Agrifac: Innovative agricultural equipment from the Netherlands
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Agrifac: Innovative agricultural equipment from the Netherlands

Thinking in terms of product's cost drivers

Agrifac is a Dutch manufacturer of agricultural equipment, specialising in field sprayers and beet harvesters. It employs a total of about 200 people, about 150 employees work at the headquarters in Steenwijk. Agrifac exports its products worldwide and, in addition to its Steenwijk headquarter, it has sales and service organizations in the United Kingdom and Australia. The company ispart of the French Exel Industries. “We are leaders in technology andinnovation, such as NEED Farming: our machines give each plant exactly what it needs instead of full-field treatments. This optimises the use of resources,” says Nick van Huffelen, Manager of Procurement & Supply Chain at Agrifac.

High standards

The key technology in sustainability is in the so-called AirFlow parts of high-performance sprayers. “If you start spraying while the wind is blowing, you will suffer from drift: the blowing away of the protective equipment is in question. The AirFlow minimizes that drift.” Agrifac once developed the product because of a customer-specific request but saw the potential for further development. “Currently, it is still at the beginning product life cycle and is mainly sold in the Netherlands because we are one of the few countries in the world that has very high standards for drift. Normally, such developments are later adopted internationally.”

Powerful information

To get a good idea of the product's production costs,Agrifac called on the cost engineering experts of Kloepfel Benelux. “At themoment, our purchasing and R&D departments still lack sufficient knowledge.Taking into consideration the current materials scarcity and, in particular,their associated price developments, we want employees to think more broadlyabout cost drivers. In the longer term, this way of thinking must become a partof their DNA,” says Van Huffelen. “A purchaser should know how to configure theamount of material there is in a machine frame and have a feel for it. Thatinformation gives power: if you are familiar with the costs of painting orwelding, and a supplier says that that has become 2 percent more expensive, youcan make a value out of that information. And if you know that there are 100 manhours in a welding job and what is the hourly rate in the Eastern Europe, youcan calculate saving opportunities in advance.”

Discussing in detail

During his previous employment, Van Huffelen had already done a similar project with Kloepfel. “I knew beforehand what they could do a cost engineering: an extremely detailed calculation with a lot of depth. The expectation was that there would be a difference with the current price levels of the suppliers. And that was what happened. You know that the difference becomes a start of conversation and discussion,” he says. “With a calculation as such, you have good factual foundation instead of only an intuition of a buyer. In other words, thanks to this calculation, we can have a detailed discussion with our supplier. In my opinion, this is how it supposed to work, especially if you strive for intensive integration of process and design with the suppliers.”

More transparency

To use Kloepfel's cost engineering software tool, the particular engineer must be able to assess the product. “I have to give the gentlemen at Kloepfel credit for that: the expertise is good and they deliver solid quality. They are able to estimate the best production technology for the product. For example, to indicate whether you should use a three-axle or five-axle, which welding division you need, and whether that accuracy is really necessary at certain parts,” explained Van Huffelen. “That knowledge has already brought us a lot. Our supplier realises that he has to be open about the cost structure. That is not yet a common sense in our supply chain. They are usually still reluctant to share such information. You first have to build a relationship based on trust to achieve that.”