Valio partners with a food storage specialist
Valio and Steveco have discussed cooperation for a decade. The effects of current global logistics problems on Valio's supply chain led to concrete action in early 2021.
"There has been a great deal of uncertainty in world trade, goods flows and container traffic for two or three years. These factors have increased our need for storage facilities and ability to handle fluctuations in the need for space. That’s why at the beginning of 2021 we started to map out where we can find more capacity,” says Juhani Pöntinen, director responsible for Valio's supply chain management and sales planning chain processes.
Valio needed to increase the capacity for buffer storage for those products whose transportation was hit hardest by the container shortage. The new storage solution was intended to reduce the pressure on Valio's own warehouses.
The products that come under the scheme can withstand longer term storage, including milk powder products headed for delivery to China and packaging materials used by Finnish powder products factories. Valio manufactures its powder products in Seinäjoki, Haapavesi, Lapinlahti and Joensuu.
Tough screening criteria
Valio began assessing alternatives using these criteria: suitability and quality of storage facilities, location of the warehouse, a monitoring system for logistics services, and the cost of storage. Regarding the location, it was important that the warehouse be located close to Vuosaari harbour.
Various facilities and operating models were extensively mapped in the southern Finland region. Valio was pleased that Steveco’s bid suggested a location in Tuusula, near Helsinki and close to Highway 3 and Ring Road 3 leading to Vuosaari harbour.
The warehouse system offered by Steveco meets Valio's strict requirements.
"Steveco's modern warehouse control system provides the method of tracking of product batches that we need. We examined this carefully during the bidding phase," says Pöntinen.
Batch tracking is important for Valio and for its customers.
"Product safety is an important issue. We want to know where every batch has been shipped to."
Suitability of the premises audited and verified
The environment of the warehouses offered by Steveco meets Valio's high standards. Valio also closely audited the storage conditions.
"We checked that the quality of the storage was up to scratch. Among other aspects, temperature and humidity monitoring, pest control and the general cleanliness of the premises were examined. It is very important to us that the warehouses are suitable for our products. Our audit was conducted in addition to Steveco's audit," says Pöntinen.
Even though milk powder does not require cold storage, the temperature and humidity of the warehouse must be uniform and within set limits. That is why it must have a comprehensive monitoring and control system.
Steveco ensures that its storage services cover a wide range of facilities for different needs. That is why it chose Logitri as its warehouse service partner, whose huge service warehouse in Tuusula also has facilities suitable for food storage.
"Our long-term partner Logitri already had some of the permits required by Valio. The rest of the permits, such as the Chinese export permit, were easy to obtain because it is a food warehouse," says Marko Tuokko, sales manager at Steveco.
Smooth information flow across the delivery chain
The cooperation started on November 15, 2021 when Valio and Steveco signed a service contract. The first batches of Valio's packaging materials were delivered to the Tuusula warehouse in November.
Daily information flows transparently in the logistics chain from Valio to the staff running Logitri's operational activities.
"Valio notifies Logitri directly about batches entering and leaving the warehouse. We receive reports on events and volumes. In regular follow-up meetings, we evaluate how the service has met Valio's requirements, and work to develop the cooperation even further," says Tuokko.
The scalable service model offered by Steveco is optimal for Valio because its needs vary quite a bit. Valio uses more than a thousand pallet spots.
When the goods flow runs smoothly, there is no shortage of containers and the logistics chain is unbroken, less space is needed. When the situation changes quickly, for example due to an acute container shortage, the demand for temporary storage can rise very quickly.
Smooth two-way traffic
The logistics of milk powder and packaging materials runs smoothly through the Tuusula warehouse. When a truckload of milk powder arrives in Tuusula, the truck returns with a load of packaging materials. Similarly, when a truck delivers packaging materials from the port, it usually returns with a load of milk powder.
Using a storage partner is not entirely new for Valio, which has employed such services when needed in the past. Cooperation with Steveco has continued for over a year now and much experience has already been gained.
"After some minor challenges at the beginning, the cooperation has been smooth and flexible in all respects," says Pöntinen.
Does anything in particular stick out in his mind?
"Logistics run well when you can’t remember anything special," Pöntinen says with a laugh.
"The cooperation has developed well and is currently working perfectly," he adds.
Steveco's Tuokko is also satisfied with the cooperation.
"Cooperation with Valio shows that we know how to serve a large and demanding food business. Thinking of Logitri, it is important for us to increase the volume of storage customers."
"As the cooperation has taken off so well, our aim is to expand our services to Valio both in warehousing and in other areas of logistics," says Tuokko.
A strengthening warehouse partnership
The partnership between Steveco and Logitri is a natural one: Steveco's strongest expertise is in port logistics and handling, and Logitri is experienced in warehousing services on land.
Steveco demands from its partners that all parts of the logistics chain click seamlessly and maintain high quality.
"Flexible cooperation and a can-do attitude are viewed positively by our customers," says Steveco's sales director Mia Brunila.
The cooperation between these two companies has deep roots, as Logitri's founder and CEO Jarno Hanhinen, himself from Kotka, knows Steveco from the last century.
"Marko Tuokko and I were working in neighbouring offices already in the 1990s," says Hanhinen.
Logitri has grown by an average of twenty per cent per year for ten years. Even when Covid struck, growth continued after the initial shock. The retention of customers and their need to increase their service warehouse operations have kept Logitri on a stable growth path.
"We are focused on storing food and food-type products. Our operations are certified with ISO 9001, ISO 14001, ISO 45001 and FSSC 22000 certificates, and many more."
"The Finnish Food Authority has approved our facility for food processing and certified that we can deliver food from here to different parts of the world. Regarding Valio, we applied for a licence from the Food Authority enabling Valio to deliver products from our warehouse to China," says Hanhinen.
In 2010, Logitri had one warehouse of 8,000 square metres. Over the years, they acquired more warehouses in Vantaa. In 2018, Logitri's first 32,000-square-metre warehouse went up in Tuusula. An extension of 17,500 square metres opened in the spring of 2021. At the beginning of September 2022, the area of the logistics centre grew to a total of 65,000 square metres. There is space for 200,000 pallet slots.
Valio’s long experience in exporting to China
Valio has operated for more than 30 years in China as a supplier of raw materials for the food industry and as an industry trainer. The first product exported to China was a demineralized whey powder called Demi in 1990. It was used in the baby food industry and in the manufacture of chocolate and ice cream.
Valio's high-quality consumer products are in high demand in China’s huge market. In 2016, the company started online sales of milk powders to consumers through, among other channels, the country's largest online store, Alibaba. In the same year, Valio established an office in China focusing on sales and marketing of consumer products.
Valio has been very successful in China. The company's sales in the eastern giant's market grew by 40 per cent in 2020 and by 16 per cent in 2021.
Text: Jukka Nortio
Photos: Tero Ikäheimonen
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