ELGIGANTEN LOGISTIK AB
Quality comes first for Elgiganten
In order to work for the electronics giant Elgiganten, a transport company must meet a large number of criteria concerning working conditions, the environment and safety. In 2015, Ahola Transport passed the test and now ranks high among the consumer electronics retailer´s partners.
Out in the distribution centre’s warehouses, the take on Ahola is positive. Jimmy Olofsson values Ahola’s flexibility.
“We are extremely pleased. Put simply, our partnership with Ahola has been one of the better ones,” says Jimmy Olofsson, Senior Logistics Manager at Elgiganten Logistik Ab, the logistics company of Elgiganten.
The current agreement with Ahola Transport became a reality in May 2015 and for now extends until 2018. Ahola is responsible for transports from Elgiganten’s distribution centre in Torsvik, south of Jönköping, Sweden, to around forty shops and home delivery warehouses in Finland. Every day, 15 Ahola Transport trucks are loaded at the 107,000-square-metre warehouse complex in southern Sweden.
“In terms of volumes, Finland accounts for 17–18 per cent of our deliveries, so Ahola is definitely one of our biggest transport companies,” says Olofsson.
Social responsibility at the forefront
When Elgiganten signed the agreement on transports to Finland, it was a huge change.
“Ever since we built this centre in 1997 and moved the Oslo warehouse here, we had collaborated with the same transport company. We handed over all of our logistics operations to them but, after a while, our demands changed and we wanted more control,” says Olofsson.
In 2014, Elgiganten and Olofsson began seeking a new operating model. Olofsson had left his position as Site Manager for the Torsvik distribution centre to focus on logistics.
“When we sent out requests for tenders to a total of 90 companies throughout the Nordic countries, we established a number of criteria that we wished them to meet.”
Corporate Social Responsibility (CSR) became a key criterion in our search for a new transport company.
“Above all we want the drivers to be properly paid according to Nordic regulations and have a good working environment. We didn’t want to contribute to the pay dumping that was already underway,” says
Harder than expected
Elgiganten did not imagine that it would be so difficult to meet its requirement, but in fact it meant that many companies were automatically out of the running. In addition, Elgiganten had a long list of criteria on the environment and safety, and the drivers would have to be able to communicate in a Nordic language or English. Twenty-six companies made the cut but many were excluded after negotiations.
“The companies didn’t really believe our pay requirements. Back then many of them thought that the price of transports was the most important thing, but to us that came second,” Olofsson explains.
Despite the setbacks, Elgiganten stuck to its guns. Responsibility had to be an integral aspect of all the operations. Ahola and one another company were still in the running for transports to Finland.
“We saw entirely eye-to-eye with both companies and decided to spread out the risks by having more than one company take care of transports in each country, but a week before deliveries were set to start, it turned out that the other company had made a mistake in its calculations,” says Olofsson.
Tough start – strong future
With just a few days to go, they were left without a solution for around half of the transport needs for Finland.
“We called Ahola and told them we had a little challenge for them, a positive one,” says Olofsson.
A meeting was called at Ahola and the next morning a decision had been made. Ahola took over responsibility for all transports to Finland.
“The fact that they managed that impressed us to no end, but it can’t have been easy,” says Olofsson.
Since then, Ahola and Elgiganten have achieved continuous development through their mutually beneficial co-operation.
“Our partnership has continued to develop, the dialogue has been excellent and Ahola has been incredibly flexible. It’s working wonderfully,” says Olofsson.
Development remains important, however. Representatives of the companies meet at least twice a year and have monthly phone conferences.
“We bring each other up to date on current matters but also focus on the future. It is incredibly important for us to change and improve,” says Olofsson.
Learning from one another
Ahola Transport also highly values the strong collaboration with Elgiganten.
“We learn a lot and develop continuously because of clients like them. They place demands on implementation and follow-up, and take us the next step forward,” says Jonas Anderssén, Key Account Manager at Ahola Transport.
Anderssén has managed the Elgiganten account since 2016. Even though he was not involved in the process when Ahola was suddenly handed overall responsibility for transports to Finland, he knows the story well.
“In the beginning it was pretty chaotic, but in line with the Ahola spirit, we said we’d get it done and today Elgiganten is an extremely important client,” Anderssén says.
Just as Elgiganten hoped, their shared journey has been paved with strong commitment from Ahola.
“When you work together, new issues come up that need solving and that is where I think we are on the same page as Elgiganten. We like to think on our feet and fix problems as they come up,” says Jonas Anderssén.
Flexibility for the client
Anderssén believes that the Ahola concept is appealing to clients like Elgiganten, especially as the company’s transports are very seasonal and vary quite a bit due to sales campaigns.
“We have extremely short communication channels and a simple organisation. The client has a single contact person for the entire set up. This results in a good relationship, which helps solve most problems. We can always tailor solutions to meet the customer’s demands. Ours is not a rigid organisation that the customer has to adapt to. We adapt to the customer,” says Anderssén.
In addition to Ahola’s simple, straightforward communications channels, the transport concept itself is the ace up their sleeve, according to Anderssén.
“We have less goods handling and don’t use fixed routes. Our concept makes us more flexible than our competitors.”
This flexibility also appeals to Elgiganten.
“Ahola does a great job,” says Jimmy Olofsson.
Work bears fruit
Besides good feedback, Ahola has also received concrete evidence of its achievements. In 2016, Ahola Transport was ranked second among Elgiganten’s ten Nordic transport companies. Ahola was praised for its impressive management of the entire logistics chain ‘all the way down to the nuts and bolts’.
“We intend to be number one in 2017. We’ve already started working towards that goal,” says Anderssén.
Improvement is in the interest of both partners and they have held shared development discussions during the winter to reach this goal. Jimmy Olofsson values the commitment displayed in Ahola’s desire for continuous improvement.
“Already at the tendering stage, commitment was extremely important. What I thought we needed was a medium-sized family-owned company that could offer us great commitment and that is exactly what Ahola is about,” says Olofsson.
Jonas Anderssén highlights that Ahola wants to give its all, especially as Elgiganten and Ahola have a very productive partnership.
“Ahola and Elgiganten share similar moral and ethical views, something that is gaining in importance throughout the industry. For a long time, it was all about price, but now, the environment, quality and values have become a thing,” he says.
As a retailer, Elgiganten is well-positioned to meet this demand and Ahola is more than happy to follow suit.
“This is a major issue in Sweden but not so much in Finland yet. In Sweden, ‘fair transports’ are a big thing among transport industry interest organisations, for example. They lobby in municipalities and the state,” says Anderssén.
Although both Elgiganten and Ahola have come a long way in developing fair, high-quality transports, both partners are looking forward to continuing this development.
“We are now at a phase in which everything is rolling along nicely and we have gotten to know one another. It’s now about fine-tuning and getting the last operative parts working impeccably,” says Anderssén.
Jimmy Olofsson seconds this.
“We are continuing to work according to our chosen policy and hope that the fruitful co-operation with Ahola continues. The next step is an increased focus on the environment.”
Long-term work has been carried out to fill the trucks as optimally as possible in order to minimise their environmental impact. Next in line is measuring the precise environmental impacts of the logistics, all the way from the factory to the consumer, for products ranging from memory cards to refrigerators.
Consumers are looking for more responsibility from the retail segment, which is something that Elgiganten is willing to and capable of delivering, also when it comes to its transport companies. Jimmy Olofsson points out Elgiganten’s well-known slogan ‘It’s stupid to pay too much’, but adds that for Elgiganten it is just as much about it being ‘stupid to pay too little’. Quality always comes first.
Elgiganten’s distribution center. Photo: Elgiganten
Elgiganten’s distribution centre
• Sees 1.1 million m3 of goods pass through each year.
• The stock turnover rate of the 107,000 m2 warehouse is approximately three weeks.
• Annually, 22,500 trucks and containers and 2,500 railway cars are unloaded at the centre.
• Cargo is sent out annually in 17,000 trucks from 60 loading docks to almost 400 shops throughout the Nordic countries, including the Faroe Islands, Greenland and Iceland.
• The distribution centre has been expanded three times since it started up in 1997.
• Employs between 370 and 700 people in three shifts, 24/7, six days a week.