Vestas: Powering Quality in the Supply Chain
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Insights
Effective supply chain management is crucial for companies like Vestas that operate in the renewable energy sector, where the production involves thousands of components from various suppliers globally. Vestas' integration of SAP Business Network into its operations is a strategic move to enhance visibility and collaboration across its supply chain. This digital transformation can significantly reduce the lead times and improve the accuracy of demand forecasting, which is essential for maintaining the balance between supply and demand.
Moreover, the ability to monitor and enforce quality standards through the network is a proactive approach to quality management. It allows Vestas to address potential defects early, minimizing the risk of costly recalls or service interruptions that could tarnish the company's reputation and affect its market share. Additionally, this level of supply chain integration can lead to more resilient operations, especially in the face of disruptions such as natural disasters or geopolitical tensions that can impact global logistics.
Vestas' commitment to sustainability is evident not only in its product offering but also in its operational practices. Utilizing SAP Business Network's capabilities to select and rate suppliers based on sustainability criteria aligns with the growing trend of environmental, social and governance (ESG) considerations in business decisions. This approach can appeal to socially responsible investors and customers who prioritize sustainability in their investment and purchasing decisions.
By saving 1.9 billion tons of carbon emissions, Vestas positions itself as a leader in the transition to a low-carbon economy. The company's sustainability performance and initiatives like the 'Circularity Road Map' highlight its dedication to a circular economy, which can lead to reduced waste and a more efficient use of resources. This forward-thinking strategy can provide Vestas with a competitive edge in an industry that is increasingly influenced by ESG factors.
The renewable energy sector is rapidly expanding, driven by global initiatives such as China's 14th Five-Year Plan, the Inflation Reduction Act in the United States and the European Union's Green Deal. In this context, Vestas' strategic partnership with SAP and its investment in quality and supply chain initiatives are timely. As a market leader, Vestas' focus on quality and performance is critical to maintaining its position and capitalizing on the growing demand for renewable energy solutions.
The company's large-scale projects and the expected increase in output reflect a robust growth trajectory. However, the sector's competitive nature and rapid innovation pace require continuous investment in R&D and operational excellence to stay ahead. Vestas' approach to integrating advanced technology platforms like SAP Business Network into its core operations demonstrates its commitment to leveraging digital solutions for operational efficiency and market competitiveness.
Feature by Bettina Wunderle
NORTHAMPTON, MA / ACCESSWIRE / February 28, 2024 / SAP
Problems with wind turbines are rare. But if one does catch fire or blades break and fly off in a storm, it tends to be headline news. This can not only damage the reputations of wind turbine manufacturers and operators, but also adds weight to arguments against wind power. And repairs are costly, too. Product defects are one possible cause, but how can manufacturers resolve quality issues when supply chains are so complex?
To address this challenge, Vestas, a major wind turbine manufacturer, launched a quality initiative powered by SAP solutions and SAP Business Network.
Pillars of the Energy Transition
Faced with the climate crisis, many countries around the globe are investing heavily in zero-emission renewables. China's 14th Five-Year Plan is driving the market for renewable energy, as are the Inflation Reduction Act in the United States and the Green Deal in the European Union. In these parts of the world, wind energy is regarded as the pillar of the energy transition and is the largest source of renewable energy.
But the wind energy sector is highly competitive, experiences rapid innovation, and is prone to massive supply chain issues. Manufacturers must source raw materials, manage global logistics operations, and mitigate the risks of supplier dependency while still keeping pace with demand. They also need to be confident that all the components in their turbines meet rigorous quality standards and deliver performance and reliability. Quality control issues can result in faults, repairs, and - at worst - major failures.
As a market leader in wind turbines, Vestas Wind Systems, headquartered in Aarhus, Denmark, launched a large-scale quality initiative. Its 29,000 employees in 88 countries develop wind energy projects worldwide and manufacture, install, and service the turbines for them. The 85,000 turbines Vestas has installed to date generated 173 gigawatts of electricity and over 151 gigawatts under service as of September 2023. Several newly commissioned major projects will see that output increase significantly in the coming years.
"Collaboration with suppliers and partners is of crucial importance to Vestas when it comes to creating a sustainable future for the world by leading the global demand for onshore and offshore wind energy," Adeola Abegunde, director of Technology Area Lead Digital Procurement and Supply Chain at Vestas, says.
Sourcing Quality with SAP Business Network
Today's wind turbines are made up of more than 10,000 individual parts. Since the companies that produce these parts are based all over the world, the supply chain is highly complex. To help manage this complexity, Vestas relies on SAP Business Network, the B2B platform used by millions of companies across 190 countries that can connect buyers with contract manufacturers and suppliers.
SAP Business Network enables Vestas to run all its procurement and supply chain collaboration processes online - even beyond company boundaries. Employees use its supply chain functions to collaborate on orders and subcontracting orders. When a supplier confirms an order and sends a shipping notification, staff at Vestas and its contract manufacturers see this information right away. Vestas employees therefore know whether raw materials or the components for an order will arrive at the contract manufacturer on time.
Projects of this scale need to run smoothly and according to plan. This is where the quality collaboration features in SAP Business Network come in. Before a supplier confirms or sends an order, it has to complete predefined quality tests and document them on the network. Vestas employees are then aware in advance of any quality issues further up the supply chain and can take corrective action. Through the network, employees can pass on changes to specifications if, for instance, one particular part had to be replaced sooner than expected and needs to be improved. If quality defects lead to incidents, the network can make these failures transparent to all partners and provide an audit trail. That helps everyone in the supply chain understand what went wrong and solve the problem.
"SAP Business Network allows Vestas to offer its trading partners a platform that makes all sorts of collaboration scenarios transparent from end to end. This means that Vestas is better able to mitigate the impact of disruptions in its global supply chain, making it more robust, future-proof, and sustainable," Florian Seebauer, senior director of the SAP Business Network unit at SAP, says.
Reducing Supply Chain Friction
Suppliers also benefit from the network's forecasting capabilities. Vestas can provide them with information from the planning tool so that they can prepare for changes and capacity increases. This helps suppliers plan more accurately and can minimize friction losses in the supply chain.
SAP Business Network also supports Vestas' sustainability goals since it allows users to select and rate suppliers by sustainability criteria. When compared to electricity generated from fossil fuels, Vestas' solutions have saved 1.9 billion tons of carbon emissions - equivalent to 88 million cars driven for a year. Vestas has established sustainability performance as a core priority across its entire value chain and introduced pioneering initiatives such as its "Circularity Road Map" for the circular economy. It is no surprise then that Vestas is ranked as one of the world's most sustainable companies, featured regularly at the top of lists such as Corporate Knights 100.
Vestas and SAP have a long-standing relationship. Vestas has been running SAP as its ERP system since 2007. In 2017, it adopted SAP Ariba solutions for e-procurement and SAP Business Network. Through SAP Business Network, it now has access to a vast pool of potential trading partners. And, because the network is connected to Vestas' ERP and the complex ordering and collaboration processes running in the background, users don't have to switch away from the systems they are familiar with. With SAP's help, Vestas is breezing into a bright future.
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