Key Takeaways:
- Hormel Foods has decided to cease bacon production at its Tucker, Georgia, plant in order to enhance its manufacturing operations, as stated in a communication to Supply Chain Dive.
- The company made the decision to halt production at the facility due to aging equipment and the significant investment needed to align with their long-term goals. Production has been relocated to other facilities.
- This move was just one of the approximately 90 projects undertaken by Hormel in Q3 as part of their ongoing transformation and modernization efforts to revamp their supply chain, according to executives during an earnings call on Aug. 28 (source).
Insightful Analysis:
The renowned global food company initiated its Transformation & Modernization (T&M) project at the conclusion of fiscal year 2023 with the aim of achieving at least $250 million in annualized operating income growth over three years. The initiative focuses on overhauling the supply chain, streamlining product portfolio, investing in data and technology, and enhancing workforce and processes, as highlighted in previous announcements.
By the end of fiscal year 2025, slated for late October, Hormel anticipates reaping $100 million to $150 million in additional benefits from the T&M project, as outlined by EVP and CFO Jacinth Smiley during the earnings call.
One of the initiatives in the current fiscal year involved establishing a distribution center in the Memphis, Tennessee area to enhance inventory management and expand distribution capabilities, according to the communication.
Previous projects included the introduction of the Hormel Production System to standardize operations across manufacturing sites and the implementation of new procurement and productivity programs, with further cost savings anticipated in various areas such as logistics, warehousing, direct supplies, and indirect supplies, as stated in a financial report.
Furthermore, Hormel established a dedicated data and analytics office to facilitate accessibility to technology, data, and analytics in support of the initiative.
Over recent years, Hormel has made several strategic changes to its supply chain leadership. In 2024, the company appointed Steve Lykken as Group VP of supply chain to further enhance operational efficiency. Following Lykken’s departure in April, Kevin Myers assumed the role of interim Group VP of supply chain, as confirmed by Hormel. Myers also serves as the SVP of research and development and quality control.