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When five separate companies were fused together to form Swedish Lantmnnen Maskin AB the new company was faced with the task of improving profitability through better use of logistics and greater service awareness. Today the company moves over 500,000 order lines per year at a profit.
Environmentally friendly farming
Few people outside the agricultural industry have heard of Svenska Lantmnnen, but it is one of the largest companies in Sweden with an annual turnover of 30 billion SEK. Lantmnnen is a farming co-operative with over 50,000 co-owners and 12,000 employees. Their motto is to enable everyone to enjoy healthy foods grown in the most healthy way. While working mainly in the Scandinavian market, Lantmnnen successfully exports its products throughout the world to countries including eastern Europe, USA, Korea, China and Japan.
Lantmnnen is made up of nine business areas that produce, market and sell a variety of goods from seeds to energy and heavy plant via Lantmnnen Maskin AB.
Five previous companies, one Lantmnnen Maskin AB
Lantmnnen maskin AB is the result of a recent fusion of 5 separate companies, all selling and servicing agricultural plant and machinery. Our work changed dramatically overnight, says Klas Gustafsson, Logistics Manager at Lantmnnen Maskin AB. We moved from being a small company employing 100 people to part of a much larger group employing almost 850 people with annual sales of up to 3.5 billion SEK. All of a sudden we had a dilemma. We had to take into account workflows and routines of the other companies and streamline our business to make sure we remained profitable.
Today, Lantmnnen Maskin serves over 190 resellers throughout Scandinavia. It has 45,000 articles in stock and manages more than 500,000 incoming and outgoing order lines each year from its 5000 m2 DC in Malm.
Service is the key
You have to admire Lantmnnen Maskins ambition. Only the best is good enough for them and they are doing all they can to stay in pole position in the Scandinavian market. Our goal is quite simple, says Klas, We want to be known as the best and most cost-effective distributor on the Scandinavian market. The easiest way for us to reach this is by achieving a level of service that none of our competitors can match. Quite simply, by having the best functioning logistics system and personnel who are acutely aware that 68% of customers dont change suppliers because of price, they do so because of the treatment and service they receive, we can keep ahead of our competitors.
Klas knows that the companys route to greater profitability comes from managing high demands on product availability, short but secure lead times, keeping a large product range that includes several slow movers and a large number of transactions that may require small deliveries. The company guaranties overnight delivery throughout Scandinavia and keeps a constant check of availability through online communication with both manufacturers and retailers. Before we were simply a wholesaler. Now we have the total responsibility of moving and managing goods throughout Scandinavia. Comments Klas.
One DC for Scandinavia
In order to create better value for its customers and by so doing guarantee long-term business survival, Lantmnnen Maskin built a DC in Malm. Modern farming places special demands on Logistics. Says Klas. Take combine harvesters for instance. While the total sales market has decreased, demands on service levels have drastically increased.
Harvesting lasts for about 30 days a year and with no backup machines, the logistics of getting parts to harvesters and getting them installed just has to work. We built our DC in Malm as it was well situated to deliver goods to anywhere in Scandinavia, from Troms in the northern Artic to south Denmark.
For Lantmnnen Maskin, the pressure to perform is most acute during the summer when the company stays open 82 hours a week. They receive goods in the afternoon and ensure shipment to retailers by the following morning. This is our competitive edge and we intend on keeping it and improving on it. Insists Klas.
Vendor managed replenishment.
Lantmmnnen Maskin made three large changes to drastically improve logistics flows:
By using a combination of well-developed air and road transport, Lantmnnen can guarantee exact delivery times throughout the region. This gives retailers real security.
Another factor in increasing security will be the introduction of a web-based vendor management tool throughout the company. We achieve vendor managed replenishment by integrating the complete supply chain via a web interface to our Movex ERP system. Says Klas. This will remove all barriers to transparency. By implementing a common system throughout our organization that links everyone we get instant updates on demand and can supply these accordingly. This will go a long way to minimizing links in the chain.
WLAN and Trafficom rugged computers from Consafe Logistics
One of the biggest challenges that Lantmnnen Maskin faced was how to improve the flow of goods in the warehouse. In our case, Paretos rule is more on a 90 10 basis rather than 80-20. Comments Klas. We needed to totally rethink the way we worked inside the warehouse. We found Consafe Logistics and their solutions to be a great help here.
Lantmnnnen Maskin encountered several problems in the warehouse. Capital tie up was high and the work of controlling the warehouse to serve customers was not optimal. They contacted Consafe Logistics to help them improve warehouse flows.
Consafe Logistics helped us with three things. Firstly, they suggested better picking routines to shorten lead times and make picking work more effective. Secondly they implemented a WLAN system that communicated directly with the WMS system. Thirdly they installed rugged Trafficom computers, both on our trucks and as handheld units. Says Klas.
We use Trafficom Shark and truck mounted Trafficom Wave computers , together with handheld scanners connected via WLAN. This gives us total transparency and enables customers and pickers alike to get the right information at the right time. Klas was extremely pleased with how routines in the warehouse have improved. Previously, one man would pick one order. This was extremely inefficient and trucks drove around without goods. Implementing WLAN and logistics equipment has been an enormous timesaving exercise. One man can pick between 5 to 10 orders at a time minimizing truck driving and confirm the pick at each station via Trafficom. Say Klas. He went on to describe the savings Traffficom made in the goods-in process. We really gain in terms of time and quality here. We can perform all operations on site and avoid all unnecessary updating after the event. Trafficom also helps us with helps us with resource planning, crucial to our summer business.
Consafe Logistics our first choice
When asked why he chose Consafe logistics as a partner Klas was very enthusiastic, We made a thorough check of the market before deciding on a supplier and found that Consafe Logistics made a very good impression. Their knowledge was wide and their products were well suited to our requirements. Another important comfort factor for us was knowing that a company of that size would always be around to give us all the support we need. In retrospect Im glad to say that we got excellent value for our money.