In the beginning of the year 2002 Glenn was handpicked to lead the interim phase of the turnaround of the National School fruit in Norway. He was headhunted by the Chief of Marketing of the largest distributor of fruit and vegetables in Norway, who also was the chairman of board of directors.
The National School fruit subscription had been declining for the last three years when Glenn enter the organizations. The board of directors thought this turnaround phase could be done in a time period of 3-6 months. It took 3 years to turn around the whole supply chain management of the National School fruit. It was much more than a simple turnaround process that had to be done, everything had to be turn around.
Why did the subscription of school fruit decline each year for the last three years?
To find this out the IPSOS market agency was hired to make an analyse of the situations.
The results were clear:
- The children did not want to have only green apples and carrot, they wanted to much more varied choice of fruit and vegetables, such as banana, orange, kiwi, red apples etc.
- The quality of the fruit and vegetables was not acceptable
- Why was it no acceptable?
- Did the distributor deliver low quality fruit?
- It was due to where it was stored, under stairs or other not suitable places in the school, this contributed to degrade the quality of the fruit quickly.
- Why was it no acceptable?
- The administration work of the school fruit subscription on each school was manually and the teacher did not like the extra work and was against it
- The distributors did not like it either, it was too much manually work and it took time and was consider as a hassle.
More or less everyone was against the school fruit subscription, not because they did not see the importance of eating fruit and vegetables, but because all the hassle around the work to administrate it. The children were not pleased about the choice of the fruit and vegetables.
The first parameter: Expand of choice of fruit and vegetables
The first challenges that one could suppose was easy to change was the first parameter, to expand the choice of fruit and vegetables. Easier said than done.
The National School Fruit is a department under the Norwegian Marketing Board of fruit and vegetables. This office gets its funding through a tax given by the Royal Norwegian Agriculture Department, while the National School Fruit sorts under the National Directorate of Health. Already here we have a case conflict of interests.
National Directorate of Health is working to increase the consumption of fruit and vegetables all over, while the Royal Norwegian Agriculture Departments interest is increase the consumption of fruit and vegetables produced in Norway. So since the funding come from a tax through Royal Norwegian Agriculture Department, the money was seen as a funding from Norwegian farmers and therefore it could not be used to buy imported fruits. Ergo case closed so far.
This was a major case and could not be changed overnight. The work of lobby started against the Norwegian Parliament and local politicians, different departments such as finance and treasury, agriculture, educations, health and to different directorates. Winter, spring, summer, autumn came and went…… In the end it loosened it up, it took almost two years and various parliamentary propositions and parliamentary hearings had to be carried out before the final proposition could be tapped through a unanimous parliamentary resolution. In a resolution in the Norwegian parliament the financial post of funding of the National School fruit was moved from the agriculture department to the health department. Then one could start to decide what kind of fruit and vegetables that could be bought to the National School fruit.
In these two year we worked heavily with lobby campaigns. People who work daily with these kind of issues says that the two years it took to change this is very fast according to the customary for such cases.
The second parameter: Quality
Then it was the second parameter that had to be changed, the quality had to be improved. This was done by analyse and looking on how the fruit and vegetables was stored on each school. In this period of time Glenn visited at least 100 hundred schools around whole of Norway.
In order to preserve the quality of fruit and vegetables after it was delivered on each schools, one needed to find a way to store the fruit and vegetables in an area with controlled temperature. Also easier said than done. Norwegian schools could not afford to set up an own room with ventilations for the fruit and vegetables. So we were back to basic again also here.
Glenn grew up on a farm and remember that his grad father use to keep the fruit in a refrigerator at his farm. He then spoke with is father about a solution to preserve the fruit. The solution was to have cooling cabinets. To make the history short one then mange to have produced cooling cabinets that was placed out each school.
By placing cool cabinets on each school, made it possible for distributor to supply the fruit and vegetables only one time a week, which minimized the cost of distributions.
The third and fourth parameter: The handling and administration of the school fruit subscription process both within the school and the distributors
The administration work of the school fruit subscription on each school was manually and the teacher did not like the extra work and was against it.
The challenges in 2002 was that all interactions that occurred between the National School fruit all primary schools around 3200 schools, around 1.200 0000 parents and guardians, around 150 suppliers and distributors etc. was done manually. Each spring and Autumn the National School fruit had to send information about the school fruit subscription to the school administration by the principal, school fruit responsible, leading nurse, student council at the school and the parents’ committee.
The physical information about the school fruit ordering scheme was distributed to the schools through an affiliate, Distribution Partner. After the schools had received the information, they had one month to decide if the school will participate in the School fruit or not. Those school who wanted to attend were needed to order the information packet about the School fruit by the end of June and December, and signed up for a delivery agreement. For schools that sign up for the subscription of school fruit the ordering schema was handled manually at the office of National School fruit.
After the National School fruit received and registered all the schools that will participate in the subscription one was needed to send a letter to all providers, a total of 150 distributors and suppliers around Norway.
The information package that each school recived contains a letter to parents and guardians and a giro with suggested text on payment of subscriptions on school fruit. Each school was then need to print this letter, deliver to each class and each student as a satchel post. Parents and guardians then had two weeks to enroll their children into the school fruit. The school then had to collect the money from each student in cash and pay the supplier.
The supplier then received a enrollment of which school, class and student who had order and paid for the fruit. The order was then needed to be manually typed into the suppliers IT system, then produce picking lists and order forms for each school.
This then had to be distributed to each schools with a long list of which class and student should have school fruit.
All this work process was estimated to 120.000 hours each semester and Autumn for the school for all the schools who attended. No wonder that “everyone” was against the school fruit subscription.
In the new system everything happened electronically and each distributor got all the orders directly into their own IT system via EDI transactions.
The manual work process look liked this (only in Norwegian)
Glenn understood early that this was not a normal turnaround case, it was one of the largest that had happened in a long time the the public sector within digitalization the workprocess. Totally it was spend 240.000 hours of teacher to handle the School fruit subscription each year.
Glenn is a technologist without being technical specialists. In this way he was able to design a new ERP system in the logistics and distribution of fruit and vegetables. Before the actual programming job started with designing the ERP system had Glenn completed several 100 hours of focus groups with 100 primary schools and several thousand parents, suppliers to find out how such a system would be. After this Glenn knew how he wanted the system to be, and then the fight started with all the technologist who was going to program the system. But due to Glenn understand the process of each step, he also knew how he wanted the system to be functionally.
The system became both a ERP system, CRM system and payment system where all transactions were done in “one” system for the customer. There was off-course several system that interacted in-between, but the customer only had one interface. One again this showing how important it is to see things from the customers perspective. The system was designed in 2002, implemented in 2004 and is still operating after 12 years.
Therfore one of the essential qualifications that a top executives need to cope with and understand is technology. Without understanding the importance of technology and the use of it, will make you very vulnerable as a top executive. Maybe one of the biggest challenges today is that top executives and management teams do not have a good enough understanding of technology, and do not quite understand what technology does for the business.
Digitalization is more than technology, it is as much about organizational change and new ways of working, where IT and technology is support functions for the organization as the bussiness case of the National School fruit shows. The top executives should not engage in detailed monitoring of daily operations and the use of hardware. It’s about understanding how we can use IT and technology to provide better and more efficient services. In short it is the strategic IT skills must be strengthened. A top executive with sufficient strategic IT gravity will also help ensure that it is the correct IT projects are prioritized and implemented. An important part of benefit realization. One of the reason that sevreal public and private digitalization project fall is due to that the top executives and top management lack understanding of technology.
If the ERP system for the National School fruit had been handed over to the technologist and they could make what they had wanted, it would not have been a sucess. The system ned to me bad to support the people and not that peole should just to the system.The top executive should no longer be reluctant to ask the IT department “dumb” questions because they cannot match the expertise. Then the organization run the risk that the one is developing several solutions that is nice to have but not have any value creating for the organizations.
In all this process Glenn has used Lean Management and continuous improvements to restructure the whole supply chain management.
Glenn used three powerful interventions to turn around the whole supply chain of the National School fruit.
- Differentiate your supply chain and corporate strategies
Whether the strategy of your business is superior service, product innovation, or cost leadership, ensure your supply chain is helping to deliver the key points of that strategy. Bring together leaders from across your business to define the supply chain that will work for you—and ensure they provide the data your organization needs to deliver. Marketing needs to tell you what your customers value most from your service, how those needs vary between customers, and what will differentiate you from your competitors. Your commercial functions have to identify which customers justify the cost of the highest service and which would be better served using a more standardized approach. Together, your supply chain and product development functions can find ways to create innovative products that suit the needs of all those different customer groups, while keeping overall costs under control.
- Create a modern, end-to-end supply chain organization
The times of managing the supply chain in separated tiers is over. Sophisticated data analysis enables companies to manage supply chains end to end and, in industries like retail, almost in real time. Appoint a single leader with responsibility for endto-end performance and for delivering improvement projects across tiers and traditional functions such as marketing, manufacturing, and procurement. Make sure your supply chain organization combines operational excellence with strong analytical capabilities and data-driven, crossfunctional decision making. Create analytical teams to support decision making and to identify hidden risks and opportunities in unstructured data. Ensure your IT function is supporting them with nimble applications and platforms that enable collaboration and analytical decision making.
- Set the performance standards for the entire organization
Incentivize your supply chain organization to work in ways that deliver the most value for your business, while protecting against its biggest risks. That means using more than the traditional metrics of cost, service, and capital. The right KPIs depend strongly on the needs of the business, the product, and the market segment: cost of production for value players; stability of supply for staples and critical products like spare parts or medical devices; agility in volatile markets with fluctuating demand; or launch excellence for new products are key. If a metric doesn’t matter in your business, don’t misdirect the organization by using it.
A supply chain allows the movement of materials, money, and related information from the suppliers of key materials and components to the end customers, in this case the fruit and vegetables. Its important that the basic strategies and best practices can be applied to plan, design, and build a product’s supply infrastructure.
Developing a strategy is the first and most important step in creating a new supply chain. The strategy should identify:
- the general structure of the product’s supply chain
- which capabilities will be bought or built internally
- which elements overlap with other products, either approved or in the pipeline.
The supply chain strategy sets the tone for launch-related activities throughout the organization, and helps to shape planning for other functions, including QA, commercial operations, and finance and development.
Developing a detailed design for the commercial supply chain should be done early and include an in-depth description of the numbers and types of organizations involved, required business processes, definitions of internal and external roles, required information flow, underlying applications, and existing constraints. As in the case of the National School fruit, supply chain design requires considering the product itself (storage and handling requirements), requirements for market or storing area (complementary components, packaging, channels). Supply chain design is inherently cross-functional, and highly dependent on decisions made in other areas such in schoolfruit.