Scandinavian Tobacco Group

Close collaboration optimizes production and reduces complexity.

When Scandinavian Tobacco Group changed its strategy from primarily local purchasing at each production site around the world to global purchasing from Denmark, a need arose to simplify cooperation with the company's many suppliers. Through close counselling, we jointly created a Single Point Sourcing solution that matched the new set-up and leaves a positive impression on the financial situation, quality, documentation, working environment and sustainability.

The complexity is high, and the suppliers are many in Scandinavian Tobacco Group (STG). Therefore, there is a constant focus on optimizing both production and the underlying supply chain through a reduction in the large number of suppliers. A development that Procudan continuously contributes to, through close collaboration and professional counselling, but which culminated in connection with a strategic shift to global procurement handled from Denmark.

- With Procudan's S-P-S solution, we have reduced the number of suppliers by approx. 10 percent, and this can be felt in the form of less administration in connection with purchasing and logistics, higher quality and easier invoicing, says Anni M. Larsen, Global Category Buyer and she continues:

- Not only have our costs been reduced, so is the workload in several functions. As an added benefit, we can, for example, download documentation online 24/7 via My Procudan.

Challenges status quo and changes workflows

However, it is not only in connection with major strategic changes that the collaboration between STG and Procudan provides concrete optimizations. In the daily collaboration, there is also a constant focus on development and optimization. This is expressed, among other things, through continuous recipe optimization, which not only brings financial and quality benefits, but can strengthen the working environment, too.

- As a professional, you are always looking for ways to optimize. At STG, they dragged 25 kg sacks of sugar around, which were subsequently manually dissolved. There we saw a clear advantage in recipe optimisation and instead using ready-to-use inverted sugar directly. In this way, the working environment was improved at the same time as we were able to reduce the quantity of sugars and thereby reduce the number of raw materials. says Bent K. Vogensen, Account Manager at Procudan.

According to Jacob A. Munk, Manager / Tobacco Specialist, this is a good example of how far you can go when you have a close collaboration based on trust:

- It is very healthy to be challenged in the daily work, but it requires both insight into us as a company and a deep professional knowledge if there is to be a sound basis in the proposals. At Procudan, we experience that they understand both us and our needs, and therefore they can make suggestions that make a difference on many levels.

Comprehensive solutions for the benefit of the environment and the economy

STG prioritises the purchase of raw materials as close to production as possible. In connection with part of the production in the USA being moved to Denmark, Procudan helped to match raw materials including specifications and quality from suppliers closer to Denmark. By adapting the procurement to the new geographical location, the transport of raw materials became shorter, just as Procudan's S-P-S solution meant total procurement and the most optimal and sustainable transport with filled trucks.

- We have a strong focus on holistic solutions and are pleased that by optimizing logistics, we take the environment into account at the same time as our freight price per kilo becomes cheaper. It is absolutely optimal that we have a solution for the benefit of the environment and financially, states Anni M. Larsen.

In control of the security of supply

As in any other production company, security of supply is the alpha and omega of STG, and with raw materials such as sugar, sugar products, glucose and cocoa, you can easily run into delivery challenges.

Here, Anni M. Larsen says that they benefit from Procudan's large network of suppliers.

- The delivery time simply must not be changed, and that is not because we think it is fun to have the goods in stock. That's because we need them. Procudan's warehousing and logistics solution ensures us raw materials in good quality and on time. Through Procudan's network of suppliers and approved substitutes, security of supply is completely in place, says Anni M. Larsen and continues:

- At the same time, they help us keep track of when we need to renew our contracts and provide advice on when it is most optimal to close agreements and lock prices.

Great demands on documentation

STG is subject to a great deal of legislation around the world, and therefore suppliers and partners must be geared to be able to provide the necessary documentation. As part of the company's SPS solution, STG always has access to all updated documents and agreements, which can be accessed when the need arises. This reduces both time consumption and manual workflows in connection with the ongoing request for documentation.

- We have a lot of requirements for documentation under every single product and every single additive. The great advantage of My Procudan is that we can always find the updated documents and agreements, says Anni M. Larsen.

Financial upside supports the development

Jacob A. Munk states that in STG they had not from the start defined a desire for a Single Point Sourcing solution, but that the collaboration developed into it due to the professional expertise and the close collaboration with mutual respect:

- The complexity is enormous, and we have been on a journey where we have jointly developed the value.

Or as Anni M. Larsen says in short:

- It is a good story that we can consolidate things and have a financial upside.