Egil Møller Nielsen’s agenda, Supply Chain Director, Bodum
By: Helen Armstrong (Supply Chain Movement)
“Good design doesn’t have to be expensive” – the motto of Peter Bodum, founder of the international company, Bodum. It’s coffee and tea products have won many design and environmental accolades and are known the world over. The Bistro Coffee Press was launched in 1974 and four years later the company moved from Denmark to Switzerland. Since then its in-house team of designers, engineers, graphic designers, and architects has been developing products based on design, functionality and quality with a focus on innovation. The Bodum Group is 100% owned by Pia and Jørgen Bodum, daughter and son of the founder. As the company prepares for the launch of a new range of products, the type of which is still undisclosed, Egil Møller Nielsen describes the challenges on his daily agenda.
1. What is the strategy for the company: operational excellence, product leadership or customer intimacy?
Product leadership! We have been inspired by Apple and we want product driven growth. Our core business is products for coffee and tea but we are moving into new product areas in particular small household electrical appliances which we started a couple of years ago. In fact this is now bigger than coffee and tea. We see ourselves as a company which makes good quality design products, with special features at fair prices. If these parameters are not in place we will not achieve our goals. We are about to launch a new product range and we see ourselves as the computer industry. Thirty years ago companies were making big boxes computer and computing on engineering basis. It has been the same with household products. We want to be like Apple is to the computer industry.
2. What is your responsibility regarding the supply chain?
I am the chief operating officer with responsibility for our global supply chain operations. That means I am responsible for new product introduction, starting with product development through to product launches, manufacturing, sourcing, procurement, planning and logistics, in fact anything which requires getting the products on the shelves. I have been in this position since joining Bodum at the end of 2010.
3. What are the main business challenges that drive supply chain projects at the moment?
Distribution in the broad sense. The dynamics within our assortment are changing. Some of our new products are increasing while others are decreasing and we are taking them out of production. Also geographically things are changing. Our entire company is growing, especially in the US and Canada, and we have new customers in central Europe, Asia Pacific and emerging markets. We experienced 30-40% growth in the USA and Canada during the last two years and we expect this to double next year. It is a big challenge for the supply chain to manage these combined dynamics. We are growing quickly but the global economy has had an impact on suppliers’ willingness to take risks. Nobody, including us, wants to have cash tied up in inventory. More than ever before this puts a big challenge on the supply chain in terms of how fast it can respond to market changes.
4. What keeps you awake at night?
The market changes are our main challenge. The US and Canadian market has been growing fast and we expect it to increase again next year but this is not carved in stone. The question is, how much risk should we take? How can we minimise the reaction time of the whole operation?
5. What do you do about these challenges?
When I started our lead time was about 120 days but we have reduced this by about 50% to 60 days. Ocean freight is 30 days so I can’t do anything about that but now we share all our forecasts with our suppliers so that they can build up stocks. We basically forced them to do this so they were not happy in the beginning. However, now they see the advantage and because we let them see the forecast for their products they can integrate it into their business plan. Also, we don’t finance the components but we do cover the risk on components with a long lead time of more than 30 days. In that way the suppliers will build up stocks according to forecasts and can respond to orders within these 30 days.
I am also focusing on capacity to increase our flexibility. Soon we will be introducing new products, not just household items, but it takes five to six months before a new supplier has installed all the tools it requires and then it needs to be certified. All-in-all we need a 10 to12 month lead time for a new product line to be fully operational. I have changed our business strategy. As we are changing our product assortment and geographical regions so the business has to change too. We have to be in control and prioritise because we can’t just invest, invest invest. We have to grow carefully.
There is a lot of change in staff at the moment but we believe we can run the extra business with a similar number of employees by working more efficiently.
6. Who would like to meet for exchange of knowledge?
Apple’s CEO, Tim Cook, would be very interesting. I haven’t had much time to visit conferences over the last couple of years. We generate most of the ideas ourselves, in-house.
7. Which book has inspired you the most and why?
I do read a lot of supply chain books and I have been particularly inspired by those written by Martin Christopher. His philosophy is that marketing, the supply chain and logistics are integrally linked together which I agree with. Marketing in the broad sense starts with product development. I also find the books by the Australian, John Gattorna, very good.
8. Where do you expect to be professionally in five years?
In a company with a lot of challenges and an interesting agenda, which is for sure the case at Bodum. I have worked in four industries: ecco shoes; LECO and DHL. I believe it is important that you always understand the company you are working in. I always try to diagnose the company in terms of the competition, the market place, products and suppliers. By understand the particular environment you work in you can make changes, differentiate yourself and become a winning company.
9. What do use for an agenda?
It’s electronic – an iPad and computer.