The Kraft Heinz and Genpact supply chain partnership in action during COVID-19

COVID-19 saw unprecedented pressure on Kraft Heinz's complex, fast-moving supply chain. BK Kalra, Genpact's global leader for consumer goods, retail, life sciences, and healthcare, talks to Kraft Heinz's global head of logistics, Bill Durbin, about how the history of the supply chain partnership between the two organizations and how it enabled an effective response to the COVID disruption.

BK Kalra: We've been very fortunate to have almost a decade-long relationship with Kraft Heinz, and this relationship has expanded to supply chain over the last couple of years. Can you describe the breadth of the supply chain relationship between Kraft Heinz and Genpact?

Bill Durbin: The partnership with Kraft Heinz and Genpact started about three years ago, building off an existing relationship across other functions of the business. Genpact started doing deployment planning and transportation planning for us as a company – a fairly big transition because several years ago, we never would have thought these capabilities could be managed by an outside party for us.

When I came into the role, this strategy had already been defined, and I was nervous and a little hesitant to drive such a big transformation with such a big part of my organization. Through the partnership and working together, we came up with a plan that we thought would be successful. We put in a lot of controls and monitoring to mitigate risks and eventually pulled the trigger and started the partnership.

The partnership has definitely exceeded my expectations. We've had great results. There's always a risk that service falls when you do something like this, or there's a negative impact on the business. But post-transition, there was stabilization very, very quickly and then actually a step up in the metrics and the KPIs associated with deployment and transportation.

That was the start of an even bigger relationship. We looked at supply planning and training and material planning as the next phase about a year or 16 months after that initial transition. When we transitioned that in March of 2019, I felt much more comfortable with the relationship, but it was obviously an even more critical component of our overall supply chain that we were entrusting to the partnership with Genpact. Through the transition, I didn't even see that just plateau or stabilize, but saw an actual increase in our performance. What Genpact brought to the table – the standardization of the roles; the better insight going down, even to the desk level; the different automation tools – helped drive that structure that we needed to be able to drive the success and the improvement in those KPIs. I think Genpact having that full end-to-end view, going all the way back to customer service – and the orders coming in from our customers, the supply planning, the deployment planning, and the transportation planning, they've been able to unlock synergies that we struggled to unlock when we were driving in siloed organizations. Having that full breadth has enabled them to tie pieces together that Kraft Heinz had not successfully connected in the past to drive efficiencies and unlock different types of efficiencies.

BK Kalra: How has this collaboration with Genpact helped during COVID-19?

Bill Durbin: For Kraft Heinz as a company, when the first stay-at-home orders were issued, we saw unprecedented demand in the marketplace. Our volumes spiked up. Single days were 50% higher than what we had ever seen before, and sustained volumes were 30% higher week after week. It put pressure on our supply chain to ship more than we had ever shipped in a day or in a week, week after week, for an extended period of time. Our capacity and transportation weren't going to be able to handle that volume of getting goods from our factories to our warehouse, or from our warehouses to our customers. So Genpact partnered with us to identify where we were constrained on that capacity, and helped as we went out into the market and secured incremental capacity to make sure that we could get those products to our customers and our consumers when they needed it most.

It meant some very long nights and long weekends, replanning our factories at very short notice to be able to change those plans and simplify the product mix, and figuring out how to get more out of our factories faster. Genpact took on the challenge of working from home with very little notice – just as the rest of us did – but also kept that very strong partnership and collaboration with Kraft Heinz, helping us replan our manufacturing base to make sure that we could get as much product out the door as possible.

I feel confident in saying that our supply chain of five years ago would have really, really struggled with this type of surge, this type of unprecedented demand that we were seeing from our customers and our consumers. I think the partnership with Genpact has given us the ability to flex up and respond to the situation. Where we've automated processes, where we've standardized, it's given us the ability to flex up as the demand increased and be able to plan that incremental 50% of trucks. It's given us the understanding of the market well enough to know how to go out and do that, but then also the horsepower and the capacity to be able to flex to what's coming at us.

BK Kalra: COVID-19 has been an unprecedented time for most companies. What learnings have come out of it as you think of the new normal from a Kraft Heinz standpoint?

Bill Durbin: I think it will change our business. We have driven simplicity in the portfolio to be able to drive more volume through our factories and make sure that we're getting the products on the shelf to our consumers when they need it most.

We've seen the impact on our supply chain, with the simplicity on the increased throughput, the increased efficiency, the better velocity through our networks and our customer networks. Definitely one learning that we'll take forward – the importance of having an extremely responsive network or supply chain that's able to respond in a crisis or when something unexpected comes at us.

BK Kalra: Let's talk about the CFR cut coding project. Before our engagement, we already manually populated 25–30% of the cut codes that we needed. Now it happens digitally using AI and machine learning. I'd love to hear your reflection and how that's helped during COVID-19.

Bill Durbin: At Kraft Heinz, we're very focused on transactional excellence, understanding where we've had issues and what we need to do to respond and change the outcome so those issues don't occur again. Every day, we try to understand where we didn't service our customers and try to understand what happened within the supply chain so that doesn't happen again. Historically, we asked our supply planners or transportation planners to go in and flag and code every issue with customers to gain a database of understanding and a repository of information on common root causes and fix those going forward. We've only been at 25% coding success because the volume can be so great, and there's a lot of work that goes into investigating each one of them. So Genpact partnered with us, understanding that 25% of the cuts were successfully being encoded, and offered an AI solution. Together we developed an AI solution that took that coding from 25% to 90–95%.

This gives us a much better, granular level of detail, giving us a better repository of data to understand what happened to prevent it from happening again in the future.

BK Kalra: I think this has helped during COVID-19, as to which particular SKU needs to go on which trucks, even from a pricing standpoint. So it has many downstream advantages, as I think.

BK Kalra: Supply chain losses has been one of the key metrics from a Kraft Heinz standpoint. As you've engaged Genpact over the last few years, have you seen a downward trend in supply chain losses?

Bill Durbin: Supply chain losses are a huge focus for Kraft Heinz. Anytime that we produce food that doesn't end up going to our end consumer, that's an issue. When we overplan, where we don't get the forecast right, we have issues within our supply chain where the product goes past our customer guarantee. Through the partnership with Genpact, you've put in a coding solution for us that identifies this at-risk product as early as possible and gives us the best chance to be able to mitigate that before it becomes food waste for us as a company.

The solution that Genpact has built collaboratively with Kraft Heinz allows that to be coded almost immediately, to get it to the right hands of the folks across the organization, who are then able to understand it, see it, take action, and get it mitigated.

BK Kalra: How has the material planning process improved from our work together?

Bill Durbin: When COVID was first coming to light in China, Kraft Heinz identified a big potential risk to our supply chain if we were unable to get key ingredients and products from our Chinese suppliers. Since Genpact manages our material planning function for us, we asked them to very quickly go through and identify all the potential risks we had in the supply chain, identify what would be required to be able to cover us on a supply standpoint for three-quarters or the full year, and then worked collaboratively to make sure that we secured that supply ahead of supply chains shutting down across the globe.

It was a great partnership between Kraft Heinz and Genpact, just going step by step, identifying where the potential risk was with our Chinese supply base. Understand the quantities that would be required to be secure and protect our finished goods being produced in the US, to secure that supply, and to make sure that we had that product either at our suppliers in the US or in our own facilities.

BK Kalra: The supply chain is the heart of a CPG company. Do you have any coaching guidance for other manufacturers as they think about transforming their supply chains?

Bill Durbin: As I look back at the relationship between Kraft Heinz and Genpact, initially, as an individual, I was hesitant to start this partnership just because of the amount of risk that I believed it would bring to my organization. But I could navigate through that risk and understand how to mitigate it. The benefits I've seen between having Genpact as a partner and working together and collaborating across so many different areas of the supply chain has made that initial risk hypothesis worth it. In order to drive change in an organization, you're always going to take a risk. Otherwise, you would have already done it.

But having the capabilities that Genpact can bring with the standardization of processes, the insight that's given to every function, the desk-level metrics that they can bring, the automation they can bring for routine tasks and capabilities – we knew we could do it but didn't have the horsepower in-house to be able to do it. All of those things combine to give you a more resilient supply chain because it gives you the ability to scale up or scale down at a much different level than when it's in-house.

It gives you the ability to focus on some of the more critical issues facing us as supply chain leaders, versus focusing on figuring out how to drive transactional efficiency or how to drive standardization and some of the more repetitive standard parts of that overall network.

It frees up your key leaders to focus on driving that next transformation, improving relationships internally or with our customers. It just allows a different type of focus for that leadership.

So the advice is, it's a big change, it's intimidating at first. You've got to find that right path that balances the risk and getting a taste of the model or understanding what it can bring, and then having a vision to be able to take that seed and grow it going forward.

BK Kalra: And what are your expectations of Genpact over the next three years? What must we do better?

Bill Durbin: The performance to date has been great, but that's the floor. My expectation going forward is we need to continue to grow together. You need to come back and continue to innovate and continue to transform. The automation, the AI. I've been extremely impressed with what we've done to date, but that's just still scratching the surface. I expect Genpact to be out there in the market – understanding that next technology, the next ways of working that's going to drive that efficiency, and the functions that you're managing for us and bring that to the table. Push me to my comfort level versus me pushing Genpact on its comfort level with what we're doing in that next change or that next transformation.

Watch the highlights of the conversation between Bill and BK and find out more about our supply chain services.