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Materials Procurement: Synchronizing the Supply Chain

How the Internet will take Kraft's packaging supply chain efficiency to the next level.

Pw 17568 Kraft

With a network of networks already in place that connects packaging suppliers with packaging buyers—the Internet—what’s needed now is software, business practices systems and a workflow that allows the two constituencies to mesh more closely than ever before. That’s the vision and focus at Kraft Foods, according to Marcia Glenn, vice president, strategy and e-procurement. Kraft is tackling e-procurement by building next-generation internal procurement systems that will talk to its suppliers’ production computers over the Internet using standard communications protocols. Once those foundation systems are in place—which will be used for all direct and indirect materials, not just packaging—Kraft intends to start evaluating packaging e-procurement in particular. Actual packaging e-procurement is slated to start happening this year. Net Sourcing conducted this interview, edited for brevity, to find out more about Kraft’s e-procurement intentions.

NS: How will e-procurement enhance packaging supply chain integration at Kraft?

Glenn: I like the analogy of the glass pipeline, where your suppliers are actually able to see [Kraft’s materials inventory requirements]. Our suppliers would know what and when we need materials at the exact same time that we do.

NS: So they would just push you more materials. There wouldn’t even have to be a person ordering. Is that over the Internet?

Glenn: It can be. This is where a number of the software companies are trying to figure that out. One of the advantages of the Internet and XML [eXtensible Markup Language] is that it is a faster, more flexible way to integrate data and transactions between different companies with different systems [compared with Electronic Data Interchange (EDI)].

NS: What’s the objective?

Glenn: To really take cost out of the supply chain . . . by reducing inventories and increasing overall efficiency.

NS: I have to imagine Kraft along with all the other consumer products companies have already gotten pretty good at trimming the supply chain and reducing inventories as far as possible. Is there really much more fat to cut?

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