Anything but Business as Usual

Due to a range of disruptions, from a 10-day pandemic lockdown in Malaysia to civil unrest in South Africa, all of Kellogg’s 50+ factories around the world have been hit by supply shortages.

CEO of the cereal giant, Steve Cahillane, has noted that the impact on the global supply chain remains severe and ongoing with everything from shipping pallets to truck drivers in short supply placing pressure on the number of goods companies can produce.

“We continue to supply the world with food, though this remains challenging as the pandemic persists,” he expressed.

“If you’re planning on running Product A and all of a sudden you have a shortage of one ingredient out of 50, well you can’t run it anymore, so you have to make a changeover and switch to something else.”

Cahillane pointed out that such changeovers in production, once a rare occurrence, have become more frequent.

“There’s not one of Kellogg’s global plants that have not been affected in some shape or form.”

According to Cahillane, while demand and eating occasions at home remained elevated, they are gradually shifting as consumer mobility returns. The company also saw signs of a gradual recovery in away-from-home channels in on-the-go snacks and pack formats.

Cahillane predicts that the supply chain challenges will last well into next year, but ultimately will be temporary. That’s because there hasn’t been a fundamental change in global demand, only bottlenecks on supply.

“That will get sorted, it just takes a while to move,” concluded Cahillane. “It’s best to forecast these types of disruptions and this type of slowed activity relative to a non-pandemic world.”