When I was a little girl, I loved gazing at the night sky to watch the stars. My parents taught me how to find the North Star, which became my anchor point in the sky when looking for constellations. Some stars I could see with the naked eye, but it was the gift of a telescope that really helped me explore and discover all the details. 

At Arla Foods, we also have our own constellations: not of stars but of people, systems, processes and data. 

Our Arla constellations rarely remain the same for more than a few years. Delivering sustainable growth and earnings in a volatile industry means that we have learned to continuously connect the dots in new and different ways by reorganizing, redesigning and adapting our business. However, the complexity of this task has increased dramatically in recent years, which led us to seek our own telescope enabling us to see beyond the obvious and ensure that we stay focused on what delivers the biggest value for our business. 

Data transparency has become our telescope. It started with a change in mindset, when our leaders agreed to prioritize data-driven decision-making and committed to spending the time, money and energy needed to get transparency where it drives material value for our business. As a result, we have gained a new level of transparency that has become incredibly important for how we run Arla Foods. It’s literally one, if not the key enabler behind every workstream in the Calcium transformation program Arla is in the middle of right now. 

At virtually all levels in our organization, we are feeling the power of being able to see things more clearly and spot relevant trends more quickly. Transparency makes patterns in our buying, milk prices and production more visible. It provides clarity, it’s objective (or at least collectively subjective) and it helps us improve and democratize decisionmaking.

A lot of upfront work and heavy lifting 
In the last 12 months alone, we have analyzed 850,000 invoices. We have brought in internal and external experts, benchmarked and brainstormed - to come up with hundreds of initiatives to spend smarter. We have completely revamped our Chart of Accounts as well as our Purchase Order compliance reporting, so everyone has the same starting point and definitions. We’ve trained over 3,500 colleagues so that everyone has a common understanding of how to use our new tools and interpret the results. We are now able to analyze detailed insights on procurement, production, logistics and other costs at an individual dairy site level. 

The legwork is worth it. The savings we are generating in procurement and indirect spend efforts alone will deliver about a third of the 400 million euros we are targeting with our transformation program. We’re ahead of plan and gaining new insights every day on how to get bigger value from the money we spend.

Much more than cost efficiency
Driving cost out of the business in a sustainable way is not the only thing that we are using transparency for. It also increases the effectiveness of what we do. 

In marketing, transparency helped us identify that a too-large share of our spend was being used for non-consumer facing activities, driven by a complex agency landscape, duplication of content development across our markets and disproportionate spend levels compared to our peers. By moving key competences inhouse and reducing dependency on agencies, we have been able to not only significantly reduce non-consumer facing marketing spend, but also deliver more targeted, timely and impactful marketing to consumers in our biggest markets.  

Transparency is also helping Arla improve the quality of our sales. Every year, we spend millions of euros with retailers on discounts, promotions, flyers and in-store activations. In this area, growing data transparency is showing us exactly which of these trade investments across our countries are driving real value, not only for Arla but also for our customers. Again, this takes a lot of work. We had to agree across markets on common definitions for all spend categories. We worked closely with customers to improve the quality of our data and we connected various systems with a common front-end that is able to provide real-time analysis at our fingertips. 

The transparency telescope needs to be calibrated
While transparency has delivered numerous benefits to us already, we’ve also had to accept that it often raises new questions and forces us to confront new, sometimes uncomfortable realities. When the performance of individual functions, categories or dairies suddenly becomes available in blunt numbers to leaders across the business to assess and benchmark against, we’ve experienced different outcomes. 

The best result is when we “find what we’re looking for” and action plans can be confirmed with lower risk, higher urgency and strong conviction across the business. 

The most common finding for us has been to discover more complexity than we initially expected, which causes us to reevaluate how we look at the issue and address it in a more nuanced way than we initially anticipated. This also usually requires peeling back another layer of the transparency onion, to harmonize and incorporate additional variables. 

And a few times, our zeal for transparency has led us down rabbit holes where new insights were limited - especially when we lacked an aligned approach and/or management support from the outset. As a result, I firmly believe it’s always important to ask if specific transparency efforts will really enable the business to perform better versus providing “nice-to-have” information or analysis paralysis. 

Transparency makes a true performance culture possible
When handled with care, transparency empowers us to act in a fact-based way and to find inspiration from high-performing peers. It gives us a common performance management language for how to tackle our challenges as an organization and that in turn opens new worlds of opportunity to strengthen financial and operational performance. 

At Arla Foods, transparency is the key enabler in creating a true performance culture and in making us even more collaborative. Personally, I love exploring all the details of our own Milky Way, but the trick is not to get lost in the details and forget the big picture. Our North Star - our vision – remains the solid anchor point to help us transform our business with our new-found transparency.