Mondelez sets sights on $3 billion supply chain savings

Will Green is news editor of Supply Management
3 September 2013

Food manufacturer Mondelez International is planning to generate $3 billion (£1.92 billion) of gross savings through innovation in its supply chain in the next three years.

The US-based firm – formed from a number of companies including the snack division of Kraft and Cadbury in October 2012 – is hoping to create savings in the US and Europe that it will then invest in emerging markets.

The work includes installing manufacturing ‘lines of the future’ that require 30 per cent less capital and reduce operating costs by $10 million (£6.4 million) per line. The lines can be installed in one third the time and provide double the capacity in half the space of older designs.

The technology is already in use for the production of Oreo biscuits, but will be expanded to other biscuit, chocolate and gum categories.

To support expected demand, the company will invest in 14 new manufacturing plants by 2020 and it predicts 80 per cent of production will take place in such ‘advantaged assets’.

Mondelez is also using ‘lean six sigma’ procurement programmes to generate savings, including cutting procurement costs by 20 per cent by partnering with strategic suppliers and simplifying the European biscuit portfolio, which is predicted to save $100 million (£64 million).

By improving cash management around inventory levels and supplier payment terms, the company delivered a $400 million (£256 million) ‘step-up’ in cash flow last year. It hopes to deliver a further $1 billion (£641 million) over the next three years.

Daniel Myers, executive vice president of integrated supply chain, said: "We're building an integrated supply chain organisation that's laser-focused on delivering a demonstrable competitive advantage and generating savings we can reinvest in our growth.”

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