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Kellogg stabilizes the food supply base a vuca response
1. http://blogs.forbes.com/kevinomarah/?p=525
LOGISTICS & TRANSPORTATION 3/24/2016 @ 1:27PM 253 views
We live in a VUCA world: Volatile – Uncertain –
Complex – Ambiguous. This term has been kicking
around business strategy circles for at least a decade
now with references as traditional as Harvard Business
Review and as new media as YouTube. For supply
chain leaders, the topic is especially challenging given
our traditional love of predictability.
Applying this idea to the food supply chain is uniquely
critical because of the way food underpins everything
on earth from demographics and political stability, to
Kevin O'Marah Contributor
Opinions expressed by Forbes Contributors are their own.
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human health and social justice. Kellogg’s efforts with
its agricultural supply base are a major step in the right
direction.
Stabilize the Base
The essence of dealing with a VUCA world is finding
ways to accommodate turmoil with agility. In Kellogg’s
case this starts with simplifying the work across
thousands of direct supply chain employees and
stabilizing a supply base that comprises 1,600 foods
sourced from 20 countries.
In contrast to a narrowly defined sourcing mandate
that might focus simply on cost, this strategy
encourages bigger thinking about value. It includes
using predictive analytics on mountains of data to find
common sense ways to achieve the win-win.
This works, for instance, by understanding how
long-term environmental trends like water shortages
and threats to biodiversity interact with consumer
trends like millennials’ preference for “real” food to
create revenue opportunities. The implication for
marketing folks is to pitch responsibly-sourced
products.
For supply chain it’s about delivering on the promise.
Kellogg’s commitments here start way upstream with
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3. farms – many in emerging markets – that lack the
visibility, resources and clout to stay ahead of
technology and market trends capable of ruining them.
In one example, Kellogg worked with Thailand’s
Bureau of Rice Research & Development to develop
drought-resistant rice supplies for its Asian market. In
another, the company worked with 700 Bolivian
quinoa farmers to maintain procedures required to
earn the prized “organic” label, which commands a
higher price. In a third, UK consumers were invited to
see the domestic agricultural base for wheat as part of
its “Origins” project.
Globally, agriculture employs in the region of 1.3
billion people and accounts for 25% of all greenhouse
gas emissions on the planet. It is also extremely
vulnerable to climate change, so food security and
supporting action in agriculture is as foundational as it
gets. Bringing consumer demand trends together with
education, engineering and public-private partnerships
upstream in the world’s farms is vital to building the
agility we all need to contend with in the VUCA world.
Simplify the Work
One of the best ways to design agility into a system is to
avoid over-engineering the dashboard that controls it.
From a leadership and management perspective, this
means offering a clear direction, or vision, while
delegating authority.
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4. Kellogg’s supply chain sustainability approach boils the
entire issue down to four key pillars.
For team members, colleagues elsewhere in the
company and external partners, these simple principles
combine accountability upstream in the food supply
chain with business impact downstream at the point of
sale. The reputation element in particular is key, since
rising consumer demand for food authenticity
depends, above all, on a transparent and responsible
supply chain.
Alistair Hirst, Kellogg’s SVP of Global Supply Chain,
touched on the reputation element of this strategy in a
keynote address delivered this month at the SEDEX
conference in London. Using an evocative metaphor,
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5. reputations are fragile like a corn flake, he says. This is
especially true today with the power of social media
magnifying every blip on the radar screen, including
false accusations.
Leadership for the Long Run
In last year’s SCM World annual Future of Supply
Chain survey, we asked 1,018 practitioners about the
role they believe their supply chains play in feeding the
world. The result: 316 said their supply chains played a
limited, but meaningful role. Another 244 said their
supply chains played a “substantial” role. Overall, 55%
believe they are personally working to solve world
hunger, even though only 11% are working directly in
the food and beverage sectors.
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6. This article is available online at: http://blogs.forbes.com/kevinomarah/?p=525 2016 Forbes.com LLC™ All Rights Reserved
The takeaway is clear: in a VUCA world, supply chains
are an interconnected web of dependencies comprising
industrial, chemical and logistics specialists working
together to put food on the table. Leadership from
global companies like Kellogg is essential to our
long-term well-being.
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