General Mills brings ‘all hands on deck’ to manage unexpected labor constraints throughout supply chain

“Input cost inflation is significantly elevated versus last year, with notable increases in things like packaging material, grains, fats and oils, freight and fuel. We expected that. And it’s largely playing out the way we expected,”​ Jon Nudi, General Mills’ president of North American retail, said at Barclays Consumer Staples Conference late last week.

But, he added, “what we didn’t expect was the labor market that we see and really experienced through our first quarter. And that really had a knock-on impact through the entire supply chain”​ from suppliers all the way through to the distribution network.

Nudi explained that labor constraints are less of an issue internally than externally, where they are harder to predict, manage and account for.

“Our internal plants are doing pretty well. We’re running and generally have our full workforce showing up every day,”​ he said.

However, he added, “it’s been more acute with some of our external supply chain partners as well as our distribution centers and the transportation network as well. And that’s really been a challenge for us.”

As a result, he said, General Mills’ service levels in North American retail “haven’t been where we want them to be.”

For example, Nudi said he recently spoke with the CEO of a “major ingredient company … about an ingredient that is really constraining one of our platforms and allowing us not to run.”

In response, the company has reverted to some of the processes it instituted at the beginning of the pandemic, including “a daily control tower at the working team level, really tackling the issues that are coming and getting after those in real time,”​ and holding a senior-level control tower meeting weekly “where we talk about some of the big issues and where senior leaders can help remove hurdles,”​ Nudi said.

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