Major dairy cooperative achieves touchless automation across key finance processes and 30% faster financial close

Company overview

Arla Foods is an international dairy cooperative owned by 10,000 farmers and is the largest producer of dairy in Northern Europe. The company is responsible for 1.5 million cows, collects 13.7 billion kilos of raw milk for processing at its 60 sites and sells its products in 164 countries, including the well-known brands Arla®, Lurpak®, Puck® and Castello®.

Business challenges

After mergers in Germany and the United Kingdom, Arla needed employees everywhere to consistently perform the same standard steps in each of its business processes. This included financial controlling activities, account reconciliations, intercompany accounts and month-end adjustments.

The company also wanted to reduce the period-end close by at least two days to get an overview of month-end activities and dependencies. Accelerating its close cycle would give Arla’s finance teams earlier access to reporting data and more time for review, analysis and strategic support.

Arla found its account-to-report (A2R) process was fragmented and lacked transparency. Just 50% of the 45 Level 3 processes were harmonized, and as a result, dozens of employees were forced to spend additional time validating and correcting errors in the close. Also, employees sometimes lacked access to vital information and documentation as it was stored locally, further compounding close-related challenges.

Employees had been executing all tasks manually using Excel and checklists, which was time-consuming, inefficient, error-prone and costly. It had become incredibly difficult to achieve the process consistency and standardization Arla required.

Solution

In 2016, Arla selected Finance Automation by Redwood because of its strong track record of SAP and ERP integration, as well as its proven ability to automate nearly all time-consuming processes. In Arla’s initial discovery workshop with Redwood Software, the company learned it could achieve full harmonization of the processes qualifying for automation and ultimately work toward a touchless close.

Finance Automation now supports Arla’s shared services center in Gdansk and helps the team maintain a consistent approach across its expanding operations. “Of course, we also have a shared services that we utilize. It also means that everyone is doing it in the same way,” says Christel Møller Broch Jensen, Finance Manager at Arla Foods.

In Arla’s initial discovery workshop with Redwood, the company learned it could achieve 100% process and data quality harmonization and a touchless close.

Results

Arla successfully deployed automation to harmonize its back-office financial processes and increase service delivery. While using Finance Automation, Arla has:

• Automated 80% of balance sheet reconciliations, with 20% fully touchless via auto-certification rules, and cut manual effort across A2R by up to 50%
• Enabled monthly recovery of Denmark energy tax refunds (previously annual), accelerating cash realization and improving compliance
• Automated salary accruals across all entities to address the 10-day gap between pay date and calendar month-end, eliminating late adjustments
• Enabled test runs and earlier closure of production orders, improving financial control, data quality and reducing last-minute bottlenecks at period end
• Sustained faster close performance as business volume and data complexity increased, keeping close timelines stable without additional headcount
• Reduced month-end close duration by 30% — from 10 to 7 days — giving finance teams earlier visibility and more time for validation and analysis
• Automated 80% of fixed asset accounting, 87% of COGS reconciliation and 85% of PCA vs. COPA module reconciliations

Strategic automation reduced the time required to complete the month-end close by 30%, from 10 to 7 days, and gave Arla real-time visibility into its close status across its financial business units while running a touchless close. This three-day reduction in the month-end close significantly exceeded Arla’s original target of a two-day reduction. The finance team now reviews and finalizes the company’s reports sooner, which gives its leaders earlier insights and empowers them to make more proactive decisions.

Arla has handled growing volumes of financial activity with fewer farmers but increased milk intake, while maintaining its accelerated month-end timeline thanks to standardized processes, consistent task execution and automation embedded in critical tasks, such as journal posting. 

Arla also automated the test run and closure of production orders within supply chain finance. Previously, these runs took too long to perform before final execution. Now, Arla performs a test run first, improving the accuracy of the final run and enabling earlier closure of production orders.

Arla has automated a majority of its financial close-related processes in the A2R area, including:

• 80% of balance sheet accounts are reconciled, with 20% of those fully touchless based on auto-certification rules
• 80% of fixed assets accounting activities are automated
• 87% of COGS reconciliation activities are automated
• 85% of modules reconciliations (PCA vs. COPA) are automated

These efforts allowed the finance and accounting teams to focus on more value-added tasks and significantly improved the company’s data quality. Automation reduced the effort required from employees by up to 50%. By cutting manual effort in half, Arla freed capacity to maintain performance as its business scaled.

This has helped build trust in the accuracy of the information they depend on for critical insights and analysis. In addition, Finance Automation’s auditability and governance provide Arla with full visibility through reliable access to who did what, who approved it and when.

Building on that foundation, Arla has continued to expand its automation footprint into adjacent finance functions. This includes streamlining tax-related workflows, where repetitive manual activities have been replaced with automated processes that deliver measurable gains.

“In Denmark, we can get refunded for some of the energy taxes that are there,” says Jensen. “And before, we did that once a year; now we’re doing it every month because we can automate it, so it’s easier to do.”

Finance Automation now automates monthly salary accruals for Arla to ensure accurate adjustments for the 10-day period between the pay date on the 20th and the calendar month-end. “We accrue for it,” Jensen confirms.  This automation eliminates late adjustments, improves Arla’s final reporting and reduces its close-related corrections.

The future with Redwood

Arla is also evaluating opportunities to improve visibility, control and analytics across their month-end processes. This includes:

• Automated updates to the Finance Automation month-end close checklist
• Dashboards for team-wide transparency
• More advanced reconciliation analytics

Arla’s roadmap also includes validating supporting documentation more efficiently and exploring additional automation across global operations.

Arla’s finance team continues to explore new ways automation can improve speed, accuracy and coordination across end-to-end processes. With a stable, well-governed, on-premises automation foundation and tighter integration across its systems, the company is positioned to expand automation into both upstream and downstream activities. The team sees opportunities to reduce closing time further through better task triggers and integrated dashboards.