Making the necessary change at the right time

Industry
Food
Foundation
1928
Location
Argentina

We all know the saying “there are no second chances to make a first impression”; in business, many times, there are no second chances when the market gives an opportunity to grow.

That window of opportunity is for those who make the necessary and smartest changes.

The client

Ilolay is an Argentinian company that offers a wide range of dairy products. Its origins date back to 1928, when Alfredo Williner, its founder, began to industrialize milk from his own dairy farms in a factory located in Bella Italia, province of Santa Fe.

Since then, the company has been diversifying through the incorporation of new dairy products and expanding its production capacity by opening new plants in its home province.

At present, the company produces long-life milk, dulce de leche (milk-based caramel), powdered milk, yogurts, custards, desserts, butter, cream and a variety of cheeses, which are distributed throughout Argentina and to more than 30 countries around the world. Ilolay transforms milk from its dairy farms into nutritious food that reaches the homes of millions of people and is part of their lives.

The context

Having a consolidated industrial complex in Bella Italia and a production of 1.5 million liters of milk per day, in 2016 Ilolay had an average of 10,000 clients to whom it supplied its products with its own distribution system. The exponential growth in the number of company clients, especially in certain parts of the country outside the capital city, resulted in a very heterogeneous portfolio of clients with small, medium and large clients. Also, the company had a diversified offer with different commercialization models for each product line.

In this context and taking into account the changes in the composition of the current competitive scenario in the sector, such as the disappearance of one of the major players in the industry, Ilolay was presented with an opportunity that it couldn’t afford to lose.

So, the company, which had historically focused on the atomization of clients, was facing the concrete possibility of increasing its market share, and, in order to do that, the need to optimize the current commercial and logistics model was imminent.

The challenge

Due to the number of clients, products and commercialization alternatives available, the planning and operational schemes needed to be reviewed. The challenge that Axonier together with Ilolay’s team faced consisted in optimizing the entire current business model. As a consequence, we needed to review the organizational and processes schemes while we identified opportunities to make transformations with respect to the commercial network, the supply chain and pricing to make channels more efficient, with the intention of reaching a quality of service and a cost structure in line with the new market share.

The solution

We developed a comprehensive model of commercial processes and supply chain that made the network and all its associated costs more efficient. Logistics operators and distributors were incorporated, and the client mix and the composition of the logistics and commercial chain were modified.

That was how a new service offer for each channel was developed, based on advanced pricing models and the evaluation of contributions per channel/client.

The result

The new supply model improved the quality of service and optimized the commercial, administrative and logistics cost structure. Management processes were unified and the new node diagram had a positive impact on the quality of assistance and control.

Its market share increase, together with the new commercial scheme, allowed Ilolay to broaden its scope in the City of Buenos Aires, especially in the mass channel (supermarkets), and to strengthen its position in those markets in which it was already doing business.

Today, the company is present in the main retails of the City of Buenos Aires and has a network of trade representatives in 11 provinces of Argentina, all of them being supplied through 9 distribution centers located outside the country’s capital city.

The new commercial diagram allowed Ilolay to report improvements in the quality of service and the quality of assistance and control, and to optimize the commercial, administrative and logistics cost structure. At the same time, the transformation of the planning and operating process accelerated the company’s ability to react to changes in demand and supply of inputs.

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