In August of 2011, consumer product goods producer Kraft Foods made a surprising announcement that included significant 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 North American grocery business. The snacks business unit, which was subsequently named Mondelez International has responsibility for $32 billion in global revenues while Kraft Foods Group is responsible for more than half that amount, namely $18 billion in revenues. The former Kraft North American grocery business umbrellas 9 major brands including names such Kraft Cheese, Cracker Barrel, Philadelphia Cream Cheese, Maxwell House coffee, and Oscar Mayer hot dogs and meats. Supply Chain Matters posted a recent commentary regarding supply chain challenges at Mondelez, and in this posting, we reflect on Kraft Food Group.
In January of 2012, Supply Chain Matters posted a commentary concerning the implications of the corporate split on each company’s supply chain and supporting systems. An important indication of the critical contribution of supply chain management led to the decision to have leadership for both of the split integrated supply chain organizations to have direct reporting relationship to respective company CEO’s. At the time, the Chief Supply Chain Officer of the former singular Kraft was recruited to lead the integrated supply chain of Mondelez, and leadership for Kraft Food was initially classified as open.
As is often the case with large mergers or acquisitions, our commentary wondered aloud what the impact of having to split out shared business processes and systems would be for both companies. We also pointed to specific differences in business strategy and outcomes that each of the supply chain organizations had to overcome.
Last week, while attending the S&OP Innovation Summit held in Boston, we were able to peek into the new chapter for the Kraft Food integrated supply chain team and to state the least, we were tremendously impressed. Specifically, we witnessed Robert (Bob) Gorski, Executive Vice President of Integrated Supply Chain for Kraft Foods articulate the supply chain transformation that is underway. Gorski landed at Kraft in March of this year after initially retiring from a 32 year supply chain related career at Procter& Gamble. As Gorski describes, that retirement lasted a mere 3 weeks. He apparently wasted no time in concluding that in spite of internal beliefs, a holistic transformation was needed across the Kraft North America supply chain.
Processes needed to be simplified, streamlined and integrated. Gorski and his current leadership team have outlined a transformation which is termed “Symphony”, one sheet of music for all. The powerful analogy used was a marathon, not a sprint, in the ways work gets done and how businesses are run. Gorski leans heavily on Vice President, Process Transformation, Rajan Nagarajan who came to Kraft with a track record in driving process change.
The presentation described product demand and supply processes touched literally 60 different times with little effect on forecast accuracy. Supply chain wide metrics were at odds with individual plant and functional metrics, some in direct conflict. There was a lack of a fixed execution planning window with 60 percent of plan changes occurring in the execution window. Production lines, on average, were forced to shutdown every 4 minutes because of various maintenance or setup issues due to inconsistent process specifications. Gorski articulately described the new goal as moving from metrics in isolation to metrics as part of a performance culture.
After the former single company invested what was described as $700 million in a global SAP ERP rollout, much of the systems were customized or augmented globally. The corporate split has caused the awareness for the need for more streamlined SAP standardization. Plans are underway to integrate 25 major platforms to integrated demand and supply planning, order management, procurement, and manufacturing control.
This author has been involved in various aspects of supply chain management for over 30 years. Thus, I have witnessed many a supply chain or operations leader. After witnessing Bob Gorski articulate a supply chain transformation plan, there is no doubt in my mind that Kraft Foods and its associated supply chain team will be the beneficiaries. You can sense a leader in his or her’s presence, style and charisma.
Readers can expect to read of positive transformation and business outcomes emanating from the Kraft integrated supply chain team in the months to come. At the beginning of this year, Supply Chain Matters began a new series of calling out distinguished supply chain management professionals. We were impressed enough to now include Bob Gorski in this category.