In the ever-evolving landscape of energy transition, one Italian company, FRIEM, stands out as a prime example of how embracing Lean Management principles can pave the way for sustainable growth and operational excellence.
Founded in 1950 by the grandfather of the current CEO, Lorenzo Carnelli, FRIEM has been designing and manufacturing power converters for the electrolysis industry from its inception. These specialized power converters are essential for various industrial processes, including metal refining and chemical production.
Over the decades, FRIEM‘s core business has been supplying these robust power converters to major players in the chemical industry, such as De Nora. This long-standing collaboration allowed FRIEM to cement its position as one of the four major players in this niche market, excluding China.
However, the company‘s ambitions have evolved, with a strategic decision in 2017 to embrace the energy transition as an additional goal. This pivotal moment marked a shift in FRIEM‘s approach, transitioning to a strategic mindset, focused on harnessing the potential of emerging markets.
We saw this great opportunity in the green hydrogen industry, but on the other side, we knew that we had to be ready prepared to be part of this business.
LORENZO CARNELLI CEO, FRIEM SPA
The Green Hydrogen Focus
Recognizing the immense potential of green hydrogen, FRIEM made a calculated move to concentrate its efforts on this burgeoning market. The decision was fueled by the company‘s existing expertise in power converters for electrolysis, which is a crucial process in hydrogen production from renewable energy sources.
“Green hydrogen is produced by electrolysis, and FRIEM has been doing power converters for electrolysis since the 1950s,” explains Lorenzo Carnelli. “So, from a technology and product point of view, we were already there.”
To solidify its position in the green hydrogen market, FRIEM invested in strategic acquisitions of several startups in the battery energy storage and power-to-gas sectors. These targeted moves allowed the company to expand its technological capabilities and position itself as a key player in the energy transition.
Embarking on a Lean Transformation
As FRIEM prepared to scale up its operations to meet the growing demand for green hydrogen solutions, the company recognized the need for a comprehensive transformation. This realization led them to Staufen Italia.
“The trigger was exactly driven by this new strategic decision,” says Carnelli. “We saw this great opportunity, but on the other side, we knew that we had to be ready prepared to be part of this business.”
Staufen Italia analysis provided valuable insights, identifying areas for improvement and proposing a step-by-step approach tailored to FRIEM‘s specific needs. The lean project touched upon five critical areas: order fulfillment, production, material management, procurement and technical department. “The initial assessment allowed us to identify the key areas where FRIEM could optimize their operations to prepare for scaling up their business,” explains Staufen Italia CEO, Giancarlo Oriani. “By systematically implementing lean practices across production, procurement, project management and other critical functions, we could establish clear objectives and measure tangible progress. FRIEM‘s openness to change allowed us to instill a continuous improvement mindset throughout the organization.”
By systematically implementing lean practices across production, procurement, project management and other critical functions, we could establish clear objectives and measure tangible progress.
GIANCARLO ORIANI CEO, STAUFEN.ITALIA
Measurable Results and Cultural Shift
One of the most significant achievements of the lean project was the establishment of Key Performance Indicators (KPIs) across various functions. By measuring and sharing these metrics, FRIEM could tangibly track its progress and identify areas for further optimization.
The results: FRIEM‘s revenues grew in percentage more than the costs, while on-time delivery improved by a remarkable 30 %. Moreover, the company experienced a positive shift in mindset among its employees, fostering a culture of continuous improvement.
“The main target is to go and really work on the people to let them understand that change and improvements are not only possible, but necessary for the company to behave in a good way,” Carnelli emphasizes.
Alongside the operational improvements, FRIEM also experienced growth in its workforce, hiring approximately 20 % more employees over the past three years. This strategic expansion of human resources was essential to support the company‘s ambitious growth plans while maintaining a focus on integrating and developing its talents.
The Journey Continues
While the lean project has already yielded substantial benefits, FRIEM recognizes that the journey towards operational excellence is ongoing. The company is now focusing on modularization, a strategic approach to product design that will facilitate scalability and sustainable growth.
“Modularization is a way in which we design the product and the systems in a different way, but this will have a huge impact on all the activities inside the company,” explains Carnelli.
This focus on modularization is a critical step in FRIEM‘s preparation for scaling up its operations in the next one to two years. By streamlining the design and production processes, the company aims to efficiently meet the anticipated surge in demand for its green hydrogen solutions.
About FRIEM
From its roots manufacturing power converters for industrial electrolysis in 1950, FRIEM has evolved into a driving force in the green hydrogen sector. With over 70 years of experience and a recent strategic shift, the company is leveraging its core competencies to deliver cutting-edge power conversion technology that enables large-scale green hydrogen projects worldwide. FRIEM‘s commitment to operational excellence through lean principles allows it to meet the growing demands of the energy transition reliably and sustainably.
Looking Ahead: Powering the Energy Transition
As FRIEM continues its lean transformation, the company remains steadfast in its commitment and is actively strengthening its presence and market development in strategic regions. One example is North America, where it established a subsidiary in 2019. In 2022 it acquired the US company DynAmp, a leader in DC current measurement systems. This strategic move not only expands FRIEM‘s geographical reach, but also enhances its technological capabilities to better serve the growing demand for electrolysis solutions.
FRIEM has not only optimized its operations, but also cultivated a mindset of operational excellence – a mindset that will undoubtedly boost the company towards its ambitious goals in the next years.
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