Patrik Färdow – COO of Orka Foods Group talks about the challenges faced by consumer goods manufacturers, and why speed and agility are so critical to supply chain planning at Orkla.
By Stefan Karlöf – published in the September 2019 issue of Supply Chain Effect Magazine.
Patrik Färdow has been a self-proclaimed logistics nerd for more than 25 years. Now COO of Orkla Foods, he began his career in planning, production and logistics at the food giant Kraft Foods Group. After Kraft, he moved to Coca Cola where he became Production Director of Coca Cola Sweden. Over the years, he has held several positions within the FMCG industry, dealing with every imaginable aspect of logistics and production.
“I’ve also spent quite a few years in industrial companies and as CEO in the security industry, but I have to say that I enjoy my current industry best. We’re working with strong brands that trigger emotions. I like the fast pace with campaigns, launches, seasonality, etc. You have to be constantly on your toes,” he says.“Logistics is all about the flows of information and materials. If you master logistics, you can manage almost every aspect of a company. With today’s business-critical and increasingly complex flows, logistics is more important than ever.”
The challenge of changing consumer behaviors
Orkla Foods is going through a period of intense change. New consumer behaviors and expectations, coupled with rapidly evolving sales channels, present the entire food industry supply chain with some major challenges, but at the same time a lot of opportunity.
Patrick explains, “These are very exciting times for the retail industry. The focus on the environment and sustainability is rapidly gaining momentum. There is a growing demand for healthier food that’s produced sustainably. Here we have a huge responsibility within Orkla and the food industry as a whole. We must have the courage to try new ideas and concepts.”
With sales of SEK 17 billion and more than 7,600 employees, Orkla Foods is by far the largest business area within the Orkla Group. As COO, Patrik is responsible for running and developing Orkla Food’s production. Everything from frozen pizza, ketchup, soups, sauces, to ready-to-eat products that are sold under well-known brands, including Felix, Grandiosa, Abba and Kalles.
Orkla’s customers are primarily major grocery wholesalers, but supermarket and petrol station chains also account for a share of the turnover. With so many products and categories, all with different requirements, it goes without saying that it’s a business full of complexity.
“My work is about getting us to master complexity at every level. It’s about how can we simplify our business and work together across functional and geographical boundaries, while at the same time realizing that everything is not always the same and therefore cannot and should not be handled as such. When we get this right, we’re almost unbeatable”, says Patrik, adding that Orkla Foods really is a fantastic company with many talented and motivated employees.
Man and machine
In recent years, the discussion regarding the inherent conflict between man and machine, as well as the future of work as we know it has intensified. This topic is highly relevant for anyone working with planning, production and logistics, and for Patrik Färdow, it’s clear cut – people are needed more than ever.
“We need smart, knowledgeable people more than we ever did. With so much complexity, but also the vast amount of supporting technology that’s available to us, it is important to have people who can connect the dots across the business, identify priorities and successfully navigate the opportunities presented by new technologies.”
There’s no such thing as the perfect plan
Patrik looks at yesterday’s logistics and production planners as skilled engineers, trying to come up with “the perfect plan”. Today it’s more about developing well-defined processes and being quick. “You have to create maximum value during the product’s lifecycle – from purchasing and production, all the way through to the end customer,” says Färdow.
“Today’s operations must be extremely agile. Everyone in the supply chain has to be both communicative and analytical. It’s also vital to stay focused on the bigger picture and make sure that the areas of most importance are identified and prioritized. For example, it makes no sense trying to develop the perfect plan when it is likely to be obsolete three hours later. In FMCG conditions are constantly changing – our customers expect delivery within 24 hours, regardless of order volume. And with a growing e-commerce channel, demands are only going to get tougher. It definitely doesn’t compare with the car industry, where the customer patiently waits for months to get his new car delivered.”
Formula 1 logistics
“With everything constantly in flux, the quest for the perfect plan is nothing but a vain ambition. The key is instead to create plans that are as good as possible, but that we can deliver quickly.” Patrik uses the analogy of the Formula 1 pit stop to illustrate his point.
“You can change tires on a Formula 1 car in about 2 seconds, but it’s only possible if there’s a standardized process in place where everyone knows exactly what to do. The same applies to planning where processes and systems – such as Sales & Operations Planning (S&OP) – need to balance supply and demand on different time horizons as efficiently as possible. There’s a lot of potential here in terms of technology development,” says Färdow.
Solutions for S&OP planning have seen major technological breakthroughs in the last decade. Today’s systems are much faster, more user-friendly and easier to implement than even just a few years ago.
“It is important to find the right balance between the various KPIs and then optimize based on this in order to maximize the value created.
Personally, I have a preference for software and consulting firms that focus on a specific niche and become true experts in their field rather than the big dragons that tend to be just ok at everything. At Orkla, we use a planning system from Optimity. It’s a Swedish-Australian company and a relatively small player globally, but they have the right strategy, tons of experience and above all an easy-to-use system that helps our planners do their job and to optimize based on what creates value.”
But investing in IT still poses plenty of challenges. It’s an area that has historically been regarded by management and boards as a bottomless pit.
Patrik notes that it is still more difficult to make investment decisions for IT systems than for example for production technology. “It is often easier to invest in a machine that produces a tangible and measurable value, than in an IT system that does the same thing. Strange, isn’t it?”
Patrik Färdow lives in Norway and has worked for the Norwegian FMCG group Orkla since 2014. He has a master’s degree in Industrial Engineering and Management from the Technical University of Linköping, Sweden. His career has also seen him work at Kraft Foods, Coca-Cola and G4S. Speed, flexibility and well-thought-through processes characterize Patrik’s philosophy and way of working. His current focus is very much on sustainability, the environment, and wellbeing.
Orkla Group is one of Norway’s largest companies. It is a leading consumer goods manufacturer with a large number of well-known brands. The company has 18,500 employees and a turnover of just over 43 billion SEK. Orkla Foods, Orkla Confectionery & Snacks and Orkla Food Ingredients are all part of the group as well as an investment branch, Orkla Investments. The company has been listed on the Oslo stock exchange since December 2018