Kraft Foods Group, Inc.: The Beginner's Guide to Understanding An Industry Leader

Kraft Foods Group, Inc.: The Beginner's Guide to Understanding An Industry Leader

By Kate Hollens & Lauren Moore

"Our aim is to be North America's best food and beverage company, and we'll get there by continuing to offer products consumers love, creating a performance-based culture that motivates and excites employees and becoming the best investment in the industry."

- Kraft CEO Tony Vernon

Kraft Foods Group is one of the largest food and beverage companies in North America. (IDEO) Its annual revenue reaches an astounding $18 billion and has a large category of anything grocery. They focus on cash flow to ensure a highly competitive dividend and the money the company makes they reinvest into their people. This reinvestment enables innovation and better brand-building. Because of this dedication, they have 10 brands with more than $500 million in sales and these brands are seen in 98% of North American households in their pantries and refrigerators. Some of their brands include A.1., Capri Sun, Cool whip, Cracker Barrel, Kool-Aid, Maxwell House and a ton of others. Kraft Foods Group is the powerhouse in brands. Also their new product innovation brings in 13% if their revenue ensuring that they can keep creating new and exciting products. (Kraftfoodgroups)

Kraft Foods Group Supply Chain is anything but ordinary, because of its love for its customers, Kraft Foods Group has chosen to actively involve customers in the supply chain as "value creation co-designers." To achieve this, Kraft became an early client of the IDEO transformation team and to put this idea into action, Kraft Foods Group first created a cross-functional team in Safeway. This had the desired effect and Kraft experienced a 162% sales increase. Each headquarters they implemented this workshop of six steps: Understand, Align, Observe, Ideate, Prototype and Implement. This process has created such a difference and effectiveness of the end-to-end supply chain, it has served to encourage scope expansion by both parties (Kraft's and the customers). It has resulted in co-management of the end-to-end supply chain and this will eventually lead them to supply chain optimization. (Supplychain Brain)

Due to this new process, Kraft Foods Group had a better turnover rate and this gave them a boost in cash flows by 20 percent. Kraft Foods Group has perfected the system of getting the right amount of goods for a market and getting them quickly into the hands of consumers. Because of this it speeds up the process of converting the products into cash. (Supplychainquarterly) Kraft Foods Group’s supply chain is a winner because they have successfully done several approaches to ensure more money and a better system for having only the inventory necessary for the locations it will be at. Philippe Lambotte, Kraft's senior vice president of customer logistics in North America says that one of the keys is "repetitive flexible manufacturing" So instead of responding daily to the changes in demand, manufacturing produce these items at a constant frequency and in fixed numbers. (Lambotte).

     

To run their supply chain, Kraft Foods Group requires food industry experiences along with commodities and procurement experience. Also the people need to have strong analytical skills in statistics, economics, modeling and strong Excel capabilities. Organizational skills along with Presentation skills are also very important. As part of the presenting skills one should know how to negotiate and have the ability to influence others. Communication is very important along with problem solving and decision making. Also Risk management experience is highly valued as part of the process of taking care of their supply chain. (Linkedin)

As societal needs change and grow so does the importance place factors the are believed to affect the day to day life of the consumer. These factors include convenience, accessibility, etc. Thus, an issue arises through the rapid growth in various technological sectors such as online grocery shopping, poses a significant threat to all members of the food industry. Listed among those affected is Kraft Foods Group, Inc. Online grocery shopping is foretasted to to grow by 9.2% annually. Furthermore, this e-commerce sector is set to become a $10.1 billion dollar industry by the year 2018. (IBISWorld)

Online grocery shopping is set to alter consumer expectations and buying trends by; changing the value added component to better suit consumer’s perceived notions of product quality, reducing company supply chain lead time, increasing on hand inventory, and more. Furthermore, though Kraft Foods Group, Inc. maybe a larger, even a global food corporation their success within the food industry could be severely hindered as the company’s supply chain is not without risk or threat as consumers migrate to increased use of technology to better suit their shopping needs. (Future of Retail Supply Chains)

To learn more about Kraft Foods Group supply chain go to:

Sources:

• Kraft Foods Group: Overview
• LinkedIn: Kraft, Strategic Sourcing Manager- Ingredients
• Supply Chain Brain: Kraft Foods Applies Product Innovation Concepts To Supply Chain Processes 
• Supply Chain Quarterly: At Kraft, cash is king
• IBIS World: Industry at a Glance
• The Future of Retail Supply Chains