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Dive Brief:
- Conagra Brands plans to invest an incremental $125 million in fiscal 2027 to strengthen its supply chain and lower costs by moving more production in-house, President and CEO John Brase said on a July 15 earnings call.
- The spending will contribute to the company’s goals of improving supply chain resiliency, maintaining high service levels and reducing inventory and days of inventory, according to the call.
- “I don’t believe we’re investing enough in our brands and our supply chain, again, why you’ve seen a significant step-up and investment there,” Brase said.
Dive Insight:
The food maker unveiled plans last year to increase investments to support supply chain resiliency as part of roughly $450 million in capital expenditures for the fiscal year ended May 31. The higher spending followed several supply challenges in the previous fiscal year, including stalled chicken production, a frozen-vegetable shortage, and tariffs on tinplate steel used to make canned-food containers.
Today, Conagra is prioritizing supply chain resiliency as part of its plans to spend 4% to 5% of net sales on capital expenditures, according to Matthew Neisius, senior director of investor relations.
The company is evaluating projects to ensure a strong supply chain foundation while also pursuing initiatives in technology and artificial intelligence to streamline work within the company’s manufacturing facilities, executives said. That effort, unveiled last December as Project Catalystaims to reengineer and automate core business processes using technology.
“I really believe complexity can be the enemy of execution,” Brase said. “And so we’re going to really get after simplification, both in our organization and how we get work done.”
Conagra’s simplification process includes reevaluating the company’s 5,500 SKUs across its portfolio to ensure they are creating value for the enterprise, Brase said.
“I think looking at making each SKU, each item, kind of earn their keep is going to be important,” Brase said.
Other CPG manufacturers have also embarked on making critical changes to their supply chains. General Mills reported this month it planned to overhaul its aging supply chain, which was built for a lower-volume era, executives said.
Meanwhile, Procter & Gamble has fully rolled out its Supply Chain 3.0 initiative across the company as part of the underlying platforms and capabilities the company has been building for years.
