This year Kellogg’s announced plans to separate into three independent companies, by spinning off its US, Canadian, and Caribbean cereal and plant-based businesses to unlock their full standalone potential. The remaining business, which is the largest chunk representing about $11.4 billion in net sales, will focus on global snacking, international cereal and noodles, and North America frozen breakfast. To support this multi-category global business, Kellogg Company sources direct materials, indirect services, and manufacturing partnerships from over 20,000 suppliers worldwide. It recognises the need to continue to form and foster relationships with key partners, continually improving, innovating, and transforming the business. Near 400 suppliers account for 80% of spend, steering resources towards those with a high-level of impact and potential to support strategic growth. “We work closely with those supplier partners that are aligned with our company’s vision, priorities, and growth agenda to drive competitive advantage against our peers that results in mutual benefit for the partnership to continue and flourish,” says Leslie Lauderbaugh, Director of Supplier Engagement and Development. Around seven years ago, the company launched the K Partners Advantage programme, focusing on those suppliers that are segmented as ‘developmental’ or ‘strategic,’ indicating a high-level of performance across competencies and behaviours that support broadly adding meaningful value to the relationship. To support the K Partners governance processes and more effectively unlock the value in collaboration, it has recently focused on digitally enabling the way it works with trusted partners, including investing in State of Flux’s SupplierBase technology to boost efficiency and ensure information is shared, accurate and up-to-date, facilitating the critical connection to their supplier network. “The nature of our supplier relationships is evolving to address the need for heightened connection, information exchange, and continuous feedback. Consistent and timely sharing of relevant data is a foundation
for trust; everything flows from that,” says Lauderbaugh. “Email has become a haystack in which critical pieces of information are needles, buried deep in in-boxes and folders. We need one source of truth that isn’t compromised by human error or unnecessarily delayed by hurdles to the exchange of information.” The SupplierBase platform reduces the intervention needed to get the right data in the right hands, she adds. “I can be confident that Kellogg and supplier teams are viewing information that is updated in as real time as possible.” And she says while follow-up surrounding the shared data may still be needed, conversations and issue resolution with suppliers is now expedited. This is vital, she adds, especially when it comes to crisis management, but it also aids performance, builds trust and enables the smoother running of operations. Revamping supplier segmentation Prior to investing in this new tech, Kellogg’s first reviewed and updated its approach to supplier management. “One of the catalysts for improving our SRM processes was the realisation of disparity in how different Kellogg functions viewed the same suppliers. Our priorities and therefore experiences with suppliers did not always match.”
“We needed to get universally aligned and holistically determine with which partners we assigned our limited resources.” The company began by refining its supplier segmentation model to ensure it was considering all the aspects that comprise a strategic long-term growth partnership. These elements are represented across seven topics, which have been refined over time and awarded different weightings. They are: 1. Customer of Choice Benefits 2. Transparency and Confidentiality 3. Aligned Priorities 4. Competitive Advantage 5. Business Growth Potential 6. Leading-edge Practices 7. Engagement and Partnership Disposition “High performance in these areas is essential to achieving and sustaining a strategic, successful long-term supplier partnership,” says Lauderbaugh. A formal segmentation exercise is carried out every two years, with every supplier going through the process. “We first examine existing volume and spend with our partners to ensure we are appropriately considering high- leverage/high-impact partnerships; we increment this pool of partners with those supplying critical goods
One source of truth
The global breakfast and snacking enterprise has long been aware of the benefits of supplier management. After fine-tuning supplier segmentation, engagement, governance, and performance management, it is now entering the next phase of development
“Email has become a haystack in which critical pieces of information are needles. We needed one source of truth.”
Kellogg’s sits firmly in the leaders’ pack when it comes to supplier relationship management. Over the years, the business has prioritised and invested significant resources into the people and processes supporting SRM initiatives, ensuring the formation of mutually beneficial connections and forward-looking plans with their most strategic suppliers. It is now looking to raise the bar on effective communication and data exchange, progressing its journey with SRM-specific technology.
It is 128 years since company founder, William Keith Kellogg, and his brother, Dr John Harvey Kellogg’s experiments with wheat led to the first flaked cereal. It is 116 years since it first traded – then as the Battle Creek Toasted Corn Flake Company. The company headquarters remain in Michigan, in the US, where it has grown from 44 to more than 31,000 employees worldwide. It now manufactures in 18 countries, sells products in 130 and reached revenues of $14bn-plus in 2021.
While the procurement department may have focused on contractual terms, operational effectiveness and quality - colleagues in research and development (R&D), for example, may have had a different perspective based on a supplier’s ability to feed an innovation pipeline.
and services, as well as diverse-owned suppliers, regardless of spend. We then take those seven partnership qualities and evaluate our list of suppliers against them through cross-functional stakeholder surveys.” →
Among its top brands are Corn Flakes, Pringles, Pop-Tarts, Frosted Flakes, Special K and Nutri-Grain
Kellogg’s was the first company to give away gifts with cereal – beginning with books and badges
Apollo 11 astronauts took Kellogg’s cereal to the moon
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