It’s not easy being a wood-processing company these days. With new legislation like the European Union Deforestation Regulation (EUDR) kicking into effect later this year, ongoing energy challenges, and a slump in building permits, revenue growth doesn’t come easy.
As one of the largest wood-processing companies in Europe, Austria-based Pfeifer Group feels the direct impact when the global economy gets weaker because fewer products need to be transported—a direct hit on the company’s sales of wood pallet blocks.
The company is facing these industry challenges head-on by embracing its sustainable roots—and innovative technology—to remain competitive.
“It’s more important than ever that we use all of the raw materials that we have been provided with wisely,” says Stefan Hammerl, head of group IT for Pfeifer. “Sustainability has always been a part of Pfeifer’s DNA and will become a part of the company’s future even more. And thanks to the insight we receive from our core SAP system, we will be able to track our sustainability measures more closely.”
TRANSPARENCY AND LOGIC OF LOGISTICS
Founded in 1948 in the aftermath of World War II, Pfeifer produces different types of wood panels, beams, cross-laminated timber, and pallet blocks. The company is also the largest manufacturer of wood pellets in Central Europe, producing around 620,000 tons each year, and runs its own power plants fueled with leftover remnants of the production process. Heat derived from Pfeifer’s power plant is used to dry sawn timber.
Because Pfeifer’s products are big and heavy, these sustainable cost-saving measures, in addition to robust logistics, have a major impact on company profits.
“Providing a sustainable, cheap, and resilient supply chain is key,” says Hammerl. “And therefore, we are happy to have SAP on our side to help us gain more transparency across our logistical processes.”
Pfeifer, and the wood-processing industry in general, is conservative when it comes to investing in new IT systems and tools. Digitalizing business processes was not always top priority. As a result, the company focused on reducing technical debts and redundancies to implement systems that help increase transparency.
“With this transparency, we are able to find out where we have problems in our processes and where we can make tweaks in order to reduce hidden costs that we didn’t see before,” says Hammerl.
DIGITAL MANUFACTURING MAKES A DIFFERENCE
Before Pfeifer implemented a digital manufacturing process, production wasn’t always smooth. While it was easy enough to see when wood was coming in and sawn timber was departing at the end of the line, other important insights were often missing along the way.
With SAP Digital Manufacturing, Pfeifer gains more transparency, especially for cross-laminated timber, the company’s most complex product to make.
“We can react very quickly on changing market and customer requirements,” says Hammerl. “If our order situation changes, we can immediately let our customers know. And because we always use the same base data for analysis, it helps the entire business as production and sales teams talk to each other to understand changes.”
Due to this increased visibility and customer satisfaction, Pfeifer plans to roll out digital manufacturing to all other plants and production areas within the next two years. This vision of piloting and standardizing business processes is a deliberate, competitive advantage for Pfeifer.
Big gains in efficiency are realized by supporting one business process running on one IT system. Internal and external consulting costs are reduced. And customer satisfaction levels increase dramatically, thanks to faster response times.
“We view our SAP implementation projects as transformative,” says Hammerl. “Pfeifer has been an SAP customer for almost eight years now, and we feel it’s more than just being a customer. We feel it’s a real partnership.”
Tim Clark is vice president and head of brand journalism at SAP.