Global Supply Chain

Global Supply Chain is responsible for procurement, manufacturing and logistics within Marel. We pride ourselves on our ability to produce solutions according to our customers’ needs, delivered at the right time and right cost, all while maintaining a sustainable approach.

Our team of more than 3,400 experts, along with colleagues recently welcomed from Wenger, works to build long-standing relationships with partners, distribution networks and key suppliers.

Together, we facilitate the innovation and distribution of standalone equipment, full-line solutions and spare parts. We also support Service, which ensures that our customers are well taken care of and underpins our reputation as a trusted maintenance partner.

Global Supply Chain had a busy and productive 2022, including a change in leadership, investments in transformative initiatives, and navigating pandemic-related challenges.

Cash capital expenditures, excluding research and development expenses, are projected to rise to an average of 4-5% of revenues in the period 2021-2026, before returning to more normalized levels. This increase will drive the performance improvements needed to achieve our 2023 financial targets.

The long-term outlook for the industry is unchanged, so Marel will continue to invest in digital solutions, spare parts handling and streamlining the backend. We remain focused on automating and digitalizing our manufacturing platform, supply chain and aftermarket to shorten lead times and support the 2026 target of 50% of revenues being generated by service and software. Marel’s aftermarket revenues, composed of recurring services and spare parts, have continued to grow throughout the years, reaching 40% of total revenues in 2022. Our spare parts revenues have been strong, reflecting our commitment to investing in the spare parts delivery model and shortening lead times.

In early 2022, COVID-19 lockdowns affected our efficiency and output performance. However, Marel’s co-location strategy enabled us to minimize the impact significantly, meaning that only a limited number of deliveries to customers were delayed.

Marel faced considerable changes in market demand and had to take extra measures to balance demand and capacity at each manufacturing site. Some sites increased capacity to maintain good delivery performance, while others decreased capacity to control costs. The manufacturing sites showed exceptional collaboration, such as taking on tasks from colleagues, traveling to other sites to provide support, and co-locating products sustainably. This demonstrates our strong unity and customer focus in the Global Supply Chain team.

We also made and implemented important co-location decisions to simplify the organization and minimize the impact of ‘mixed sites,’ where one site was supporting several business units. An example of this is the OneMeat initiative, where we have begun moving manufacturing of our meat-processing solutions from Boxmeer to Lichtenvoorde. We also plan to relocate manufacturing of our solutions for the processing of prepared foods from Støvring to Boxmeer.

Marel maintains a global price list to administrate the sales prices in its product portfolio. In 2022, we saw high inflation for raw materials, with the cost prices increasing significantly during the first half of the year. Fortunately, in the second half of the year the price cost stabilized, primarily due to lower stainless steel prices.

To respond to fluctuations in cost, Marel has a continuous price revisions process. We begin by studying the global price list to administrate the sales prices in the product portfolio. As a response to inflation and the resulting effects on operating costs, we executed three price revisions on the global price list, including equipment, software, spare parts and hourly rates (tariffs). The process for price revision is based on the continuous development of macroeconomic trends as well as a quantitative assessment of the market environment.

In addition to price revisions, we tightened our quote validity in 2022. For equipment, the validity was reduced from 120 to 60 days, and for parts, it was reduced from 60 to 30 days.

The already enacted pricing actions and volume upside are expected to filter through until the second quarter of 2023, with variations depending on the time lag by business mix. For aftermarket, the time lag is around six to eight weeks, compared to three to six months for standard equipment and nine to 12 months for larger projects. This should support improved price/cost coverage and margin expansion toward our 2023 financial targets.

In the third quarter of 2022, Marel invested in a new production facility adjacent to its current operations in Nitra, Slovakia. We made this strategically important investment to improve production efficiency and cost-effectiveness.

The 18,700 m2 facility is named Nitra West and officially opened in November. We have already transferred warehouse operations into the new building. Equipment assembly commenced in January 2023 following the completion of minor interior building projects, and the building will be in full use in the first half of 2023.

Marel Nitra

We are continuously evolving our Global Logistics operations. In 2022, we initiated an important project to establish the Global Logistics organization at all Marel sites, except for Brazil and Lichtenvoorde, the Netherlands where we expect to roll out the project in 2023.

We also conducted and planned multiple tender activities, reviewing bids from suppliers offering services across different transport modes. The EU Road tender took place in 2022 and will be fully implemented in 2023.

In addition to establishing the Global Logistics organization, we made sure to implement best practices. These include the secure utilization of frame agreements and carriers we selected from the tender processes.

The Global Logistics organization spanning all Marel sites operates under guidelines that promote scalability, process alignment and knowledge sharing to ensure an efficient and consistent way of working.

We continuously strive to make working environments even safer for our employees. In 2022, we made incredible progress toward our target of zero harm, making this goal more tangible and attainable for all Marel sites.

Through proactive and preventative safety measures, we were able to decrease recordable incidents by 25% and increase hazards reported by 28% during the year. This was largely due to the constant focus and leadership of our managers, who regularly conducted ‘safety walks,’ gathered feedback from employees and acted promptly on any reported hazards.

We use our in-house Track concern management tool to record incidents and follow up on the root causes. In addition, we share lessons learned from incidents with all our colleagues in Global Supply Chain, with our operation directors leading calls twice a month to discuss safety concerns and share their insights.

These ongoing efforts have paid off, as two of Marel’s key sites, Nitra in Slovakia and Guaporé in Brazil, had zero recordable incidents throughout the year. We are very proud of this achievement and consider it a testament to our commitment to health, safety and the environment (HSE).