mymuesli GmbH: Increasing company value by optimising procurement processes
How mymuesli achieved significant savings by implementing systematic raw materials procurement and buying at the right time
mymuesli was founded in 2007 by three university friends in Passau, Germany, where mymuesli still has its head office to this day. Initially, the idea was to allow customers to create their own favourite muesli, choosing from a variety of different ingredients and then ordering it through an online platform. Over the next years, more and more products followed and mymuesli expanded beyond the borders of Germany, adding new distribution channels through large retail chains such as REWE and Edeka. The company’s products can now be found in its own-brand stores on high streets in many cities across Germany, Switzerland, Austria and Sweden. In its first ten years, mymuesli grew enormously and there seems to be no end in sight as the company continues to expand rapidly. But with growth also comes the difficult task of constantly having to develop new processes and to implement new structures.
To tackle this challenge, INVERTO was commissioned to optimise mymuesli’s procurement processes and reduce both direct and indirect purchasing costs. One of the objectives was to improve the procurement of certified organic raw materials of the highest quality, which are in short supply on the market. mymuesli needed to procure agricultural raw materials like fruits (such as freeze-dried berries), grains (such as oat flakes and crunchy clusters), nuts (such as cashews and walnuts) and chocolate (such as chocolate flakes). In close partnership with mymuesli’s procurement, quality assurance and product management departments, the INVERTO project team designed and implemented a strategic procurement process – from preparing the calls for tender to awarding the contracts for all raw material requirements.
The procurement organisation was heavily centred on operations and driven by demand. There was no systematic demand management and no forecasts for future requirements. Instead, materials were procured based on current production needs for rather short periods of time. Procurement processes were not completely systematised and there was zero cost transparency.
Another challenge was the difficult market environment and the supplier market for agricultural raw materials. These raw materials markets tend to be highly volatile, which make prices difficult to predict. External factors such as crop failures and currency crises in the producing countries could significantly influence market prices and lead to shortages.
Moreover, organic certificates, regional ingredients and the highest quality of raw materials were part of the company philosophy at mymuesli, and therefore took precedence in the procurement process. This greatly restricted the suppliers available on the market. While the demand for certified organic products is currently very high, some of the raw materials required by mymuesli are only grown organically to a limited extent. This imbalance between supply and demand naturally weakened the negotiating position of mymuesli buyers.
The aim was to optimise procurement and achieve savings for mymuesli by modifying the procurement processes on the basis of harvest times and price trends on the relevant raw materials markets. And the way to do that would be to set the optimal price of agricultural raw materials by concluding annual contracts at the optimal purchase time.
The most important requirement, as far as mymuesli was concerned, was to ensure a constant secure supply for the entire range of raw materials, so that the production department had access to all their usual organic ingredients at any time. To ensure that the supply of raw materials would continue to be secured in the future, the supplier pool would be expanded to include major producers.
For some of the key requirements, product improvements were also included in the scope of the project, such as sugar and palm oil-free crunchy clusters.
A detailed requirements analysis was carried out at the start of the implementation phase. For each raw material, the consumption volume from the previous year was compared with the consumption forecast for the year ahead. Taking into account the development of new and discontinued products, the annual planned volumes could then be determined, which were subsequently used as a basis for the annual supply contracts.
A harvest calendar was also created, which consolidated the information about all the raw materials. The harvest calendar was compared with the relevant raw materials indices, and internal and external experts were asked to pinpoint the optimal time to procure a product using the consolidated information.
Based on this data and taking into account stock levels and forecast consumption, INVERTO consultants together with the buyers at mymuesli set out a tender calendar with five combined market analyses.
Organic suppliers for the upcoming tenders were pre-qualified following an extensive supplier search and subsequent RFIs. INVERTO identified a large number of suppliers that had no relationship with mymuesli until that point and so was able to considerably expand the pool of organic suppliers and supplier markets in neighbouring countries.
In the subsequent implementation phase, the tenders agreed upon were issued by INVERTO, sampling and quality checks were carried out and price negotiations entered into.
By concluding annual contracts with fixed prices, mymuesli was able to make considerable savings in the double-digit percentage range, as well as increasing planning and supply security.
Thanks to the systematic tendering and sampling process, the pool of approved suppliers was expanded and the product quality was even partially improved, which will simplify procurement in the future. Furthermore, the relationship with existing partners was intensified and new partnerships were forged, while an optimised supplier structure was also achieved.
As a result of the new contracts, payment terms were also harmonised.
All in all, as a result of the project, raw materials procurement was further professionalised and the role of procurement was strengthened within the company. The savings achieved played a major part in significantly increasing the company’s value.