2006 Processor of the Year: Kellogg Co.

The $4.5 billion Keebler acquisition taught Kellogg lessons in manufacturing efficiency and to look to employees for ways to cut plant costs.

By Mike Pehanich, Plant Operations Editor

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Sustaining that culture is a record of worker longevity few processors can match. The accompanying institutional memory has enabled the company to transfer countless efficiencies.

 

Technology in the service of cost and quality

Without question, the SAP enterprise resource planning system that Kellogg acquired with the purchase of Keebler has been the most influential technology the company has added in recent decades. It has enabled the company to understand and manage assets and costs in a way impossible prior to the advent of the system.
Other influential technologies include:

Automatic guided vehicles - They are used in three of the company's warehousing operations.

Process controls - Include some of the latest available to the industry. Alarm systems alert operators when systems have gone outside operating parameters. "We know exactly where a problem is immediately," says Marty Carroll. "This has radically reduced downtime." The company has also shifted "more toward continuous control rather than batch control," according to Carroll.

In-line quality measurement - Quality control has come out of the lab down to key points of manufacture.

Energy utilization - Kellogg is "actively and aggressively reducing energy consumption," says Carroll. Efforts have included the move to more energy-efficient illumination options.

High-speed packaging - Kellogg has added high-speed conveying, packaging, bagging and cartoning systems.

 

"You don't see a lot of turnover at Kellogg. But you do see natural attrition," says Carroll. "We forecast that attrition and adjust our training accordingly. We are proud of our people."

Recently, Kellogg's Memphis, Tenn., plant hosted a 25-Year Club dinner. One of the attendees had worked at the 48-year-old plant for all 48 years. Workers there average 27 years with the company. "We have an incredibly active retiree community, too," adds Carroll. "They still come back to the plants and want to know who's running things."

An engineering partnership

Over the past 15 years, no manufacturing function has gone through more turmoil than engineering. Kellogg was no exception. Given the corporate pride in workforce longevity, downsizing engineering was particularly painful.

Kellogg had a bold plan that shifted a significant portion of engineering duties to a third party, Jacobs Engineering, based in St. Louis.

"One advantage we had in the transition was that a lot of the members of our engineering group went to work for Jacobs," says Carroll. "So we didn't have all of our engineering expertise walk out the door.

Also, a succession plan was always in place. We took a realistic approach during this process, so ours went more smoothly than it did for a lot of companies. The transition was accelerated, but we managed it effectively."

Though Kellogg has tweaked and shuffled the arrangement, the Jacobs alliance has proven effective. Kellogg maintains its corporate engineering group, which tends fundamental packaging, processing, electrical and mechanical capability. It also has strengthened engineering capability at each of its plants. Each facility has an engineering director responsible for projects and maintenance.

SAP as MVP

Among the most valuable players in the Keebler acquisition was its SAP system for enterprise resource planning (ERP). It has been a critical tool in manufacturing management for the expanded Kellogg.

Recognizing that Keebler may have had a leg up on the acquiring company in understanding of the asset management tool, Kellogg built a unified ERP program around the Keebler SAP system. In fact, Kellogg's IT department is still headquartered in the former Keebler headquarters in Elmhurst, Ill.

"We relied on Keebler's expertise in implementing the system throughout Kellogg operations," says Carroll. "We called it 'Sister Plant Resourcing,' and it broke down barriers quickly. We understand the importance of that integration today."

One of the many ways the system has proven its worth is on the maintenance front. "We can track the run hours of an asset and know exactly what to do to keep that equipment running effectively," says Carroll. "It gives us a huge advantage."

Asset utilization has become one of Kellogg's greatest strengths. It has helped the company improve manufacturing effectiveness, setting maintenance and sanitation schedules for all the plants, most of which operate 24/7. "Honestly, our facilities are all high-performance plants today," says Carroll.

Teams and talent management

Indeed, managing and training for success has been a Kellogg trademark. Global supply chain teams set manufacturing strategies, succession plans, training and disciplines within RQT. The company takes pride in its talent management process, which includes training, performance feedback and discourse on engineering objectives.

Kellogg's technical programs are linked to local colleges. Maintenance personnel must pass an apprenticeship program that includes computer-based training. "We have not backed off of training programs over the past 10 years," says Carroll.

Although Kellogg does not employ self-directed work teams, it has pushed decision-making down the ladder. The role of the supervisors has changed, too. "They are facilitators rather than foremen," says Carroll. He expects plant mangers today to be "more strategic, thinking about next year."

Kellogg encourages and assists workers who wish to expand their experience and expertise within the company. Carroll, for example, managed three plants and was international supply chain lead prior to assuming his current senior VP supply chain position. He requested experience in training, logistics and human resources at various points in his career and got it.

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