kellogg stabilizes the food supply base a vuca response

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

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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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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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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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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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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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