Parts distribution: Sandvik enters a new era

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For Robert Van der Waal, new Vice President of Logistics and Parts and Services at Sandvik Mining and Rock Solutions, getting parts where they need to be has never been harder.

Delivering drilling and mining equipment and their spare parts to some of the most remote places on earth has never been easy. With key component shortages, supply chain bottlenecks, the pandemic, skyrocketing material prices and a software upgrade at a key distribution center gone wrong, it’s a miracle. that Robert Van der Waal can sleep at night.

The man is the newest vice president of logistics for the Parts and Services division of Sandvik Mining and Rock Solutions. His job is to organize logistics and make sure customers get the parts they need, where and when they need them. “In 20 years I have never seen anything like this, the whole logistics world has been turned upside down. We just have to find the best way to operate in this new dynamic, explains Van der Waal. Some of the problems are beyond our control. control, but we have brought others – such as the necessary – but difficult – implementation of a new warehouse management system in our central distribution center in Eindhoven, the Netherlands, where the majority of our parts are stocked. Our customers have undoubtedly been impacted, but fortunately they have been remarkably understanding. Now that we are back on track, we can reshape our supply chain to adapt to the new environment, with systems up to date.”

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Congested ports

This is already the case with the Eindhoven plant, which now produces +40% volume since the system upgrade. Even products stuck in ports such as Long Beach in California and Yantian in China are moving slowly through the supply chain. Geopolitics don’t help either, such as the closure of Mali’s borders after the recent military takeover, meaning mines cannot be supplied via standard routes. And the rules of Covid keep changing as the pandemic evolves…

“You only have to see a delay in the supply of parts to realize how important they are for customers,” continues Van der Waal. They need spare parts to continue operating their mines. So we have changed our shipping methods. In the past, we sent 40% by air, 40% by sea and 20% by road – today up to 70% of the parts are sent by air. It’s faster but the costs are enormous. But we have no choice – it’s a price to pay for satisfying customers.”

Rising lead times and costs, falling availability

It’s not just the cost of freight that’s going up, but also that of simple screws and bolts to wood used for packing. Sea freight prices in particular have soared – a shortage of vessels means container prices are skyrocketing from around $2,000 per container a few years ago to $18,000 today. Sandvik is absorbing a large part of these increases, but the cost pressure is intense. “That said, there are problems that even money can’t solve. The global shortage of semiconductors is hitting electronics component suppliers, causing delays for the entire industry, and that shouldn’t happen. “We’ll ease anytime soon,” Van der Waal believes. “Our shipments now take twice as long as before. Even express delivery services that previously guaranteed next-day delivery can now take two days.”

Credit: Sandvik

But does this mean the end of “just in time” logistics? “Not necessarily, he says. We just have to adjust our supply chain so that we are always there with the right product at the right time for the customer. Where historically a supply chain was built around efficiency, disruption due to the pandemic and new market dynamics are driving companies, including Sandvik, to transform their supply structures to make them much more robust. Those who are better able to handle unexpected disruptions and disruptions.”

Back to basics

New technologies and new processes undoubtedly have a role to play in ensuring that Sandvik parts and equipment get where they are needed. But rather than making big leaps of faith in new technologies (such as artificial intelligence), Van der Waal advises caution and a more “back to basics” approach. “This past year has shown us what happens when we lose control of our processes. We must first master the basics of old-fashioned logistics, maintain good relationships with our suppliers and put in place plans to emergency if situations change unexpectedly. New technologies will play a big role in our future success, but we will only take actions that we know we can handle – no more overconfidence in IT. parts to our customers on time is too high a priority to take risks.”

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Parts distribution: Sandvik enters a new era

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