3 min read
Ready for Growth
May 2010
When economic conditions turn, and order intake increases, it is crucial to be prepared. In recent years, industries and businesses have scaled back and focused on costs. While cost control remains a priority, there is now an increasing focus on optimising logistics to adjust to a forthcoming period of growth. This feature article takes a closer look at logistics as a lever for growth.
Savings through Restructuring
Growth spurts and temporary fixes are often seen in Danish companies' logistics functions, but short-term solutions designed to address urgent challenges can become permanent obstacles to long-term growth. Typically, the warehouse and logistics functions are not the core of the problem, but rather the lack of focus on how logistics can support the business. Even large companies whose operations rely on handling and transporting goods often place less emphasis on logistics compared to areas such as sales, finance, and other management disciplines. This occurs despite the potential for significant financial benefits in logistics. One reason may be that logistics and supply chain management are rarely represented at the professional level in the typical Danish executive team, which risks hindering growth potential.
Analysis Work as a Prerequisite
‘One of the most important aspects for a logistics project to get off to a good start is conducting thorough analysis at the outset. However, we find that companies often opt to save on the analysis phase in favour of practical solutions.’
Several of the articles we've chosen to feature in this edition of Langebæk;log illustrate how companies have chosen to take the opposite approach, yielding remarkable results. Another example is Actebis Computer Nordic, one of Denmark’s and the Nordic region’s largest distributors of IT equipment.
The company is entirely dependent on a streamlined logistics system, which has increasingly become a key factor in growth and competitiveness. As a result, Actebis has decided to move away from temporary fixes:
‘Our growth so far has resulted in one growth spurt after another. Our warehouses have continuously expanded, but the consequence has been higher costs per picked order line. By addressing our growth challenges on the logistics side, we will be able to significantly reduce the cost per handled order by a double-digit percentage’, says Claus Holbæk, Logistics Manager at Actebis.
His current focus is on the company's Nordic expansion over the next ten years.
Time for comprehensive changes
The financial perspective is so compelling for Actebis, which is solely engaged in distribution, that management fully supports an upcoming and extensive restructuring of the warehouse setup and associated logistics.
‘It is often said that management and logistics functions fail to understand one another. Management typically comes from a background in economics and trade and may not always grasp the role of logistics. At Actebis, our management understands that logistics plays a crucial role in our upcoming growth. This is largely due to the analyses and forecasts we have conducted in collaboration with Langebæk Logistics’, says Claus Holbæk.
Logistics is becoming a focal point in many industries, and even hospitals are beginning to recognise how fundamental changes in logistics can lay the groundwork for new and more efficient operations. A critical factor, regardless of the industry, is ensuring that companies do not fall into the trap of making decisions based on intuition or being swayed by equipment alone.
‘At Actebis, our recommended solutions will generate savings of 10 – 15 million Danish kroner annually. We have clearly outlined and visualised this for the company’s management. This means that the layout of the company's warehouse will not be a shot in the dark, but rather a project based on precise data and real needs related to future growth requirements. It also ensures that Actebis will not pay for unused capacity or, conversely, for a solution that does not meet its needs’, says Martin Schultz, Langebæk Logistics.
This is precisely what has concerned Actebis: ‘This time, we want to do it right from the start, which is why we are seeking professional assistance. I am familiar with our company and could handle an expansion that would meet our needs for the next few years, as we have done several times before. The problem is that we would then find ourselves in a situation with bottlenecks again, while still having high costs’, says Claus Holbæk.
Derivative benefits
In three to five years, when Actebis’ new facility is in place, there will still be room for further efficiencies.
‘It can be said that we will be on par with our industry - maybe even a step ahead technologically. But we will also gain a number of derivative effects. For example, we will be able to manage more suppliers, and we will become more flexible in our order handling. Additionally, we can grow significantly without needing to increase the number of employees, which is a great advantage in a potential upcoming economic boom’.
The value of these derivative effects is not included in Actebis’ calculations but is expected to positively contribute to the company’s ability to grow.
