The Changing Business Climate: Partnership is the Key
by Kelly Frederick
posted on June 9, 2009
“The one message I would like to get across is partnership,” said Chris Mallett (right in photo), Corporate Vice President R&D at Cargill, at Monday’s Theme General Session “Responsive Strategies to Changing Consumer Demands and Business Climate.” Each presenter shared examples of ways in which their respective companies are adapting business platforms to better respond to the economic climate and consumers’ changing consumption patterns and preferences. Despite their different roles—food manufacturing, food retailing, and food ingredients—each presenter agreed that the business climate is changing and to meet the challenges raised by this change every company involved in the food industry needs to partner more closely with each other. So, what is causing this change? Consumers and the environment they live in are forcing a change in the way food companies do business.
Food Quality & Safety
Recent foodborne illness outbreaks have taken a toll on the entire food industry, because the safety and quality of food has moved to the forefront in the consumers’ minds. Christine Summers (center in photo), Director of Food Safety and Quality Assurance at Costco Wholesale, discussed the stringent food safety and quality program that CostCo has in place to ensure its products are meeting consumers’ demands. The program includes extensive safety training for all employees handling food products; a safety operations team; internal and third party food safety audits; and quality assurance testing via in-house labs and third party testing. Chris Mallett, Corporate Vice President R&D at Cargill, Inc., sees partnership as an integral aspect of ensuring food safety, especially when doing business globally. Working closely with suppliers—in Cargill’s case, raw material suppliers—enables the establishment of consistent global standards so that food safety is carried out on all levels of production. Mallett concurred that companies must “be mindful that the supply chain remains integral to food safety.”
For consumers, healthy foods equate to food quality. Stephan Habif (left in photo), Vice President R&D North America at Unilever, explained that the company’s eight vitality life goals are based on consumer life goals and include helping consumers be healthier and live longer lives. To meet this goal, Unilever has worked on lowering salt, sugar, and trans fatty acids in its food products. In fact, from 2005 through 2008, the company removed 9,000 tonnes of salt from their products.
In Mallett’s presentation he explained that “corporate image and sustainability are becoming increasingly more important” to consumers. For Unilever, sustainability is measured on four fronts: water, waste, greenhouse gases, and sustainable sourcing. In addition, the company examines the total life cycle of a product, from sourcing of the raw materials to a consumer’s use and disposal, in order to measure sustainability. For example, through research Unilever realized that in its food production the most water is used to grow the crops that produce the food ingredients. Partnering with their suppliers is key to tackling this problem and finding ways to reduce the water usage.
According to Summers, Costco is committed to sustainability and says it has a “responsibility to the communities to leave them better than when we [CostCo] got there.” CostCo does this by looking at sustainability from a three prong approach: economical, environmental, and social. Today’s consumers are looking for more than quality food products, they expect the company to take an active role in maintaining and improving the environment in which we live. And, as Summers stated, if a company “stays the course and does what it knows is right, consumers will reward you by coming back.” And Habif agreed, stating that companies will “do well by doing good.” Each speaker explained that sustainability practices can be improved upon by working with the supply chain. For example, CostCo worked within its supply chain to change the size of its cashews container, thus enabling it to go from 288 units on a pallet to 432 units per pallet. This drastically lowered the amount of truckloads needed, thereby cutting down on carbon emissions.
Overall, it is becoming clear that consumers are beginning to make purchasing decisions based on the entire company’s image rather than just the food it produces. And to succeed in such an environment the session speakers made it clear that partnerships and communication within the supply chain is crucial. Ending the session, Mallett brought the point home by saying, “We fail together and we succeed together.”