Th executive enjoyed 14 years in Lifco's dental business, led the relocation of warehouses and overall operational efficiency development, and played a key role in integrating and developing Directa. He worked closely with Lifco's current CEO and helped shape the structure of Lifco's dental division.
Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.
It was somewhat of a coincidence. I was offered two jobs at the same time in early 2001. I had a managerial role at a manufacturing facility belonging to ABB's ventilation division in Norrköping. They asked me to start with facility management in Västerås. At the same time, the job at Lifco came up. So, I had to make a choice.
I started as a warehouse manager and purchasing manager. At that time, Lifco already had a central warehouse supporting the Swedish market. The dental division of Lifco was quite small in 2001. We had two companies in sales, Nordenta and DAB Dental, which we supported with warehouse services. We also had a company in Denmark, Dansk Nordenta, and one in Norway, LIC Scadenta. That was about it. There was also an industrial division. When Fredrik hired me, he and Carl Bennet agreed that Fredrik should manage not only Lifco but also the industrial Sorb Industri. A year before I started, there was also a division, which dealt with health consumables, like prep things, medicine, etc.
No, it was not so much to the pharmacists, it was to private stores. The business was initially part of the Lifco organization. When it first entered the stock market, there was no significant development in the share value. It remained flat. Consequently, Carl Bennet decided to buy the entire business out of the stock market and merge it with Sorb Industri, which he fully owned.
The dental business has never been a part of Getinge, nor has it ever been connected.
No, it was not the industrial, just the trade business. Lifco. It was named Lifco when it was listed on the stock exchange. At that time, they were distributing natural medicines and health-related products. But that was phased out, I believe, at the end of 1999 or early 2000.
In 1998, it was not solely, it was more or less the health side.
I believe the market didn't understand the business, so there was no interest in buying a share where the purpose isn't clear. It's quite simple.
Yes, he sold the health business and got back the same amount of money he had spent when he bought the group out of the stock exchange market. It was a good position at the time.
Yes, he acquired the dental business, which was operating in the Swedish, Norwegian, and Danish markets. It was placed under the Lifco umbrella. The industrial part was completely separated from Lifco at the time. It was named Sorb, which is actually the name of a berry. The third leg was Getinge, the production unit. When I started in the dental business, I soon began to expand. The first expansion was in the Baltic, where DAB bought a small group. It was a Swedish guy named Anders, I think. So, those three companies in Estonia, Latvia, and Lithuania joined Lifco under the Lifco umbrella, along with DAB. You can still find them as a DAB company. After a few years, I believe Fredrik was the driving force to expand in Norway. So, Jacobsen Dental came into discussion. Jacobsen Dental was acquired. It was also the first time I was a part of the due diligence process. We went down to Germany for [Mieleweigant]. Fredrik evaluated the [Mieleweigant] and presented an offer. It was later purchased, I believe, by Henry Schein or a similar company.
Yes, they focused on dental distribution. Only one company had some manufacturing capabilities, which was Directa. Towards the end of my tenure at Lifco in 2015, Directa, under new management, began to expand and acquire smaller manufacturing businesses within the dental field, both in England and the States.
The first merger was between DAB Dental and Nordenta. I'm not sure if Carl was involved in the business at that time, so I can't say for certain who initiated the merger.
LIC was a development from the Swedish county councils. They realized they couldn't run the business, so it was bought out from the county councils and merged with DAB Dental, which was a competitor to LIC. LIC was also part of an old company in called Nordenta. I know the person who started Nordenta with his father. They sold Nordenta and developed a machinery wholesale distribution idea.
Actually, thousands.
We sold to both private and public dentists. When I started, we had one product that was the largest. It was x-ray film. Around 2007, the market for x-ray film died as it was replaced with digital cameras. Everything was sold to dental practitioners, both private and public.
During my time at Lifco, the Lifco group and the Finnish group were the two major players, each controlling almost 50% of the market. The Finnish player, Plandent, also produced equipment like chairs, which Lifco didn't have.
Yes, Henry Schein was a competitor because a major part of the Swedish market is run by tenders. At the time, public tenders made up about 50% of the market, though it might be a bit less now. Then, there's the PTJ, Praktikertjänst, a group of private dentist corporations.
Yes, it's more than just a purchasing group, as they also offer financial services and insurances. A significant portion of the Swedish and Norwegian markets was run by tender business. The demands from these tenders were so challenging for a player like Henry Schein that they were not operating in the Swedish market at all.
The difficulty was mainly due to delivery. Overnight delivery wasn't sufficiently developed. If you didn't have a warehouse or logistic organization in the country, it was hard to guarantee overnight delivery.
Actually, I'm not sure. I don't think so. They might have acquired a smaller player, but I don't really know.
It could pose a significant risk for Lifco if Henry Schein were to enter the market. However, Lifco is more than just dental today. It's driven by highly committed individuals, which I believe is Lifco's greatest strength.
As I mentioned, they didn't exactly shift, it was more of an evolution in that direction. Perhaps it was due to the people in Directa who could think in a broader perspective than their predecessors. Directa was a distribution and manufacturing company.
I believe it was before my time.
Yes, it was quite early. They started by acquiring a Swedish manufacturer, TrollDental, and then it just continued. I think the major shift from solely dental distribution was around 2012. That's when it became more apparent that OEM production could also be a part of the business, similar to how Plandent already had that type of structure.
It was, and I believe still is, quite simple. We had sales companies that were very strong. All the sales companies were evaluated and they had the authority to make all marketing and selling decisions. We had a contract where they bought services from Lifco Dental, which you could say was a group supplier. When I was at Lifco Dental, we had a purchasing volume of about 500 to 600 million Swedish krona a year. The market value was quite high, so the earnings were substantial.
No, they only consist of sales teams.
The warehouses for Directa were managed under my supervision. Their product portfolio consisted of a lot of small, niche products, such as wedges for teeth. They only sold in the Nordic region and Germany. Essentially, Directa sold primarily in the Nordic region. We took care of the logistics for Directa, and they paid a certain part for it.
Lifco provided the warehouse, which was located here in Norrköping. However, there was a small production unit in Directa, in Upplands Väsby. They had a workshop where they assembled certain products, which were then stocked and distributed.
I'm not sure who made the decision, but before 1997, Lifco, Nordenta, and DAB Dental in Norrköping and Upplands Väsby, decided to merge. They were still competitors in the market with different warehouses. Then a decision was made, possibly involving Fredrik, to merge these two warehouses. I believe it must have been Frederik who managed this idea of combining the two warehouses. Then Lifco Dental was formed because it was deemed inappropriate for two competitors to have all their material in the same warehouse owned by one of them. So, everything was separated under a different organization. This was all set when I joined in 2001.
Yes.
You could say that behind the scenes, the warehouses were where everything cooperated. Nordenta's private label products were placed beside DAB's private label, and they sold a lot of the same products. It was a win-win situation because you could have double sales volume and easier control over logistics instead of having stock levels for two separate companies.
Lifco Dental owns all the products and is responsible for the service level and purchasing volumes. I was always evaluated based on a high service level in terms of complete order lines delivered the same day. We had a service level between 97% and 98%. The number of complete order lines delivered per day was quite high.
Yes, they were buying.
No, it was a cost plus. We had a cost budget per year. For instance, if Lifco Dental's cost was 40 million Swedish krona, depending on how many order lines were delivered to each company, they had their share of Lifco Dental's cost. When pricing the products, it was a cost plus, and then they had monthly cost for that.
It was strategic not to create margin in different steps. In this case, it's full transparency because if you buy a product for 50 Swedish krona, then this product is sold to the sales company for 50 Swedish krona upon delivery. No extra charge for that. This allows the sales company to measure their own margins in separate sales and better monitor how their pricing affects the result.
In 2007, I was appointed as Managing Director for Lifco Dental. Before that, between 2001 and 2007, my colleague Gunnar Samuelsson was the CEO.
Gunnar, whose special field is economy, helped Fredrik a lot with acquisitions. He moved up to CFO at the group level and I took over as Managing Director for Lifco Dental.
I managed the warehousing and all the other managers reported to Fredrik, as chairman
My responsibility was quite limited. It was to take care of the logistics and the services which we also had developed for Norway. We had overnight delivery to Norway. So, the central warehouse and airshipping expanded during this time to also take care of the Norwegian and Finnish markets.
Are you asking about my personal compensation?
On what were you primarily focused?
We didn't have any earnings, so my performance was measured on a cost basis. The goal was to keep the costs down, maintain as high a service level as possible, and minimize scrapping.
We were only measured on hard facts. If we did a better job, the earnings would be visible at the operating company. The operating companies received the earnings.
Yes, exactly. Also, if the sales company managed to meet certain growth and earnings targets, we had a quite good bonus system.
We also provided IT support. We managed all the IT systems.
First, we would analyze it. Take Jacobsen Dental as an example. Jacobsen Dental is in Norway and they had their own warehouse for one or two years. Then the manager at Jacobsen and I sat down and discussed how operations were done at Lifco. He decided, and it was approved, to move their warehouse to Sweden. They had their own ERP system. We started with a philosophy to have an integrator between the two systems. This is a good way to go because the sales organization stays in an environment they are familiar with. The two systems are defined. Information from one system to another can easily be directed. It's fairly simple to integrate two systems, as long as you know what information is sent and how to receive it in both ways. So the ERP systems mainly stay the same at the sales company, but the logistics are physically moved to the central warehouse.
There are products and contacts we use.
Yes, exactly. The company that delivered our system, IBS, had developed an integration platform, which they called Integrator. That was the first thing we started with because it was connected to our ERP system. But then, some guys from IBS started their own business and began to develop and modernize this integration platform. During my last four years there, we started to work closely with these guys with our new system.
As a manager, it's crucial to rely on communication. If there are special campaigns, for instance, these need to be communicated so we can stock up if necessary.
We have a reliable forecasting tool in our system. I've spent a lot of time adjusting the parameters in the forecasting. I believe we didn't overstock, and we managed to meet the inventory demands. Of course, this also requires fine-tuning and an efficient purchasing department.
The department was under my supervision. It consisted of five people.
Lifco Dental had a total of 50 employees.
We had an IT department of four people, a purchasing department of five people, HR, finance, which handled the bookkeeping, and the rest were operational personnel in the warehouse, including a dedicated warehouse manager.
They handled bookkeeping for Lifco Dental, for the warehouse.
They managed the salaries for the Swedish company, for Directa, Lifco Dental and Nordenta.
Yes, we provided the Swedish companies, subsidiaries with salary services.
Yes, you could say that. It was part of the monthly cost and was paid through the charge of how many order lines you used.
Yes, that's correct. It was a one-person team.
Jacobsen gained a couple of things from this transition. Firstly, they gained access to a wider product range than they had before. They also experienced a better service level, at least that's what they felt. We managed to deliver complete order lines more efficiently than Jacobsen could on their own. However, one area where we didn't improve was overnight delivery. Only a limited region of Oslo could receive overnight delivery. When they had their own warehouse, they were able to serve a larger part of Norway with overnight delivery, but this wasn't a deal-breaker.
Each division was separate. The Demolition division, for example, had its own setup and sawmills, functioning as independent entities.
I haven't been involved in that, so I can't provide an accurate answer. However, I do know that Lifco has a system where all reporting from the separate divisions is set up in a group reporting system. This allows for results to be generated from the bottom up. This is quite efficient, as my old colleague developed this group reporting system. It only takes a few days for the entire group to be consolidated.
Until 2015, we didn't discuss any kind of group benefits in that respect. I believe there is a significant difference in how the markets operate, making it difficult to transfer demands from the dental area to the industrial area.
Yes, I've experienced both worlds.
Yes, the Directa items were also stored in a separate section of the warehouse. As I recall, they actually owned that part. So, it was in the same warehouse. We had one section defined as Directa. Lifco Dental, as a central warehouse, we placed orders to Directa and they were lifted 15 meters into the central warehouse. The remaining part was still a part of Directa, so they sold to other competitors and other parts of the world.
The differences in rules can be challenging. Perhaps that was one of the reasons I decided to start my own business. When you have seven different sales-oriented managers each with their own unique demands, it's quite difficult to satisfy all of them completely. There's always a risk of criticism. It requires resilience.
Of course, they were upset at times, especially when there were issues with deliveries. I had a philosophy that didn't sit well with one of the sales managers. He was very keen on buying gray market products from Germany at a very low cost. The problem with these products is that there's no warranty if something goes wrong. This manager wanted the profit margin without the associated risk.
Aside from that, everything was generally okay.
In Sweden, we had DAB Dental, Nordenta, Directa, and another IT company whose name I can't recall. There were a few manufacturers under Directa. In Norway and Denmark, we had two or three each. So, in the dental field, there were 15 different subsidiaries.
That would be Per Waldemarson.
Yes, I reported to Per. He was a good guy, very determined, and quite adept at analyzing situations. He had a challenging role because he had to manage so many different managers. It's not easy to keep track of 20 different subsidiaries.
Yes, the entire dental division was reporting to Per at that time. He came from the demolition sector, but he didn't demolish anything, he built.
They submitted monthly reports, which were then consolidated at the group level. They kept a close eye on sales and monitored how things were developing.
The report is prepared and then sent by the bookkeeper at Jacobsen Dental to the CFO at the group level for consolidation.
Per is the chairman of the board in all different companies.
That's correct.
They were based on growth, I believe. Growth in EBITA, I think. The EBIT figures were quite important at the time.
I'm not entirely sure, but it could be due to efficiency and cost management. I also think price management is a vital part. Lifco has never been known for high price competition. We sell at a certain level with a very high service level, and that comes with a price. It's a combination of factors. Within the Lifco Group, when you buy, you can add the margin from sales into the center.
A small staff group at the group level.
They might suggest a company that they've seen at an exhibition or something similar. A lot of things happen at exhibitions. You can see different companies and assess their marketing, etc. Then you start to discuss. Fredrik Karlsson was interested in [Mieleweigant] in Germany for a long time. The owner of [Mieleweigant], a lady, wasn't prepared to sell. But when she finally decided to sell, Henry Schein bought it. However, Henry Schein was forced to sell due to a market situation in Germany.
They were too dominant.
I enjoyed it. He was very clear, sometimes impulsive, but once you got to know him, he was very straightforward. He had simple targets. He could analyze a balance sheet in seconds. You couldn't hide anything from him. As long as you were honest and didn't try to be too smart, it was very good. He was very much like me, actually.
As I mentioned earlier, I believe Per is perhaps a bit calmer than Fredrik. With Fredrik, it always seemed to be a competition.
Yes, indeed. My colleague Gunnar Samuelsson recently met Fredrik and mentioned that Fredrik, now realizing he's over 60, has decided that while he still enjoys competing, it's no longer necessary for him to win.
I believe there's a significant level of centralization in terms of reporting structure and financial structure. It's rare to find a group this size that can finalize a report in such a short period of time. Financially, it's centralized, but the spirit remains decentralized. Lifco, for instance, tries to retain the manager or previous owner when they acquire a company, providing incentives for them to stay for a couple of years.
It varies, but if they stay and also build EBITA, thus contributing to growth, they receive a substantial incentive.
There's no issue with staying longer. Once they've proven their loyalty, they often stay for many years.
This risk is if you lose your direction and try to be something else. The dedication of all managers in subsidiaries is crucial. Even though it's a large family, maintaining that family feeling is vital. Every manager contributes to the overall result.
Possibly. If Per leaves and they can't find a suitable replacement, it could be a risk. However, I believe they would likely recruit internally to maintain continuity.
Yes, Per is only in his 40s.
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Th executive enjoyed 14 years in Lifco's dental business, led the relocation of warehouses and overall operational efficiency development, and played a key role in integrating and developing Directa. He worked closely with Lifco's current CEO and helped shape the structure of Lifco's dental division.