At Dana Lim, the focus is on the customers’ needs and a desire for growth. Today, ABC is used as a key management tool that ensures satisfied customers and an efficient supply chain. In nine months, satisfaction in the boardroom has grown in line with the soaring service level, while at the same time the production planning has calmed.
Lars Christensen came to Dana Lim in 2014 from a position as sales director at Hempel A/S and with 20+ years of experience of international sales and marketing. He soon found that if Dana Lim was to achieve the company’s 2020 goals of being in the top 3 on all markets, growing from DKK 300 to 500 million and increasing the EBIT margin to 6%, it was necessary to improve coherence across the entire value chain – from sales to warehousing.
Space problems initiated the process
“Our major bottleneck was a crowded warehouse with too many items in too few square metres. This presented so many challenges, was time consuming and demanded focus.
We started out with a space problem, but it soon became clear to us that we wanted a more efficient value chain.
We wanted to raise our service level and generate better business results. So we implemented the ABC method in our top management level,” explains Lars Christensen.
Supply Chain is the key to growth
“In our industry, there is no significant product differentiation, which means that efficient supply chain management is a very important competitive parameter.
We must meet our customers’ needs for faster deliveries, higher delivery reliability and competitive prices.
We can only do that with an efficient supply chain where full transparency ensures correct prioritisation,” says Lars Christensen, adding: “Our strategic foundation is built on ABC thinking, and it is particularly important now because we want to grow: We need to have control of the core business before we push the button.”
From 82 to 92% in nine months
Introducing double ABC proved to be a good idea, and with the help of the ABC Analyzer tool Dana Lim achieved the following results:
- Service level increased from 82 to 92%
- There is no “noise” in the value chain and much less “fire-fighting”
- Turnover increased by 7%, corresponding to DKK 20 million.
This was achieved in just nine months.
Clear objectives from the outset
In early 2016, Dana Lim’s management group agreed to adopt the ABC method with the following
focus areas:
- More satisfied customers and additional sales
- Data-based dialogue between sales and supply chain
- Common understanding of priorities across departments
- Establishment of service level measurement
- Better balance between inventory levels and service level
- Ensuring that focus is on the products that generate the majority of turnover and profit
- Reduction of the range
- Create “consistent and credible data” across Dana Lim
Careful preparation
The company established a steering group and terms of reference describing eight focus areas with associated KPIs and monitoring, and in the following months the ABC method was rolled out.
All focus areas have a process owner, and the project involves sales, marketing, customer service, logistics, IT and finance. There are monthly meetings between the steering group and all process owners, and once every quarter the steering group carries out an evaluation of the results and priorities.
ABC is embedded at the top
The ABC project is embedded with CEO Lars Christensen.
“The ABC project is crucial to the growth we want. It requires attention from everyone in the organisation, and that’s why I have to be in charge of it,” he says.
“To us, ABC is a reporting tool for management just like financial reporting,” says Lars Christensen. Dana Lim uses ABC Monitor to track trends and progress, making it easy and quick to see whether the focus areas are having the desired effect. With ABC Monitor, development is measured across four central KPIs: Inventory value, delivery performance, turnover across 12 months and turnover rate.
“One of the great benefits of the systematics of ABC is that we established a common language across silos so that everyone agreed on what “net sales price” is,” says Lars Christensen.
Dana Lim’s ambition is to expand ABC from finished goods to including analyses of raw materials and suppliers in the first half of 2017 and customer segmentation in 2018.
Results in nine months
- Service level has increased from 82 to 92%
- There is no “noise” and far less fire-fighting in production
- Turnover has increased by 7%
- Proper inventory composition: The inventory value of AA products has increased from DKK 4.6 to 6 million, while
- the inventory value of CC products has dropped.
About Dana Lim
Dana Lim is Scandinavia’s leading glue, grout and filler producer with more than 400 product types, 150 employees, a factory in Køge, 80% own production and land purchased by the factory in Køge for planned expansion. Has subsidiaries in Sweden, Norway, Lithuania and China.
Dana Lim is one of four “Best Practice customers 2017”
Every year, ABC Softwork selects 4 strong Danish companies to share their experiences and best practices at a closed event for ABC customers: ABC Breakfast Club. Read the articles about this year’s three other best practice customers: