In Part 1 of our interview series with CTA GmbH, we talk to Managing Director Hans-Dieter Worch about digitization in SMEs, what challenges it brings, and how SMEs can overcome these challenges to benefit from digitization.
MAX FISCHER: Mr. Worch, tell us a bit about your background.
HANS-DIETER WORCH: I have a technical background, studied mechanical engineering, and then worked in the packaging industry. There I got into sales and worked in the cosmetics and pharmaceutical industries for many years. Now I have been with CTA for about a year as Managing Director. I therefore have both a technical background and a lot of experience in sales and marketing.
MAX FISCHER: How do you assess the current situation of CTA, also in relation to the current COVID-19 pandemic?
HANS-DIETER WORCH: The current situation for CTA is excellent despite the pandemic. In the first lockdown, in April and May 2020, we noticed a clear drop in orders of around 25% and naturally felt this in our capacity utilization. However, we then changed over very quickly and started filling disinfectants. That is what characterizes us at CTA, to be flexible in difficult times. When everyone started to produce disinfectants, our core business picked up again. Since Q4 2020, we are back at pro-COVID levels.
MAX FISCHER: What is currently the biggest challenge for CTA?
HANS-DIETER WORCH: Our biggest challenge now is the procurement of raw materials and packaging materials. This is mainly due to the pandemic, but also due to the blockade in the Suez Canal. That means that we currently have to process many orders that we would otherwise have handled in one production run in several steps, because we simply don’t have the materials. This has a major impact on costs. Looking back, it pays off that we invested in IT projects even before Corona and optimized our processes. This has made us much more flexible. Without this flexibility, it would have been difficult to master this situation.
MAX FISCHER: Talking of digitization – how do you approach this topic at CTA?
HANS-DIETER WORCH: At CTA, we look at the topic of digitization from the process side. Many companies digitize simply to digitize. We analyze our internal processes and see whether there is potential for optimization – for example, whether we can reduce complexity for us and our customers or increase value creation for our customers. The first step is to look at the processes themselves. Digitization is more of a means to an end. Today, CTA collects real-time data across the entire value chain, from logistics to production to shipping. This leads to a completely new level of transparency. This transparency is in turn the prerequisite for continuously improving our processes. In this way, we can immediately identify the causes of our problems and respond accordingly in a timely manner – for example, by making adjustments in sales, purchasing or production.
MAX FISCHER: What are some examples of digitization projects that you have been able to successfully implement at CTA?
HANS-DIETER WORCH: We have completed various projects. One truly relevant example is digital order processing. In concrete terms, this means that the workers at the machines receive their orders in real time on tablets instead of on paper. Potential changes in the order process are communicated directly to the workers. The workers, in turn, can use their tablets to request the material they need or have finished goods picked up. This has made us much more flexible in production. As a result, we can incorporate changes in orders into production much more quickly. This flexibility enables us to successfully master the challenges of the current era, avoid errors, and sustainably increase quality in production.
Hans-Dieter Worch joined CTA GmbH as CEO and Managing Director in April 2020.
MAX FISCHER: In your view, what are the biggest obstacles for midmarket companies in terms of digitization?
HANS-DIETER WORCH: One obstacle is data protection. As a managing director, I do not want to make a mistake in this area. But as a medium-sized company, you cannot afford your own data protection experts and must rely on expensive consultancies. In addition, it is difficult for medium-sized companies to attract the appropriate talent and to have enough staff with the needed know-how. Of course, we are also competing with companies like Daimler or BMW, which can offer a lot to graduates. As a medium-sized company, you have to invest a lot to be attractive to these people.
MAX FISCHER: How do you meet these challenges?
HANS-DIETER WORCH: My predecessor invested a lot in promoting talent internally and focused on a broad range of training in the IT sector. We are already benefiting from this now, as we train young people and familiarize them with CTA at an early stage. The trainees also benefit from CTA, as they can take on responsibility very quickly with us. That also makes us somewhat proud as a company. In addition, there is also external support from companies such as Actyx, which help us to meet these challenges.
MAX FISCHER: What advice would you give to other CEOs of medium-sized companies to help them drive digitization forward in their companies?
HANS-DIETER WORCH: I think the most important point is not to do digitization because you want to do digitization. My tip to other SMEs is to look at the processes and then decide where it hurts in the organization. From these points, you then must pick out individual, smaller projects, tackle them and check whether there are opportunities for optimization here.
The question of whether it is helpful to digitize these processes for optimization should only be asked in the second step. If I make a hasty decision, I will not feel any quick added value. In our projects, we have always felt the first successes at various levels very quickly. The introduction of such systems pays off very quickly if you address a clear problem. This also has the advantage that you can quickly justify further investments in IT projects. In this way, we have always been able to recoup and amortize the costs for our digitization solutions very quickly.
Another important point is communication and transparency within the company. This is essential for a good change process. Involving the workforce at an early stage helps to allay fears and give them the confidence they need to embrace these changes and recognize the added value for us together, as employers but also as employees.
MAX FISCHER: Thank you very much for your insights, Mr. Worch! In the next interview, we would ask your IT manager, Mr. Brenner, to join us. I look forward to more exciting stories!
HANS-DIETER WORCH: Thank you very much for the interesting questions! I look forward to the next interview.