Once upon a time there was a customer vision in the supply chain world that became reality – Part 2

BY HANS BERGGREN AND DANIEL LARSON
This article was originally published in Supply Chain Effect no 5/2023.

Once upon a time there was a customer vision in the supply chain world that came true. Even today, people wonder how this could happen, since all the technology has been in place for a long time, but oh how difficult it has been for the supply chain world to succeed. But then one day the Danish industrial group LINAK found the key to the realization of the supply chain vision.

The key opened the eyes to the visionary leadership and LINAK‘s very strong will to succeed. In addition, the leadership was inclusive in that both suppliers and customers were involved in LINAK’s supply chain vision. Together, the management and other committed employees percieved that change is realized through maximally digitized information sharing that creates common insights for improved flows and immediate profits.

LINAK is a Danish industrial group with approximately EUR 600 million in turnover and 2,500 employees. They have their headquarters in Guderup in southern Denmark and are present in 35 countries. The story of the customer vision becoming a reality began with LINAK and PipeChain coming into contact and saw that both companies shared the common vision:
To digitize LINAK’s entire supply chain for the highest possible level of service (availability) at the lowest possible cost.

The story of the customer vision is true

The cool thing about our joint vision is that it became a reality and that LINAK has largely realized its supply chain vision in five years. We described the thoughts behind and what made the realized vision possible, in our previous article “Once upon a time…” in Supply Chain Effect no 6/2022. In this article, we describe in more detail how and what we did.


From left to right: Hans Berggren, CEO PipeChain Group and Daniel Larson, visionary Supply Chain consultant within business area PipeChain SCM. Photo: Robert Lipic & Private

The challenge

The challenge was to build a maximally digitized supply chain for LINAK that enabled a more efficient and controllable end-to-end supply chain. This meant that more than 20 subsidiaries and their operations, their various ERP systems, several hundred suppliers and about a hundred customers would be connected and managed in the digitized flow.

How did we rise to the challenge?

As said, the project started about five years ago and at that time LINAK was in a so-called “Reactive mode”, that is, the entire organization worked based on acting on what was happening and, in addition, doing its best to solve the problems that arose. The project’s first ambition was to, as far as possible, move LINAK to a phase where the most serious problems could be predicted, to an “Anticipating mode”, and thus be able to act before problems arise and before they start to cost money. Once LINAK succeeded in this, the project continued towards a wider rollout of digitization and process improvement in collaboration with both customers, suppliers and carriers. The aim was partly to improve cooperation with customers and suppliers, partly to enable smarter control and more flexible management of logistics flows.

The most important steps in LINAK’s successful change journey have been:

• 1. The digitization of a factory and of the forecast-to-delivery process with five suppliers.
• 2. The connection/digitalization of all around 20 subsidiaries (sites) and their more than 250 suppliers in the forecast-to-delivery process, including the visualization of LINAK’s stock balances and gross requirements.
• 3. The implementation of VMI (Vendor Managed Inventory) with a selection of strategic suppliers.
• 4. The connection of three large carriers in the digital flow vis-à-vis LINAK’s subsidiary.
• 5. The involvement of the customers in the digitization by implementing both EDI (including automatic PDF interpretation/conversion) and a web-shop.

The next step for LINAK is to visualize in the PipeChain platform inventory balances and gross requirements also from a selection of LINAK’s customers and to introduce a mobile app for the order-to-delivery process for those customers who can streamline their relationship with LINAK using a mobile app.

Results of the change work

LINAK believes that the main results of the change work so far are:

• That via the PipeChain platform they have established a “single point of digital communication” for all their suppliers and customers.
• That via the platform and the collaboration with PipeChain they have a “speaking partner” for all their thoughts and ideas for how the supply chain vision should be realised.
• That more than 85 percent of the purchase order lines vis-à-vis the supplier level are now handled automatically, from order to delivery.
• That more than 80 percent of all deliveries and related information on delivery status (ETD, ETA) are automatically monitored.
• That suppliers and carriers are automatically evaluated on the basis of critical KPIs with the aim of constantly improving common flows.
• That the customer processes, despite the fact that these are slower to digitize, still achieved a digitization rate of about 20 percent and are growing rapidly.

Orchestrating its supply chain was LINAK’s vision

Today, LINAK uses PipeChain’s solution to plan, control and create increased competitiveness for flows that affect more than 20 of its own subsidiaries, including more than 250 suppliers and 60 customers – all with a global supply chain perspective. The entire solution is set up in an end-to-end flow that can be monitored and in relevant parts controlled via PipeChain, regardless of which business systems are used in LINAK’s business areas and subsidiaries.

In short, LINAK is now in the very advantageous position of being able to effectively orchestrate its supply chain based on market needs, which was our shared vision when we started the change journey.

Hans Berggren is CEO of PipeChain Group.
Daniel Larson is a visionary Supply Chain consultant within business area PipeChain SCM.