Danya Foods is celebrating a staggering growth of 22 percent in terms of volume, thanks to the DKK 35 million of investment in training, systems, process optimisation, production and warehousing capacity and is now looking better than ever in the Middle East and North Africa region.
Danish based global dairy giant Arla Foods, producer of the unmistakable Lurpak butter, is the parent company of Danya Foods. This has seen particularly benefits for Danya as growth has also been partly driven by low prices in the countries where it sources its products and raw materials from, which is usually EU.
Thomas Nordholt, Regional Supply Chain Director at Danya Foods, said: “Not only production and operational capacity, but with all of the investments we did in automation has allowed us to meet an ever-growing demand. We have been able to significantly reduce our production cost per kilo and distribution cost per kilo, and this have helped us finance other parts of the company that have driven the accelerated growth. This is very positive for us and our owners and will help drive our regional expansion in the years to come. This has also allowed us to compete in new markets which have helped grow our volumes further.
“We have an increased requirement to employ local staff; it’s called Saudization and it is good for the national economy to do this, so we have embarked on the project and managed to place Saudis in roles where we once only had expats. More admin, procurement and warehousing roles are now filled by locals where we previously had to rely on expats. It means we have more stability as a business too, in terms of retention.
“We have expanded our product range mainly with line expansions. We have also re-launched our main brand called Puck, in new packaging designs across many product ranges. It has been well received in the market so now we see new products that look as high-quality, nutritious and appealing as they actually are.”
Competitive edge
Danya products are always based on raw materials that are mainly sourced from EU. So with such high quality ingredients Nordholt says the company uses fewer additives than competitors in every item, making for very clean and healthy products.
But the firm has also ensured that those same products are kept in good condition at every stage of the production process. Last year it started on a project to build a new warehouse in Riyadh and that has now been constructed. Once fully operational, the warehouse space will be further optimised with more environmentally friendly and energy efficient solutions to help cool the products, which is 35 percent of the energy consumption in a warehouse if you have chilled products in a hot climate such as Saudi Arabia.
As well as adding reefer and freezer technology at many facilities, there has also been investment in acquiring larger distribution vehicles so Danya now has multiple larger trucks able to carry containers at its disposal.
The company has also experienced success in Africa. Nordholt said: “We have experienced major growth and right now that is slowing slightly which is expected, but yes we have experienced growth in recent years in Africa too. This has been mainly West Africa and also we are building large manufacturing plants in Nigeria which is going ahead really well and fast.
“A warehouse is planned for opening around November this year and we are doing it in a 50/50 joint venture with a local partner; once completed there will be 200 people working there. We are also starting up several new plants in other African countries.
“Across the board we have some smarter automation such as handheld scanners and overall warehouse management systems that will help the whole semi-automated warehouse. Due to our investments, we’ll have increased capacity and volume but the same number of staffs. We have a good understanding where the market is going and we act proactively”
Forecasting accuracy
Nordholt believes the biggest reason Danya has had this success is because it has greater collaboration between sales/marketing and the supply chain. For example management knew they were going to launch a new mozzarella range with new packaging so research was done which revealed it would increase volumes by 20 percent.
It was therefore easy to go back and see how much freezer space and distribution facilities the company needed, giving them ample time to go out and get the approvals for the investments and start to hire the drivers and warehouse staff, and plan activities accordingly.
“It is a very smooth ride when sales, marketing and the supply chain aligns. At the start of the year we sat down and ensured we understood our values and set out our new plans and forecasts. We then took that and rolled it into supply chain and factored that into the equation when making capital investments for the coming year.” said Nordholt.
“We make the necessary investments in production, distribution and warehousing based on the knowledge of where the different types of product are going to grow in volume and why. In this case, we are planning 2 years in advance to see where are business is going to grow or decrease and plan ahead. Collaboration is a big part of our process now, it is a key element and means we don’t keep surplus stock or tie up capital unnecessarily.”
Bright future
Danya Foods now sees a new challenge on the horizon now it has exceeded its targets and achieved excellent growth; the balancing act between growth and investment.
A main focus will be training and retaining those key employees that make the next step happen, which is exactly the same growth in the coming year. To hit those heights again the company needs to retain the key employees.
Nordholt concluded: “We can and want to grow but now we are the level where almost all growth had to be preceded by investment in production and operational capacity. You could say it’s a balancing act deciding where to put the funds in order to get the best ROI in the short to medium term.
“We have a new business area which is food service; basically selling our products to large factories, food manufacturers and restaurant/hotel chains who buy our stock. Some of our products we sell in bulk to them, like 20kg blocks of cheese instead of 50 tubs. We sell our mozzarella blocks to pizza companies and even sell processed cheese to governmental institutions now.
“From a supply chain and production perspective I like it because it gives me volume and I am able to reduce costs. Almost 4,000 tonnes of processed cheese has been sold to industrial customers and that volume helps me drive down the cost per kilo for all categories and extends the benefits to all customers.”