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02Kester-InnovationattheSpeedofChange

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					Innovation at
the Speed of
   Change



 Jeff Kester
 Senior Manager, Logistics Operations
 Pillsbury U.S.
Agenda

• Context / General Mills overview

• Change Happens
  • Industry trends


• Innovation to Create Value
  • Examples
General Mills

• World’s 6th largest food company
• $12.5 billion in FY06 net sales*
• 28,000 employees
• Marketed in more
  than 100 countries




 * Includes proportionate
   share of JV sales
General Mills
  FY06 Worldwide Net Sales: $12.5 billion


                       International
                        $2.7 Billion
                           22%

       U.S. Retail            U.S. Bakeries &
        $8 Billion             Foodservice
                                  $1.8 Billion
          64%                        14%




                             *Includes proportionate share of unconsolidated JVs
Nine Divisions

• Big G Cereals
• Pillsbury US
• Meals
• Baking Products
• Snacks
• Yoplait
• Small Planet Foods
• Bakeries & Foodservice
• International
Headquartered in Minneapolis…
…with GMI Plants across the US…
…and International Expansion
 Canada Plants
 International Division Plants       11,000 Employees
                                 •• 11,000 Employees
 CPW Plants
                                     40 Plants
                                 •• 40 Plants
Change Happens

Looking at selected trends :
  • Consumer
  • Customer (Retailer)
  • Globalization & Technology
Consumer Trends


• Value Focus
  –   The Wal-Mart
      Effect
  –   Private Label


• Channel-
  Hopping
Consumer Trends
                       Wal-Mart Grocery $ Share

                                           12%
• Value Focus
  –   The Wal-Mart    2000
      Effect
  –   Private Label


• Channel-
                                           23%
  Hopping
                      2006
Consumer Trends
                      Private Label Unit Share
                                          10%
• Value Focus         1980
  –   The Wal-Mart
      Effect
  –   Private Label


• Channel-                                20%
  Hopping
                      2000
Consumer Trends


• Value Focus
  –   The Wal-Mart
      Effect
  –   Private Label


• Channel-
  Hopping


                      THEN
Consumer Trends


• Value Focus
  –   The Wal-Mart
      Effect
  –   Private Label


• Channel-
  Hopping


                      NOW
Consumer Trends


• Value Focus
  –   The Wal-Mart
      Effect
  –   Private Label


• Channel-
  Hopping             Channels: Grocery, Supercenter,
                      Mass, Drug, Club, Dollar Store

                                    Source: ACNielsen, 2004 data
    Customer (Retailer) Trends


• Emerging
  Channels

• The Big are
  Getting Bigger

• Customer
  Expectations
    Customer Trends


• Emerging
                   Warehouse Club    Discount
  Channels

• The Big are
  Getting Bigger
                       Dollar         C-Store

• Customer
  Expectations

                       Drug         Supercenter
    Customer Trends
                   Food & Beverage Sales by Channel
                                            1980
                                            Tradl Grocery: 98%
• Emerging
  Channels                                  Other Channels:
                                            2%


• The Big are
  Getting Bigger                            2005
                                            Tradl Grocery: 65%
• Customer                    35%
                                            Other Channels:
  Expectations                              35%


                                    Source: Management Ventures; ACNielsen HH Panel
    Customer Trends
                   TOP 10 Customers
                   % of General Mills Business
                   1980
• Emerging
  Channels                      29%

• The Big are
  Getting Bigger
                   2006
• Customer
  Expectations
                               66%
    Customer Trends

                   • Inventory pushed
• Emerging           upstream
  Channels         • Case and layer pick
                   • Faster Cycle Times & DSD
• The Big are      • Efficiency Programs
  Getting Bigger   • Special Pack
                   • Customization
• Customer         • RFID
  Expectations
                   • Serving multiple channels
    Globalization & Technology



• Cost Pressures
  fueling Global
  Marketplace

• Enabled by
  Technology
    Globalization & Technology

                   • input cost inflation is steep
• Cost Pressures
  fueling Global
  Marketplace

• Enabled by
  Technology
    Globalization & Technology
                   Total US Food Product Imports
                             2001 - 2005

• Cost Pressures
  fueling Global
  Marketplace

• Enabled by                            40+% increase
  Technology



                   In Million $$
                                   Source: US International Trade Commission data-web
    Globalization & Technology
                                            Doctor’s notes
                                            transcribed in
                                            India overnight
                                            via satellite
• Cost Pressures
  fueling Global
  Marketplace

• Enabled by                McDonald’s
  Technology               Where is the
                          person on the
                        other end of the
                             drive-thru?


               Source: “The World is Flat” by Thomas L. Friedman
Change: summing it up…

• Margin Pressures driven by…
  – Retailer expectations
  – Inflation
  – Limited ability for price advances
• Complexities added by…
  – Customer needs and Channels
  – Globalization
• Competition coming from…
  – Innovative Peers
  – Customers
  – Globally & Technology-savvy
Innovation at the Speed of Change

 Must Define & Create Value
 • Corporate Value
 • Customer Value
 • Consumer Value
    Innovation to Create Value
                         Addressing
Examples:                Industry Trends:
•    Demand Planning     • Complexity in the
                           Marketplace

•    Customer Value      • Shift of Customer
                           Power

•    Agile Network       • Rapid Market
                           Changes

                         • Competition and
•    Consumer Value
                           Cost Pressure
Ex. 1    Value of Demand Planning
        Companies best at obtaining demand visibility average:
            • 15% less inventory
            • 17% stronger perfect-order fulfillment
            • 35% shorter cash-to-cash cycle times
            • while having a tenth of the stock-outs of their peers
                                      Source: AMR Research, “Demand Driven World”




        sample of 6 major
        CPG companies:
Demand Planning

• Centralized Organization
   – “Center of Excellence”
• Top-Down
   – Aligned by Business
• Bottoms-up
   – Connected with Sales/Customer


2 years ago                   Today
• Fragmented                  • Clear ownership
• Small % of people’s time    • Full-time experts
• No common process           • Investment in tools
• Much data… little insight   • Alignment and results
Ex. 2   Creating Customer Value
        • GMI Customer Logistics Organization
          – Alignment with Sales
          – Understand Customer strategies early
          – Respond with ideas and capabilities



                                                   Leveraging
                                                   Logistics as
                                                   a way to
                                                   grow the
                                                   business,
                                                   not just a
                                                   Supply
                                                   Chain cost
Creating Customer Value

Special Pack Responsiveness
 – Developed on-line tools for Field Sales Rep
 – Reduced Lead-Time
 – Increased Customization
Creating Customer Value
7-day service
• Decrease inventory and work-load surges
• Partner to create savings for GMI and Customer

    Example of Store Sales Volume Percent / Day
Ex. 3    Building an Agile Network
         Traditional Supply Chain

    Manufacturing             GMI Warehousing     Customer Warehousing        Retail Stores




         Future Supply Chain
                                                      Demand Driven Supply



        Manufacturing          GMI Warehousing   Customer Warehousing      Retail Stores




                        Direct Plant Ship
                                                            Direct Store Delivery
                               Demand-Based
                               Replenishment
 Agile Network

• Asparagus year-round production
  – Versus 2-months
• Aligns asparagus production with sales
• Quality
  – Shorter holding time
  – Smaller production lots
  – Improved shelf life
Ex. 4   Defining Consumer Value

        • “H” “O” “T” pretzels




        • Pasta shapes




        • Consumers love frosting
Innovation at the Speed of Change


• Change Happens
  • Complexity
  • Margin Pressures
  • Competition

• Innovate to Create Value
  • Corporation
  • Customer
  • Consumer

				
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posted:9/28/2013
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