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Four key challenges facing Kellogg Company in a VUCA world

In the first of two blogs, Charlotte Durrant, Sedex Marketing Communications Manager, reflects on key learnings from the keynote speech by Alistair Hirst, SVP Global Supply Chains at Kellogg Company, at the Sedex Conference 2016.

Alistair Hirst, SVP Global Supply Chains at Kellogg Company, has been working in supply chain for Kellogg Company for 32 years, across four different continents. Given his long history and experience across the globe, we invited Hirst to be our keynote speaker at the Sedex Conference and share his vision for simplifying supply chain sustainability.

Hirst opened by setting the scene: “The world has never been as complex and volatile as it is today” he said. “There are so many agendas out there, to have programmes and policies against, it seems sometimes insurmountable. But that’s the world we live in today.”

He described how Kellogg Company has been working closely with the Institute of the Future, based in California, to help develop their strategy in what the Institute sees as a VUCA world – volatile, uncertain, complex and ambiguous. According to the Institute, to manage in this VUCA world you need to have vision of where you’re going, understanding of how you’re going to get there, clarity of purpose and agility to help with long- or short-term supply shocks.

Hirst picked four key challenges which impact stability, risk and sustainability in global supply chains, to demonstrate the dynamics that managing in a VUCA world brings to Kellogg Company:

1. Political instability: From the crises of wars in Iraq and Syria and the migrant challenge in Europe affecting the socio-economic balance, to foreign exchange and volatility around Brexit in the UK. These kind of challenges have huge impacts on Kellogg Company’s sourcing and play into the sustainability field at a very high level.

2. Climate change: Climate records are being broken all the time – it’s too hot, too wet, too dry. Hirst asked, “How do you start creating resilience in your supply chain to account for some of these things that are occurring?” before going on to talk about how climate change is changing where the growing regions are in the world. “We need to predict how the growing regions will be changing, because the people who are going to be affected most by climate change are the ones who are already struggling to find food security. I’m interested in what climate change will do to our business, because being a food company, everything we make starts with what the farmers are growing for us out in the fields,” he said.

3. Food security: The most vulnerable populations out there are the ones who will be most affected by this challenge. Hirst described how “these are our current consumers and hopefully in the developing markets, this is where our future business will be. So we have a vested interest in making sure the communities in which we operate have access to food and nourishment on a regular basis. And business can do that – we can step in and we find commercial ways to take people from subsistence farming into the commercial cash crops.”

4. Urbanisation: Hirst detailed how “the estimates at the moment are that the world’s population will be nine billion by 2050 and 70 percent of that population are going to be in urban areas. So not only are there going to be more mouths to feed, but there will be no more land or water appearing – we’re going to have to do more with less.” For Kellogg Company, “that means we have to have a strong sustainability agenda, particularly around productivity and finding ways to improve food security for the people who are actually left on the land, so they want to be farmers and want to produce food for those who are moving to the cities.”

These four challenges set the context within which Kellogg Company is trying to simplify its supply chain sustainability.