Mondelēz is on track to deliver supply chain savings of $3 billion in gross productivity, $1.5 billion in net productivity and $1 billion in incremental cash flow over three years, according to Daniel Myers, executive vice president, integrated supply chain.
Speaking at the Consumer Analyst Group of New York (CAGNY) conference, Myers highlighted the company’s approach to transforming its manufacturing processes to develop more efficient, modular designs for global product platforms, called “Lines of the Future.” These advantaged lines are cutting conversion costs by 30 per cent in biscuits and 20 per cent in chocolate and in gum as they replace older, more inefficient assets.
“Our Lines of the Future are driving significant savings in reduced engineering, installation and start-up costs. And we’re reducing conversion costs through increased throughput, less waste and lower staffing per line,” said Myers.
At the same time, Mondelēz is restructuring its end-to-end supply chain network. From 2013 to 2015, the company will have funded and built 11 new or expanded manufacturing plants around the world, including in Bahrain, Brazil, China and India. By 2018, the company expects to build another five sites.
“When we started our journey, only 15 per cent of our Power Brands were produced on advantaged assets,” said Myers. “By 2018, we expect that number to be about 70 per cent.”
Myers said the goal is to have all of the company’s Power Brands produced on advantaged assets in advantaged locations at advantaged costs. Revenue per plant is expected to increase more than 50 per cent from $200 million per plant in 2012 to more than $300 million by 2018.
Brian Gladden, executive vice president and CFO, said: “Using a zero-based-budgeting approach, we significantly reduced overhead as a percentage of revenue in 2014. This puts us well on our way to reduce overheads by at least 200 basis points by 2016.”
“In the current challenging environment, we’re executing against our transformation agenda by controlling what we can control, reducing costs, pricing to protect profitability and driving our Power Brands and innovation platforms in key markets,” said Irene Rosenfeld, chairman and CEO. “By executing these strategies, we’re well-positioned to continue to deliver strong shareholder value through sustainable, profitable growth over the long term.”
Mondelēz will be speaking at the Logistics & Supply Chain Conference on 18th and 19th March 2015 in central London – for more info click here.