Trond Aune, Global ERP Manager and Henning Haugen, Group Technical Manager – Maintenance, both at Jotun, join Sarah to discuss the role of company culture in innovation, how a single source of truth was an imperative foundation for Digital Transformation, and how they’re building on success with the move to predictive maintenance.
Sarah Nicastro: Welcome to the Future of Field Service podcast. I'm your host, Sarah Nicastro. Today, we're going to be talking through another journey of digital transformation. I'm welcoming to the podcast today, two gentlemen from Jotun, Trond Aune, the global ERP manager and Henning Haugen, the group technical manager for maintenance. Trond, can you give a brief introduction to Jotun and introduce yourself?
Trond Aune: Yes, thank you, Sarah. I am the ERP manager of Jotun. And Jotun is one of the largest paint companies in the world. We are producing paints for different purposes. And we are into four different segments. One segment is the marine segment, where we are painting ships actually. We are painting every fourth ships in the world with Jotun paints. Another segment is a protective and industrial painting. Where we are painting large assets of our customers like infrastructure, power plants, oil platforms and so on. The third important segment is what we call the decorative cell segment. That is more beautification and protectional. Our homes and buildings and the fourth segment is powder, where it's actually industrial and decorative protection of steel and wood and other stuff. So Jotun is a major player within the paint manufacturing. And we actually have a turnover of almost three billion US$ and 10,000 employees globally.
Sarah Nicastro: Okay, great. And Henning can you introduce yourself and tell folks about your role?
Henning Haugen: Hi Sarah. Yes, of course. My role is group technical manager, maintenance. So my team is in charge of the setting the corporate requirements guidelines and tools, to be used by our maintenance teams across the world. So that's the short introduction.
Sarah Nicastro: Good, good, excellent. Well thank you both for being here. I'm excited to talk through your story. We have companies on the podcast all the time that are at some point in their digital transformation journey, right? And so we're going to be talking about some of the different aspects of yours today. But one of the things that I've learned over time is how critical culture is, when you're talking about any change. And using your company culture to really anchor that change. Whether that's digital transformation or a change in business processes or business focus, whatever that might be.
Sarah Nicastro: And Jotun has a really unique culture, it's the penguin culture. So Trond, can you start by telling us a bit about the penguin culture, and what it means to Jotun. How it originated, what the core values are and how it sort of permeates everything that the company does.
Trond Aune: The penguin culture is in the veins or all employees in Jotun. We, as all other companies across, we have some core values. For Jotun, that is respect, boldness, loyalty and care. That is not unique. What is maybe more unique is the way we in Jotun actually utilize this. Even though that we have excellent products and we have a fantastic infrastructure to produce and distribute those products to our customers, the most important asset we have is our employees. And by you saying, "the penguin culture," which is kind of a branding of the way we behave to each other. The way we behave to our customers, to suppliers, the thinking we are doing when taking decisions, how we treat the environment, how all these important aspects, when we take decisions every day, this is as I said in the veins of us and that is actually how we are succeeding also.
Trond Aune: This has been supported and promoted by the management in the company for so many years. And we really see the benefit of this now. And it's not only some expressions being used in the brochures, it is actually really into the company. The penguin is there, obviously penguin is an animal. And we relate to it very much. It is surviving in very tough conditions. It is a nice animal. It behaves very nice to each other, take care of each other. And obviously it's a bold creature in so. So this is things that's fits very well into our thinking. And of course it's also a great marketing tool, both internally, but also externally. And Jotun has actually got quite well-known and almost famous about how we are utilizing this strong, strong business culture.
Sarah Nicastro: I think that's... it's so interesting to me. And we talked a little bit about this before Trond. And I know that, to you it's more what it means than the visible emblem of it. But the comment I made is, I can see how having that visible emblem, that mascot, that brand, could be so helpful in reinforcing the traits that are so important to the company. And really having a way to regularly remind employees of the mission to create a common language around it and to create alignment. So I think it's a really interesting point for listeners, just to think about, how do you take the important traits or characteristics of your culture and what are some of the ways that you can really, whether it's visually or otherwise, permeate that through everything the company does in the way that Jotun has with the penguin? So the characteristics, respect, boldness, loyalty and care. There's one that stands out to me and it's boldness. And I love that that's included. And I want to talk about some of the ways that boldness is encouraged at Jotun. Can you share a little bit about that?
Trond Aune: Yeah. Obviously Jotun has over many years grown organically. And we grow in areas and countries which is early in the phase of economic development in many cases. It was one or the first companies entering Myanmar, one of the best first of the Western companies after the country open. And of course that is boldness. And they use this expression as a boldness, in order to show that, yes you are allowed to do mistakes obviously and that is part of our culture. Take decision, be bold on your decisions, be bold on your point of view. And that has proven, that openness and that philosophy has proved to be very important for Jotun and actually for Jotun growth. That all the work we are one of the really fast, most fast growing paint companies in the world.
Sarah Nicastro: I was just going to comment that I love that that trait is emphasized. Because I think that, when you talk about... today we're talking about digital transformation. When you talk about any sort of innovation, any sort of growth mindset and what it takes to be successful there, I think this emphasis on boldness makes so much sense to me. I think you want a company culture where everyone feels empowered to speak up. To share new ideas, to challenge thinking in an inappropriate and respectful way. To really, that elevates the company's mission overall because everyone's contributing. So I just really like that aspect. And I think that as it relates to the topic of today's conversation in digital transformation, I think that promoting boldness and giving people an opportunity to speak up and weigh in, is part of what's required to successfully manage change, which is what we see often as the biggest, or one of the biggest obstacles when it comes to successful digital transformation. Is change management and adoption and that sort of thing.
Trond Aune: And Sarah there is one more dimension to it actually. Jotun has very wide geographical footprint. We are into more than 50, 60 countries. And of course the cultural diversity is so huge. And we are European and Americans. We are bold when it comes to actually to speaking out and to push forward our point of view. But when it comes to other parts of the world, people are more careful. And in that respect also the boldness thing is very important, to give people real opportunity to speak out the commuter gear, to give their idea. So this is actually more than just a word. It is really an important part of our culture.
Sarah Nicastro: Yes, that's a really good point. Okay, so let's shift gears and start talking then about the digital transformation journey. So one of the big aspects of that is that Jotun has undergone a major effort to consolidate disparate ERPs into a global instance of IFS apps which is used in more than 50 countries. So the overarching objective of that I guess, was to create this single source of truth. So tell us a little bit about that project and some of the challenges you were looking to overcome and what the goals were there.
Trond Aune: Yeah. I think that when we took that decision back in 2004, that decision maybe it was more bold than what we expected to be. Because it has proven really to be a challenging journey. But we are now at the really end of that journey. We are about to complete the last country, so we're a lot of IFS in the 50 countries we are into. And we now really see the benefit and we are extremely happy that we started that journey. Obviously we saw a lot of benefits of having one instance, one thing is the data and then one truth. The other one is across the standardization of processes, to do things the same way in all the companies. The third one I recall, it was the huge internal trade we are doing in not in between all the companies that is not fully automated, which was impossible when all companies have their different solutions.
Trond Aune: And of course, the fourth one was the transparency and actually to Jotun was growing. Has been expanding a lot, and it's there's of course a need for control also from the corporate side. And all of these things has been fulfilled by the one instance set up of IFS in our group. And it's I think it's quite unique to have such a big setup, with all the challenges it's represent, all from a technical point of view. With access and performance and connections, but also on the solution side and the legal side, with all the problems related to the legal requirements, specific business requirements and of course the standardization of business processes. Which is not only an IT project, it's a huge business project actually to implement all this. So this has now, it's now about to give us a really our payback time. We are going into the payback time for this huge investment. And we are really happy to have done this journey.
Sarah Nicastro: Good. So, you touched on this a bit, but let's talk through... it's a huge undertaking, right? To, as you said, not just on the IT side, but on the business side. You can summarize it in a couple of minutes, what you've accomplished. But it really is a significant undertaking to consolidate to that degree and to really bring in that single source of truth. So talk through... I want to talk about two aspects of that. First, let's kind of recap some of the benefits. What have been the major benefits in introducing a single point of truth into the business?
Trond Aune: Obviously consolidated reporting on sales profitability on customers, on products, that is a huge benefit. Of course we have much better control than if you have a lot of truth. But I think even more important, is the benefit and the wins we have had, when it comes to the internal alignment, because the ERP system is not only a transaction system, it is actually a carrier of standard-standard business processes. And it is an enabler to improve your business processes as well. As I mentioned earlier, especially on the advanced and complex setup we have, when it comes to delivering paints to moving targets as a vessel, a big ship is moving. So one day you have to deliver in Rotterdam and the next month it might be in Singapore. And then it might be in Korea the next time. And of course the complexity of handling that kind of customers, that is the global rollout of why IFS has really been helpful a bit.
Trond Aune: But it has also enabled us to start utilizing, not only the core ERP functionality, now we are also looking into expanding the utilization of IFS and linking up new modules. Where we actually can see that, the one source of truth, the standardized processes and the one instance and one database is really helpful and might make it much easier to implement a new functionality as well.
Sarah Nicastro: Yeah, that's another thing we talk about a lot on this platform, Trond. Is the importance of setting a strong foundation. Which is what I look at, at the ERP journey as. It's a major undertaking to set a strong, consistent, cohesive foundation that then you can build upon, with your digital transformation journey by adding different functionality and different technologies and different capabilities. When companies get enamored by some of the sophisticated tools that exists today, without having done those foundational efforts, they can make a lot of investments for not, right? Because they don't really have the basics, solid, to be able to expand on, so that makes sense. Before we move on, the other thing I wanted to ask related to that project and the breadth of experiences that you gained through it is, what would you say is the biggest lesson you learned?
Trond Aune: We have a fantastic support from group management, from top management in the group when we started this project. And that support has been maintained throughout the whole project. And I think that is at least one of the most important key success factors, that you have a strong ownership throughout the business, from the users up to the top management. So that has been an important things to have with you. We have also learn that building the competence internally, in our company has been important. We not only implementing implementation ERP, it's actually implementation of new business processes. And that where we, though that learning beyond the project lifetime and into the lifetime of their company, that is difficult if you have too many external. So we have actually built a strong team internally to do it, that is another learning. The biggest frustration and the biggest problem has been on the legal side. To implement the legal and to fulfill the legal requirement in countries like Brazil, Russia, India, Vietnam, Korea, Mexico, it's extremely challenging.
Trond Aune: That has obviously, we underestimated that complexity that has caused the project to be more time consuming and more costly than we initially thought. But we are now happy that we was patient. We carried that through. It was times when we were so close to give it up. We didn't do that because of the patient, our management, our shareholders. And now we have our solid setup in all these countries as well. Many other companies actually gave that up and do local installations. And if you do that of course, you breach the chain or the one truth will breach the chain of your supply chain in order to have that as our quinoa one integrated supply chain. So that has been important for us
Sarah Nicastro: Persistence and dedication, okay. Can you talk to me next a bit about how Jotun is embracing Servitization?
Trond Aune: Yeah. Traditionally of course, Jotun has been selling products. And we have been good at selling products and we have excellent products to sell. Jotun is a high-end supplier of paints. We are not competing in the low-end. Our focus is to have high quality products. Still and we have been very successful in that. The last few years of course, we have seen that it has gradually gone from not only selling products, we are also selling some services together with the products. And now we are seeing the gradual turn into more Servitization that our customers don't own, they don't want our products, they want the outcome. They want us to sell the outcome of what our products can give. Jotun has a lot of focus on innovation and our innovation has now also turned into Servitization and we will still paint. Selling paint will still be the major business, of course.
Trond Aune: But we are having examples where we, for example, are offering our customers information and data about climate conditions, sea conditions on how they can plan their routes from A to B in the most efficient way, by reducing the resistance on the whole of the ship. Because we have that data, with all the experience we have. We are also are going into a more environmental friendly and sustainable approach to this. And are offering products and services which actually clean the hull of one huge ship. So we are offering both the hardware, the software, the services, to clean the hull of the ships and of course reduce the fuel consumption of a ship and increase the profitability for the owners. And I know course giving Jotun both are environmental, putting us in a more in-mind friendly position, but also supporting our customers, into the right direction by not only selling paints, but also adding services and package our products in such a way that it's fits into the customer's needs.
Sarah Nicastro: It's really interesting to me to hear you talk about Servitization. Because I guess, I talk about it a lot and I realize how pervasive it is. But at the same time, even I don't know that I've thought of it as something that a supplier of paints would get into. So it's just a really good example of exactly how important of a trend it is. If we look at a specific example, I believe one of the ways that you're doing this is in the marine division, right? And so can you walk us through the example of how you track ships and then provide this service on, I believe sort of a subscription basis?
Trond Aune: Yeah. How we do it? We actually put sensors on the propeller exits on the huge throstles. And we are monitoring sort of the efficiency of the engine, or the ship. Combine with weather conditions, wind, seas and the climates they are into. Put this, a lot of this information together. And then of course we are tracking the ships in addition to, as I said, sell that kind of information to customers at least, offer that information to customers so that they can improve their profitability as well.
Sarah Nicastro: Interesting.
Trond Aune: So that is utilization of data and information we have, of course. And we are of course, developing good products, to get not only the service, but we are also supporting all of this with good products, improving our products according to the learning, we have this kind of information.
Sarah Nicastro: Good.
Trond Aune: Jotun our digitalization approach is not to be the most fancy and utilize whatever exist or digital tools. We are very focused on doing this, either because it serves our customers, or because it improve our efficiency. So we are not jumping in all kinds of digitalization trends, but we are very focused on those activities we start. And of course digitalization has a very high attention in Jotun these days, that is for sure.
Sarah Nicastro: Good, good. And I think that's a really smart approach. So good, all right. And Henning, I want to talk about another initiative in Jotun's digital transformation journey which is a proof of concept that you're working on, related to predictive maintenance in your production line. So talk to us a bit about the goals of migrating to a predictive approach.
Henning Haugen: Yes, to answer that, I think we should go a little bit back into our maintenance journey in Jotun. Earlier our maintenance organizations was often seen as a cost driver. So and where the main strategy was the reactive maintenance. There was often missing maintenance strategy and how proper maintenance could support efficient operations, both locally and from group. So in 2009, group maintenance also established and with that, we established a maintenance belt program. Like a corrupter thing, where we needed the one level before we can go to the next. And together with that, we also set the first standalone, computerized maintenance management system. This was required to be used at the all sites, except Norway. Because they were already in IFS and using a maintenance module.
Henning Haugen: So during this maturing process in maintenance, moving toward IT the preventive, reactive maintenance ratio, we start to see some of the limitations of the system. And it was because it's separate databases, there's no single source of truth. You need to go into each server database, if you would like to collect all the data from all the sites. Must know system support or cost control, or no links to other company function as purchase, some things like that. So it's not a complete standalone system. So, second half in 2018, we started to set up a global solution for our planned maintenance module. And using the experience from our Norwegian factory as a basis, and planned a rollout to 35 factories approximately, from second half to 2019 and 2020.
Henning Haugen: But as everybody knows, during that period, we have the COVID happening. And of course that put a stop to our onsite training. So we had to take one step backwards and think okay, what should we do now? What kind of options do we have? So we were thinking, okay, we need to do something online. And we moved all of our training to Teams. we did some piloting to ensure that they got the quality we wanted. So we have that small delay of two months. But, two months delay in a plan that first made two years back involving actually several hundred people in total, I think it will be quite reasonably good even without COVID.
Henning Haugen: So I am still pretty satisfied with that process. So until now, we have actually been very focused on preventive maintenance by a time-based money maintenance. But, last autumn we were introduced for this project and moving more towards a condition-based or predictive maintenance. As I think time-based maintenance is the most cost efficient to run maintenance. As we are probably are over-maintaining or under-maintaining the equipment. Because it's difficult to cope with the variations we have in having production module, or product types. And a real part lifetime and things like that. So for us it has been the next natural step now, it has to be to look into the cost condition-based functionality and the predictive maintenance opportunities.
Sarah Nicastro: Okay.
Henning Haugen: So by that, we expect that should thoroughly reduce the maintenance cost and maintain or increase equipment reliability and uptime. And also release more time for our technicians and spend more time on the other linear tasks, less manner of data logging and find new monitoring methods to increase equipment reliability.
Sarah Nicastro: Okay, okay. So you're working on shifting from maintenance, which is done at time intervals, to maintenance that is provided as needed based on predictive analytics.
Henning Haugen: Yeah.
Sarah Nicastro: Okay.
Henning Haugen: That's true, yeah.
Sarah Nicastro: Good. And Henning, how will the addition of predictive maintenance capabilities, help you when it comes to building on the success of Jotun's partnership with IFS? So building on that foundation that Jotun has created with the ERP project?
Henning Haugen: For us to say it's a great motivation boost, in a project like this. I think it will push our organization to look into more functionality and make us able to take better decisions and be more efficient. When it comes to utilizing other huge amounts of data, that is actually created by the equipment and the systems are much faster. Trying to manually handle and analyze all this data, to get something useful out of it, is really resource demanding. And we are often too late to implement required to changes.
Henning Haugen: So if we can have some more automate this process into the system and then giving us a triggering task when it's needed, due to the conditions on the equipment or predictable by the system, that will help us a lot. So for us, it's interesting and motivating to work here, together with the IFS on this. To be in the forefront and develop new functionality and tools. So if we go, beginning like different future prospects as well.
Trond Aune: And Henning I think it's fair to say that we're utilizing new technology like this, both machine learning and internet of things into our maintenance processes to identify and capture and analyze data, utilizing that to be better in the preventive maintenance has been really a nice and exciting journey for us. It has been often a really good cooperation with IFS in that respect. To be honest, this is tool and areas which we probably not have been gone into without IFS supporting us and helping us into those areas. As I said initially, we are a little bit luggage when it comes to utilizing the forefront technology in that respect. But we are really happy that we had got that opportunity. We really think that that will help us in developing our maintenance process and hopefully reduce maintenance cost over time.
Henning Haugen: And I think we're already much faster than we would have done if this project was initiated by us. So, very good.
Sarah Nicastro: Yeah. I was actually Trond, I was going to come back and ask, you had said, just a bit ago that Jotun is quite, what's the right word? You take projects seriously and you don't just dive into every technology that's out there. So I was going to ask, what about the opportunities of predictive capabilities made you say yes to adding that? So it sounds like part of it is the relationship and the history with IFS and then part of it is driven by the ability to really improve efficiency, right?
Trond Aune: Yeah, but it's all solid feed back to the sort of, our approach to digitalization. We really need to see the benefits of it. And obviously being in the middle of the implementation of the maintenance and modular IFS and starting to see some opportunities. But then boosting that with the machine learning, internet of things part of it, and get though that really gave a boost effect to the whole project. So at least that is what we believe it will do. We have not finalized it yet.
Sarah Nicastro: Sure.
Trond Aune: So it's, yeah. It has just confirmed the way we are thinking around digitalization.
Sarah Nicastro: That makes sense. And we know that digital transformation is an ongoing journey, right? It's more of a path of continual evolution than it is sort of crossing a finish line. So you have this predictive project in the works. And you evaluate new technologies and capabilities quite carefully. What is the thought process I guess overall, at Jotun on this sort of continual evolution when it comes to digital transformation?
Trond Aune: I think I touched into it a little bit earlier as well. We are in some aspects I mean, Jotun was one of the first companies in the world to start to tint paints in the shops. I know if you go into a paint shops and you pick exactly the color you want. You can choose an infinite number of colors. Going 40, 50 years back, you had the maybe 25 colors to choose between. Jotun was one of the first companies in the world to implement tinting technology in the shops. Another example is that Jotun was one of the first, had the most advanced, automated warehouse, when they build a new factory that was I think in 80's.
Henning Haugen: 1977 I think.
Trond Aune: 1977, yeah sorry. And that is examples of area really are in the forefront. Where we see the benefits of it. When it comes to the digital trend of digitalizing everything in your business, I think we are not in the forefront. We are sort of in the middle. But then we saw for example, the way what we have introduced now, the way to offer a solution for us or our customers, to clean the hull of a ship, that is groundbreaking. And so that is a way of thinking. We pick our important areas which make us unique. And that is what we have done several times when it comes to digitalization. It is our customers and it's the efficiency and the profitability and the growth, which is important for us and there. And so I think that is short and sweet, our approach to digitalization. But of course, we are doing digitalization every time and we are implementing e-invoice and online services and all that kind of stuff is of course hitting us as well. And we are doing that together with all the other companies around the world.
Sarah Nicastro: Makes sense. Henning, anything to add?
Henning Haugen: I think Trond has wrapped it up very, very well. But of course yes, we select areas we expect high effect on the likelihood of a success of course. I think that's important. If you are going to jump into all the new trends of digital transformations or other business methods, I think rather this system will run, it will be run by these systems rather than we are running the systems, so yeah.
Trond Aune: What we do see though, Sarah, is that obviously the capability to collect data, the capability to present and analyze data with tools like Power BI for example, has really also boosted the digitalization over the processes, because we've seen all the, really the possibility those kinds of tools gives us to improve in all respects. So that is also an important part of it.
Sarah Nicastro: Going back to how we started this conversation with the penguin culture, it's a really well balanced approach. You as a company, you're very bold, where you need to be and where you've proven it to be beneficial. But you're pragmatic and grounded in not feeling the need to dive into areas that are outside of your expertise, or to try things that you don't know will bring a strong benefit to the company. So it's a really well balanced approach because I wouldn't... you're not a laggard, you're not ultra conservative, you're bold where you need to be, but you're smart about where you choose to apply that. So I think it's a good lesson for anyone listening to think about that. So very good. I appreciate you both sharing your time with us today. It's been a pleasure hearing Jotun's story and talking with you.
Trond Aune: It's a pleasure to share as well so, and thank you very much, Sarah.
Sarah Nicastro: Thank you.
Henning Haugen: Thank you very much.
Sarah Nicastro: You can learn more by visiting us at futureoffieldservice.com. You can also find us on LinkedIn as well as Twitter @TheFutureOfFS. The Future of Field Service podcast is published in partnership with IFS. You can learn more about IFS service management, by visiting www.ifs.com. As always, thanks for listening.