The Absolut Company

A Food and Beverage Case Study

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Highlights
  • Dramatically improved planner productivity and effectiveness
  • Raised delivery performance while lowering stock levels to meet expectations of parent company Pernod Ricard
  • Helps meet environmental targets and requirements of traditional processes

Project and Objectives

After Pernod Ricard acquired The Absolut Company it set about extending and diversifying its range, adding trendy new flavors like Mango and Berri Açai. In the next five years the company grew core flavors by 63 percent and limited editions six fold, resulting in a lot more slow moving, long tail items. While this proved very popular with global consumers, it made life a lot harder for Absolut’s one planner.

According to Ingela Lennartsson, Master Planning, The Absolut Company, “Handling all the planning myself was becoming increasingly unsustainable. It was getting to the point where every time I wanted to take vacation, I would typically have to work most of the hours I was planning to take off ahead of time. Then, I would invariably return to lots of fire-fighting. It was pretty stressful!”

Manufactured in the small town of Åhus, Absolut Vodka is Sweden’s single largest ‘food’ export and the world’s fifth largest spirits brand. It exports 99 percent of its vodka to nearly every country on earth and must ensure high availability to the Pernod Ricard Market Companies (local affiliates). At the same time, part of the Absolut One Source brand promise is to honor its commitment to ‘climate neutral’ and ethical production, using local wheat and water in Åhus. This puts considerable pressure on the company to run a lean supply chain with no room for error and waste.

These combined factors meant that Absolut’s old system – a collection of manually-intensive spreadsheets and an old ERP environment– was no longer robust enough to meet the demands required by Pernod Ricard.

Absolut turned to local service provider Optilon to implement an integrated planning system that used ToolsGroup’s SO99+ to automate demand management, fulfillment and replenishment for the company’s entire range of plain and flavored vodkas.

“For us, quality - not the least in production – is paramount and we can’t leave anything to chance. After a thorough evaluation, we chose Optilon and ToolsGroup to provide the best skills and technology to improve our supply chain and production processes and help us reach our goals,” commented Peter Neiderud, Director Supply Chain, Quality and Environment at The Absolut Company.

Day-to-Day

The live implementation in Åhus followed a year-long proof-of-concept project led by Optilon that modeled Absolut’s portfolio of 350 vodka SKUs, taking constraints like production capacity into account.

According to Peter Neiderud, “As a Pernod Ricard brand, The Absolut Company participates in a company-wide process based on the principles of S&OP called “Supply Review.” As part of this, supply chain and customer service people collaborate to optimize sales and inventory planning using forecasts generated by SO99+.”

Now Ingela is still able to manage all of Absolut’s forecasting and planning, relying on SO99+ to automatically produce plans that optimize inventory against service levels while leaving room for some manual fine-tuning.

Results & Benefits

Absolut has seen more stable delivery performance, despite lower-than-expected stock levels over the last 12 months. The lower inventory is partly linked to increased shipments but S099+ forecasts a more optimal SKU mix. Absolut is currently measuring whether production line efficiency is being positively impacted by the new system.

Absolut initially set out to improve planning efficiency which has been very successful. The new system has freed up Ingela from a stressful, time-intensive manual process so she can contribute her valuable business knowledge to optimize plans and manage by exception. Ingela is still the only full-time planner, but not only is she more productive and effective, she can even take stress-free vacations! She concluded:

“SO99+ helps me manage all of our SKUs and gives me a quick overview that really saves time compared to using the old system. This has freed me up to be much more proactive and analyze with a broader perspective. Crucially, the replenishment tool has made it possible to reduce our safety stocks while meeting service levels to the Pernod Ricard markets.”

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The Absolut Company grew from the success of Absolut Vodka, a unique Swedish vodka that conquered the world on its own terms. In a little more than 30 years, Absolut Vodka has become one of the world’s best-selling spirits and has created a unique legacy of quality, creativity and originality that lives on to this day. Upon becoming a part of Pernod-Ricard in 2008, five more brands were added to the Absolut Company family. Like any great family, each member is very different, yet each distinguishes itself as only a great family can.

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