Milking the benefits of both core and cutting-edge IT
Valio’s CIO Juha Penttilä is applying two decades of industry expertise to maximizing the value of the Finnish dairy company’s investments in traditional business applications while carefully betting on the new wave of digital technologies.
In many ways, Juha Penttilä was always going to be a natural choice for a senior management role at Valio, the €2 billion ($2.7bn) Finnish dairy products company. Having grown up in one of the country’s countless farms — complete with a small herd of cows — he graduated as a dairy technician in 1992 and worked his way through Valio’s regional offices as a quality manager and plant manager, before heading to the Helsinki headquarters as development director for the company’s order and delivery processes.
But his latest move looks like a less obvious step — although not to 45-year-old Penttilä. In taking the CIO’s role at Valio early this year, the breadth of his business experience was more valuable than any formal qualification in IT, he argues. “I like straying from my comfort zone. So, the best part of my job is having the opportunity to learn something new all the time,” he says. “I already knew how production, order processing, logistics and the rest of the business works — and I knew people across the company well. I also had a pretty good understanding of the ways IT management is connected to everything. That's probably why I’m sitting here today,” he outlines.
His background has certainly exposed him to the ways in which IT supports the company’s growth and effectiveness. “I’m familiar with our many systems and with the end-users’ viewpoint [Valio has 4,600 employees across Finland and its five international subsidiaries]. But I leave the deep insight into ‘the bits and bytes’ world to IT experts.”
That expert team comprises 30 colleagues in-house, but the majority of Valio’s IT services are delivered in close collaboration with a number of outsourcing partners. And Penttilä sees his ongoing mission as strengthening the management of that partner network. “No one can do this alone,” he says. “It’s got to be a group effort, with the [internal and external] team widely networked and actively communicating with the business.”
As at any modern company, the IT department is no longer seen narrowly as an expense line or a support function but as a developer of business innovation. Its role as a strategic partner to the business is a given, says Penttilä, and collaboration with the business is continually being enhanced: “Business and IT work hand in hand.”
Ultimately, though, that symbiosis has to deliver value to the end customer. Consumers expect Valio’s fresh milk, yogurt, cheeses and other dairy products on the supermarket shelf every day. So Valio’s logistics and supply chain, which handles 1.9 billion liters of milk annually and millions of kilograms of goods every day, must perform flawlessly.
The company is in the process of upgrading its financial systems to SAP, with ICT partner Fujitsu playing a major role in that development and deployment challenge. That effort is part of a multi-year, staged adoption of SAP’s broad business applications suite that dates back over a decade to when the company made the strategic decision to standardize on SAP, progressively replacing standalone applications from numerous other vendors. Valio’s SAP implementation (ValioSAP) serves as a central sales, logistics and enterprise resource planning system, and Fujitsu has been responsible for the operational management and support of many of those key applications. Aside from the finance upgrade, there is an extensive SAP production-planning project under way for its milk solids products.
Valio characterizes Fujitsu as one of its “significant” suppliers and, indeed, collaboration between the two companies goes back a long way — to the mid-1990s — something that has helped Fujitsu develop a deep understanding of its customer’s business and the industry in which it operates. Fujitsu and Valio collaborate under an extensive infrastructure and application service agreement, covering Fujitsu’s managed IT services, application support and further development services in logistics and milk procurement. Fujitsu also provides Microsoft Lync real-time communications services to Valio and is working on a SharePoint 2013 workspace project.
In regular discussions, Valio looks to Fujitsu (as it does with other service providers) to proactively put forward ideas in areas where productivity, working practices and collaboration could be improved. That requires “an agility, an ability to adjust its ways of thinking, as needed,” says Penttilä — something that is evident in Fujitsu’s own operations.
Agility is also one of the principles that underpins Valio’s — and Penttilä’s — enthusiasm for Lean, the management approach that advocates cycles of continuous improvement and elimination of waste through rapid, iterative development and deployment.
“Lean has always been an integral part of my work,” says Penttilä. “In our case, the bottom line of that is how to bring a product faster to the consumer. We must be able to deliver the right product, of the right quality, at the right time and to the right place as quickly as possible. And the same law applies to the ICT world as well.”
Lean allows Valio to look into information flows, find out where time is being consumed, and what can be changed, he adds. “In production, this is a complicated task, involving multiple equations — how many items there are, what types of manufacturing processes are employed, what is the minimum production batch for a certain product,” he explains.
As every CIO is aware, the business opportunities and challenges presented by today’s technology innovations are on an unprecedented scale. Cloud services, big data, mobility and the Internet of Things are likely to disrupt many industries and shake up competitive positions. Valio, says Penttilä, is “preparing a road map for how these new things should be considered in ongoing projects.”
One example is the company’s evolving interest in exploiting the use of real-time information across its logistics operations. To this end, it deployed a new mobile system for its milk trucks last spring to provide continuous information to the company and producers on their location, schedule, the status of milk collections and so on.
Such innovation aside, Penttilä highlights that Valio is prudent about following new technology trends. A certain amount of stability needs to be retained, he says. “[Pioneering] projects sometimes result in bitter experiences. So we are not necessarily the first ones to raise our hands and test the newest of the new.”
That formula for blending the established with the innovative, however, has served Valio well, sustaining its brand as one of the strongest and most trusted in Finland. “You know what you get when you buy Valio products,” says Penttilä. “We have good basic products but also strong R&D, including a lot of novelty products that consumers are looking for.” And with his personal favorites of vitamin-supplemented milk and Valio’s line of quark (curd) items, Penttilä’s personal taste is a suitable reflection of that.
• Portait photography by Jussi Särkilahti; translation from Finnish by Päivi Vuoriaro