For Fast Company’s Shape of Tomorrow series, we’re asking business leaders to share their inside perspective on how the COVID-19 era is transforming their industries. Here’s what’s been lost—and what could be gained—in the new world order.
John Church is the chief supply chain officer for General Mills, the parent company for brands including Cheerios, Pillsbury, Betty Crocker, Progresso, Häagen-Dazs, and more.
We’ve always prioritized human safety and food safety at General Mills, but COVID has tested us like never before. As China started getting exposed to this and we began to understand what the government was mandating, we became early adopters here of things like temperature checks, mask use, social distancing. We had our masks and thermometers on order before the CDC said we should, because we’d learned enough and knew that taking these precautions wouldn’t hurt.
The food industry doesn’t move all that quickly. There are swings and shifts in categories as things come in and out, but to a large extent that is predictable. What you don’t see is governments locking their people in, businesses being closed, entire countries working from home. That ends up drawing such an incredible demand shift that it’s something you just can’t plan for.
People who used to get their breakfast on the go, eat their lunch at work or at school—suddenly they were eating at home. You don’t build for this. What used to be done on a monthly basis started happening on a daily basis. We had to build new tools, new rituals, and new processes in order to navigate what used to be a very predictable business into [one] that was changing, sometimes, by the hour. People started pantry loading with things that are shelf-stable and they could count on. Our soup business went up dramatically, as did Old El Paso, Pillsbury doughs, Betty Crocker, even Gold Medal Flour. There were months of 300% demand surges. We depleted our inventories quite quickly. On an ongoing basis, the demand surge has been 10-30% incremental business across our categories.
You can’t build that much extra capacity. So the first thing we did was simplify. We used to stock 90 SKUs of Progresso Soups. We looked at it and said, “We could be more efficient, make more cases per day, feed more people if we did only 50 SKUs.” We simplified our portfolio, and that allowed them to ramp up their production accordingly. For the first three months of the pandemic in the U.S., we made 10-15% more cases in our manufacturing plants than we would have pre-pandemic. Over time, we had to bring on extra capacity, because you don’t build supply chains to spin that way in the food business—it’s not like 30% more people will suddenly join the population.
We thought we were in a marathon, and then it turned out we were in an Ironman.”
General Mills' chief supply chain officer John ChurchAt our manufacturing plants, we’ve been acting as though we’re still in the first wave. We anticipated a second wave, like the experts did, so we didn’t want to take our foot off the gas or relax procedures. After the panic buying, we continue to have strong demand across most of our categories. The real unknown is, how long is this going to last? I [was] on a call the other day and said, “We thought we were in a marathon, and then it turned out we were in an Ironman, and we may have to double down.”
Matthew Putman is the cofounder and CEO of Nanotronics, a technology company that uses AI, automation, and imaging to improve manufacturing. The technology is used in factories worldwide, in industries such as electronics, healthcare, and aerospace.
Nanotronics does a mix of manufacturing our own things and working with other companies. The idea is to improve factory processes using the latest [in] artificial intelligence. We enable customers to make products with faster iteration and designs, and improve their yields, all of which ultimately brings the costs down. So if you want your factory to have better yields, or if you want it to consume less energy, we put the AI onto the factory floor itself. Sometimes it’s guiding humans on the factory floor, or sometimes it’s interacting with factory robotics that are making changes in real time in order to make a product better.
If there is a race to have a vaccine, understanding how to improve the yields of genomic sequencing, for instance, is hugely important.”
COVID-19 has made many of the projects that we’ve been working on for many years incredibly urgent. If there is a race to have a vaccine, understanding how to improve the yields of genomic sequencing, for instance, is hugely important. We have to produce our equipment faster and collaborate with our customers faster. We work with customers who make UV lights that work in ambient rooms without damaging your skin. We work with companies that make N95 masks. We can use AI to improve yields and have self-correcting action, and take things that would have been very expensive in the past and make them less expensive. So we’ve been focusing on those types of customers and those products. We also started a subsidiary and are manufacturing BiPAP devices, which are inexpensive, noninvasive ventilation devices, for use around the world. I never thought of us as a pandemic response company, but a lot of it applies because intelligent factories can scale and create products that people need, quickly.
Scott Tannen is the founder and CEO of Boll & Branch, a direct-to-consumer bedding company. Its products are all organic, and it is the first company in its category to be certified by Fair Trade USA.
COVID has made consumers think about their homes a lot more. So demand has not slowed at all. It’s increased. In the early days, there was a lot of concern because we source from the developing world, from areas that have challenges from a human health and safety standpoint to begin with, and we have factories with thousands of workers who are entirely dependent on Boll & Branch for their living. The first thing we wanted to do was ensure that we made them feel safe. We started paying for goods early, because we expected that in India, where we source most of our products, there was going to be a shutdown coming.
Boll & Branch founder and CEO Scott TannenWith our ethical standards, there are a very small number of factories in the world that we can use. Fortunately we’ve done contingency planning.”
We had to think about the timing of various shutdowns and restrictions. India was slower to have a rise in cases relative to the U.S., so in the U.S. we front-loaded the production to make sure if there was a shutdown, we didn’t cut off our supply chain. For our overseas operations, we actually had to diversify regionally as a result of COVID. We’ve brought on board manufacturing in Portugal, Turkey, Pakistan, and other countries. With our ethical standards, there are a very small number of factories in the world that we can use. Fortunately we’ve done contingency planning, and we knew [alternative locations we could begin using] and started auditing them and making sure they met our standards.
India shut down for six weeks. We had been planning as early as February that we could see some supply chain disruptions. So we started leaning in with our suppliers and ramping them up to full-speed, holiday-level production early in the year. We were able to take the inventory risk with the assumption that one of two things was going to happen: If we have more inventory on hand and we don’t experience a shutdown, that’s a huge advantage for us, and if we do have a shutdown, we’re in a position where we can still service our customers. [When shutdowns did happen], we didn’t have a single order we couldn’t fulfill. Now all of our factories are now online and we’ve onboarded a number of suppliers in new regions, which gives us the capability that if we see a phase 2 shutdown, the team really understands how to shift and move things.
When most people think about direct-to-consumer brands, they think about big marketing functions and a supply-chain person over in the corner. We’re the absolute inverse of that.
More from Fast Company’s Shape of Tomorrow series:
- Why performance reviews may be a thing of the past
- The leaders of the Mayo Clinic, Cleveland Clinic, Doctors Without Borders, and more tell us how healthcare is being transformed by the COVID-19 pandemic
- Is advertising really dead? Here’s how the leaders of Droga5, TBWA, Wieden+Kennedy, and more are inching forward
- The retail Armageddon may have finally arrived. Here’s what top executives at Nike, Athleta, and more believe it will take for stores and brands to make it through
- Insiders at LinkedIn, Glassdoor, and Jobcase tell us which companies will be hiring, what skills will be important, and how the workplace of the future will change
- How COVID-19 has changed investing, according to VCs at Sequoia, Insight, Forerunner, 500 Startups, and more
- Architects and urban planners from Gensler, Harvard, and Bloomberg Associates explain the changes coming to our shared spaces
- Planned Parenthood’s president on surviving the pandemic and bracing for battle with the Supreme Court
- Watch out Amazon: Walmart could be the comeback story of the COVID-19 era. Here’s how brand perception is changing
- NHL commissioner Garry Bettman shares lessons from the bubble
- Four higher education experts on how COVID-19 is upending the college experience
