The CEO of Mondelēz has described how the company is handling the many challenges faced during the coronavirus pandemic.
Dirk Van de Put, chairman and CEO of Mondelēz International, said the biggest issue at the start of the crisis was uncertainty.
“If you are dealing with a food safety crisis, lets say a Salmonella infection in a plant, you know what to look for, what to deal with, you can go to case studies, but in this case there was no playbook,” he told attendees at the 2021 virtual Global Food Safety Initiative Conference.
“We have about 120 plants around the world and we started to monitor our people showing up for work every day. The first one to two months, the ongoing escalation of seeing how big this was becoming and starting to affect (operations) around the world was mind-boggling.
“You had to deal with all those fronts where potentially something could go wrong and you needed to prepare for it. As the crisis continued we got more used to it and it became clearer what we should be really focused on. The biggest challenge was to keep the supply chain going.”
Mondelez inspects its own plants on an ongoing basis and visits suppliers, but during the outbreak normal in person activities were not possible so one change included use of virtual food safety inspections.
Prepare on all fronts
Van de Put said being prepared is important but not knowing what the crisis is going to be means it is always discovering how to react.
“At Mondelez we have this system in place of Special Situation Management Teams, there is a global one, one for every country around the world and in every plant. When a situation arrives we can call upon those teams to discuss what needs to happen.
“We learned it is a moment where you cannot improvise too much. My style normally is letting people around the world take their responsibility and get on with the business and I see myself as a coach, helping them be successful. In a time like this as a leader you need to give strong guidance on what the priorities are, what the framework of action is and what you want people to do.
“You need to be clear on your priorities, we didn’t know what was going to happen so we had to take all types of measures. We didn’t know if people could keep on showing up into plants so we had to make sure we had the right inventory.”
The company had four priorities with the first being the safety of colleagues, customers and consumers.
“The second priority was business continuity. In our case, consumption of our products particularly in North America went up. So not only was it more difficult to operate our plants and we started to get an increase in people not showing up for work, at the same time the demand for our products started to increase. In certain countries there were measures that plants couldn’t operate or our sales force couldn’t go into the streets,” said Van de Put.
The third priority was about helping communities which included about $30 million in donations.
“The last priority was about emerging stronger, we used the opportunity to accelerate our strategy and put in place a number of things we knew was going to help us when we get out of this to be a stronger company. At the end of all of it, we had a successful year, we increased our market share like never before and everybody feels proud of how we’ve reacted to this crisis.”
Using pandemic as a chance to change
A crisis creates a unique opportunity to drive through change, said Van de Put.
“There were three elements in what we did. The first was to simplify our business, the supply chain was our main concern and getting business continuity, so we used this opportunity internally and with the retailers to reduce the number of SKUs we have in the company, because we know that would make life in our plants easier, keep the shelves stocked at the retailers and bring down costs which we needed because we knew we were going to incur extra costs because of COVID.”
The company already planned to reduce office space by 40 percent but the pandemic accelerated that plan. Van de Put said it was important to reduce costs.
“We wanted to make sure that the $200 million extra costs due to COVID in the business could be absorbed and we could deliver normal financial results for the year but at the same time we wanted to invest more,” he said.
“The other was acceleration — do the things we already wanted to do but do them faster. The example there is every year we want to increase investment in our brands and we accelerated our investment even more and that helped us to come out stronger at the end of the year with the market share increase.”
QU Dongyu, Director-General of the Food and Agriculture Organization of the United Nations (FAO), gave the keynote address at the conference.
“You, as food industry leaders, are responsible for the production, processing and distribution of food, touching the lives of millions every day. After all, the fate and wellbeing of every human on our planet depends on reliable access to sufficient amounts of safe and nutritious foods,” he said.
“The pandemic has been challenging for all of us. Our focus has been to enable the adaptation of food safety governance and food trade processes to ensure the smooth flow of foods from the field to the consumption as much as possible. All of you stepped up to the challenges and frontlines, did the very best possible to minimize the disruptions in the production and supply chain.
“Yet much remains to be done. Today more people suffer from food insecurity than before the crisis, more people struggle to access sufficient, safe and nutritious foods and the trends are not encouraging. Unsafe food causes significant financial burden in low- and middle-income countries, generating a productivity loss of some $95 billion per year. Safe food, from tillage to table, from muddy to mouth, from boat to bowl; this requires a strong collaboration of all stakeholders, public sector, private sector and consumers.”
Amazon’s $11 billion investment and HelloFresh team expansion
Another session during the conference looked at how COVID-19 has impacted food safety operations in various e-commerce models.
Caroline Easterbrook, head of food safety EMEA at Amazon, said it was an ever changing environment with increased cleaning and minimized customer touch points.
“We saw an incredible increase in shopping for home consumption as the out-of-home eating and dining options plummeted due to lockdown restrictions. Our initial challenge was to respond to that massive increase in demand. We learnt as we went, we built our solutions and scaled them country by country and region by region and joined them up with our approach in North America to create our global response.”
Amazon made more than 150 major process changes throughout the pandemic period. It invested $11.5 billion on COVID-related initiatives such as handwashing stations, hand sanitizer, gloves, masks, thermometers and thermal cameras.
Janet Cox, associate director of food safety and compliance at HelloFresh International, said the firm needed more employees and increased hours of production, stockholding and deliveries while dealing with additional COVID restrictions.
“We were seeing strong growth before the pandemic hit but the surge in demand due to lockdowns and homeworking was immense. We believe the pandemic has just accelerated shopping behaviors that we probably would have seen anyway in the next few years as people’s lives evolve. It is clear the last 12 months accelerated trends particularly in the e-commerce sector. We’ve learnt that we can deliver and implement more whilst still ensuring food safety is not compromised.”
Cox said the international food safety and quality assurance (FSQA) team at delivery meal-kit service HelloFresh at the beginning of 2020 had three people and now has 11.