In August of 2011, consumer goods provider Kraft Foods made a surprising announcement that included global supply chain implications. The company announced that it would split into two independent public companies, one to be focused on a global snacks business with the other being the company’s core grocery business. The timing of this split is slated for late this year. The snacks business unit will have responsibility for $32 billion in global revenues while Kraft Foods (Grocery) will be responsible for half that amount, namely $16 billion in revenues.
At the time of this announcement, Supply Chain Matters provided a commentary with an open question, namely how will the company respond with its corresponding supply chain and distribution strategy alignment. The essential challenge is that the global snacks business is driven by fundamental different performance metrics and investment needs than grocery. The former is high touch, complex channels driven while the latter is high volume, designated channel, low margin driven.
The latest indicators related to supply chain realignment came this week when Kraft initially named the senior leadership team among both companies.
Irene Rosenfeld, current Chairmen and CEO of Kraft will be the designated Chairmen and CEO of Kraft Foods Global Snacks. Ms. Rosenfeld leadership team will essentially be the same as existed in the singular company, including EVP’s of Europe, North America, marketing, human resources, R&D and quality.
The Kraft Foods Business will have as its CEO W. Anthony (Tony) Vernon. Vernon is the current EVP and President of Kraft Foods North America. Vernon’s management team is essentially the same North America team with the exception of the CFO, who is designated as Timothy McLevish, the current CFO for all of Kraft.
Supply chain team leadership among both companies is split, but has senior management leadership designation. Daniel Myers, the former P&G executive who was recently recruited and named Chief Supply Officer of Kraft was named EVP, Integrated Supply Chain for Global Snacks. His responsibilities are noted as procurement, manufacturing, engineering, logistics and customer service. The EVP, Integrated Supply Chain slot for North America Grocery is currently noted as open. While it does appear that Kraft management recognizes that each business unit will have to be driven by different global supply chain leadership tenets, we wonder aloud if there will be some form of shared services arrangement for certain functions among both companies. More details related to supply chain strategies and resources will obviously follow in the coming months but we trust that both organizations will have the autonomy to drive distinctive strategies and deployment models for each business unit.
In the critical area of information systems, the Global Snacks business will have IT reporting under the office of the CFO. Kraft Foods (Grocery) will have IT reporting to the EVP for corporate strategies, mergers and acquisition. We can each make our own interpretations of these structures for IT, suffice to state that they are different.
A review of the newly announced management teams seems to evoke an impression that management loyalties prevailed over management cross-seeding or balance among both of the newly created entities. Then again, that may allow the grocery business team to shine with more innovative out-of-box thinking that includes supply chain capabilities. As is usually the case, only time will provide the real story.