3/30/2019 Kellogg stabilises the food supply base: a VUCA response | SCM World

Kellogg stabilises the food supply base: a

VUCA response  0  0
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O'Marah March Content
25, 2016 and Research
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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 human health and social justice. Kellogg’s
e orts with its agricultural supply base are a major step in the right direction.

Stabilise the base

The essence of dealing with a VUCA world is nding ways to accommodate turmoil with agility. In Kellogg’s
case this starts with simplifying the work across thousands of direct supply chain employees and stabilising
a supply base that comprises 1,600 foods sourced from 20 countries.

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In contrast to a narrowly de ned 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 nd
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
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revenue opportunities. The implication for marketing folks is to pitch responsibly-sourced products.

For supply chain it’s about delivering on the promise.

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Kellogg’s commitments here start way upstream with 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-
resistantMember
rice supplies
Loginfor 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 o ering a clear direction, or vision,
while delegating authority.

Kellogg’s supply chain sustainability approach boils the entire issue down to four key pillars.

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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,
reputations are fragile like a corn ake, 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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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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