How bakery company Vaasan used AI to upgrade their planning
The Finnish baker Vaasan knows a thing or two about fast delivery. After all, the company’s roots date back to year 1849, which makes Vaasan one of the oldest nationwide bakeries in Finland. Vaasan is best known as the producer of Finland’s most popular bread, Vaasan Ruispalat. The company has to be fast, because the baking industry moves quickly. The product is produced in the morning and typically sold by the afternoon. To provide high quality products and service to their customers, large bakeries must rely on very short planning cycles that are informed by various data sources from across the organization.
Today Vaasan has 1,400 employees across Finland and the Baltics, working together to put their fresh bread and pastries on store shelves daily. It takes a lot of coordination to make this happen, and as their business grows, they increasingly rely on advanced planning tools. With automated planning and analytics workflows, Vaasan is able to surface actionable insights across different business departments quickly to continuously improve their operations, 172 years into the company’s history.
The COVID-19 pandemic was, as Joonas Alasaari, Senior Business Controller at Vaasan put it, an ideal “stress test” for the company, especially in its first few weeks as consumer uncertainty peaked. Vaasan’s demand doubled overnight as panicked shoppers cleared shelves of their household staple loaves. It was an opportunity for the company to step back and reflect on how years of increasingly lean operations left them surprised by the unprecedented spike, and what they might do to better face a similar future challenge.
IBM Planning Analytics with Watson is the root of the Vaasan planning process, allowing the company to perform budgeting, forecasting, and other financial processes in one place across their entire organization, alongside a wider range of planning functions like energy consumption management, workforce management and product planning.
Vaasan leaned on Intito, a Nordic technology consulting firm that works with the IBM Business Analytics portfolio. Intito provides clients with integrated business planning, both financial and operational, using tools like AI-infused business analytics. With the help of IBM Planning Analytics with Watson and Cognos Analytics, Intito helped Vaasan use predictive capabilities in three unique ways across their business:
- Predicting energy consumption and costs. Vaasan and Intito have built an algorithm that factors in external factors like expected outside temperature, along with production estimates. This gives Vaasan more accurate predictions into their future energy needs, which they can then translate into estimations of energy costs. Prior to developing this model, this data was gathered and processed manually, more slowly and with less accuracy.
- Long-term product planning. Vaasan developed a model that uses historic performance data to better determine where their products are situated in their life cycles. This enables planners to rely less on intuition and make more data-driven decisions. The model often gave planners much more advance notice of a product’s decline, giving them more time to course correct or develop replacement products.
- Analyzing cost center trends. This model is being tested today and is embedded within Vaasan’s cost centers. It is used to discover anomalies that don’t conform to typical trends. Being able to unearth anomalies so quickly saves planners hours of sifting through data manually at the end of the month.
Vaasan uses IBM Planning Analytics with Watson for monthly estimates, evaluating the current and coming fiscal years, using an integrated model with lots of inputs. With high participation across the organization, the people closest to the decisions are able to provide top-level planners with specific real-time data about current supply, demand, and external economic factors.
As a result, the company is able to operate with less excess capacity, and by extension, higher profit and customer satisfaction. This value has been lying dormant within Vaasan’s data, perhaps for over a century. They only needed the right tools to draw it out.
IBM Planning Analytics with Watson gives planners a central hub from which to gather insights and adjust plans accordingly. To learn more about how it works, watch the full fireside chat between Dave Marmer, VP, Product Management, Regtech, Cognos Analytics and Planning Analytics with Watson, IBM and Joonas Alasaari, Senior Business Controller, Vaasan, from IBM Think.
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