Milling & Baking News - February 24, 2009 - 10

Business

Kellogg sets $1 billion cost savings
goal, unveils K-LEAN program
BOCA RATON, FLA. - The Kellogg
Co. has set what company executives
have called an "aggressive goal" of
achieving $1 billion in cost savings over
the next three years through a series of
initiatives ranging from a complete
review of the companies indirect
procurement and purchasing to
implementation of a new best practices program called K-LEAN.
Speaking at the Consumer Analyst Group of New York Conference in Boca Raton on Feb. 18, David Mackay, president and chief
executive officer at Kellogg, said
the company hopes to have $1 billion of annual savings in 2011 that
it currently does not have in 2009.
"We believe we can achieve
this goal, but I would caution
that with inflation and our desire to
invest back in the business, that we
have plenty of opportunities to actually spend the savings when we make
them," Mr. Mackay said.
In order to achieve the savings, Mr.
Mackay said Kellogg plans to draw
from K-LEAN, which stands for Lean,
Efficient, Agile, Network. The project,
which started in two U.S. plants and
now is being rolled out through much
of North America, Europe and Latin
America, is focused on driving process optimization, asset utilization
and waste management.
By his own admission, Mr. Mackay
said initial success of the program has
surprised the company.

with shared buying to leverage the
purchasing power of the total company," he said. "These include things
like globalized global I.T. where we
"We had always seen our manufac- can contract to lower consulting
turing facilities as being world-class," costs, P.C. costs and telecommunihe said. "We didn't think there were cations costs. On logistics we're opreal savings opportunities there. We timizing our truck and intermodal
brought in some external consultants to shipping."
In the area of overhead, he
said Kellogg will look to "simplify, standardize and automate as
'We're going to
much of what we do as possible."
apply the K-LEAN
"We're going to apply the
approach to help us
K-LEAN approach to help us
review our processes and proreview our processes
cedures to truly simplify our
and procedures to
work across the organization,"
truly simplify our
he said. "And it's very imporwork across the organization.'
tant when you think about what
- David Mackay, president and chief
we're doing in manufacturing,
executive officer, The Kellogg Co.
streamlining there to reduce
complexity and to save costs,
that we review the organization
really challenge whether that was actu- from end to end to make sure that
ally true or not and I'd have to say that every aspect of our business is as
we've been quite surprised at some of streamlined as possible."
Mr. Mackay said all the initiatives
the opportunities that they've identified with our workforce to actually go will not only drive a cost-efficient orfor significant benefits over and above ganization, but create a strong organization for future growth.
what we thought were possible."
"I think if we all look at the premise
He said the initiative is probably
going to use a little bit more than half that you can save your way to prosof the company's 2009 up-front costs perity, the great thing about driving
but may show some benefit accrue higher and stronger visibility and cost
savings is it gives you the ability to
from around midyear.
In addition to K-LEAN, Mr. Mackay have confidence to invest for the fusaid Kellogg will undergo a complete ture," he said. "And that's exactly the
review of its indirect procurement way we're looking at this." MBN
and purchasing.
"We've identified many procurement items that can be centralized NutraCea begins baby

J.M. Smucker to add Snack 'n
Waffles line in Kentucky
ORRVILLE, OHIO - The J.M. Smucker Co. is planning to add a new production line at its Scottsville, Ky., plant,
which currently makes Smucker's Uncrustables frozen peanut butter
and jelly sandwiches.
The new line
would allow for
the production
of Hungry Jack
Snack 'n Waffles.
"The addition of the new Snack 'n
Waffles line to our Scottsville facility
will allow us to better meet the needs
of our consumers while continuing
to grow the successful operation already in place there," said Maribeth
Badertscher, director of corporate
10 / February 24, 2009

Milling & Baking News

communications for J.M. Smucker.
Snack 'n Waffles are ready-to-eat
frozen waffle products that do not require any syrup as the flavor already is
baked into the waffle. They
are made primarily
for food service
vendors but also
sell for about
$2.99 a box at
grocery stores.
The $3 million investment
by
J.M. Smucker will add 25 jobs to the
community, according to the Kentucky Cabinet for Economic Development, which will provide a $550,000
tax credit over 15 years. The facility
currently employs 288. MBN

cereal production in
Phoenix

PHOENIX - NutraCea has begun
cereal production and new customer
sampling at its Phoenix facility. Currently, the facility has the capacity to
handle 2,700 tons of stabilized rice
bran with plans to be able to handle
5,000 tons by the end of the second
quarter of 2009 and 7,000 tons by early
2010.
"We adjusted the ramp up at the
Phoenix facility in order to ensure that
all phases of production are running
smoothly and to further guarantee the
consistency and quality of our baby
cereal and stage 2 products," said Leo
Gingras, chief operating officer.
Stabilized rice bran is a byproduct
of white rice production in which the
external layer of rice is removed and
processed into an alternative form of
grain. MBN
bakingbusiness.com / world-grain.com

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

Milling & Baking News - February 24, 2009

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