In 2005, Novozymes was faced by the challenges that the cost of producing in Denmark was 4x times higher in than in China due to production salary and operation. The outsource of the operation to China was obvious with a cost saving of 17 Million Euro, meanwhile the Executive team wanted to keep the production in Denmark and a BPM business case to optimize the operations with a cost saving of 16 Million Euro was initiated and executed. The transformation initiative is a major undertaking with all odds against it.
Meanwhile, with a structural approach and with surgical precision mapping all tasks, activities, functions, roles and processes across departments and organizations. The transformation initiative included focus higher level of standardization, optimization, and streamline production with focus on effectiveness and efficiency in order to reduce cost, increase product quality and technology development and adoption.
The main objectives activities where communicated:
- Technology-driven efficiency. Implement technologies that automated and allows for a more efficient execution of the work with fewer people & less process variation.
- Consolidate production lines for more efficiency through better planning &utilization of steel & manpower.
- Stream-line work efforts effectiveness & efficiency. Create an environment, mindset to improve and proactively streamline daily operation.
- Alignment of tasks & resources in all units at all times to 24/7.
- Effectively maintenance of our plants, with minimum resource consumption supports our need for full capacity. The maintenance must be based on business needs.
Critical Success Factors:
- Reduced the total capacity costs by approx. 15%.
- Reduced our maintenance costs by approx. 30%.
- Emerge as a highly efficient production for themselves and others view.
Resulting in 2010 in an overall reduction of cost of 16 Million Euro (120 Million DKK), while increase product quality & technology development & adoption. The factor of production in Denmark versus China was reduced from 4 to 2.3, thereby turning the tide. Today it is cheaper to produce some of Novozymes’ products in Denmark for the European market, rather than in China due to tax, transport cost and transport time.