Why Bauer Is Reinventing Its Supply Chain

The BAUER Group produces the sophisticated machinery for its own ground- and groundwater-related work. And for its direct competitors. The company has embarked upon a transformation designed to continue its extraordinary tradition of world championship performance in this highly specialized field.


Potash is produced in Jordan by pumping water from the Dead Sea into basins in the earth. Bauer used its machinery to install cut-off walls to a depth of 30 meters in the salty soil. Bauer AG

One of the world’s largest zinc mines lies around 170 kilo­me­ters north of the Arc­tic Cir­cle and about 1,000 kilo­me­ters north­west of Anchor­age, Alas­ka. In oper­a­tion since the 1980s, Red Dog mine accounts for approx­i­mate­ly 10 per­cent of the world’s zinc pro­duc­tion. The ground at the site is in a com­plete­ly frozen state of per­mafrost. But if the per­mafrost should thaw, the Ger­many-based BAUER Group was com­mis­sioned to do field tests to deter­mine the steps need­ed to shore it up. It con­duct­ed these tests on jet grout­ing and cut­ter soil mix­ing (CSM) process­es, and showed that the lat­ter would be suit­able. CSM process­es cut up soil, shift it, and mix it with an aggre­gate. The BAUER Group was also com­mis­sioned to con­struct a secant pile wall with 93 sec­ondary piles, using a mul­ti­pur­pose BG 30 drill rig with spe­cial Arc­tic equip­ment. The two pieces of machin­ery involved were devel­oped and pro­duced by BAUER Maschi­nen GmbH in the south­ern Ger­man town of Schrobenhausen.

Bauer brought its specialized equipment by ship and plane directly to the Red Dog zinc mine at the Arctic Circle. Ground improvements are needed to counter the effects of thaws in the permafrost. Bauer AG

Of special note here is the combination

The fam­i­ly busi­ness is list­ed on the stock exchange with 11,000 employ­ees at 110 sub­sidiaries and total Group rev­enues of a good 1.5 bil­lion euros. Its work is divid­ed into three seg­ments. The con­struc­tion seg­ment does large-scale spe­cial­ized foun­da­tion projects world­wide (sales share: 45 per­cent). The equip­ment seg­ment is a glob­al mar­ket leader in devel­op­ing and pro­duc­ing machin­ery for spe­cial­ized foun­da­tion engi­neer­ing (40 per­cent). And the resources seg­ment is a ser­vice provider in the fields of drilling, water wells, envi­ron­men­tal sys­tems, con­struct­ed wet­lands, min­ing, and reha­bil­i­ta­tion (15 per­cent). The BAUER Group is posi­tioned as an inno­v­a­tive and high­ly spe­cial­ized provider of prod­ucts and ser­vices for spe­cial­ized foun­da­tion work and asso­ci­at­ed mar­kets. Its machines can bore, ram, cut, shift, and com­press soil. They are not restrict­ed to the Arc­tic but can see action any­where: exam­ples include build­ing dikes at the Dead Sea in Jor­dan, extend­ing Bruce High­way in Queens­land in Aus­tralia, and expand­ing the port of Alexan­dria in Egypt. The heavy-duty rigs can weigh up to 300 tons (BG 72), and cost from 500,000 to a good five mil­lion euros.

The BG 45 drilling rig has a multifunctional design. Only the basic version is standard. Its features are adapted to customers' requirements—sometime for a single specialized foundation project.Bauer AG

The Bauer brand—a worldwide name in specialized foundation engineering

In 1790, Sebastian Bauer acquired the right to found a copper smithy in the southern German town of Schrobenhausen and began producing household utensils, brewery vats, and roof cladding. Around 110 years later Andreas Bauer drilled an artesian well for the local train station. A new field of business was born. His son Karl built the centralized water supply system for the town of Schrobenhausen in the 1920s, followed by wells and water systems for other southern German cities and industrial facilities. Karlheinz Bauer promoted the company's specialization in foundation engineering. In 1958, injection anchors were invented and a patent filed for the construction process. In 1976, the first BG drilling rig went into operation, which would become the focus of Bauer's mechanical engineering expertise. And in 1984, the company made its first diaphragm walling machine. In the 1980s the company’s mechanical and foundation engineering activities became increasingly international in scope. Then the owners took a major new course. They decided to offer their "made by Bauer" machines to the competition in order not to encourage imitators. This turned a specialized foundation engineering company that produced its own machinery into a globally active group that also supplies other specialized foundation engineering companies. "It's a balancing act," observes Professor Bauer. "Our customers need to be sure that our business fields are separate and their confidential information will not be passed on within the group." Following multiple acquisitions and start-ups, BAUER Aktiengesellschaft was founded in 1994 and went on the stock market in 2006. Activities expanded to include well construction, hydrology, and geothermal projects. The company put its construction, equipment, and resources structure into place. Synergies among these three segments enable it to transfer experience from specialized foundation engineering to mechanical engineering and thereby promote ongoing further development.
Dams have been one of Bauer's special focuses for decades. Regional networks around the globe enable rapid and flexible deployment of foundation experts and machinery to projects worldwide. Bauer AG

Bauer is a very spe­cial type of hid­den cham­pi­on. Over its 230-year his­to­ry the com­pa­ny has con­stant­ly acquired new mar­kets and respond­ed suc­cess­ful­ly to change. “A readi­ness for change is part of our genet­ic make­up,” says Pro­fes­sor Sebas­t­ian Bauer, mem­ber of the own­ing fam­i­ly who directs research and devel­op­ment for BAUER Maschi­nen GmbH. The entire BAUER Group needs this abil­i­ty too, as its cus­tomer struc­ture is extreme­ly het­ero­ge­neous. As Bauer observes, “Each cus­tomer is dif­fer­ent, each con­struc­tion site poses spe­cial chal­lenges, and each coun­try has its own soil and trans­port con­di­tions. Max­i­mum depth will be impor­tant in one coun­try, drilling power in anoth­er, and trans­port weight will be the cru­cial sales cri­te­ri­on in yet anoth­er.” That is one rea­son why each of the approx­i­mate­ly 200 large-scale pieces of machin­ery the com­pa­ny pro­duces annu­al­ly is unique. Only very rarely is one of the machines just like its pre­de­ces­sor. Also of note is the fact that many buy­ers will wait to order their spe­cial­ized drilling rig or diaphragm wall cut­ter until the con­tract they seek is con­firmed. But then they need to act fast. For a long time the com­pa­ny focused on meet­ing cus­tomers’ needs with ready-made prod­ucts that were adapt­ed to indi­vid­ual spec­i­fi­ca­tions short­ly before deliv­ery. BAUER Maschi­nen GmbH pro­duced equip­ment to “keep in stock,” and there­fore had to store a large num­ber of machines on its premises.

Professor Sebastian Bauer studied mechanical engineering at the Technical University in Munich. As a member of the owning family, he directs research and development for BAUER Maschinen GmbH.Bauer AG

This type of pro­duc­tion car­ries high cap­i­tal com­mit­ment costs. But that’s not all. As Bauer explains, “For a long time we were incor­po­rat­ing a great many func­tions into our machines so they’d be suit­able for near­ly every cus­tomer and appli­ca­tion, in an attempt to avoid dis­tri­b­u­tion prob­lems and alter­ation costs.” This “ultra-stan­dard­iza­tion,” as Bauer calls it, meant that cus­tomers ended up with more com­plex machines than they actu­al­ly need­ed. As a result, they only used or appre­ci­at­ed a frac­tion of the appli­ca­tions their machines could per­form. “We’re now in the process of chang­ing that,” he notes. The over­all project is one of strate­gic trans­for­ma­tion. New com­peti­tors on the mar­ket, espe­cial­ly from Asia, are anoth­er rea­son this step is need­ed. As Bauer con­tin­ues, “If we want to safe­guard our lead­ing posi­tion in inter­na­tion­al com­pe­ti­tion, we have to become faster, more flex­i­ble, and more eco­nom­i­cal.” The goals are to short­en pro­duc­tion through­put times, reduce inven­to­ry, lower costs, and increase cus­tomer choice. The cho­sen instru­ment is a sup­ply-chain strat­e­gy. “It puts us in a posi­tion to sup­ple­ment our basic mod­els in such a way that we can pro­vide each client with a large­ly cus­tomized and unique product—in a rapid and stream­lined man­ner,” he says.

The aim is to pro­duce 80 per­cent of all machines on com­mis­sion and to deliv­er them with­in six weeks. In a word, the aim is ambi­tious. The idea is to achieve this by using pre­fab­ri­cat­ed mod­ules and com­po­nents that are pro­duced either in-house or by sup­pli­ers and are already “on the shelf”. When a machine is ordered, the pro­duc­tion team can imme­di­ate­ly retrieve the req­ui­site com­po­nents and mod­ules from the ware­house and adapt the over­all con­fig­u­ra­tion to the spe­cif­ic require­ments. As Bauer explains, “We’re no longer deter­min­ing the machines’ detailed spec­i­fi­ca­tions a year in advance and then essen­tial­ly adjust­ing the entire thing. Instead, we’re assem­bling each indi­vid­ual piece of equip­ment in a high-speed pre­ci­sion process.” What’s impor­tant here is to keep the level of pre­fab­ri­cat­ed parts as low as pos­si­ble. It’s also clear that this trans­for­ma­tion requires employ­ees to change how they think and act. “We need more flex­i­bil­i­ty here too,” notes Bauer.

Strategic transformation with Porsche Consulting

The con­tract came in May 2020. Fol­low­ing pre­lim­i­nary talks with sev­er­al con­sul­tan­cies, BAUER Maschi­nen GmbH select­ed Porsche Con­sult­ing as its part­ner for turn­ing the vision of strate­gic trans­for­ma­tion into reality.

We wanted a partner who would challenge us, and who would turbocharge our progress.

René GudjonsRené Gudjons
Managing director of BAUER Maschinen GmbH

“Porsche Con­sult­ing under­stands pro­duc­tion,” says René Gud­jons, the man­ag­ing direc­tor of BAUER Maschi­nen GmbH in charge of pro­duc­tion, in explain­ing the choice.” And it has expe­ri­ence in man­ag­ing change.” Trans­for­ma­tion was on the agen­da, and ideas were already for­mu­lat­ed. “We want­ed a part­ner who would chal­lenge us, and who would tur­bocharge our progress,” he says. And that is what hap­pened. The project is now in the stage of inter­nal implementation.

The consultants served as catalysts in accelerating the supply-chain strategy.

Rainer RossbachRainer Rossbach
Managing director of BAUER Maschinen GmbH

Rain­er Ross­bach, the man­ag­ing direc­tor of BAUER Maschi­nen GmbH in charge of com­mer­cial admin­is­tra­tion, adds: “The con­sul­tants spurred us on, put our ideas into prac­tice, and served as cat­a­lysts in accel­er­at­ing the sup­ply-chain strat­e­gy.” The orga­ni­za­tion­al changes intro­duced have also played an impor­tant role. “At the begin­ning, the process felt like a minor rev­o­lu­tion, where­as the next two or three years will be more a mat­ter of evo­lu­tion­ary changes,” says Gud­jons. Ini­tial suc­cess­ful results of the trans­for­ma­tion are expect­ed to become evi­dent in mid-2022.

A suc­cess­ful sup­ply-chain strat­e­gy for a glob­al­ly active mechan­i­cal engi­neer­ing com­pa­ny absolute­ly has to build on cur­rent and con­sis­tent data. That is all the more true when it comes to plan­ning. After all, the Schroben­hausen-based com­pa­ny has to antic­i­pate as accu­rate­ly as pos­si­ble which machines will be need­ed on con­struc­tion sites world­wide in twelve or eigh­teen months. “For that we need to front-load the process with a lot of intel­li­gence,” says Gud­jons. This requires all the com­pa­ny divi­sions to change the way they think. All the depart­ments and all the sub­fields require plannable process­es. Data exchange process­es need to be improved as well, both with­in the group and with sup­pli­ers. As Ross­bach puts it, “We want our sup­ply-chain approach to relieve the dis­tri­b­u­tion and pro­duc­tion process­es that pre­vi­ous­ly had to con­tend with far too many ad hoc measures.”

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