NEW YORK — Working collaboratively is more important than ever along the food supply chain, said industry leaders at a recent conference. At the BMO Capital Markets Farm to Market Conference held May 19 in New York, representatives from Cargill, General Mills, Inc. and Kroger Co. were asked how their relationships with one another have changed over the last several years and what factors drove the change.
Marcel Smits, chief financial officer of Cargill, Minneapolis, said he sees “massive change,” with more people than ever interested in what is transpiring from farm to fork.
|Marcel Smits, c.f.o. of Cargill|
“At Cargill we actually have visibility on what goes on at the farm,” Mr. Smits said. “So we have visibility all the way back to the origin of the supply chain. And that means that we’re doing very different things with customers than we used to do a couple of years ago.”
As an example of the change, he mentioned a collaborative effort with Minneapolis-based General Mills.
“Rather than looking at different elements of the supply chain, what we control and they control, we work together and collaborate and try to come up with solutions that cut across the supply chain,” he said.
Mr. Smits also said Cargill prides itself on being one of the contributors to the growth of the deli segment of fellow panel member Kroger.
“Last year when avian influenza hit we actually helped them (Kroger) to find new sources of turkey,” he said. “So the fact that consumers are asking lots of questions as to what’s going on in food and the origin where does it come from and how is it made and is it healthy leads industrial and food service and retailers to come to us and say we need to provide those reassurances to customers and consumers, provide us help with how we can do that.”
Building on Mr. Smits’ comments, Don Mulligan, executive vice-president and chief financial officer of General Mills, said it all starts with the consumer.
|Don Mulligan, executive vice-president and c.f.o. of General Mills|
“I think a great deal of what is driving the increased partnership across the food chain is the evolving needs and the rapidly evolving needs and preferences of the consumers,” Mr. Mulligan said. “So whether it is with Cargill to create technical solutions to challenges we face such as how do we reduce sugar, how do we increase the whole grains in our products to co-creating with our retail partners in terms of what products, what merchandising programs are going to be most relevant and resonant with the changing consumer needs, that linkage in each point of the supply chain is important from a transparency standpoint and it's important from a speed-to-market standpoint.”
He said he couldn’t recall a time when consumers’ preferences and needs were changing as fast as they are today. Those needs range from understanding where food comes from to what ingredients are in the food.
“It’s important for us as a manufacturer in a consumer-driven company to respond to those,” Mr. Mulligan said. “We can’t do it alone. So partnering with Cargill and other suppliers in terms of understanding where the product comes from, reformulating products to meet those needs and then with strong partners like Kroger in terms of how do we actually get those in front of consumers in a way that works for both the retailer and for the manufacture and obviously for the endgame for the consumer.”
For Kroger, much of the groundwork has been laid by companies such as Cargill and General Mills. But there are still challenges, said Mike Schlotman, executive vice-president and c.f.o. at Kroger, Cincinnati.
|Mike Schlotman, executive vice-president and c.f.o. at Kroger|
“Our difficulty comes from having 50,000 or 60,000 items in the store from a variety of suppliers and the customer wanting our associates to be able to tell them those answers,” he said. “The interesting thing is while there is a huge trend toward this, there’s a lot of customers that frankly don’t care or ask. And we haven’t seen the ability or desire of the consumer to go one way or the other, which adds a level of (complexity) at retail but makes it no less important for our associates to understand the origin of the product and how the product is done.”
As an example of its collaborative effort in the supply chain, Mr. Schlotman mentioned Kroger’s 10-year partnership with Murray’s Cheese. Kroger has more than 200 Murray’s Cheese shops inside of its grocery stores, and the retailer requires its associates to work for a two- or three-week training session to learn all about where the cheese is made. The associates visit the caves and spend time with the Murray’s Cheese executive team.
Upon passing the “cheesemonger test,” the associates receive a red vest or a red smock to wear back in the store that signifies they’ve gone through the training class and have passed it. This becomes a symbol of pride for them, Mr. Schlotman said.“A lot of these folks haven’t even traveled before,” he said. “But it also becomes a source of solid information for our associates to know that that person has been trained to that level to discuss the product they are buying.”