Danish Crown - Brochure 2020

A procurement transformation Project partners

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A procurement transformation CPOstrategy visits Denmark to speak to Danish Crown’s Group CPO, Lars Feldskou, regarding the company’s massive procurement transformation WRI T T EN BY

Andr e w Wo o d s

PRODUCED BY

Hey kel O u n i

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P

rocurement transformation represents a dramatic shift in an enterprise’s structure,

operations and bottom line, resulting from the establishment of a new collective mindset, processes and tech. Those tasked with rolling out new procurement strategies require experience, ambition and the ability to motivate and organise large numbers of staff.

Danish Crown AmbA is a food processing company, dealing primarily in the meat processing of pork and beef and through its subsidiaries, as part of Danish Crown Group, it’s Europe's largest pork-processing company and Denmark's largest beef-processing company. Like many traditional and well-established manufacturers, Danish Crown operated in a divisional, siloed structure that saw separate arms of the company working in relative isolation. However, the current demand of business owners, the wider market and the all-important customer focus now require companies like Danish Crown to be fast, agile and centralised.

In 2016, Danish Crown launched a new transformational programme across the Group called the 4WD Strategy (4WDS).

4WDS was established to reconfigure the €9bn company so it could break free from its different divisions, to work as one 4

DANISH CROWN

unified company. An integral part of the strategy involved the transformation of the procurement function.

Lars Feldskou joined Danish Crown as Group CPO in 2017 to help facilitate the 4WDS across procurement. A highly experienced procurement professional who has delivered many transformations at previous companies, Feldskou relished the challenge of delivering a Group-wide strategy. “The old strategy was very much decentralised, while the new strategy is very much based around 5

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www.solina-group.eu

You can’t underestimate the value of a great working relationship. The benefits of two

to success in the market,” says Moens. “We have

companies aligning together on key projects in a

the Pulled Beef. Those concepts have been

harmonious collaboration brings alignment on

launched into the market, and are now front

strategic goals, and nurtures innovation.

runners in retail.”

Solina is a leading designer of customised ingredient

One of the key trends linked to customer demand

solutions for customers operating in the savoury

is that of sustainability, of which an important

food industry, food service and butchery markets

element is strategic sourcing, being vital for

and a key customer in those endeavours is Danish

a modern food company. Therefore, Solina works

Crown, the global meat production group. Excellent

in close partnership with key suppliers to achieve

and trustworthy – the pair enjoy a long-term

full transparency related to the quality of the

relationship which goes back to the early 1930s.

ingredients, and their traceability. “We’ve really

One of Solina’s companies in Denmark (previously

been ahead of the curve with best practice, for

known under the name SFK), had been owned by

example with sustainable pepper. We are always

Danish Crown in the past.

investigating how we can value optimise our

several examples such as the Pulled Pork and

customers’ proposition and so procurement is “Solina is the leading European provider of taste,

a key aspect. How can we be more efficient for

texture and functional solutions for the savoury

them? We are all working in the same direction to

food industry,” Anthony Francheterre, CEO Solina

have healthier or cleaner products, for marinades

Group explains. Anthony Francheterre joined Solina

for example,” says Francheterre.

as CEO in September 2019, having worked at some major food brands, and was soon made aware of

NEXTERA® by Solina – the future generation of

just how intimately the two companies have been

Protein Foods – is a “new” business unit within

working together from day one. “Danish Crown is

Solina that is focused on the development of

one of our key customers because of its size, the

new protein foods. The concepts and creations

quality of the relationship, and the match of the

of NEXTERA cater to vegan, vegetarian and

respective DNA.”

flexitarians, people who simply want to eat less meat while retaining the full pleasure of food.

One of the key values the two companies share is

“It goes without saying that we used all our

a sense of being ‘glocal’. Solina and Danish Crown

know-how to develop with Danish Crown the

operate globally, but are keen to capture the local

first veggie based paté on the Danish market,”

trends and respond to consumer needs in each

says Moens.

market. “So, we’ve got a kind of mirror effect on how we operate. And it means that because we are

To meet these challenges, in a constantly changing

operating in a diverse market, we need to be agile,

environment, Solina and Danish Crown rely on

flexible and innovative.”

one vital aspect of their enduring partnership: trust. “Danish Crown is one of our key customers,”

Innovation is one of the main drivers between the

says Francheterre. “I think it’s a win-win relationship

two companies. Several growth platforms have

because we learn a lot from each other as we

been created completely in line with how they

build on the same platforms for the growth of

work together with customers. Kristel Moens is

both companies. You can’t discuss Solina, without

responsible for Marketing at the Solina Group: “The

discussing one of its most important customers,”

two sides come together in a partnership approach

he says.

working together to achieve innovation and to drive new concepts to market by doing workshops based on new ideas, new trend insights, exciting taste propositions and consumer preferences.

It’s so exciting the way our working together leads

www.solina-group.eu

centralisation and a group perspective

“Formerly, the business units had their

on many key areas,” he explains from

own local setup for procurement,” he

Danish Crown’s offices in Randers. “I

explains. “And so, the first thing we did

must say, I love the challenges of work-

was create a group of existing staff

ing with transformations, development

within it. I'm a very strong believer that

projects and change management.”

things are driven by people and not only

Feldskou’s procurement transformation

by Excel sheets and PowerPoints and

at Danish Crown was initially two-fold.

other systems. We had to get the people

The first element was to establish a

engaged and centralised. I had to create

number of initiatives to create some

a strong management team that under-

bottom-line savings. The second ambi-

stood the journey, the vision, while also

tion was to build up a centralised global

being prepared for a massive amount of

professional procurement department.

change such as the collective mentality,

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DANISH CROWN

“ I now have a good set-up and a mix of people that know the business from the inside, and people that have come in with knowledge from the outside” —

LARS FELDSKOU, GROUP CPO, DANISH CROWN

involving the readiness to live in an envi-

existing staff, some of whom know the

ronment where everything changes week

business from the inside out including

by week and month by month. Some

Annette Jakobsen, Henrik Skov Madsen,

people live it and love it. Other people

and newcomers Chris Hoffmann, Niels

hate it. For me it was important to find

Hedegaard, Ole Mortensen and Adrian

out who could embrace this change and

Fisher. “I now have a good set-up and

the journey and who could not. Setting

a mix of people that know the busi-

the right management team and the right

ness from the inside, and people that

procurement team, was the first thing that

have come in with knowledge from the

we focused on.”

outside, from companies that have been

Danish Crown now has seven main leaders in the procurement management team with a mix of new and

on a similar journey over the years,” he says.

According to Feldskou it was the 9

tangible business opportunities that were

The start of the procurement transfor-

the main drivers behind the new strat-

mation was about creating relationships

egy. “Danish Crown got a new CEO, in

with the businesses, as Feldskou talked

Jais Valeur in 2016, who saw that there

with them about their ambitions and the

was a number of opportunities that could

best strategies to achieve them. “Danish

be harvested in doing things in a differ-

Crown is a big company with nearly

ent way,” he explains. “This was about

25,000 employees and 60-plus facto-

working across the different businesses,

ries all over Europe and Asia also. So, for

some of which were better at it than

me, in the beginning, I was getting out

other business units, but it was never

and getting to know people to find out

really planned or managed in an organ-

what they were doing, as well as their

ised way. He saw that going a bit hori-

challenges, what they were good at, and

zontal instead of going vertical, in our

where they could see possibilities. It was

approach to a lot of things, could benefit

very much about creating some fast and

the company.”

significant results that we could use in 11

our communications to prove that work-

at the heart of the Group, and Boston

ing together across the company was a

Consulting Group (BCG) came in to

greater benefit to working in silos. It was

recommend points of action. “We invited

very much about convincing people that

BCG to come in early 2019 and make a

this new setup was right with benefits

review about the level we had achieved

within it, so they could play an active part

to that point and asked them to come

to get something out of it. We established

with their recommendations about how

a very clear structure and organisational

we should take it to the next phase. They

plan, including a new reporting set-up.

(BCG) went around and talked with a

We outlined some very clear targets and

lot of people both in the business unit

KPIs.�

and the group setup and came up with

One of the key parts of the procure-

a model which introduced business unit

ment strategy involved the establish-

procurement partners, that represents

ment of a new operating model that

group procurement inside the business

would place the procurement function

units. The partners have a role in the

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DANISH CROWN

“ It’s vital to have the support from the top management; support that is very visceral, very communicated, and fundamental to all layers of the company” —

LARS FELDSKOU, GROUP CPO, DANISH CROWN

challenge. “Danish Crown is a huge company and has a long, long history of being decentralised. Then, suddenly, you’re working on group targets, group mandates, group perspectives, which are a huge challenge. This is a 180-degree turnaround. There was also a massive job in terms of standardising master data across all the different levels of the company from business unit to business unit.” The technological side to the transformation addressed Danish Crown’s procurement tools. For many years, Danish Crown had been running SAP across the different business units and individual set-ups. However, JAGGAER

daily life in each of the business units,

was introduced as a procurement

but also play a part in our procurement

tool for source-to-contract which also

strategy and journey. They became

addressed e-procurement in the busi-

ambassadorial and acted as a bridge

ness units, acting as an umbrella across

between us and the business units to

the business.

ensure the projects and the strategy we

“From a procurement point of view, we

execute is also implemented out in the

can do a lot of stuff, having implemented

business units. It was a good, strategic

that system. This will give us transpar-

move to get an external company like

ency and knowledge about our daily

Boston Consulting Group to come in and

business. Right now, we’re creating the

do that for us because they were neutral

baseline or the foundation for taking the

and looking from the outside in.”

journey into a lot of other procurement

Feldskou has delivered a number of

activities and areas. We still have a way

transformations in his time, but even

to go to establish, for instance, transpar-

accounting for his experience, this shift

ency on our master data. In certain cate-

at Danish Crown represented a massive

gories, we're very good, because in the 13

categories like ingredients and packag-

at challenging each other. I think that's

ing materials that goes directly into our

where we start to see things happen-

end products, we have a lot of knowl-

ing. This team are good at challenges

edge; we have item numbers, we have

and supporting each other, and they're

a specification and stuff like this. But in

good at moving each other into new

other areas like our logistics, our indirect,

levels. And by having such diversity in

our CapEx spare parts and stuff like this,

the team, we create a genuine speed

we don't have the transparency and we

that moves this transformation forwards,

really need to move as fast in those categories as we can. We're going live here in the second half of 2020 with our ePro as we call it, and that will take us into the next level with precise, described procedures and processes and even further transparency. We can then control our spend and eliminate a lot of the tail spend and maverick spending that we have today. That will probably take a couple of years before we are through with that journey.”

Niels Hedegaard is Senior Director Group Procurement, Business Development: “One of our levers for getting more in control with our procurement activities across the company is through implementing systems that will help us. So, we have invested in a piece of software called JAGGAER, consisting of two modules. We launched the “Source to contract” module on the 13th of December, so that all of our category managers can operate in our six-step 14

DANISH CROWN

Lars Feldskou Group CPO, Senior Vice President, Danish Crown For the past 20 years Lars has worked on establishing, optimising and restructuring and/or building up/downsizing organisations such as Ecco Shoes, BB Electronics, Vestas and MHI Vestas Offshore. His work has included major change management transformations with massive costout and source-to-pay-transformation programs within procurement, logistics and supply chain management areas.

Lars also has extensive experience in the management of big organisations including team establishing/team-building exercises.

Lars has been Group CPO, Senior Vice President at Danish Crown since 2017.

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sourcing model, through that tool. The other part is the “E-procurement” tool.

That is more or less an eBay platform for all of our employees across our company. Whenever they want to buy anything from a pencil, to a spare part, a piece of machinery, or a marketing event, or whatever they want to buy, then they will actually go into this platform instead of just picking up their phone and doing maverick buying. Getting this tool implemented will be a great, great lever for us to be even more in control around our procurement activities. This will make us even better in securing the suppliers with whom we have contracts because their catalogues are available in the JAGGAER system. So, it's easy peasy for our colleagues to find whatever they need from the suppliers that are already approved.”

Feldskou is particularly enthused by his team, tasked with driving the massive operational changes across Danish Crown. Feldskou is determined to underline the importance of the team and constantly underlines the importance of a positive and talented workplace. “We have a very good mix of people that are thinking very pragmatic and operational, and others who are thinking very strategically, and together they're good 16

DANISH CROWN

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because there's always one in the team

easy to communicate. It's easy to make

that takes the next step and gets the

decisions.”

rest of them to follow. I think we've come

We've detailed a lot about the trans-

quite far in terms of the way we operate,

formation program at Danish Crown, but

communicate and the way we work in a

what advice would Feldskou impart to a

standardised, organised way. I think we

CEO or CTO or CPO contemplating such

are recognised for that, and we already

a large transformation? “It’s vital to have

reached the targets in 2019 that were set

the support from the top management;

for 2021. But that’s just the beginning of

support that is very visceral, very commu-

the journey and has created the path for

nicated, and fundamental to all layers of

the years to come. We are at a level now

the company. One of the strongest things

where we are very organised. We have

I have at Danish Crown, is a very precise

a structure and a governance around

strategy that runs the overall company.

what we do, which is working, and is

I have massive support from our CEO,

making a lot of things transparent. It's

COO and CFO in the journey, and that's 19

important. I have strong support from the

Krakow within procurement. And last, but

management teams out in the business

not least, we also are heading up training

units, and I don't think we would have

and education of people within the group

been able to have the speed we have

procurement environments.

without that support. That's the main

The really big change Lars is leading, is

driver besides creating the right team to

one of the key strategic initiatives within

actually execute it. So, ensure you have

our organising, namely, to establish a

the right capabilities, the right skills, the

group procurement organisation and

right people with the right mentality. It is

thereby delivering on the strategic ambi-

the people that drive it. In daily life, it's

tions within procurement. Previously all

the people that engage with the relevant

procurement activities were handled in

stakeholders. For me, the most important

the different business units, and thereby

aspect of taking on a transformation like

the opportunities with leveraging the size

this is to ensure that you have support

of our company were simply not happen-

from the top, and that you set the right

ing. As part of defining the 4 Wheel

team in place from day one. Then you

Drive Strategy, we expect to improve on

can overcome a lot, and ensure that you have movement, and that you're moving forward, fast.�

Niels Hedegaard, Senior Director Group Procurement, Business Development, Danish Crown “Within the business development area, we have our strategic development that we are leading, we have our entire strategic governance structure, we have the controlling and reporting and KPI follow-up. We are also developing processes and systems in close cooperation with our colleagues in the Procurement Centre Of Excellence in 20

DANISH CROWN

“Right now, we’re creating the baseline or the foundation for taking the journey into a lot of other procurement activities and areas” —

LARS FELDSKOU, GROUP CPO, DANISH CROWN

the company's performance to start to join forces on procurement across the business. And that was why the group procurement organisation was established and Lars was hired to take the lead on that journey.”

Annette Jakobsen, Director of Procurement, Danish Crown “The main changes we are seeing now in the way we're doing procurement is how we involve the business and work together with the business. Previously, it was very much doing the procurement at a desk and only looking at what we buy today: ‘Let us go and find the same, just at a lower price.’ Today, we look into the whole value chain and look for optimisations. In order to do that, we need to work really close to the business. We also have the new operating model that ensures that we actually do work with each business unit. Each business unit has a business unit procurement partner with one leg in procurement and one in the business unit. They report into the business unit, but work closely together with us.

This brings us much closer to the business unit.”

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DANISH CROWN

Henrick Skov Madsen, Procurement Director, Danish Crown “The benefit of making it into one big organisation, where we pool the quantity is we’re much, much stronger together, in that we can start optimising. Now we can work across Europe on finding ways to focus on the best suppliers. Because if you want to be a good European supplier, it requires a different set of skills to being a good Swedish, Danish or Polish supplier. From an organisational point of view, we need to make sure we get the benefits out of the size we have when we're talking with suppliers.

We have opportunities that we simply didn't have before when we were operating as eight different units at the time.

When we put all the business units together, we can see the value of what it makes for us, but also what we can offer the supplier market, and help them with a totally different agenda than we have seen before.”

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www.danishcrown.com

www.danishcrown.com