Dec 22, 2009

Creating a Krafty supply chain

 

Kraft Foods as you might be able to imagine, has a mighty complex supply chain. The company prided itself in maintaining a high degree of supply chain efficiency and best practices right from 2003 when a lot of companies were still struggling with the term. The following is an article about the process improvement actions undertaken by the company during that period. It reflects the company’s drive to excel.

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Let us do a brief background study of the company itself.

Kraft traces its origins to the early 1900s when J.L Kraft launched a successful Chicago cheese distributorship. Kraft's vision for the company was to bring to retailers a variety of cheeses of consistent quality with longer shelf life. In fact, one of the company's earliest contributions was the development of processed cheese in 1916.

Kraft was acquired by Philip Morris in 1988, and following an $8.4 billion initial public offering (IPO), began trading as a public company on June 13, 2001. With 18 U.S. dairy plants, Kraft reaped some $4.1 billion in dairy sales in 2002.

With 100 years of innovation under its belt, Kraft's core business strategies have included accelerating growth of its brands; driving global category leadership and world-class productivity, quality and service; and building employee and organizational excellence. By creatively focusing on new product development in response to consumer demand for convenient meals, on-the-go snacking, and health and wellness, Kraft has captured its fair share of some of the fastest-growing distribution channels worldwide. The company has also developed customized products and marketing to reach rapidly expanding demographic segments such as the African-American and Hispanic populations in the United States.

Copyright: 2003 Stagnito Communications

With its stock now at just a fraction of what it was in the years ensuing this change, especially combined with its hostile bid to take over Cadbury, Kraft Foods entered 2009 looking for creative ideas to drive down costs and drive up profits. It is a fact now that in 2009, Kraft Foods has cut down 50 million Truck miles from its distribution network, thereby drastically reducing fuel costs and also keeping a tab on maintenance.

The $42 billion manufacturer of products from Kraft cheese to Maxwell House coffee to Oscar Mayer meats chopped the highway miles over the past four years using alternatives to trucking, and rethinking its distribution network on a broad scale.

Some of its inbound and outbound freight shifted from highways to rail and to waterways, the company said. It also streamlined distribution, repositioning hubs and other facilities to reduce the number of trucks it needs and the number of miles they travel.

"We think about miles, piles and idles when moving our product," Steve Yucknut, vice president of sustainability at the Northfield, Ill.-based company, said last month. "We're finding ways to drive fewer miles, reduce inventory piles and eliminate idling trucks."

In Ohio, the company switched 10,000 truck shipments to barge to deliver wheat to its Toledo flour mill. That saved more than a million miles and 2,000 tons of carbon dioxide emissions, the company said. It is testing hybrid trucks in direct store delivery service.

Its 20 largest plants and distribution centers in North America also are using transportation and warehouse optimization software to maximize the amount of product shipped per truckload, taking the equivalent of 1,500 trucks off the road. Kraft also used transportation management software from Oracle to cut more than 500,000 empty miles from its private fleet trips last year.

The company's top 50 for-hire motor carriers use the software as well, the company said. Kraft is also among the shippers pushing Congress to allow heavier trucks on U.S. highways, claiming the use of trucks weighing up to 97,000 pounds would reduce fuel use and carbon emissions and allow shippers to move freight in fewer trucks.

Source: Journal of Commerce Article

Dec 22, 2009

Creating a Krafty supply chain

 

Kraft Foods as you might be able to imagine, has a mighty complex supply chain. The company prided itself in maintaining a high degree of supply chain efficiency and best practices right from 2003 when a lot of companies were still struggling with the term. The following is an article about the process improvement actions undertaken by the company during that period. It reflects the company’s drive to excel.

image

Let us do a brief background study of the company itself.

Kraft traces its origins to the early 1900s when J.L Kraft launched a successful Chicago cheese distributorship. Kraft's vision for the company was to bring to retailers a variety of cheeses of consistent quality with longer shelf life. In fact, one of the company's earliest contributions was the development of processed cheese in 1916.

Kraft was acquired by Philip Morris in 1988, and following an $8.4 billion initial public offering (IPO), began trading as a public company on June 13, 2001. With 18 U.S. dairy plants, Kraft reaped some $4.1 billion in dairy sales in 2002.

With 100 years of innovation under its belt, Kraft's core business strategies have included accelerating growth of its brands; driving global category leadership and world-class productivity, quality and service; and building employee and organizational excellence. By creatively focusing on new product development in response to consumer demand for convenient meals, on-the-go snacking, and health and wellness, Kraft has captured its fair share of some of the fastest-growing distribution channels worldwide. The company has also developed customized products and marketing to reach rapidly expanding demographic segments such as the African-American and Hispanic populations in the United States.

Copyright: 2003 Stagnito Communications

With its stock now at just a fraction of what it was in the years ensuing this change, especially combined with its hostile bid to take over Cadbury, Kraft Foods entered 2009 looking for creative ideas to drive down costs and drive up profits. It is a fact now that in 2009, Kraft Foods has cut down 50 million Truck miles from its distribution network, thereby drastically reducing fuel costs and also keeping a tab on maintenance.

The $42 billion manufacturer of products from Kraft cheese to Maxwell House coffee to Oscar Mayer meats chopped the highway miles over the past four years using alternatives to trucking, and rethinking its distribution network on a broad scale.

Some of its inbound and outbound freight shifted from highways to rail and to waterways, the company said. It also streamlined distribution, repositioning hubs and other facilities to reduce the number of trucks it needs and the number of miles they travel.

"We think about miles, piles and idles when moving our product," Steve Yucknut, vice president of sustainability at the Northfield, Ill.-based company, said last month. "We're finding ways to drive fewer miles, reduce inventory piles and eliminate idling trucks."

In Ohio, the company switched 10,000 truck shipments to barge to deliver wheat to its Toledo flour mill. That saved more than a million miles and 2,000 tons of carbon dioxide emissions, the company said. It is testing hybrid trucks in direct store delivery service.

Its 20 largest plants and distribution centers in North America also are using transportation and warehouse optimization software to maximize the amount of product shipped per truckload, taking the equivalent of 1,500 trucks off the road. Kraft also used transportation management software from Oracle to cut more than 500,000 empty miles from its private fleet trips last year.

The company's top 50 for-hire motor carriers use the software as well, the company said. Kraft is also among the shippers pushing Congress to allow heavier trucks on U.S. highways, claiming the use of trucks weighing up to 97,000 pounds would reduce fuel use and carbon emissions and allow shippers to move freight in fewer trucks.

Source: Journal of Commerce Article