Kellogg Realigns Supply Chain To Help Achieve Cost-Savings Goals
The Kellogg Company has turned to its supply chain to help achieve the goals of its Project K, a four-year “efficiency and effectiveness program” that aims to save the snack and cereal company $425 million to $475 million annually by 2018.
Announced late last year, Project K seeks to strengthen Kellogg’s core businesses, expand the company’s reach in emerging and developing markets, and boost “value-added innovation,” the company says. Among the benefits, it says, will be optimization of supply chain infrastructure, including factory consolidation and elimination of excess capacity, to increase margins and efficiency.
Fitch Ratings recently said that Kellogg expects to achieve more than half of its Project K savings from the supply chain.
Since announcing Project K, Kellogg has made several moves in its supply chain.
In February, the company announced it would close its Charlotte, N.C., snacks plant and eliminate two lines at its Cincinnati, Ohio, snacks plant by the end of 2014.
That news followed the December announcement that Kellogg would close its Charmhaven, Australia, snacks facility and its London, Ontario, Canada, ready-to-eat cereal plant by the end of this year. At the same time, the company is expanding its Rayong, Thailand, cereal and snacks plant.
“We have a compelling business need to better align our assets with marketplace trends and customer requirements, Kellogg President and CEO John Bryant said in company press releases.
“To that end, we are taking action to ensure our manufacturing network is operating the right number of plants and production lines – in the right locations – to better meet current and future production needs and the evolving needs of our customers.”
Kellogg in January said it would build a new snacks plant in Malaysia that will increase Pringles chips production capacity in Asia Pacific markets. The facility, expected to go into operation in mid-2015, will produce halal certified Pringles and, eventually, halal certified snack brand foods. The company said the new plant supports its goals of becoming a global snacks player and building its emerging-markets footprint.
