Milling & Baking News - March 4, 2014 - 20

Financial Results 

Mondelez putting building blocks in
place for more efficient supply chain

million in our plants in New Jersey
and Virginia. Across our North American asset base, we expect to install 16
new biscuit lines over the next five
years. But we are going to also continue to focus on improving our fundamentals and driving both the old and
new assets to optimal performance.
We remain committed to delivering

"Every package that ships from this
BOCA RATON, FLA. - Operating
in a logistics network that was opti- hub will be on average 1,000 basis
mized for the old Kraft Foods and not points higher in gross margin than our
for a new biscuit-focused business put existing network," Mr. Clouse said.
While construction is under way
Mondelez International in a disadvantaged cost position when it spun off
from Kraft in October 2012, said Mark
'These decisions are never easy, and we certainly don't
Clouse, executive vice-president of
Mondelez and president of developtake the impact lightly. But (plant closings are) a critical
ing markets. But the Northfield, Ill.enabler in taking advantage of our scale and making us
based company has set its sights on
more competitive now and in the future.'
the reinvention of its supply chain, an
- Mark Clouse, Mondelez International
effort the company expects to be the
main driver of margin improvement.
In a Feb. 18 presentation at the Consumer Analyst Group of New York on the Salinas facility, Mr. Clouse said returns well in excess of capital cost
conference in Boca Raton, Mr. Clouse Mondelez is making headway on its for every dollar invested."
The last building block of Monsaid the company has put forth sever- second building block by consolidatal building blocks: Developing a new ing facilities and upgrading assets delez's plan is to optimize its distribustate-of-the-art growth plant for the to take advantage of the same break- tion model. At the time of the spin-off,
Americas, streamlining and upgrad- through technology used in its Mexi- Mondelez had warehouses that had
been built for the old Kraft Foods.
ing its existing network, and optimiz- can bakery.
"We have already made tough de- Mr. Clouse said there were too many
ing its logistics.
"All of these steps will build on our cisions regarding our existing foot- and they were positioned best to serve
improved processes and discipline prints, including the closure of our Kraft's geographic footprints.
"For example, we had more invenacross the entire supply chain," Mr. Lakeshore Bakery in Toronto last September and the planned closure of our tory than we needed in the Midwest
Clouse said.
In looking at its growth plans for the Philadelphia bakery in early 2015," he despite the fact that our business
Americas, Mr. Clouse said Mondelez said. "These decisions are never easy, skews East because that is where the
is building an integrated supply chain and we certainly don't take the impact warehouse space was," he said. "We
lightly. But it is a critical enabler in tak- have now exited three of those Midhub in Salinas, Mexico.
"This is part of our global efforts to ing advantage of our scale and mak- west distribution centers, and we have
manufacture our top products on ad- ing us more competitive now and in one more closure scheduled in Q3 this
vantaged assets at advantaged costs," the future. As we consolidate volume, year. In doing so, we are moving our
he said. "The facility is on track to we are also installing our new lines of capacity closer to our business while
open in the fourth quarter. It will be a the future. We are making our existing reducing warehouse costs by 5%."
The redesigned distribution network
fully integrated site with new technol- bakeries significantly more efficient
ogy, co-location of suppliers, integrat- and we are adding critical packaging allows Mondelez to ship products faster to customers by going directly to the
ed logistics and the ability to support capabilities and needed capacity.
"For example, we recently an- company's branches, he said.
growth and expansion for our power
"This enables us to be more renounced our decision to invest $130
brands in the Americas."
sponsive to demand and
Mr. Clouse said Mondelez
eliminate a step in the
has made "tremendous progprocess," he explained.
ress" in its construction of the
"These shifts have alfacility, and when the plant
ready generated a posiopens it will have 5 lines entive impact on service
tirely focused on growth with
and on-time delivery.
a potential for up to 14 for furCase fill rates have imther growth and expansion.
proved by 5 percentage
"The new plant will showpoints over the last two
case our lines of the future,"
years while on-time dehe said, adding that on averlivery rates improved by
age the lines will be 50% to
10 points. Going forward,
60% more efficient than other
these changes will signifilines in the system. The plant
cantly improve our abilalso will include a logistics
ity to manage inventory
hub to take advantage of the
and working capital to
company's existing bakery in
improve cash as we conMonterrey, Mexico, to scale
tinue to keep pace with
shipments directly to Monour manufacturing transdelez's branches, bypassing
formation." MBN
mixing centers.
Mondelez will close its Philadelphia baking plant early in 2015.
20 / March 4, 2014 Milling & Baking News

bakingbusiness.com / world-grain.com

http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - March 4, 2014

Table of Contents for the Digital Edition of Milling & Baking News - March 4, 2014