Significant profit improvement in a tough market

Challenge: 

Norrmejerier faced rising costs, declining volumes, and shrinking margins in a highly volatile market. Knowit was engaged to develop a clear and structured improvement plan for critical areas within supply chain and operations. 

Solution: 

• A focused, actionable operations improvement plan 
• KPI framework for performance tracking and streamlined reporting 
• In-depth production study, including analysis of full consolidation to Umeå 

Result: 

• The board approved the closure of the Luleå site (Aug 2023), unlocking significant cost and efficiency gains 
• Norrmejerier delivered a positive result for the first time in years 
• A scalable foundation established for long-term profitability and operational resilience 

Norrmejerier is northern Sweden’s largest food company and is owned by 275 dairy farmers. Production consists of milk, cultured dairy products, and cheese. Some of the better-known brands are Norrlogiskt, Fjällfil, Vedum, and Västerbottensost. The company was founded in 1971 and focuses primarily on the Swedish market.

Recent years were challenging, especially 2023, with declining volumes and reduced profitability due to high inflation and increased consumer demand for low-price products. Added to this were high costs for the owners, which resulted in reduced payments to the dairy farmers. The declining volumes resulted in decreased cost efficiency within the supply chain, as costs did not decrease at the same rate as the volume. This led to increased cost per unit and reduced product margins. 

The assignment for Knowit's Management Consultants was to develop a clear structure for improvements within supply chain and operations. The plan included mapping improvement potential and prioritized actions, with clear responsibilities for each activity. Through close collaboration with Norrmejerier's team in interviews and workshops, the program was anchored early within the organization.

Based on detailed cost analyses, we developed a KPI model that enabled continuous monitoring of goal progress for the organization's different parts. The model simplified structure and reporting within the supply chain and created clearer governance. 

Structural change through production consolidation to Umeå 

In parallel, Knowit conducted a feasibility study of the dairy structure. The study evaluated the pros and cons of closing the Luleå dairy factory and instead centralizing production to Umeå. The analysis considered volumes, future sales development, investment needs at the Umeå plant, as well as transport costs and logistics consequences. The results showed significant synergies and long-term cost savings. 

Based on the feasibility study, Knowit recommended to Norrmejerier's board that the dairy  in Luleå should be closed. The board followed the recommendation and decided in August 2023 to implement the change. 

The actions yielded quick results, and in 2023, Norrmejerier reported a positive result for the first time in several years. The efficiency improvements strengthened both the company's profitability and future prospects. 

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