Actona Company reduces risk and increases profitability

Dynamically matching manufacturing output with customer demand with IBM Business Analytics

Published on 25-Apr-2013

"IBM Cognos Business Intelligence 10 is a key enabler of our growth strategy. We have increased our revenues by a factor of three since implementing Cognos – an achievement that would have been impossible using our ERP system and spreadsheet reports alone." - Lars Zielke, IT co-ordinator, Actona Company A/S

Customer:
Actona Company

Industry:
Consumer Products

Deployment country:
Denmark

Solution:
BA - Business Analytics, BA - Business Intelligence, BA - Risk Analytics, Transforming Business

IBM Business Partner:
Kapacity

Overview

Headquartered in Tvis, Denmark and employing more than 1,500 people worldwide, Actona Company A/S (Actona) is a furniture distributor and upholstery manufacturer. Through its network of approved resellers in Europe, the USA and Asia, the company generates annual revenues of approximately €150 million.

Business need:
Actona wanted to increase its profitability and boost revenues by understanding customer demand through its network of resellers, and then adjusting its manufacturing output to match.

Solution:
The company implemented IBM® Cognos® Business Intelligence 10 – enabling near real-time visibility of product profitability, warehouse stock levels and new orders from resellers.

Benefits:
Enables Actona to scale manufacturing up or down dynamically according to sales performance on each product line – reducing the risk of unsaleable stock, increasing profitability, and supporting a three-fold increase in revenues.

Case Study

To read a Danish version of this case study, click here

Headquartered in Tvis, Denmark and employing more than 1,500 people worldwide, Actona Company A/S (Actona) is a furniture distributor and upholstery manufacturer. Through its network of approved resellers in Europe, the USA and Asia, the company generates annual revenues of approximately €150 million.

To accelerate growth and increase profitability across its worldwide reseller channel, Actona wanted to gain a better understanding of fast-changing regional demand for its furniture products, and adjust the output of its manufacturing plants to match.

As Lars Zielke, IT co-ordinator at Actona Company A/S, explains: “Every year, we ship around 13,000 containers from our manufacturing plants in Asia. With large quantities of stock and lead times of up to five months, it’s vital to have clear visibility of customer demand. If we ship too much of an item, we risk being left with unsaleable goods in our warehouses. On the other hand, if we ship too little of what turns out to be a popular line, we risk losing sales because we have insufficient stock to meet demand.”

Multiple versions of the truth threaten growth
In the past, the company manually created spreadsheet reports using ERP data to keep track of sales figures from its reseller network. The ultimate aim was to identify the profitability of each product, and determine whether manufacturing orders were at the correct levels.

“Previously, we lacked company-wide definitions for key performance indicators [KPIs], which led to multiple versions of the truth in reports across the business,” says Zielke. “For example, our sales teams often had spreadsheets indicating that a certain product was performing well, and our purchasing department had reports for the same product showing that this was not the case.

“We couldn’t get a clear picture of the profitability of our products. Because we only had a rough estimate on how profitable each product was, it was difficult to plan manufacturing and logistics to align supply with demand.”

Choosing IBM Cognos Business Intelligence
To realise its growth objective, Actona decided to implement IBM Cognos Business Intelligence – replacing spreadsheet reports with a single source of actionable business insights. “In addition to its excellent scalability, Cognos offered a comprehensive range of features to meet our business requirements,” says Zielke.

To accelerate deployment, Actona engaged analytics experts from Kapacity, an IBM Business Partner that specialises in business intelligence and performance management solutions.

Strong partnership
“Kapacity are more than just a supplier to us – they are a trusted partner and advisor to the company,” says Zielke. “In more than ten years of working with Kapacity, we have always found them to be professional, precise and responsive.”

Kapacity’s consultants met with Actona’s C-level executives to determine the company’s analytics requirements, and create a single set of definitions for KPIs across the business. Zielke comments: “The initial consultation process was invaluable – working with Kapacity, we were able to put together a strong framework for the Cognos implementation.”

After defining the new set of KPIs, Actona examined the back-office systems that would provide the raw data to calculate them. “We found that some of our back-office data needed to be cleaned to generate the new KPIs,” says Zielke. “To avoid cleaning data simply for the sake of it, we performed some quick cost-benefit analyses – showing the business value we stood to gain by better understanding each data point.”

Today, Actona uses IBM Cognos Business Intelligence in almost every part of its business. “We started seeing the benefits of Cognos Business Intelligence right away,” says Zielke. “Because Cognos enables a single version of the truth, there is now complete clarity about how each of our product lines is selling worldwide.”

Fast reactions reduce risk
With deeper insight into its sales data, Actona can react more quickly to changes in the market – reducing risk and increasing profitability.

“Thanks to Cognos Business Intelligence reports, we can refine the accuracy of our sales forecasts – helping us to match our manufacturing output with customer demand,” says Zielke. “For example, if we stock a two-month supply of a certain product and it is still in the warehouse at the end of that period, we can scale down our future manufacturing orders accordingly.”

Actona now uses insights from IBM Cognos Business Intelligence reports to improve quality control. “In the past, our spreadsheet-based approach to analytics made it difficult to quickly identify products that may have problems,” says Zielke. “Today, our quality assurance and after-sales managers use Cognos reports to get instant insight into product returns worldwide. If they spot a high number of returns of a certain product, they can quickly determine whether it is faulty, and cancel any outstanding manufacturing orders. This helps to ensure that our warehouses are only stocked with high-quality, saleable items.”

Moving to Cognos Business Intelligence 10
Following the success of the IBM Cognos Business Intelligence solution, Actona decided to upgrade to the latest version of the software. Working together with Kapacity, the company then combined Cognos data cubes with cubes from its ERP system – enriching its insights.

“We previously used our ERP system to create reports on order gain – the process by which resellers add or subtract from their orders – but it was extremely slow,” says Zielke. “By creating a data warehouse of sales orders in Cognos Business Intelligence 10, our sales teams can see changes in the market in close to real time.”

He continues: “If our sales teams see that resellers in a certain region are cancelling or reducing their orders, they can perform an instant analysis using historical data for the same date. If historical data shows an unexpected trend, our sales teams can quickly take action to cut our manufacturing orders – reducing the risk of producing goods that we cannot sell.”

Actona’s warehouse managers use Cognos 10 reports to accelerate warehouse value management – the process of ensuring that there is an optimal distribution of high- and low-margin product categories in a warehouse at any given time. This ensures that resources are directed at the right products, keeping margins at the correct level. Zielke says: “Upgrading to Cognos 10 enables us to explore our data in new ways, which adds a lot of value to our business. Because of our careful planning with Kapacity, the Cognos implementation was a great success, and we have a well-defined timeline for implementing the new features of Cognos 10 in the future.”

Improving customer service
Actona’s IBM Cognos 10 solution has increased automation – enabling the company to invest more time in activities that add greater business value.

“We’ve now automated the reporting process for our worldwide sales teams,” says Zielke. “Using a Cognos 10 web portal, our power users in the head office can generate and email PDF reports to all the teams who need them at the touch of a button. At Actona, the customer is king; our sales department devote all the time they save using Cognos to building closer working relationships with our resellers around the world.”

The company is now planning to implement the Active Report feature of Cognos 10 for its worldwide resellers. Zielke comments: “Active Report will enable us to offer our resellers self-contained, offline Cognos reports for the data that is important to them – without the need to give them access to the main Cognos instance.”

Conclusion
By implementing Cognos 10, Actona has gained a deeper understanding of regional demand for its products. By dynamically adjusting its logistics capacity to match demand, the company has dramatically reduced the business risk of over- or under-stocking – increasing profitability and helping to achieve its growth objectives.

“IBM Cognos Business Intelligence 10 is a key enabler of our growth strategy,” concludes Zielke. “We have increased our revenues by a factor of three since implementing Cognos – an achievement that would have been impossible using our ERP system and spreadsheet reports alone. By continuing our partnership with Kapacity, we plan to extend the Cognos solution to deliver even greater business value.”

About Kapacity
Kapacity is a Danish consultancy firm with expertise in business intelligence, analytics and data warehousing solutions. With many years of technical experience and deep corporate awareness, Kapacity has demonstrated its core competences in a diverse range of public and private sector organisations.

To learn more about products, services and solutions from Kapacity, visit www.kapacity.dk

About IBM Business Analytics
IBM Business Analytics software delivers data-driven insights that help organisations work smarter and outperform their peers. This comprehensive portfolio includes solutions for business intelligence, predictive analytics and decision management, performance management, and risk management.

Business Analytics solutions enable companies to identify and visualise trends and patterns in areas, such as customer analytics, that can have a profound effect on business performance. They can compare scenarios, anticipate potential threats and opportunities, better plan, budget and forecast resources, balance risks against expected returns and work to meet regulatory requirements. By making analytics widely available, organisations can align tactical and strategic decision-making to achieve business goals.

For more information
For further information please visit ibm.com/business-analytics

Products and services used

IBM products and services that were used in this case study.

Software:
Cognos Business Intelligence

Legal Information

© Copyright IBM Corporation 2013. IBM Danmark ApS, Nymoellevej 91, 2800 Kgs. Lyngby, Denmark. Produced in Denmark. April 2013. IBM, the IBM logo, ibm.com, and Cognos are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the web at: www.ibm.com/legal/copytrade.shtml. This document is current as of the initial date of publication and may be changed by IBM at any time. Not all offerings are available in every country in which IBM operates. The client examples cited are presented for illustrative purposes only. Actual performance results may vary depending on specific configurations and operating conditions. THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR CONDITION OF NON-INFRINGEMENT. IBM products are warranted according to the terms and conditions of the agreements under which they are provided.