Retail in Asia

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Mondelez International undertakes supply chain redesign to drive margins

Global snacking powerhouse Mondelez International is redesigning its supply chain to achieve gross productivity savings of $3 billion in the next three years.

The company said the projected savings will be the primary driver of approximately 60 to 90 basis point annual improvement in base operating income margin.

"We’re building an integrated supply chain organization that’s laser-focused on delivering a demonstrable competitive advantage and generating savings we can reinvest in our growth," said Daniel Myers, Executive Vice President, Integrated Supply Chain.

Myers said the team is transforming manufacturing processes and partnering with suppliers to develop more efficient, modular designs for global product platforms.

He said the Oreo manufacturing line, for example, will require 30 percent less capital and reduce operating costs by $10 million per line. These "lines of the future" can be installed in one-third the time and provide double the capacity in half the space as older designs. The company is now implementing similar transformations for other biscuits Power Brands and the chocolate and gum categories.

The company said it is also currently restructuring its supply chain network and plans to invest in 14 greenfield plants by 2020, to be built on advantaged platforms in locations with optimized logistics.

By 2020, the volume produced on advantaged assets will rise from 15 percent today to about 80 percent. Similarly, revenue per plant is expected to more than double by the end of the decade.