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04/16/2015

Findus Sweden AB Takes Back Control

Findus Sweden AB (www.findus.com) is one of the country’s leading food companies with a large selection of frozen food and grocery products in its range, including products for not only supermarkets but also the restaurant and catering industries. Quality, a love of food and passion are all key drivers for the organization.

The company operates in four channels: retail, food service, industrial (mainly pea production) and international. The international channel exports Findus products to various markets including Australia, South Africa, Canada and Malta, among others.

With a supply chain that includes 800 finished goods items, 2,000 raw materials SKUs, four factories in Sweden, 23 production lines, a distribution center, replenishment to Finland, France and Norway, and 15 major customers (and hundreds of smaller ones) — inventory control is no easy feat.

Reponsible for Findus’ entire supply chain, Erik Brtemark, Supply Chain director, saw an opportunity to cut costs and make the inventory optimization process more systematic.

“The main driver was that the Findus owners (private equity investors) claimed that we were holding too much in stock. The board wanted to free up working capital in order to make new investments,” explains Brtemark.

The company chose to implement ToolsGroup’s SO99+ software (www.toolsgroup.com) with its IT partner, Optilon (www.optilonsolutions.com). Both had proven track records in optimizing inventory for consumer goods companies and came with strong references.

In order to get investor buy-in, Brtemark and his team first started with a “proof of concept” pilot. The timeline for the project included:
  • Fall 2012: Engaged in a project “pre-study’ which included developing and approving the business case and securing the funding
  • January 2013: Started “proof of concept” pilot with ToolsGroup’s Swedish partner Optilon who developed a full-scale model for Findus (800 SKUs; 8 finished goods and 2,000 raw material SKUs)
  • May 2013: PoC went live
  • May through December 2013: Optilon continued building on the model, developing the infrastructure as well as testing for Findus
  • January 2014: Optilon implements ToolsGroup’s SO99+ on premise version at Findus

“With the benefit of reliable, up-to-date data, we treat inventory in a totally different and more structured way. The team finds it much more satisfying, and even fun, to work with this data because they know it’s going to be used somewhere, and they get immediate feedback,” says Brtemark.

In addition Brtemark notes that because the team members no longer had to spend all their time manually crunching numbers, they were freed up to engage in more valuable work.

“The greatest benefit from this project is that we managed to completely change our agenda from one of growing working capital to improving service levels. This is because one didn’t have to come at the expense of the other,” explains Brtemark.

Team morale has improved, not because Findus reached its original goal of reducing inventory, but because process service levels have improved quite dramatically, especially in the retail channel. By using the solution for retail, the company went from service levels of 96 percent in 2012 to achieving its target level of 98 percent in the beginning of 2014.

Brtemark adds, “At the same time, we grew our working capital for the finished goods by a little bit more than planned — SKR 12 to 13 million. So we’ve exceeded our goal to decrease inventory by 10 percent, while improving our service by more than 2 percent.”

Brtemark and his team offer some best practices for other companies that are tackling inventory optimization:
  1. Optimize your inventory around one number, and it should be a customer service level target. Historically, we always had either low inventory or high service — never both at the same time. SO99+ provides the visibility needed to challenge the old ways of working in order to improve service and reduce inventory costs.
  2. It can be hard to get planners to change the way they work, so I would recommend that you really involve the planners in the change process and continue to get feedback so they feel they are contributing.
  3. Change needs to be made in small steps so that there is gradual impact on the supply chain and people gain trust in the process over time.
In the future, Brtemark and his team also plan to roll out the software in Finland and Norway.

“When it comes to fine-tuning data, we’re currently developing our master data tool so planners can see different views of the S099+ data visually on the screen. In supply chain, the more you can visualize the data, the faster you can learn from it and act on it,” he closes