European dairy cooperative Arla Foods has launched an internal transformation programme called “Calciumâ€, which is set to deliver more than 400 million euro of savings by the end of 2020 through improved efficiency in all areas of the company.
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The programme looks to boost Arla’s performance to the benefit of its farmer-owners and further strengthen the company’s investment capability.
With Good Growth 2020 Arla has a strong strategy in place that has been growing the company’s business successfully and remains right for the trends that are driving the global food and dairy market.
Ongoing cost savings and efficiencies are a vital part of Good Growth 2020 strategy, and consequently Arla has initiated a three-year transformation programme called “Calcium†which will change the company by creating significant efficiencies.
The internal Calcium programme, which is already underway, will deliver a run-rate of at least 400 million euro of savings by the end of 2020, and the profit impact will build throughout the life of the programme.
While the transformational aspirations of Calcium have been carefully planned since the end of last year, the scope of the cost-savings ambition has been increased by Arla’s management in recent months in light of unique external challenges facing Arla as a result of the extent of the company’s exposure to the British pound and unfavourable developments in commodity markets.
The Calcium programme will cover activities throughout Arla, covering production, products, procurement, promotional marketing and people. It aims at unleashing the full potential in Arla’s organisation by transforming ways of working, reducing bureaucracy and complexities, and cutting costs.
Of the total cost reduction of more than 400 million euro, Arla expects to return approximately 300 million euro to the farmers through the farmgate milk price with the additional savings being reinvested in the company’s Good Growth 2020 strategy to fuel further growth and improve profitability. ■