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Kraft Food Cost Reduction Strategies

Kraft Foods Inc has initiated number of steps to reduce cost through procurement initiatives .
Few of them would be
  • Leverage scale with reduced number of strategic suppliers across total spend .
  • Expand global sourcing and low-cost country sourcing .
  • Simplify material and product specifications while maintaining quality .
  • Re-engineer processes to reduce inventory

CPO Ms Julia Brown gave details to the reporter s on cost reduction initiatives taken by Kraft Food Inc . She told that every spend category would be reviewed and supplier base consolidated . More of the items would be bought for the manufacturing through central buying team rather local buying .

Other cost reduction initiatives are

  • Reducing its cash conversion cycle from 46 days in 2008 to 41 days by 2011 .
  • Reducing overhead as a percentage of net revenue from 14% in 2008 to 12.5% in 2011 .
  • Focus on category value chains, manufacturing platforms .
  • Remove bottlenecks .
  • Reduce waste .
  • Optimize labor .
  • Streamline inventory .
  • Cover more than 30 category value chains across geographies over next two years


1 comment:

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