As one of the world’s largest snack companies, generating almost $40bn in annual revenue and operating in more than 150 countries, Mondelēz International operates a supply chain that spans thousands of suppliers, contract manufacturers and distribution partners.
Given the supply chain is complex, global and third-party spend accounts for a huge proportion of the company’s revenues, CPO Thomas Gaengler (pictured above) is a critical contributor to corporate success and someone who can materially impact both top- and bottom-line performance.
Having taken over as CPO in 2022, following a long and varied career with the company that had taken him all over the world, Thomas saw opportunities to improve performance in many areas, but a significant one was reducing complexity. And last week he joined Procurement Leaders to explain his approach and its impact during a CPO Connect call.
First, the why. Supply disruptions during and after the Covid-19 pandemic made it clear to Thomas that the supply chain had too many dependencies and an overreliance on monopoly suppliers. In short: too much risk, too much complexity.
To address this, he took several actions. First, rationalise the supplier base and prioritise strategic partners; second, simplify material portfolios and reduce low-value complexity; third, standardise specifications where possible; fourth, strengthen dual or multi-sourcing for critical materials; and, finally, focus on continuity-first sourcing decisions.
While the initiative was originally conceived to improve business continuity during a period of immense disruption, it required significant savings targets to gain internal approval. It has since become a huge productivity success story, confirming that resilience and value delivery can go hand in hand.
In the current landscape, where supply chain volatility and unexpected disruptions are keeping company boards awake at night, it’s a useful reminder that procurement can deliver greater resilience and financial impact.
Naturally, it wasn’t straightforward and Thomas had to overcome a fair amount of internal resistance to get it off the ground. But by sharing credit with relevant stakeholders and gaining the right executive sponsorship the programme was – and continues to be – a huge success.
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