Kraft Food Cost Reduction Strategies

Kraft Foods Inc has initiated number of steps to reduce cost through procurement initiatives .
Few of them would be

• Leverage scale with reduced number of strategic suppliers across total spend .
• Expand global sourcing and low-cost country sourcing .
• Simplify material and product specifications while maintaining quality .
• Re-engineer processes to reduce inventory

CPO Ms Julia Brown gave details to the reporter s on cost reduction initiatives taken by Kraft Food Inc . She told that every spend category would be reviewed and supplier base consolidated . More of the items would be bought for the manufacturing through central buying team rather local buying .

Other cost reduction initiatives are

• Reducing its cash conversion cycle from 46 days in 2008 to 41 days by 2011 .
• Reducing overhead as a percentage of net revenue from 14% in 2008 to 12.5% in 2011 .
• Focus on category value chains, manufacturing platforms .
• Remove bottlenecks .
• Reduce waste .
• Optimize labor .
• Streamline inventory .
• Cover more than 30 category value chains across geographies over next two years

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