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Significant Profit Improvement in a Challenging Market


Norrmejerier has launched a comprehensive efficiency program with the help of our management consultants, covering both operational efficiency and structural issues. Now, there is a clear plan with prioritized actions to achieve profitability goals.

Market challenges have led to decreased volumes and reduced profitability

Norrmejerier is the largest food company in northern Sweden and is owned by 275 dairy farmers. Its products include milk, yogurt, and cheese, with well-known brands such as Norrlogiskt, Fjällfil, Vedum, and Västerbottensost. The company was established in 1971 and primarily serves the Swedish market.

The past few years have been characterized by declining profitability, with 2023 being particularly tumultuous due to significant market challenges following high inflation and consumers' focus on low-price products. At the same time, the company's owners have struggled with continued high costs and rising interest rates, while the compensation to dairy farmers had to be reduced due to decreased consumption and demands for price reductions. The declining volumes have resulted in decreased cost efficiency within the supply chain, as costs have not been reduced at the same rate as the volume. This has led to increased cost per unit and reduced product margins.

2023 was a year of uncertainty, but thanks to our ability to quickly adapt to the current market situation and focus on streamlining operations, we have managed to improve our results and defend our market position. At the same time, we have made significant strides in reducing our climate impact. We have reduced energy and water usage, optimized our transport, and begun phasing out fossil fuels.

Gerhard Bley, CEO


Development of an action program with goal management and review

Knowit's mission was to develop a clear plan and improvement structure for the key areas within supply chain/operations. Norrmejerier also received help in assessing potentials and drafting prioritized improvement proposals with broken-down activities where responsibilities were clarified within each area. The project was carried out in close cooperation with Norrmejerier, including interviews with key individuals and workshops for early anchoring in the organization.

Based on a detailed cost breakdown, a KPI model was developed for continuous follow-up against set goals for various sub-areas within the organization. This clarified and simplified the structure for reporting and communication within the supply chain.

Knowit also conducted a preliminary study to examine the dairy structure, assessing the effects and consequences of potentially closing the Luleå dairy factory and concentrating all production in Umeå. The work began with dimensioning incoming volumes and assessing future sales developments for various products. This served as input for capacity requirements and necessary adjustments in Umeå and to assess the investment needs. Other important parts of the project included calculating the logistical consequences and impact on transportation costs for both incoming deliveries and customer distribution.

The preliminary study concluded with a recommendation to the board to shut down the Luleå dairy factory. The change showed clear synergies and cost savings. Additionally, it reduces future investment needs and maintenance costs associated with operating two facilities.

Norrmejerier reverses the trend and reports a positive result

Based on Knowit's preliminary study recommendation, Norrmejerier's board decided in August 2023 to close the Luleå dairy factory, and detailed work and preparations for implementation are now underway.

The project was carried out during 2023, and for the first time in several years, Norrmejerier reported a positive result in the same year. The work Knowit has done is part of Norrmejerier's key initiatives moving forward to increase the company's efficiency and profitability.

Knowit has truly contributed to a step change. The concrete approach and close collaboration with the organization have been particularly appreciated.

Gerhard Bley, CEO


How the solution contributes to Agenda 2030

Contribution to Goal 8: The project has contributed to Goal 8 by reversing Norrmejerier's profit trend to generate a positive result in 2023. Positive results lay the foundation for sustainable economic growth and are essential for long-term and sustainable business.

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Erik Påhlson

Manager of services in Profitability Management