Baking&Snack - October 2013 - 16

Mondelez plans massive operational changes

IOI Loders Croklaan Americas,
Channahon, IL, opened its new
Creative Studio Americas to serve
its fats and oils customers, both local
and global. The new 16,000-sq-ft,
two-story site represents an investment of more than $3 million in
building and equipment.

Over a five-year period ended in 2008, Kraft
Foods Inc. spent $3 billion on a restructuring
program the company said would optimize
its capacity and leverage its global scale.
Apparently, it wasn’t nearly enough.
Even though the program was expected
to generate $1.4 billion in annualized savings
and included the closing of 35 production
plants, a top Mondelez International executive recently described the Deerfield, IL-based
company’s supply chain network in 2013 as
“fragmented, complex and inefficient.”
In a presentation at the Barclays Back-toSchool Conference in September, Daniel P.
Myers, executive vice-president, integrated
supply chain, outlined ambitious plans to
address the challenge. In the form of new
plants or new lines, the planned capacity
additions and replacements — as well as its
few state-of-the-art plants operating presently — between now and 2020 will be near
or possibly greater than the company’s entire capacity operating in 2013. Mr. Myers
did not offer a cost estimate of the planned
new production capacity.
“A number of our 170 plants around the
world are old, subscale facilities that require
significant ongoing investment to maintain,” he said. “In Europe, only about 15%
of our 70 plants are ‘A’ rated. And in North
America, about 60% of our manufacturing
lines are [more than] 40 years old.”
Changes in staffing and culture have
been made to position the company to
address the supply chain problems, Mr.
Myers said. Over the past 12 months, 30
vice-president and director level staffing
changes have been made, he said.

To gauge the company’s progress, Mr.
Myers said Mondelez will be benchmarking against best-in-class performance in
“any industry, anywhere.”
At the heart of planned changes in the
Mondelez production platform will be a
standardized modular concept Mr. Myers
said would allow the company to “quickly
install and modify lines to optimize current
operations and launch innovations.”
Mr. Myers said the effort to develop this
new standardized system began about 18
months ago.
“Imagine if we could install new lines with
30% less capital, deliver $10 million in operating savings per line and 500 basis points
in gross margin improvement,” he said. “We
wanted to be able to install new capacity in
one-third of the time using a modular format, focusing on seven days start up, and using a ‘Lego building block’ design, we do the
engineering design once for the line, for the
building and for all facilities.”
This vision has been accomplished with
a prototype and is “becoming the basis for
the reinvention of our supply chain,” Mr.
Myers said.
He noted the physical footprint of its
new Oreo lines takes up half the space as
before. “What is more, these new lines have
doubled capacity of any of our current
production lines. And they require fewer
people to operate,” he said.
Mr. Myers said Mondelez will be bringing its “line of the future” to all its biscuit
power brands.
The new modular lines will be part of
a larger overhaul of the company’s global

manufacturing footprint in the coming
years. The company needs to increase overall capacity by 25% in the next three years
and will do so by building “eight new flagship plants,” he said. These include facilities
recently announced for southern India and
northern Mexico.
Already in 2013, Mondelez has announced
plans to close a dozen production and distribution facilities around the world.
“By 2020, we expect to build another five
greenfield sites and double capacity at 16 strategic sites while consolidating other subscale
plants and distribution centers,” he said.
With these changes, Mondelez aggregate
production at what Mr. Myers called “lowcost, globally advantaged assets” will rise to
80% of the company’s output by 2020 from
about 50% in 2016 and 15% today.
— L. Joshua Sosland,
Milling & Baking News

American children ages 6 to 12
consume 4.1 snacks a day.

Teens ages 13 to 17
eat 3.8 snacks daily.

90% of school snacks
are brought from home.

NPD Group

/ Baking & Snack / October 2013

Drake’s cakes returned to stores on
Sept. 23. The products are available in supermarkets, supercenters,
value retailers and convenience
stores throughout the Northeast,
according to McKee Foods Corp.,
Collegedale, TN.

Baking&Snack - October 2013

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