General Mills and Their Super Adaptive Supply Chain Ethics
(GM) is an American multinational manufacturer and marketer of branded consumer goods, headquartered in Golden Valley, Minnesota, and markets a vast plethora of well-known North American brands. In a piece written by Paul Gallagher, Vice President of General Mills North American supply chain, explains how adaptive core mechanics allowed them to disrupt their supply chain and ultimately overcome a lot of the problems the pandemic brought.
“Prior to the pandemic, we were already transforming our North America supply chain. We had our sights on enabling a consumer-focused, competitively advantaged value chain through a test-and-learn culture. And because we had laid a foundation and built the muscle for how to do this – and accelerate – we were better prepared to deliver when COVID-19 became a global pandemic in March 2020.”
People & Safety First
GM is over 150 years old now, and the concept alone of prioritising people and safety is not a new one, which proved invaluable when March 2020 rolled around. Gallagher mentions a flour mill explosion that occurred in 1878, which kick-started GM’s need for ‘best-in-class safety measures’, and goes onto explain that the measures introduced were shared with competitors, something GM repeated when COVID struck.
This early adoption of immediate safety practices would echo through to the modern-day and initially cause some disruption. As early adopters of preventative COVID measures, GM was able to strategise and work around ever-evolving news, reports and information, as the pandemic spread in March, primarily by adopting mask use early and the implementation of social distancing.
“Early in the calendar year, as the situation in China began impacting our business, we started to watch and learn. As the virus spread, General Mills created a global task force to ensure an enterprise response.”
GM also made an effort to lift the spirits of employees through surprise rewards, daily bonuses and video-captured recordings of company leaders expressing their thanks and gratitude, maintaining motivation through tough COVID times.
The Power to Pivot
It’s of no surprise that a lot of companies found it difficult to change their tactics in response to the pandemic, but GM was set and ready to meet increases in demand and the shifting dynamic between corporation and customer. One of the things put in place prior to the pandemic was “a new platform of business process management”, which allowed GM to be more agile during high demand and daily changes, giving internal teams knowledge of how to make efficient decisions quickly.
“We also sharpened our North America Supply Chain mission, which was to make as many cases as we could, safely. It was simple, unarguable and allowed 10,000 employees to get really clear and aligned on what they needed to do in a short amount of time.”
GM was also able to leverage partnerships with other companies to speed up lengthy operations and provide a consistent output of goods and items by utilising their extensive network.
Learning to Learn
The operational decision making behind GM had always been focused on the utilisation of knowledge gained from over 150 years of experience, but when COVID struck, they were forced to learn how to move forward and adapt. Through a daily meeting, GM was able to monitor supply and demand risk and production capacity, opening the floor for discussion between departments.
“Cascading metrics allowed us to make decisions at the speed of business, creating a true cohort of shared consciousness. It also helped put into practice and normalise an iterative, imperfect style of creative problem-solving.”
GM even employed virtual reality to remotely view a large capital expansion, adding extra capacity for consistent output of products, as well as investing in external capacity to maintain specific platforms like cold products, to be able to meet seasonal demand. Alongside investment in data and analytics, a learning mechanism in itself for GM, an increased focus on revenue management and machine learning implementation for demand forecasting, GM is very much setting themselves up for success.
“Beyond the pandemic, we have been ruthlessly focused on delivering customer value by working with customers on their priorities. This requires an acute listening and learning mentality.”
The closing statement insists upon an important lesson: that even large systems can become agile in times of crisis, such as the pandemic, and that all it really takes is the dedication and willingness to adapt one's supply chain processes to their maximum potential.
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”