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Total Cost of Ownership

Dairy company reduces costs and downtime

It is essential for a company and its revenue to have efficient procedures and structures. Purchasing constitutes a big part of its expenses and resources. However, it is rarely an area that companies investigate for possible improvements, and often the purchasing patterns are characterised by a high number of suppliers, scattered ordering and a lot of time spent on handling of items and invoices.

Learn more about TCO

When André Kjøller started working at dairy company Mille Food as Supervisor and Technical Purchaser, he saw the range and broadness of suppliers that Mille Food had and the potential to increase discounts.

Having a background as an electrician, André knew Solar and what they could offer and contacted them to discuss the discount levels.

Talking to Martin Lauritsen, Account Manager Industry OEM at Solar, it quickly became apparent, though, that Mille Food had a potential for more: for improving their stock and consolidating suppliers.

Optimising purchasing and stock

In a case like this, Solar looks at the total cost of ownership (TCO), meaning all costs associated with purchasing an item when analysing the entire value chain – related to indirect spend, i.e. all non-product related parts. Martin explains: “We create an overview of the items and suppliers in the company, performing a transparency analysis and shedding a light on the processes and their costs. Presenting the results to the customer, they can see how many transactions, deliveries and invoices they can save by consolidating their purchasing. This is usually quite an eye-opener. Our concept is a package solution that besides the calculations of soft and hard savings, analyses and data enrichment, also consists of a Kanban solution”. Kanban is a controlled inventory solution that includes racks and shelves with boxes containing only the minimum amount of stock necessary on hand at any time. Solar fills up the Kanban stock continuously, based on the calculations and analyses of the company’s needs.

Now, all Mille Food’s stocked items have been analysed and consolidating, and 89 % of them are supplied by Solar, saving Mille a lot of money. Continuous work is being done by Solar in cooperation with André to implement and supply additional items and thus optimising and structuring their supply situation even further.

The cooperation with Solar is outstanding. I get a quick response, and it’s always possible to get competent and efficient support. André Kjøller, Supervisor and Technical Purchaser, Mille Food

Outsourcing the work

“Analysing all suppliers and stock items is a huge task”, André says. “We could do it ourselves, but that would not be feasible in a busy company. When Solar does the work, analysing our stock and suppliers, it frees up a lot of time for us, and we can just concentrate on taking care of our daily business. Our financial department has all in all spent 1 hour’s work on this, extracting numbers, and I can get involved when I’ve got the time for it. Also, the analyses and implementation can be done stepwise and doesn’t need to be a big task all at once”.

André explains that the big advantage for them is that Solar acts as their stock, meaning that Mille doesn’t have a lot of items bound in stock at their sites. Their stock items are always up-to-date with exactly what Mille Food needs, having a great overview and structure and saving a lot of time and money. Furthermore, their production downtime has significantly decreased, as they always have Solar’s contacts and wide product portfolio to cover their needs.

“The cooperation with Solar is outstanding”, states André. “I get a quick response, and it’s always possible to get competent and efficient support. An important part of carrying out a procedure like this is the cooperation with Solar and the trust that we feel. That’s crucial for success. And knowing Solar’s background, their product offerings, expertise and services, we feel confident in this partnership”.

 

About Mille Food

Mille Food A/S is a Danish dairy company, specialized in producing infant formula. The factory is approved by Danish, European and Chinese food authorities and carries an FSSC 22000 certification.

About Solar

Solar is a sourcing and services company within electricity, plumbing, industry, ventilation and climate and energy. Our business focuses on a wide range of products, high availability, unique logistics and value-added services.

TCO: More control and better profitability

At Solar, we not only help you deliver the right products - we can also help you improve your company's business. By focusing on TCO, Total Cost of Ownership, you gain better control while lowering your total costs.