Kellogg Company

Kellogg Company
Here we have the opportunity to gain insight on the development of a successful supplier relationship management (SRM) approach over 16 years, from the person who has been at the centre of things from the start.

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In 1898, W. K. Kellogg and his brother Dr John Harvey Kellogg were trying to make granola. The attempt failed but resulted in them accidentally flaking wheat berry.

W.K. kept experimenting until he successfully flaked corn, and created the delicious recipe for Kellogg’s Corn Flakes. By 1906, W.K had opened the Battle Creek Toasted Corn Flake Company where the initial batch of Kellogg’s® Corn Flakes® was created. In the years that followed, Kellogg Company continued to expand and eventually opened factories in Australia, England, Mexico, Japan, India, and beyond. Today Kellogg’s breakfast cereal and other products can be found in over 180 countries.
Kellogg’s has a commitment to quality and one of the most recognisable global brands in the famous red signature of founder W.K. Kellogg. They have long realised the importance of their suppliers in maintaining quality and protecting their reputation.
While supply chain management has been a feature of Kellogg’s operations since the very early days, the current approach to SRM can be traced back to 1997.
Cathy Kutch, Director of Supplier Relations and Diversity, is almost unique in having been part of the Kellogg’s SRM programme from the very start. We were delighted when she agreed to share with us some of the highlights of the journey that Kellogg’s has been on and in particular the role of programme lead.

What operating model have you adopted for SRM and how many people are involved?

Our approach is for managers in procurement to maintain the relationships. There are a small group of our raw materials suppliers that can do extremely innovative things that are managed out of our research quality and technology group. However, we adopt a team approach and they work very closely with us, because in the end we maintain the relationship within procurement. I know that people debate that and I see merit in the argument to position SRM more in the business. However, we believe that having the relationship managed here in procurement works better to promote a single interface and consistent communication.

Is that a dedicated role or is it combined with the sourcing role?

We combine SRM with the sourcing role. Again, I know opinions vary on this, but we regard SRM as part of the end to end strategic procurement process and believe that involvement in, and a good understanding of, current supplier relationships is vital to long term strategic sourcing.

What are the most significant challenges the programme has faced?

There are numerous challenges but I think the biggest of all is to communicate the value, as it not always tangible at first. Everybody is very busy but it is important for everyone to see the value of their efforts realised. Suppliers themselves reinforce this value constantly. It is our job to make sure the message is carried throughout the organisation.
The second challenge I would say, is the technology it takes to pull all that information together. I have been very fortunate to have a small team that supports me. We are currently working on a better technology solution which will be a great help.
Continuous marketing of SRM and its value to the business is a challenge as well. Our supplier days help on this front, when the suppliers meet with our executives and promote the benefits of the approach themselves. I’ve never had a supplier say ‘look this doesn’t add any value to me’. In most cases suppliers would pay to get this level of information and engagement.

What are the most successful features of the programme?

We see successes all over and they vary significantly. When we were segmenting our suppliers we were very clear with them about the level at which they were positioned. As a result, we have a much better alignment of expectations for both sides. We have seen examples of suppliers responding very positively to the investment we put into engaging with them in this manner. One of our suppliers said to us, “you investing in us and keeping us top of mind means we’ll do the same thing for you”, and we have seen that happen.
Having performance data has made a huge difference. Conversations with suppliers are very different. They have a much better business structure because we have put something in place that generates a different thought process. When you start providing direct feedback, your suppliers get involved and they start asking what they need to do to become better, so their conversations with stakeholders are very different.
The more I think about it, the more convinced I am that it’s the information that makes the difference. I know that changed attitudes and behaviours are also key, but without information you have little to work with. We now provide information that then becomes the stone we throw in the pond, that then ripples out and has an impact around the business.

What is it about the Kellogg’s SRM programme that makes you proud?

Our executives are deeply concerned about the values and strategic objectives of Kellogg Company. What makes me proud, is to be able to say to them that we are being viewed by our suppliers as strategic. Investing in these suppliers, who we regard as valuable assets to our business, has an absolute ROI for us and seeks to achieve a win:win outcome for both us and our suppliers. Holding a supplier day and all the work this entails makes a difference to the relationships. If I had to choose one thing it would be the improved communication. This takes the form of both information on performance and meetings where the strategies are shared. All of our feedback from our suppliers tells us this makes a real difference to our supplier relationships.

What aspects of the programme are you currently looking to develop refine and improve?

First, I want to get more KPIs and more solid data – although I would say solid data is just as subjective as survey data because you have to understand where it is coming from and what it’s telling you. Second, we are looking at how we scale up globally for both direct and indirect procurement. 
We want to become more standardised across the globe and all of our categories. We are looking at how we can add value and really engage with suppliers on innovation. It’s a never ending journey. We are determined to get better every year and ultimately have suppliers say ‘this is the best year yet’.  

It may be that you are almost unique in being at the centre of the Kellogg’s SRM programme since its inception. What is your perspective on the role of the centre?

I think this role is about providing structure behind the process. It’s not about an individual; it has to be the philosophy of the company. To back up that philosophy the company has committed the resource required to make this role a success.  This includes the administrative support required to enable effective performance management and fund the supplier days, etc. The planning and organising of the annual supplier days is a lot of work, but it’s vital to put the structures in place so that strategies are aligned and the vice presidents can take it to the next level. If you don’t have opportunities to have those kinds of forums and discussions, you can never get to the point where the conversation is about ‘OK what’s the next step?’.

What do you think the key skills and attributes are for somebody in your role?

I think it’s really about passion, determination and drive. Knowing that what you’re doing makes a difference, because that gives you persistence to keep moving and to keep trying things in different ways. What you also need is an environment that promotes and reinforces the right behaviours.
You need the ability to be able to bring people together that understand the value of collaboration. Listen to people and understand stakeholder and supplier needs. It’s important that you don’t just drive your own agenda. 
When you have put in place the necessary structures and process, you then need to spend time and listen to the people involved. Once there is a common understanding of what’s going on - they will support you. 
Remember you are dealing with a broad spectrum of people at many different levels, both in your organisation and among your suppliers. Most of the time you will be working without the authority to make demands, which means you need to be a great communicator, develop your influencing skills and build rapport. I have found that paying real attention to detail and always communicating is critical.  You need the support of the people around you to succeed in this role.

What advice would you give to somebody taking on the role of leading an SRM programme?

Never underestimate the impact you can have by working with what you have right now. Start small and move it forward; even putting in place basic processes makes a difference. Don’t wait for somebody to wave a magic wand and get you all the budget and resources you need. Look and see what resources and capacity you have, and what can you do right now. 
I am very happy and honoured to have been given this responsibility and opportunity. You’ve got to figure out your own path and make sure you understand collaboration. You’ve got to make sure you surveyed your suppliers and that your stakeholders understand what makes a difference. You’ve got to be flexible and supportive. I always tell my team ‘shame on us if we don’t do the very best that we can do’. It’s our job to make this procurement department so proud of us that they’re willing to support us. And we need their support to make this process a success.
* Co-manufacturers are partner companies that also manufacture Kellogg’s products