Enjoy the cereal you have in your pantry: While the pandemic has waxed and waned across the world, the impact on the global supply chain remains severe and ongoing, says the head of packaged-food giant Kellogg.
The main challenge isn’t producing the raw materials needed to make goods, but rather getting those materials where they’re needed, Chief Executive Officer Steve Cahillane said in an interview. With everything from shipping pallets to truck drivers in short supply, there are limits to the amount of goods companies can produce.
“If you’re planning on running Product A and all of a sudden you have a shortage of one ingredient out of 50 ingredients, well you can’t run it anymore, so you have to make a changeover and switch to something else,” he said. Normally, such changeovers in production are rare, but they’ve become more frequent, he added.
Of Kellogg’s more than 50 global plants, “there’s not one of them that has not been affected in some shape or form,” Cahillane said.
The CEO listed several lines that are “bumping up against capacity,” including the alternative-meat brand Morningstar Farms, Eggo and some cereal brands, including Frosted Flakes. The company is still filling its orders, he said, but it is also adding more production capacity.
Kellogg is among a group of packaged-food companies that has seen demand swell during the pandemic as consumers stay home and eat there more frequently instead of dining out. While the boom has started to taper recently, sales remain healthy.
Cahillane spoke after his company, which also makes Pringles potato chips, reported quarterly sales that outpaced investor expectations. For the full year, Kellogg now sees sales in a range of flat to 1 per cent on an organic basis, which strips out items like currency swings and acquisitions. That’s a slight improvement from the company’s previous outlook.
Cahillane’s company has faced a range of disruptions at plants, from a Pringles factory in Malaysia that was closed for about 10 days because of a pandemic lockdown to a closure in South Africa related to civil unrest.
Source: | This article originally belongs to smh.com.au
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