Rigged for growth
Harmonie Norge AS is an exclusive supplier of premium-quality doors and windows to select building supplies retailers. The company has its head office and central warehouse in Stokke, Norway.
Glenn Jarle Eriksen is the CEO of the company. He joined the company as newly hired logistics manager in the fall of 2015. Together with Marcus Ødegaard, who owns the company, they developed a strategy to rig the company for future growth.
The challenge was however, most of the work processes at the warehouse, as well as planning for procurement, purchasing and warehousing processes were manual and labor intensive. With plans for significantly increased turnover, it became absolutely necessary to gain control of capital tied up and delivery capacity. At the same time, the efficiency of manual processes had to be significantly increased. Eriksen saw that the key to success lay first in gaining control of delivery ability while optimizing capital tied up, ie full control of purchasing and inventory. Together with Ødegaard he saw that this could trigger considerable potential and later pave the way for – and even pay for – a WMS project.
In the spring of 2016, an agreement was signed with Inventory Investment AS to implement the cloud-based Supply Chain Planning / purchasing system from Blue Ridge. The solution is an expert system that continuously receives data from the company’s ERP system, Multicto.
When we first took on a role as an exclusive, up-market supplier of high-quality windows and doors to our customers, it was very important for us to achieve extremely good availability. At the same time, we were completely dependent on keeping capital consumption to a minimum so that our working capital could be plowed into further growth and not into unnecessary stock building, ”says Eriksen. “We were also very conscious that we couldn’t afford to continue to spend a lot of time on manual work processes, so the tool we chose had to allow us to grow with radically less resource spend as well.”
Achieving business-critical goals
Eriksen, Ødegaard and Rosmo set up a business case in which key effects were modeled for the coming years. Conditions such as improvements in product availability, inventory reduction, reduced resource use and the effect of more profitable procurement were key parameters.
“It’s astonishing to see the extent to which the business case has come to realization over these years,” says Eriksen. “We have through these years seen that all the desired business effects have been achieved by using the Blue Ridge solutions. We have an availability of our products which is extremely good, it now averages 98.5 % – 99.5 % for the entire range. In addition, we are 33 % lower in stock than we would have been at today if we had continued with the same turnover as before we started using the Blue Ridge solutions and following the recommondations from Inventory Investment. During a period of very strong growth, this has made available at least NOK 15 million in capital, which has proved absolutely crucial to our success. This financial freedom has enabled us to have an even wider and more complete range and thus further supported our strategy ».
A proven process
Advanced Supply Chain Planning and Buying solutions should not be complicated to learn. That’s why Inventory Investment uses a profitable buying approach called the 7 steps of buying. It is simply about:
- Demand Forecasting: We let the system find out what customers normally will buy in the future
- Lead Time Forecasting: Although the supplier states a lead time, it is not always true in real life. Let’s capture the expected lead time and – variation so that the system can take that into account in its calculations of safety stock, supply plans and order calculations.
- Service Level Optimization: Let the system help set sensible service level goals that match your priorities and minimize costs.
- Ordering Strategy: Take into account all logistical and commercial conditions so that the system can create optimal orders where financial results are maximized and you get a perfectly balanced inventory.
- Daily orders: Let the Blue Ridge solution determine when an order is due for ordering from a supplier, which items that should be included on the order and ensure that all conditions are met, such as smart container filling or full truck loads.
- Special orders: Move from a focus on small details (the system can handle it for you) to planning unusual needs (campaigns, projects, forward buys) ahead of time.
- Order validation: The system creates a fully optimized order. A quick look at the key points and then the order can be confirmed.
This system has been proven and is in daily use by thousands of buyers worldwide. “Our logistics consist of a multitude of variables, and things often change faster than you can keep up with. This was especially true about the way we worked before Inventory Investment implemented the Blue Ridge solution – I don’t see how we would have handled our business today without this solution. The 7 steps of buying is a very good visualization of an otherwise rather complex field. It made it very easy for us to get to grips with what this was all about and thus get started reap results quickly.”
Buying is a great profession!
The Blue Ridge Supply Chain Planning & Buying solutions that Inventory Investment deliver allow customers to automate many of their processes. This means that once the system has calculated its parameters and set the objectives, it creates a basis for freeing up time – time Inventory Investment is very keen on should be used to further professionalize the buying function, in fact make buying a destination for the employees and as well a resource center for the whole business.
“In one of their Inventory Investment newsletters, it was a bit of a joke that the lazy buyer is the best buyer. They of course wanted us to focus on managing the parameters and then handle the alerts presented by the system. We have taken that quite literally and today we work completely “by the book”. This means that we strictly follow their recommended routine descriptions. The consequence being that the resources we previously spent on buying became redundant – in fact, I myself buy our entire item range! ”, says Eriksen. “The system keeps track of when a supplier is due for ordering. And I know that the quantities proposed both meet demand and maximize our profits ”.
Close cooperation with Inventory Investment
The fact that precious time is freed up and that the buying function can be professionalized is a key point that we work hard for all customers to experience. Therefore, we have designed training programs for our users that will lift them to more powerful and advanced use of the system in addition to working with forecasts and daily purchases. “We have become acquainted with Inventory Investment’s consultants and training program during these years. We have both gone through their Champion programs and taken certifications. But I would also like to emphasize that the consultants are extremely capable and genuinely interested in our business. Through their analyzes we have become aware of things that need to be adjusted and refined, and not least we have gained access to new reports and analyzes that have created additional value. Among other things, we have got a much clearer overview of our supply chain; in fact all the way back to our suppliers, which we can then work even more closely with and thus ensure future deliveries in a much more elegant and automated way ”.
A solution that creates results – right on your bottom line
So then the question is, will Glenn Jarle recommend this to other companies? “I think the integration we got into place with Multicase, our ERP provider, was very good. It works flawlessly. And I know that there are other Multicase users who also definitely would use the solution with great success, so especially Multicase users will most likely be able to go live with this solution quickly. On a general note, I would add that our experience is that Inventory Investment did not oversell the benefit we could achieve, they have to date been more than fulfilled. Any player who wants to commit to a more efficient supply chain, more profitability and strong growth, and not least the professionalization of Supply Chain Planning and buying, should take the time to listen to Inventory Investment. We did so and it has paid off. “