Vestas: Powering Quality in the Supply Chain

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 14^th 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.