Danish Crown Hones its Strategy
Danish Crown has announced that its target for savings in procurement has been raised, a number of administrative functions are set to be moved to Poland, and construction of a new head office in Randers is on hold until further notice.
It is almost two years since Danish Crown presented its 4WD strategy, which includes the express target of boosting the price paid for the pigs supplied by its owners by 0.60 DKr per kg relative to an EU index. Virtually all of the new initiatives announced in November 2016 are now under way, and the Danish Crown management has therefore decided to go one step further in a number of areas.
“We continuously review our strategy, and in three specific areas we have decided to strengthen our efforts as we believe this will benefit the group in both the short and the long term. However, these are not easy decisions to make as it means saying goodbye to a number of employees in different parts of the organisation. At the same time, we are postponing the construction of our new head office, which will no doubt be a disappointment for our employees in Randers,” says Jais Valeur, chief executive of Danish Crown.
Jais Valeur.
The plans for a new joint head office for Danish Crown and Tulip Food Company were announced a year ago. The idea was to transform the former sausage factory in Randers into a modern office building with 23,000 square metres of floor space, but these plans are now being put on hold.
“The situation is that the difference between the cost of producing a pig and the price at which it can be sold is being pressured by the low pig prices. As a result, we do not feel that this is the right time to go ahead with this project. Having Danish Crown and Tulip Food Company move in together still makes a lot of sense, but it will not happen at the beginning of 2020 as originally planned,” points out Jais Valeur.
Danish Crown has also raised its target for savings in procurement from DKr500 million before the end of the 2020/21 financial year to DKr650 million. “We have established a new procurement organisation, and our specialists have identified significantly higher potential savings than were originally estimated in our strategy process. These are not savings which we can realise overnight, but the process has confirmed that we were right to invest in new procurement expertise, and this is the reason why we are raising our target,” explains Preben Sunke, chief financial officer at Danish Crown.
As part of the 4WD strategy, Danish Crown will in the coming years bring together, standardise, and automate a number of administrative functions in a new Global Business Services centre in Poland. The first step is the transfer of approximately 50 jobs from Randers to Krakow in Poland.
“This will bring benefits in relation to serving our customers as well as delivering specific savings. However, it is a complicated operation, and it is therefore important for us that the project is rolled out at a pace which is not going to adversely affect our business. The whole process is therefore expected to take two to three years,” says Preben Sunke. “Once fully implemented, the transfer is expected to generate annual savings of around DKr40 million, which will contribute to realising our strategic target.”
