Showing posts with label William Thompson. Show all posts
Showing posts with label William Thompson. Show all posts
Tuesday, July 9, 2013
Kroger to Buy Harris Teeter for $2.4 Billion
A Kroger-operated market in Del Mar, Calif. Kroger will acquire 212 Harris Teeter stores.
The Kroger Company, seeking to expand in the Southeast and mid-Atlantic regions, said on Tuesday that it would acquire Harris Teeter Supermarkets for $2.4 billion.
Kroger agreed to pay $49.38 a share in cash, about 2 percent above Harris Teeter’s closing price on Monday and 34 percent above the price on Jan. 18, when media reports emerged that Harris Teeter was exploring strategic alternatives.
Harris Teeter has 212 stores in North Carolina, Virginia, South Carolina, Maryland, Tennessee, Delaware, Florida, Georgia and the District of Columbia. The company also operates distribution centers for grocery, frozen and perishable foods in North Carolina. Harris Teeter posted $4.5 billion in revenue for the 2012 fiscal year. Kroger said it would finance the transaction with debt and assume Harris Teeter’s outstanding debt of about $100 million. Harris Teeter will continue to operate its stores as a subsidiary of Kroger and will continue to be led by Harris Teeter’s senior management team. There are no plans to close stores.
Kroger expects the deal to result in savings of $40 million to $50 million over the next three to four years.
“This is a financially and strategically compelling transaction and a unique opportunity for our shareholders and associates,” David B. Dillon, Kroger’s chairman and chief executive, said in a statement. “Harris Teeter is an exceptional company with a great brand, friendly and talented associates, and attractive store formats in vibrant markets run by a first-class management team.”
Thomas W. Dickson, the chairman and chief executive of Harris Teeter, said, “Harris Teeter has a long track record of creating shareholder value, and this merger is the culmination of those efforts over many years.”
Bank of America Merrill Lynch advised Kroger and Arnold & Porter served as legal adviser. J.P. Morgan Securities advised Harris Teeter, and McGuireWoods was its legal adviser.
Original Article authored by Dealbook for the NYTIMES and can be located here)http://dealbook.nytimes.com/2013/07/09/kroger-to-buy-harris-teeter-for-2-4-billion/?ref=business
Thursday, May 23, 2013
J.M. Smucker’s Rules For Success
J.M. Smucker’s Rules For Success
(Article authored by Robert Stevenson, Guest Author for Jexet.net)
In an article I wrote a while back called Corporate Culture Counts, I briefly wrote about the J.M. Smucker Company. I believe this company is an excellent role model to follow for teach-ing anyone how to successfully run a business today. Founded in 1897, this company now employs over 4,800 employees and is doing over $4.7 billion in sales. Tim and Richard Smucker are the Co-CEOs for the J.M. Smucker Company and they believe they serve 6 constituents:
“the consumer, the retailer, our employees, our suppliers, our communities, and our shareholders. We believe if we take care of the first five, the sixth will automatically be taken care of.”
They live and work by the creed, You Will Reap What You Sow. Here are their rules for achieving success in business:
•Let the Golden Rule guide every decision.
•Don’t have secret strategies – make sure everyone knows the strategy and knows their role.
•Have a culture that promises people a better tomorrow based on their good work.
•Don’t be content; you’re responsible for making things better.
•Doubt your own infallibility.
•Have faith. Believe in a higher force.
•Don’t do what you know only for material rewards – be called to your life’s work and have a purpose.
•Laugh and have a sense of humor.
In a world where corrupt deception abounds, it is refreshing to have such a prominent company set a great example of just the opposite. But their written words are only a guide to follow; it is your leadership, your example, your culture that will determine your success.
About the author: “Robert Stevenson is a highly sought after, internationally know speaker. He is the author of the best-selling books “How to Soar Like An Eagle in a World Full of Turkeys” and “52 Essential Habits For Success.” Robert is a graduate of the Georgia Institute of Technology (Georgia Tech) and is a former All-American Ath-lete. He started his first business at 24 and has owned several companies. Robert has international sales experience dealing in over 20 countries and his client list reads like a Who’s Who in Business. He has shared the podium with such renowned names as General Colin Powell and Norman Schwarzkopf, Former President George H.W. Bush, Anthony Robbins and Steven Covey. www.robertstevenson.org “
Monday, May 20, 2013
Sprouts Seeks Fuel for Growth in IPO in Plan for 1000 Store Expansion
Sprouts Seeks Fuel for Growth in IPO
(Article written by Jon Springer for Supermarketnews.com and can be found here)
PHOENIX — Sprouts Farmers Markets is touting rapid sales growth and the potential to add more than 1,000 new stores in a prospectus detailing plans for an initial public offering of stock.
The retailer here, which operated 157 stores as of May 1, said it plans to grow its store count by at least 12% annually over the next five years, with the potential to operate as many as 1,200 nationwide. Sprouts posted comparable sales growth of 9.7% in 2012, according to the filing, and has marked positive comps for 23 consecutive quarters.
Sales for 2012, including Sunflower assets added during the year, totaled $2 billion. The company posted $20 million in net earnings for the year.
Spouts, which is controlled by the private investor Apollo Capital Management, did not indicate how much it intended to raise in the IPO, but said it intended to use proceeds to service debt from its recent refinancing and for general corporate purposes.
Sprouts in the filing said its combination of natural and organic foods and low prices in produce gives it broader appeal than "high end" natural and organic retailers. Its strategy is to use low prices in produce to attract and then transition conventional grocery shoppers into more loyal "lifestyle" shoppers.
"The foundation of our value proposition is fresh, high-quality produce which we offer at prices we believe are significantly below those of conventional food retailers and even further below high-end natural and organic food retailers," the company said. "We believe that by combining our scale in and self-distribution of produce, we ensure that our produce meets our high quality standards and can be delivered to customers at market leading prices. In addition, our scale, operating structure and deep industry relationships position us to consistently deliver ‘Healthy Living for Less.’ We believe we attract a broad customer base, including conventional supermarket customers, and appeal to a much wider demographic than other specialty retailers of natural and organic food."
The IPO would follow those of other growth-oriented speciality food chains that have tapped the public markets recently, including Natural Grocers by Vitamin Cottage, The Fresh Market, and Fairway Holdings.
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Wednesday, May 8, 2013
Where Did Food and Grocery Companies Land on this Year's Fortune 500?
Where Did Food and Grocery Companies Land on this Year's Fortune 500?
(Written on May 6, 2013 by Davide Savenije for Fooddive.com)
1. KROGER
Rank: 23
Revenue: $96.8 billion
Profits: $1.5 billion
2. ARCHER DANIELS MIDLAND
Rank: 27
Revenue: $89 billion
Profits: $1.22 billion
3. WALGREEN
Rank: 37
Revenue: $71.6 billion
Profits: $2.13 billion
4. PEPSICO
Rank: 43
Revenue: $65.5 billion
Profits: $6.18 billion
5. COCA-COLA
Rank: 57
Revenue: $48 billion
Profits: $9.02 billion
6. SAFEWAY
Rank: 62
Revenue: $44.2 billion
Profits: $597 million
7. SUPERVALU
Rank: 86
Revenue: $36.1 billion
Profits: -1.04 billion
8. MONDELEZ INTERNATIONAL
Rank: 88
Revenue: $35 billion
Profits: $3.03 billion
9. TYSON FOODS
Rank: 93
Revenue: $33.3 billion
Profits: $583 million
10. PUBLIX SUPER MARKETS
Rank: 108
Revenue: $27.7 billion
Profits: $1.55 billion
11. KRAFT FOODS GROUP
Rank: 151
Revenue: $18.3 billion
Profits: $1.64 billion
12. GENERAL MILLS
Rank: 169
Revenue: $16.7 billion
Profits: $1.57 billion
13. KELLOGG
Rank: 192
Revenue: $14.2 billion
Profits: $961 million
14. LAND O'LAKES
Rank: 194
Revenue: $14.1 billion
Profits: $240 million
15. CONAGRA FOODS
Rank: 209
Revenue: $13.3 billion
Profits: $468 million
16. SMITHFIELD FOODS
Rank: 213
Revenue: $13.1 billion
Profit: $361 million
17. DEAN FOODS
Rank: 217
Revenue: $12.9 billion
Profits: $159 million
18. WHOLE FOODS MARKET
Rank: 232
Revenue: $11.7 billion
Profits: $467 million
19. H.J. HEINZ
Rank: 234
Revenue: $11.6 billion
Profits: $923 million
20. HILLSHIRE BRANDS
Rank: 288
Revenue: $9.3 billion
Profits: $845 million
21. LEUCADIA NATIONAL
Rank: 299
Revenue: $9.3 billion
Profits: $855 million
22. HORMEL FOODS
Rank: 319
Revenue: $8.2 billion
Profits: $500 million
23. CAMPBELL SOUP
Rank: 338
Revenue: $7.7 billion
Profits: $774 million
24. COCA-COLA ENTERPRISES
Rank: 339
Revenue: $7.6 billion
Profits: $677 million
25. DOLE FOOD
Rank: 372
Revenue: $6.8 billion
Profits: -$146 million
26. HERSHEY
Rank: 384
Revenue: $6.6 billion
Profits: $661 million
27. INGREDION
Rank: 386
Revenue: $6.5 billion
Profits: $428 million
28. SEABOARD
Rank: 411
Revenue: $6.2 billion
Profits: $282 million
29. DR PEPPER SNAPPLE GROUP
Rank: 427
Revenue: $6 billion
Profits: $629 million
30. J.M. SMUCKER
Rank: 452
Revenue: $5.5 billion
Profits: $460 million
Friday, May 3, 2013
Ball and Its Mason Jars Get Better With Age -- Thanks to Pinterest, DIY
Ball and Its Mason Jars Get Better With Age -- Thanks to Pinterest, DIY
A Recognizable Name, a New Approach to Marketing and a Perfect Storm of Trends Has Jarden's Jars Riding High.
(Article written by Rupal Parekh Agency Editor for Advertising Age and can be located here.)
Thousands of people across America are eagerly awaiting a case of the blue Balls.
Jarden Home Brands -- which licenses one of the oldest brands in America, Ball Home Canning -- has released a limited-edition "Heritage Collection" line to mark the centennial of the innovation commonly known as the mason jar. A commemorative note etched onto each pale cyan glass container is marked with "100 Years of American Heritage" and the year 1913, denoting the date the Ball Brothers, a group of five U.S. industrialists, integrated the construction of the jars so it was no longer a lid made by one person and a jar made by another.
This homage to old-school jars is just the latest way that Ball, a brand more than 125 years old yet experiencing its best sales in history, is catering to a fervent fan base. More than ever, Americans are eager to rediscover the art of canning.
The brand revival began a few years ago when Ball realized it was in, er, a bit of a jam.
It may sound like a homey little brand, but Ball is acutally part of a huge consumer products company based in Rye, N.Y. The $6.7 billion portfolio for Jarden spans outdoor and kitchen products including Marmot, Coleman, CrockPot, Mr. Coffee, Oster and Sunbeam. (Jarden does not break out sales for Ball.)
With over 96% brand awareness, name recognition wasn't a problem for Ball. But research showed there were many misperceptions about canning that prevented people from trying the process -- including worries that it was time consuming, too complex and unsafe. There was also the matter of fighting off competition from the likes of big private labelers like Walmart and other retailers. With the help of its agency of record, Kansas City, Mo.-based Barkley, and 360 Public Relations, Ball has gotten its bearings on a low budget.
Over the past two years, it's undertaken social-media campaigns and online canning demonstrations to expand its reach. It has modernized communication, leaping from the pages of Good Housekeeping to Pinterest and Facebook, and in the past year has devoted attention to developing new products to connect with a younger audience.
Timing helped. The recession fueled a resurgence in home canning and DIY projects while Americans' focus on healthy homemade and artisan foods made with fresh ingredients has been a boon for Ball. And as a heritage brand, it's riding the throwback trend -- when not used for actual canning, the jars often serve as simple centerpieces at outdoor weddings or as glasses at comfort-food restaurants.
Peruse Pinterest and the fandom is evident. There you'll find all manner of ideas of novel ideas for repurposing Ball Jars, including one page dedicated to 101 different uses. They range from making layered salads in a jar; creating a hanging light; making a DIY air-freshener; and using Ball Jars as a bathroom accessory to hold cotton balls and swabs.
Traditionally, there were two main brands when it came to mason jars: Ball and Kerr, with Ball being used primarily east of the Mississippi River and Kerr being used west of it. Both are licensed by Jarden, so they're not quite competitors. But the most loyal and passionate fans over the years have been for Ball, and it's where the majority of the marketing support has gone as the brand migrates across the country.
Passing the passion around
For a sense of how passionate home canners are about Ball, go back to 1992. At the time, there was a Twinkie-like run on the jars when news reports about a spin-off prompted worries the company was in trouble. Ball had to publicly reassure its stockpiling consumer base that it was going to be around for a long time to come.
While Ball was a trusted brand, back then it wasn't growing or innovating. Sales of home-preservation products were flat through the 1990s, and there wasn't much new in product strategy or innovation.
Chris Carlisle, senior director-marketing for the Ball home-canning products, said the trick is to strike a balance between keeping relationships with longtime fans and bringing millennials into the fold.
"We want to preserve the authenticity of Ball, but you have to show that you're moving forward," he said, noting that the company has been focused on a product strategy that simultaneously shows where Ball "has been historically and where we want to go."
That thinking bred a new appliance called the "FreshTech Automatic Jam & Jelly Maker." Users can just dump in some fresh fruit, sugar and pectin, and jam is created in under 30 minutes, cooking and stirring the ingredients for you. "We understand [cooking is] time sensitive today and the making of fresh jams and jellies is a bit of a lost art," Mr. Carlisle said. "Our job is to pass the passion around."
It's also expanding beyond jams, jellies and pickling with fresh-food innovations such as a wet herb keeper that extends the life of fresh herbs.
Private-label competition
Keeping at the forefront of product development is crucial at a time when Ball's core product faces competition from private labelers. Walmart has launched a line of private-label products under its Mainstays brand, while the upmarket Williams Sonoma has been
Kilner jars from England. Ball jars retail for $12 a dozen, while Kilners can run as high as $25 for four.
"Part of our protection as a brand is the notion of authenticity and what that means -- particularly to younger consumers -- is staying true to our roots," said Mr. Carlisle. "Our jars and lids are still made in the USA, and if you look across the competitive set … they are sourcing their jars from China. (Ball jars are predominantly made in Indiana, with some production also occurring at plant in Salem, N.J). He added: "None of those other brands have a communication strategy that facilitates storytelling, while our consumers get to participate in a two-way conversation."
Ball has changed its media-allocation strategy to largely shift from marketing in cooking magazines toward social media and events. (According to Kantar in 2012, measured media was $1 million, but digital spending takes the figure much higher.) The company hired Barkley in 2010, which has since launched a campaign called "Shine Through," indicating that an individual's personality and creativity can shine through with the use of Ball products. The strategy involves a total revamp of the Ball website, renaming it freshpreserving.com; a streamlined e-commerce interface; and an easy-to-use recipe section.
"Ball's challenge was to re-energize the category as the category leader, and take share -- and that's tough to do -- but they did it," said Jeff Fromm, exec VP at Barkley and co-author of "Marketing to Millennials," which is due in July. He attributes much of the growth to paying attention to the ways that younger consumers may want to interact with the brand. "Some of the interesting things we know about millennials is that they are interested in being enviro-friendly and they like sharing things with their friends. That trait is shareworthiness. It's not about the brand, it's about them. If you enable their sharing and self-expression, then they like your brand."
How did Ball make itself shareworthy? An expanded social strategy on Facebook allowed new canners to learn from experienced ones. Ball also held events with well-known canners and launched national "Can-It-Forward" day events at farmers markets where canning demonstrations were held concurrently in person and online.
Over the holidays, Barkley ran a promotion on Facebook called the 25 days of anti-gift cards. Each day running down to Christmas, the campaign offered new uses for the jar, for example, as part of a vodka-infusing kit or way to store keepsakes from favorite vacations.
In the span of a year, Facebook fans increased by 40% and website visits increased by 30%, bringing the company firmly back into the conversation again. And on one of the ultimate sharing sites, Pinterest, Ball is approaching 4,000 fans. With the help of 360 Public Relations, Pinterest is now one of the top 10 referral sites to freshpreserving.com for e-commerce, which it only began in earnest in 2011.
But most important, this can-do attitude has led to strong sales. Mr. Carlisle said "2012 was far and away our best sales year ever -- we grew 20%. It changed the profile of the brand and we saw a big leap in our sales growth." Not bad for a brand born before the advent of touch typing. And Ball thinks the future looks even brighter. "We continue to see momentum in 2013," said Mr. Carlisle, anticipating the company's biggest volume months ever this June, July and August.
Or in Ball terminology, he believes the brand will shine through.
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Thursday, May 2, 2013
Newcastle drops a new ale, and it's a bombshell!
Newcastle drops a new ale, and it's a bombshell
(Written by Brian Warmoth for Food Dive and can be found here)
- Newcastle announced Wednesday that it would release a new Newcastle Bombshell pale blonde ale for the U.S. in May, making it available through July.
- The labels for the beer will feature a blue color scheme and illustration of a blonde woman.
- It will be sold in 6-bottle and 12-bottle packs.
WHITE PLAINS, N.Y., May 1, 2013 /PRNewswire/ -- Newcastle, the No Bollocks beer brand, today announced the release of its limited edition Newcastle Bombshell pale blonde ale. Available nationwide between May and July 2013, Newcastle Bombshell is a refreshing new addition to the Newcastle portfolio featuring an eye-catching blonde on the label intended to catch the eye of beer drinkers nationally. And sell more beer.
"An Englishman's first love will always be his brown ale, but now he can have a summer fling with a beautiful blonde," said Charles van Es, Brand Director, Newcastle Brown Ale. "With its golden ale color, light aroma and silky smooth finish, Newcastle Bombshell is a real British beauty worth waiting for, with a label as alluring as the beer inside."
Newcastle Bombshell is an English-style blonde ale that offers a floral hop aroma, a balanced and bittersweet flavor with toasted biscuit notes and a smooth clean finish with hints of caramel sweetness. Brewed with a combination of Cascade, Hellertau and Northdown hops, Newcastle Bombshell has an alcohol by volume (ABV) of 4.4 percent with 28 International Bittering Units (IBUs). In other words, it's a great beer.
To support the release of Newcastle Bombshell, Newcastle is rolling out a series of consumer sampling events across the country and is also unveiling a new TV spot called "Bombshell," created by Droga5 New York. Featuring an array of pigment-challenged sunbathers, the spot proudly points out the similarities between the smooth, refreshing, new blonde ale and an Englishman in the midst of summer. Namely: they're both pale. "Bombshell" is the latest asset in the brand's No Bollocks 2013 marketing campaign dedicated to honesty and transparency in the beer category.
Newcastle Bombshell is available nationally in 6-bottle and 12-bottle packs priced comparably to Newcastle Brown Ale and may also be found on draught in most markets.
To view the new Newcastle "Bombshell" spot, visit www.youtube.com/newcastle. For more information about Newcastle Brown Ale and Newcastle Bombshell visit www.facebook.com/newcastle.
About Newcastle Brown Ale
A No Bollocks beer brand, Newcastle Brown Ale was first brewed in 1927 to satisfy thirst of hardworking Englishmen. Colonel Jim Porter crafted the ale with its own distinct golden brown color, lightly hopped taste and character that quickly became a local favorite. Best served cold, Newcastle Brown Ale has since become a world favorite as a dark beer that's easy to drink. Newcastle Brown Ale is imported by the nation's premier beer importer, HEINEKEN USA, headquartered in White Plains, New York. For more information, please visit www.facebook.com/newcastle.
About HEINEKEN USA
HEINEKEN USA Inc., the nation's leading upscale beer importer, is a subsidiary of Heineken International BV, the world's most international brewer. European brands imported into the U.S. include Heineken Lager, the world's most international beer brand, Heineken Light , Amstel Light, Newcastle Brown Ale, and Strongbow cider. HEINEKEN USA also imports the Dos Equis portfolio, Tecate portfolio, Sol, Indio, Carta Blanca and Bohemia brands from Mexico. For a safe ride home, download the HEINEKEN USA-sponsored Taxi Magic™ application from your smartphone at taximagic.heineken.com.
Monday, April 29, 2013
New Twinkie Maker Cold-Shoulders Union Labor
New Twinkie Maker Cold-Shoulders Union Labor
(Written by author By RACHEL FEINTZEIG for the Wall Street Journial. Original article can be located here.)
"We do not expect to be involved in the union going forward," Mr. Metropoulos said in an interview Wednesday.
Hostess Brands Inc., the company that filed for bankruptcy protection in January 2012 and eventually sold off its brands and plants to several buyers, was once powered by 19,000 workers, 15,000 of whom were represented by unions. The company's largest union, the Teamsters, had agreed to a new labor contract following a contentious bankruptcy trial. But the second-largest union, the Bakery, Confectionery, Tobacco Workers & Grain Millers International Union, launched a work stoppage after the company imposed new labor terms on the union's members. Hostess said the strike crippled its operations, forcing it to shut down.
A Teamsters spokeswoman declined to comment. A spokeswoman for the bakers union couldn't be reached for comment Wednesday.
In February, before the $410 million sale to Metropoulos and Apollo was finalized, the president of the bakers union expressed confidence that his thousands of out-of-work members would find opportunity at the Hostess facilities once they were reopened by their new owners. President David Durkee said the strike had left the union in "a position of strength," and he expressed confidence its workers would get a better deal from the new owners than Hostess offered during the bankruptcy case, its second in recent years.
He added that the only way for the brands to have a "seamless restart" would be to hire back unionized bakers. "Only our members know how to get that equipment running," Mr. Durkee said. "A work force off the street will not be able to accomplish that."
But Mr. Metropoulos and his son, Daren, the co-CEO of Pabst Brewing Co. who is also heading up the reborn Hostess's marketing strategy, expressed confidence they would be able to find skilled, nonunion workers near the four plants, which are in areas with high unemployment.
"We're trying to find the most qualified people in these local markets to come work for the company," Daren Metropoulos said.
The new Hostess is firing up plants in Columbus, Ga.; Emporia, Kan.; Schiller Park, Ill.; and Indianapolis, Ind. It's also considering whether to reopen a fifth plant it purchased, in Los Angeles. Previously, the Hostess products that Metropoulos and Apollo bought were made at 11 plants, but the elder Mr. Metropoulos said those plants were running at less than 50% capacity under the old model. The new Hostess plants will run at 85% to 90% capacity, making the business "as efficient as possible," he said. The new company expects total capacity to be back to where it was before Hostess's shutdown by September.
The elder Mr. Metropoulos said he wasn't sure how many employees it used to take to produce the classic Hostess snack cakes now under the control of Metropoulos and Apollo. The new Hostess plans to use third-party drivers and an outside sales organization. It will also switch distribution models, delivering Hostess Twinkies and Cup Cakes directly to supermarket warehouses instead of individual locations.
"Ultimately, the consumer will be getting fresher products sooner through this model," Daren Metropoulos said.
The company also aims to increase distribution to locations that Hostess couldn't reach before, including smaller convenience stores and dollar stores.
The snack-cake company will begin considering new products, including healthier options like 100-calorie packs and whole-wheat or organic varieties, in the fall. But for now, it is focusing on getting the classic treats back on the market. In some cases, that may require the company to compete with similar products that rivals Grupo Bimbo SAB and Flowers Foods Inc. launched to fill the void during Hostess's hiatus, according to the Metropouloses.
A Bimbo spokesman declined to comment and a Flowers spokesman wasn't immediately available for comment Wednesday.
"We feel very, very confident that the originality of this brand is going to win out and the copycats will fade out," the elder Mr. Metropoulos said.
Write to Rachel Feintzeig at rachel.feintzeig@dowjones.com
A version of this article appeared April 25, 2013, on page B3 in the U.S. edition of The Wall Street Journal, with the headline: Twinkie's New Owners Will Shun Union Labor.
Copyright 2012 Dow Jones & Company, Inc. All Rights Reserved
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This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.
Friday, April 26, 2013
Involving all aspects of supply chain in S and OP can lower inventory carrying costs
The "S" in S and OP Can Stand for Supply Chain, Too
Involving all aspects of supply chain in S and OP can lower inventory carrying costs.
(Written Apr. 18, 2013 by Becky Partida, research specialist, supply chain management, APQC on and for Industry Week. Original article can be found here.)
Sales and operations planning (S&OP) has the potential to promote visibility within the enterprise and foster collaboration among business functions. However, the functions involved in the S&OP effort can vary from organization to organization. APQC asks organizations participating in its Open Standards Benchmarking in supply chain planning to indicate the business functions they involve in S&OP (Figure 1). Not surprisingly, sales and marketing is involved more often than not, with more than two-thirds of responding organizations indicating that they involve this function. Less frequently involved are supply chain functions, with 65% of responding organizations indicating that they include the purchasing and manufacturing functions and less than half reporting that they include the logistics function.

Given that S&OP can affect demand forecasts, inventory levels, raw material purchase projections, production plans and forecasted labor utilization, it is worth considering whether the involvement of all supply chain-related functions in S&OP could have a positive effect on supply chain performance. APQC compared the cost of supply and demand planning and the inventory carrying cost of organizations that involve each of these groups in S&OP to the costs of organizations that do not involve the groups.
Demand and Supply Planning Costs
Table 1 presents the median performance of organizations with regard to demand and supply planning costs per $1,000 in revenue. Organizations that involve the logistics function and the manufacturing function in the S&OP process spend slightly less at the median on demand and supply planning per $1,000 in revenue than organizations that do not involve each of these functions. However, organizations that involve the purchasing function in S&OP spend $0.72 more per $1,000 in revenue on demand and supply planning than organizations that do not. For an organization with $5 billion in annual revenue, this would result in $3.6 million in additional demand and supply planning costs associated with involving the purchasing function in the S&OP process.
Table 2 presents organizations’ median inventory carrying cost as a percentage of average inventory value. Organizations that involve each of the supply chain functions spend much less to store and maintain inventory than organizations that do not involve each of these functions. The difference is largest when considering the involvement of the logistics function: the median inventory carrying cost for organizations that involve the logistics function in the S&OP process is almost half as much as that of organizations that do not involve this function. Organizations that involve the purchasing function have a 1% lower inventory carrying cost than organizations that do not involve this function. Although this difference may not seem large, for an organization with $1 billion in average inventory value, a 1% difference would translate into $10 million in additional inventory carrying cost.
The difference in performance illustrated in Table 2 indicates that involving the supply chain functions in S&OP can have a significant effect on the ability of an organization to plan for demand and thus to maintain an optimum amount of inventory. Keeping these functions involved in discussions regarding demand and production plans can enable the organization to optimize planning, purchasing and manufacturing to reduce the amount of inventory that must be stored.
Weigh the Effects
Because S&OP affects the entire supply chain, organizations should give serious thought to involving representatives from the supply chain functions in this process. Organizations should consider whether any additional costs incurred in the planning process would be offset by increased efficiency or costs savings generated within the procurement, manufacturing, or logistics functions. It may be that involving the supply chain in S&OP is worth the investment.
Becky Partida is a research specialist, supply chain management, with APQC, a member-based nonprofit and one of the leading proponents of benchmarking and best practice business research.
Wednesday, April 10, 2013
As Coffee Rust Devastates Latin America... What's in Store for the CPG Coffee Segment Forecast?
After the CPG coffee sector has seen such tremendous growth in the few years, this put quite the hurt on the double digit 2013 forecasts for coffee. I had no idea. Take a look at the graph on volume and value growth, then read the article. ~ William Thompson
(Graph pulled from Coffee 2013: Ready for Take-Off - International Coffee Organization)
As Coffee Rust Devastates Latin America, Colombia's Cenicafé Leads The Resistance
The British have long favored tea as their caffeinated beverage of choice, but another drink had its moment during the glory days of the British empire -- coffee.
In the 18th and 19th centuries, the British controlled vast coffee plantations across southern India and Ceylon, now known as Sri Lanka. But a strange fungal disease called coffee rust became widespread by the mid-19th century, crippling the industry and forcing producers to switch to tea cultivation. The change effectively altered beverage preferences across the empire as coffee drinkers were forced to switch as well, according to The Nature of Disease in Plants. Today, the region that was Ceylon is best known for the teas grown there.
Now the shift could be happening again in the "New World," as coffee rust strikes at crops across Central and South America. A recent outbreak is causing the worst devastation since the disease was first spotted in the Western Hemisphere in 1970; Guatemala has declared a national emergency, 2013-2014 harvests in some parts of Costa Rica may be half of what they were last year and there are troubling reports of the disease in Nicaragua, El Salvador and Mexico.
The pestilence is especially concerning when you consider that a significant chunk of the coffee consumed in the U.S. and abroad derives from beans grown in Central and South America. Data from the U.S. Department Of Agriculture puts Brazil, Colombia, Honduras, Peru, Guatemala and Mexico as some of the top 10 coffee producing countries in the world.
But coffee culture in the Americas may not be doomed. Leading the charge is Colombia's Cenicafé, a research organization funded by the Federación Nacional de Cafeteros de Colombia (National Federation of Coffee Growers of Colombia). The federation represents the interests of more than 500,000 producers, the vast majority of them small farms.
"[Y]ou can actually take care of the rust and control it," Cenicafé's Alvaro Gaitan said in an interview with The Huffington Post. Gaitan is the research center's head of plant pathology. But, he cautioned, "with coffee rust, you can not wait until the water is around your neck. You have to work really fast."
Thanks to early research, Cenicafé was ready with a rust-resistant coffee plant variety a year before the pestilence first struck Colombian operations in 1983, according to Gaitan. The so-called "Colombian" variety is a cross between the Caturra variety, which thrives in Colombian climates, and Southeast Asia's Timor hybrid, which was discovered to be coffee-rust-resistant in the 1960s by the Food and Agriculture Organization of the United Nations. A second generation of the variety, called Castillo, was released in 2005.
Cenicafé's foresight has been helpful during this most recent coffee rust outbreak, especially since Colombia was initially hit harder than other nations, Gaitan said. This is partly due to the ocean-atmosphere phenomenon La Niña, which brought heavy rains to parts of the region. Between 2008 and 2011, the increased rainfall provided an ideal environment for the fungus in some areas, and in August of 2011, Colombian coffee exports fell to their lowest level since 1988 following a particularly bad string of weather. "At some point, everything comes together and creates the perfect storm," Gaitan explained.
Cenicafé had initially struggled to convince farmers to switch over their crops; family businesses were reluctant to part with their traditional varieties and unwilling to forgo profits in the three years it usually takes for coffee plants to reach maturity. In years before the outbreak, only about 25 percent of Colombian farmers were growing the resistant Colombia variety, according to Gaitan.
But, he noted, seeing an entire crop blighted is a compelling incentive to replant with a resistant variety. Today, more than 55 percent of farmers grow both Colombia and castilla varieties by Cenicafé estimates. The results are striking: in 2011, more than 40 percent of all Colombian plantations were infected with coffee rust. As of 2013, Cenicafé puts that number at 5 percent.
Colombia's success in combating coffee rust could be a useful lesson to farmers elsewhere in Central and South America, only 3 percent of whom plant resistant varietals, Gaitan said. Many rely on fertilizers and fungicides to stave off the disease, but Gaitan believes these are short term solutions. He estimates that most other nations are dealing with infection rates of up to 30 percent. "If you go over 30 percent, there's almost no way you can recover the plant for that harvest," Gaitan warned.
Starbucks may be answering the call; the chain recently purchased its first farm in Costa Rica with the goal of developing new coffee varieties and testing defenses against coffee rust. A few other research programs studying the disease exist in other countries as well, including the Federal Rural University of Rio de Janeiro in Brazil and CABI in the U.K.
But, Gaitan said, it's important for nations to conduct their own research to determine which varietals works best in native climates. For instance, he cautioned, "Castillo might not work in Central America."
UPDATE: This story has been updated to highlight a supporting text,
The Nature of Disease in Plants by Robert P. Scheffer.
Tuesday, April 9, 2013
How Procter & Gamble achieved zero waste to landfill in 45 factories
How Procter and Gamble achieved zero waste to landfill in 45 factories
(Gillette's World Shaving Headquarters in Boston is one of the factories to have achieved zero waste status. 82% of employees have opted in to the zero waste space programme. Photograph: Dave Walsh. Today Procter and Gamble (P&G) are announcing that 45 of their facilities across the world have now reached zero manufacturing waste to landfill status.)
Globally P&G has already ensured that 99% of all materials entering their plants leave as either finished product or end up being reused, recycled or converted to energy. But in the 45 plants that have achieved zero waste status, through innovative technologies and creative reuses, the company has managed to find ways to divert that remaining 1% from landfills. Better still for the company's bottom-line, they have found ways to convert this waste stream into a new revenue stream.
Much of the success in tackling that 1% of landfill waste is attributed to the company's Global Asset Recovery Purchases (GARP) team which was formed in 2007. The GARP team, which is headed up by Forbes McDougall, do not look at "waste as waste," but as something "that can always be reused for another purpose." So, for example, when they found that after recycling scraps of paper from their Charmin plant in Latin America, they were still left with unusable fibres, they found a way to convert those fibres into low cost roof tiles. Similarly, waste that is left from making shampoo is turned into industrial fertilizer and scraps from feminine care products are turned into pellets that are used to make plastic soles for low cost shoes. The genius behind GARP, says McDougall, is that his team specialise in purchasing and are not an environmental team per se.
"It's very easy to just press the scrap button. But now we tell people 'don't scrap stuff, call GARP.' Purchasing guys are good at finding viable solutions financially, so we treat (handling waste) as a business opportunity. Once you start delivering revenue for the business, then you are everyone's friend."
Repurposing waste also requires innovative (and often simple) uses of technology. McDougall describes how rejected feminine care pads at one of their plants in Budapest, Hungary ended up being diverted from landfills to be used as fuel to make cement. Initially the pads which contained both paper and plastic were sent to the cement plant whole. But they soon discovered that they burned much better and became a better energy source if they were shredded down. So they developed a new shredder and a vacuum that enabled them to separate the paper from the plastic and vacuum off the material as it went along the line. What was once landfilled became a good source of fuel and a good source of revenue for P&G.
One of the sites that has achieved zero waste status is the Gillette Plant in Boston, better known as the World Shaving Headquarters. The no waste philosophy is immediately evident when you enter their office building. At almost every work station there is a small sign saying this is a "zero waste space" meaning that the employee has volunteered to give up their individual bin in favour of using the centralised waste station where the company has found they tend to recycle more and trash less. At each waste station as well as recycling opportunities, there is a compost bin where employees can dispose of any raw or cooked food. Some stations also have a bin for plastic bags. The sustainability team at the site proudly note that 82% of their 1,320 employees opted in to the zero waste space programme.
The same no waste ethos is also highly visible in the employee cafeteria. There are huge signs everywhere encouraging employees to recycle and compost and even better signs explaining exactly what is compostable. All of the packaging for takeaway items is made from either corn or sugar and so ends up back in the compost bin where it is later taken to a local farm along with any food or beverage waste and converted into industrial fertiliser. The same biodegradable material is also being used in packaging for Gillette and other P&G products. The packaging for the Gilette Fusion ProGlide razor is made from a combination of sugarcane, bamboo & bulrush which the company says has led to a 57% reduction in plastic and a 20% reduction in gross weight.
On the manufacturing floor great care is taken to ensure that nothing that has value or can be repurposed ends up being trashed. Under each machine there is a bin to collect any discarded or rejected items.
These pieces of scrap metal or plastic are then transferred to pristine containers where employees are instructed to take care to keep each resource separate. Mixing metals or plastic can cause contamination and will reduce the reuse value. The Site Solution Provider, who handles all the plant's recycling, will then find the appropriate vendor for each specific material stream. Plastic from dispensers is ground up to make new dispensers. Scrap metal is recycled into new metal for marketplace and scrap wood pellets are turned into particle board or biomass fuel chips.
At the manufacturing level, P&G is well on its way to achieving their zero waste to landfill goals in all their plants. More challenging is their long term goal of achieving zero consumer waste as well. Approximately 4.6 billion people around the world are using P&G products. According to Len Sauers, VP of global sustainability, the company is constantly engaged in research to quantify the impact of its products across their life cycle so they can direct their research and development efforts where the impact is.
An obvious high impact area is the energy and water used with cleaning products, so the company has developed both cold water and reduced rinsing detergents to counteract this. For obvious reasons, no date has been set for when the company may achieve their goal of zero consumer waste. "It's a journey," Sauers says, "and the destination keeps on changing."
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P&G has achieved double whammy of zero waste status and increasing revenues with innovative technology and re-use. You have to admit... that's impressive.
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Study: Specialty Food Sales Reach Record Highs @ 14.3%. (Originally Predicted @ 3%)
Study: Specialty Food Sales Reach Record Highs
(Article originally posted on supermarketnews.com and can be viewed here)
(Picture of http://www.leavittandsons.com/ store-front)
NEW YORK — U.S. sales of specialty food and beverages rose 14.3% to $86 billion in 2012 — more than double the 6.8% increase recorded the previous year — according to the Specialty Food Association’s annual State of the Specialty Food Industry report.
Cheese and cheese alternatives is the largest category with $3.6 billion in sales, followed by yogurt and kefir, which leapfrogged over other foods for the number two spot with $2.27 billion in 2012 sales. The next largest categories are chips, pretzels and snacks; coffee, coffee substitutes and cocoa, and meat, poultry and seafood. Energy bars and functional beverages stand out as the fastest growing specialty foods.
Read more: Independents Say Cheese
The report tracks sales of specialty foods through supermarkets, natural food stores and specialty food retailers, and includes surveys of specialty food manufacturers, importers, distributors, brokers and retailers, and is prepared in conjunction with Mintel International and SPINS. It also found:
- Gluten-free and convenient/easy-to-prepare are characteristics most likely to be included in product development plans this year.
- Alcoholic beverages spiked to 13.3% of product introductions in 2012 as entrepreneurs introduced small batch offerings.
- Importers report that Mediterranean is the fastest-growing cuisine followed by Latin, Italian and Vietnamese.
Suggested Categories | More from Supermarketnews |
Read More: http://supermarketnews.com/speciality/study-specialty-food-sales-reach-record-highs#ixzz2Py6CB3PG
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