A recipe for success
The South African arm of General Mills has a reputation for quality among its six million customersÔÇöa figure which looks set to keep on growing. Andrew Pelis talked to managing director Craig Leathwhite about the companyÔÇÖs success and its future expansion plans.
Globalisation has been the buzz word in business for a number of years now. However, when the product being distributed is food, issues of culture and taste vary greatly from country to country, providing a real challenge.
In just 10 short years, General Mills has successfully introduced many of its much-loved food brands to the South African market. It hasnÔÇÖt always been an easy journey, but as managing director Craig Leathwhite explains, quality has given the business a competitive advantage.
ÔÇ£General Mills is among the worldÔÇÖs leading food companies, and offers consumers around the world products that enhance nutrition, shorten preparation times, provide health benefits, enable on-the-go eating andÔÇöof courseÔÇötaste great,ÔÇØ he says. ÔÇ£Our goal is to nourish lives, helping to make peopleÔÇÖs lives healthier, easier and richer, whether they are our customers or our employees.ÔÇØ
Headquartered in Minneapolis, USA, General Mills had its initiation in South Africa in 2002, when it acquired the Pillsbury Company. Historically, Pillsbury entered South Africa in 1993 through a joint venture with Food Corporation, which saw frozen vegetables brought into the country. Then in 1995, its Bakeries and Foodservice business was launched, introducing the Pillsbury brand to the local market. A local manufacturing facility was established in 1998 and in 2002, Pillsbury South Africa became the fully-fledged South African arm of General Mills.
Today, the company operates one facility on the Linbro Business Park in the Wendywood region of South Africa, from where it manufactures and distributes over 100 different products. Many of these brands are instantly recognisableÔÇöin addition to Pillsbury, the site markets Old El Paso, Big T burger products and H├ñagen-Dazs ice cream.
Leathwhite is happy for his business to be classified under General MillsÔÇÖ Latin American region, as he feels South Africa faces similar challenges to those encountered in South America. ÔÇ£I feel that the socio-economic climate is comparable,ÔÇØ he says. ÔÇ£Both here and in South America we have encountered labour unrest and high inflation, which have made the operational environment very similar.ÔÇØ
As tastes vary greatly from country to country, General Mills in South Africa operates its own innovation and technology department, which looks at developing products locally but also adapting products from around the world with local ingredients, to suit the local palate.
With so many products manufactured on site, one of the biggest challenges for the company is managing the supply chain effectively. ÔÇ£It is difficult to get the right balance for our inventory. Raw materials are definitely our biggest cost,ÔÇØ admits Leathwhite. ÔÇ£It really depends on each ingredient. For example, we use lots of liquid egg and receive deliveries almost daily; however, we would have an entirely different relationship with Orley Foods, for something like chocolate.ÔÇØ In some instances, the company buys a yearÔÇÖs supply of raw materials up front and stockpiles them in its warehouse.
ÔÇ£We certainly form long-term relationships with our suppliers and this is critical, as quality is always our key ingredient,ÔÇØ Leathwhite continues. ÔÇ£We operate to the highest quality standards, running stringent in-house quality systems, and we are currently working towards ISO accreditation for May 2010. Customers including McDonaldÔÇÖs and Pick n Pay regularly audit us, as does the American Institute of Bakers. In addition, we have already attained halal certification.ÔÇØ
All of the companyÔÇÖs supplies are based on manual forecasting. ÔÇ£We are always looking at ways to improve this system,ÔÇØ says Leathwhite. ÔÇ£We need to make sure that when a customer orders a product they can get it when they want, at a decent price.ÔÇØ
But forecasting is just one area that the company is looking to improve upon, having started to look at lean manufacturing over the past year. ÔÇ£My philosophy is that our customers should not pay for inefficiencies, so we have a big drive on lean at the moment. This ties in nicely with the General Mills ÔÇÿholistic margin managementÔÇÖ (HMM) approach.ÔÇØ
HMM came into being several years ago after the US business had seen the effects of rising commodity and energy costs. Driven by the need to generate higher levels of productivity and cost savings to protect margins, the concept of HMM was introduced, engaging people from marketing, to research and development, through to those on the shop floor, in identifying business costs that were not adding value for the customer.
ÔÇ£Our parent company helped us with the essential tools and processes and has also sent staff over from the United States to assist us with implementing HMM. They have been tremendously supportive,ÔÇØ Leathwhite acknowledges.
He describes the South African facility as ÔÇ£clean and clinical, with lots of stainless steelÔÇØ. Aside from the raw material warehouse, there is a pre-mix area and processing line, further mixers, ovens and freezers. Distribution, like the warehousing, is outsourced.
One of the key elements in successful operations and implementation of HMM at General Mills South Africa is its people. There are at present around 50 full-time employees, who are coming to terms with the need for staggered shifts. ÔÇ£We have had to change peopleÔÇÖs hours but they are now seeing why this is necessary in order to meet our customersÔÇÖ needs,ÔÇØ explains Leathwhite.
ÔÇ£We are very much into training our workforce and feel that it will be beneficial if our people can multi-task. First and foremost, we have a lot of intelligent workers lacking basic English and mathematics, so we provide adult education to help them better understand what is expected of them but also what systems we operate in the factory. This builds flexibility into our facility.ÔÇØ The company is receiving encouraging feedback from staff who now better understand the needs of the business. ÔÇ£Ultimately, with HMM, it is vital for our shop floor workers, who have first-hand experience, to give us feedback on how we can improve efficiency further,ÔÇØ states Leathwhite.
But General MillsÔÇÖ South African site extends its social responsibility way beyond just teaching its workers. For the past 10 years it has supported the Pillsbury day care centre, which forms part of the Alexandra Disability Movement. The centre provides a place of safety and educational support for 70 disabled children from the Alexandra township, north east of Johannesburg. It has gone from strength to strength and plans are afoot to convert the day care centre into a fully-fledged boarding facility by early 2010.
The niche products of General Mills South Africa now cater for up to six million customers, who have acquired the companyÔÇÖs taste for quality. Leathwhite says that the next stage is to look at opportunities created by the 2010 FIFA World Cup; then, the sub-Sahara region beckons. ÔÇ£We already export to neighbouring countries like Botswana, Malawi, Mozambique, Namibia and Zambia. We see South Africa as the springboard to the sub-Sahara region,ÔÇØ he concludes.
