish an improvement plan, which of the things they should fix and improve first to become more resilient in this area. And in some cases where we have very business critical suppliers, we even go onsite to them. We also have a partner here who supports us on that. And everything is in that sense to lower the likelihood of critical cyber incidents. I mean critical because you never have a chance to avoid everything, but at least we would like to reduce this biggest impact here to KION and I mentioned this likelihood here and here I have quite an interesting example how this is becoming reality because we have them statistics from our partner security score cut here according to their rating. And suppliers that have the lowest F rating, they have significantly higher probability to be a victim of a cyber incident. And through our preventive program, those are only three suppliers from couple of months ago until now, we have many, many more. We have seen that our suppliers really do try to collaborate and they make an effort to improve, to fix those vulnerabilities, to improve their rating and then quickly reduce the likelihood. And on the other hand, as I mentioned, we also try to help them to establish more organizational processes and prepare themselves from this perspective in terms of people, tools and processes, how to manage better cyber security and information security.
This is a very, let’s say long-term program the same as our capacity management. So that’s another example what my team does. So for EMEA, we have over 400 of suppliers on onboarded that share with us their capacity data either on monthly or quarterly basis and basically tell us if they can meet our demand for the next 12 or 18 months. And if they cannot, they specify exactly which materials for which months they might not be able to deliver. And it’s been extremely successful because this was one of the issues and one of the pain points that KION had that materialized back in the COVID times where we didn’t have visibility into our suppliers capacity. And thanks to this program, we do have it now and we are able to act preventatively up to the next 18 months no matter what the issue is. It might be related to SAP suppliers, raw material availability related to increased illness rate and our suppliers and so on and so forth. And the majority of our suppliers share this information in a transparent way so that we can work together on mitigating it. And then I believe last but not least is our approach for semiconductor management. And again, it is been born in the Corona times, in the COVID times where global chip shortage was extremely painful for entire world. And back then this initiative was born as a task force. But since then we transformed this in a preventive regular approach where we onboarded over 30 suppliers, key electronic suppliers globally, where they share us with us the data on regular basis, they shared their bonds transparency with us, we help them to establish the early warning system also for them, if we spot any shortage on the market, any lifecycle issues, we use the silicon expert tool for that. We use also our work expert knowledge and we are able to map our complete value trend from early production side. We even had this incident a year ago, two hurricanes, Milton and Helena, thanks to Everstream.
We knew about them very quickly and once we knew, we were informed that high purity silicone mine was affected, we were able to very quickly identify how much we might be impacted. And then luckily there was no big impact anyway globally, but within days we were able to see how much time we have to make any decisions, any buffer stock or whatever to secure the critical supplies of semiconductors. And next to that, we are also in a very close collaboration with our tier two suppliers. We also do buy semiconductors from them directly, but way more over our tier one suppliers. And just last week we had a great event of first semiconductor supplier day where we invited all of those players and we showed them our product portfolio mainly from thematic, so automated auto numbers, warehouse solutions. And now we are continue working and developing the potential areas for further cooperation here with two goals in front of us. One is of course resilience, but also we see quite a lot cost effectiveness opportunities here with establishing the partnership with those key providers. And if I’m not mistaken, that was the last slide. Exactly. So with that, thank you so much for having me and for having this opportunity. It was great to talk to you all and thanks for your comments and the discussion. As I mentioned, very happy to be in touch with anyone with any risk management, passionate on LinkedIn, on professional and private note. I always enjoyed those discussions and looking forward to any questions if we have.
Franziska Nothofer: Thank you so much, Jakub. It was really interesting to hear the thought process that went into establish those very sophisticated processes and hear about your best practices and what that looks like in real life. We have a few questions come through, we’re just a bit over time, so if you need to drop, you can drop off. The session is recorded and we’ll share that out within 24 hours and we can answer a few of the questions now. So the first one is for Jakub actually. Can you share a concrete example of how supplier risk visibility helped KION prevent the disruption and what the financial impact was?
Jakub Watemborski: Right. I mean, I think I cannot disclose specific numbers about the financial impact, but even from the Today risk council that I had before the webinar, I was showing a couple of example of suppliers where we effectively reduced expected rates by several hundreds of thousand of profit. And that was thanks to on the one hand mitigation effort, we also had some examples where we clarified the financial risk in more detail because sometimes what the external agency shows is just a benchmark model because some data, financial data might not be available for some of the suppliers. It depends on the country, on the legal entity and so forth. But then we reach out to those suppliers, we ask for the data collected it analyze, and thanks to that we understood that the risk is much lower than it was earlier anticipated. And thanks to that, just the likelihood got reduced significantly. Well, and you might say, okay, it was not a medication because this risk just didn’t exist before. But I would argue with that this visibility was just not perfect, and through the actions that we took, we actually confirmed the real number and the real level of the risk.
Franziska Nothofer: Perfect. Thank you so much. That was a very good answer. Another one, when a key supplier is flagged as high risk, how do you decide whether to develop them or find an alternative supplier?
Jakub Watemborski: So here we work closely with the strategic procurement department because what we see as a key supplier in terms of business criticality might be or might not be perceived as strategic supplier for KION. So if this is not a strategic supplier, then of course it’s a way easier to make a decision to find the second source. But of course you have many different factors related to that. It usually requires some investment, it requires some effort, time, and so forth. For strategic partners though, the approach is usually different because then we need to work with the supplier to reduce this risk. We help the supplier, we use different levers, but first and foremost, it’s about collaboration and partnership with the strategic suppliers.
Franziska Nothofer: Perfect. Thank you, Jakub. Okay, we’re almost at time, so we will get back to you one-on-one on any questions that we couldn’t get to during the session today, and we will share out the recording within the next 24 hours. Thank you again to Yako and all for joining the session today and for running such an engaging session with loads of takeaways for everyone. And yeah, have a good rest of your week and hopefully see you soon. Thank you. Thank you so much. Goodbye.
Ulf Venne: Thank you for being here, Jakub. Bye-bye.