FoodService Danmark

Customer-centricity is important in many industries and companies. However, it is rarely as critical as it is for FoodService Danmark, a supplier in the foodservice industry, where all activities are designed to fit in with customers' business models. But it isn't until you discover that customers are a diverse lot - from cafes, canteens, and Michelin restaurants, to schools, hospitals, and nursing homes, as well as hotels, campsites, and theme parks - that you start to get an idea of how difficult it is to master.

The true difficulty only becomes apparent as Finance Director, Niels Peter Habekost, recounts the background for the decision to invest a nine-digit sum of money in optimising the logistical structure, and as he explains why it is critical for the company's competitiveness and is a cornerstone of the 2020 company strategy.

Focused on customer service levels
He explains: "Customer service levels are everything. Simply put, it is a measure of our ability to deliver the right goods, in the right quantity and quality, at the right time and place. But when customers are as disparate as ours, service levels are complicated in practice, which has implications for our entire supply chain and includes all the companies that make up FoodService Danmark, incl. S-Engros, Catering Engros, HKI Ost, Grøn Fokus, and Kødgrossisten.

"The differences among our customers creates an enormous variation in demand, both in the number of stock items in total and in the volume of each item. We stock more than 15,000 items, including dry goods, refrigerated goods, and frozen goods, which is to say that as far as our warehouse is concerned, our list of requirements is quite long. It is obviously important that it has the right dimensions. Less obvious but absolutely critical is that it has the right layout. We receive and ship goods every hour of every day - except for public holidays - and must be able to process a customer order in less than six hours at any given time. The warehouse layout has to support the complex flows of goods from receivals to restocking, picking and packing."

"In addition, the overall geographic distribution of our customers impacts the decisions we make regarding the location of our warehouses, how large our fleet of trucks must be, and how many miles that fleet needs to drive each day. At the same time, the specific location of our customers may present us with certain distribution challenges, such as delays due to congestion. But the greatest challenge is without a doubt the daily business cycle of each individual customer, which determines when they place their orders and expect delivery. Expected delivery is often particularly important. If we are delayed delivering fresh food to a restaurant, they could lose an entire day’s turnover."

A virtuous unwillingness to compromise
Maintaining the operations necessary to reach the customer service levels that FoodService Danmark have is costly. But as Niels Peter Habekost repeatedly underlines, the customer service level is the most important strategic performance measure by far, and he is adamant that the company will not compromise on this issue.

"In 2015 we looked back at a number of years of above-average growth and profitability. It is a positive problem to have, of course, but it stretched our operations and our logistical structure to the limit, particularly in the Copenhagen area. Short term, we would rather accept rising operational costs than lower the customer service levels, but in the long term that would obviously be bad for business. It became patently clear that we could not continue to grow within the confines of the existing structure. Taking that route could only lead to higher operational costs in the form of additional warehousing, employees, internal transport, etc. and would probably increase the frequency and significance of errors and delays."

From thought into action in an instant
"To get ahead of the situation and to help prepare us for continued growth, we reached out Langebaek early in 2015. They are one of the very few consultancies in Denmark that have both the strategic and operational competences to take on a project like this, and have been an outstanding partner to us throughout - from the initial extension and optimisation of our facility in Middelfart to the ongoing construction of the new warehouse in Ishøj."

"In no small part due to Langebaek, we broke ground just six months after they presented their recommendations. The facility in Ishøj will be completed on schedule in 2017, creating the conditions necessary for us to continue growing. This includes, amongst other things, bringing together our various business units in the same place for the first time, including Catering Engros, S-Engros, Prima Frugt, and HKI Ost, as well as the administration, including procurement and customer support. As a whole, we expect this to improve our operational effectiveness substantially. In the end, however, customer-centricity will continue to be of primary importance. The new logistical structure will enable us to raise the customer service levels even higher than they are today," Niels Peter Habekost ends.