Kraft to cut supplier base in half: report

Posted by Daniel Palmer on 10th September 2009

Global food manufacturer Kraft Foods is intending to halve its supplier base in a bid to slash costs by US$300 million per year, according to a Reuters report.

Such a move would affect more than 30,000 companies.

The news comes amid continued speculation that the owner of the Vegemite and Oreo brands will increase their offer for UK confectioner Cadbury.

The plan was in the works long before the Cadbury proposal, with Kraft reportedly informing suppliers of the review back in March.

Kraft’s plan, the article suggested, involved consolidation of purchasing of ingredients and packaging materials to improve efficiency in the wake of acquisitions over recent years which had left them with an ever increasing supplier base.

“This is probably the first truly holistic view we’ve taken,” Julia Brown, Senior Vice President of Procurement at Kraft, told Reuters. “We’re essentially taking a white sheet of paper and saying ‘what is the right number of suppliers to support this particular category, who are they, what is the capability we need for now and in the future, and does the current supplier base have that’.”

Ms Brown said they were hoping the moves would lead to stronger relationships with the suppliers that stay with the company.