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Summary

This transcript provides an in-depth look at Davidsen's procurement and supplier strategy, emphasizing the importance of strong supplier agreements, particularly within Europe, to ensure product quality and efficient delivery. The company balances between centralization and decentralization, with a focus on working with a select number of suppliers for core items while maintaining flexibility for special requests. The role of logistics is also key, with specialized transportation and local knowledge ensuring timely and accurate deliveries to customers. The speaker emphasizes the value of reliable, quality products and strong communication in maintaining a competitive edge.

Takeaways

• 😀 Davidsen operates with two main groups of suppliers: those providing products for sale (Aftal suppliers) and other suppliers for various needs like computers, cars, and cleaning.
• 😀 Aftal suppliers make up 92% of Davidsen's purchases, ensuring strong legal foundations, maximum competitiveness, and reliability in the supply chain.
• 😀 Davidsen occasionally works with non-Aftal suppliers when specific customer requests arise, opening up the supplier temporarily to fulfill a specific order.
• 😀 Davidsen focuses on suppliers within the EU to simplify logistics and avoid the challenges of sourcing from far-off regions, balancing quality and cost.
• 😀 The company aims to consolidate its supplier base but ensures not to overly depend on a single supplier to avoid risks, opting for multiple backup options when possible.
• 😀 Market disruptions, such as the war in Ukraine affecting oak supply, emphasize the importance of having alternative suppliers to avoid project delays.
• 😀 Quality and reliability are essential when selecting suppliers, as Davidsen provides long warranties on its products and needs suppliers to be financially solid.
• 😀 Suppliers must also have strong organizational capabilities, competent staff, and a long-term business model to ensure stability in the partnership.
• 😀 Efficient logistics are critical, as suppliers must be able to deliver products to both central warehouses and individual stores while minimizing transport costs.
• 😀 Davidsen's ERP system handles 330,000 product SKUs, and the company categorizes products into standard, special, or outgoing items for better inventory management.
• 😀 In the logistics system, products sold online are shipped from a centralized warehouse, while bulky construction materials are distributed regionally from local logistics centers.

Q & A

What are the two main categories of suppliers that Davidsen works with?

Davidsen categorizes its suppliers into two main groups: those that supply products for resale in their business and those that supply other goods like computers, cars, and cleaning services.

What is the role of 'Agreement Suppliers' at Davidsen?

Agreement Suppliers are those with whom Davidsen has established fixed agreements to ensure a strong legal foundation, competitive pricing, and reliable delivery of goods for their stores.

What percentage of Davidsen's purchases are from Agreement Suppliers?

In 2024, approximately 92% of all purchases at Davidsen come from Agreement Suppliers.

How does Davidsen handle suppliers that are not part of their Agreement Supplier group?

For suppliers outside of the Agreement Supplier group, Davidsen allows salespeople to contact them directly if a customer specifically requests a product, ensuring flexibility while maintaining the structure of the main supplier agreements.

Why does Davidsen prioritize suppliers within the Eurozone?

Davidsen prioritizes suppliers within the Eurozone because of easier logistics, better regulatory compliance, and the proximity to the suppliers, making it easier to resolve any potential issues.

What is Davidsen's approach towards managing supplier risk?

Davidsen aims to avoid relying on only one supplier for any product to mitigate risk. For products with multiple suppliers, they ensure they have secondary or backup options in case the primary supplier fails or if commercial disagreements arise.

How did the situation in Ukraine affect Davidsen's supply chain?

Due to the Ukraine war, products like oak wood became scarce. This highlighted the importance of having multiple suppliers to ensure product availability, especially for long-term projects where specific products are required.

What is the focus when selecting suppliers at Davidsen, beyond product quality?

Beyond product quality, Davidsen also looks for financial stability and organizational competence among suppliers, ensuring that they are reliable and capable of providing long-term support for warranty claims and other issues.

How does Davidsen classify the large number of products in their system?

Davidsen uses a classification system to manage its extensive product range, including categories such as 'stock items', 'order items', and 'discontinued items' to help salespeople navigate the 330,000 products in their ERP system.

How does Davidsen manage logistics for their physical stores and online orders?

Davidsen operates a regional logistics model where large building materials are stored at local centers or warehouses, while smaller items for online orders are shipped from a central warehouse, ensuring efficient and cost-effective distribution.