Campbell Soup Company: Supply Chain Management
Campbell Soup Company is a leader in the consumer packaged goods industry producing many
staple products consumed by Americans. One of their top products is Campbell Soup (marketed
by Campbell Soup North America), which markets to U.S., Mexico and Canada and accounts for
more than $5.2 billion in revenue. Campbell Soup North America has 26 plants, co-packers and
distribution centers, which produces almost 1,000 products. 1
In 2004, Campbell’s consumer products division implemented Demand Sensing (DS). This
software was provided by Terra Technology. After implementing DS, Campbell experienced a
reduction in demand forecast error of approximately 50% and also improved its quality of
shipments from warehouses and plants.
Basically what DS did was applied complex pattern recognition algorithms to daily demand
information, including channel inventory and retailer data, to create an accurate prediction of
demand. DS empowers consumer products companies such as Campbell to improve customer
service, lower inventory levels, stabilize production schedules, reduce warehousing costs,
improve sales revenue by reducing stock-outs and ultimately lead to higher profits for the
company. 2
After the success of DS, Campbell also implemented Multi-Enterprise Inventory Optimization
(MIO) in 2005. MIO helps Campbell to optimize inventory across its entire supply chain, from
raw materials to warehouses to retailers. MIO models Campbell’s supply chain and comes up
with an inventory strategy that decreases safety stock requirements by 10% or more without
jeopardizing service levels.
Campbell saved $10 million in inventory within the first year of implementing MIO. The
company also managed to decrease its safety stock by 20% across its supply chain. In 2007,
another division of Campbell Soup, Away From Home also implemented Terra Technology’s
solutions. Away From Home provides end-to-end support to a growing market of universities,
health care, convenience stores, vending and delis and benefited by improving their short-term
forecast error by more than 40%.
According to Steve Cortese, Director of Supply Chain Infrastructure at Campbell, before
implementing DS and MIO, the company did not have the visibility to the volume of production
required to service their consumer markets. The existing supply chain planning, opportunities,
processes, organizations and systems were also not designed to neither facilitate an accurate
prediction of demand signals nor plan inventory optimally. With Terra Technology’s solutions,
Campbell was able to predict demand based on real-time available information.
1
2
(Terra Helps Campbell's Sense Demand, Optimize Inventory, 2008)
(Demand Sensing)
Lilian Tam (MBAM 613.18)
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Campbell Soup Company: Supply Chain Management
According to Kopczak and Johnson3, supply chain management has resulted in six major shifts
in business focus. It is evidenced from Campbell’s implementation that shift #1 (from crossfunctional integration to cross-enterprise) is achieved. For Campbell it is a private initiative
whereby its MIO system have effectively assisted in communication between manufacturing and
retail, streamlining inventory at all levels of the supply chain. As for shift #2 mentioned in
Kopczak and Johnson’s article, “how do we minimize the costs of matching supply and demand
while continuing to reduce the costs of production and distribution”, even though no specific
figures were mentioned regarding reduction in costs of production, Campbell did manage to
decrease stock levels by 20%, which indicates that warehousing costs would have been
concurrently reduced.
Campbell’s adoption of DS clearly supports the third shift, from supply focus to demand focus 4
mentioned in the article. Campbell was trying to predict demand in order to match their supply to
the market’s demand.
Lastly, for the fourth, fifth and sixth shift respectively as mentioned by Kopczak and Johnson,
there was no evidence in Campbell’s implementation that supports these shifts. Collaborative
product design, breakthrough in customer value and providing a tailored customer experience are
not addressed by DS and MIO. This does not mean that supply chain management cannot effect
changes in the abovementioned factors, but rather that for Campbell, these issues were not
addressed by their DS and MIO software.
There is a lot of potential for improvement in Campbell’s supply chain. As Campbell is
providing food service to many different segments of customers, both retail and through other
channels such as bulk supply to education and health institutions, there are many ways in which
Campbell can add value to its customers with a more sophisticated supply chain. For example, in
future, Campbell might decide to tailor their food products to specific needs of different
demographics of customers, maybe different SKUs of soup to children (for schools) and patients
(for hospitals) suffering from different ailments. Campbell may decide to specifically produce
soups with low sodium (for patients with hypertension), or enriched with calcium and other
pertinent minerals for children under 18 years old (to be provided to schools). If Campbell
decides to go down that road, the supply chain needs to be even more sophisticated than it
currently is to predict demand by segment and tailor products to meet specific customer needs.
3
4
(Kopczak & Johnson, Spring 2003)
(Kopczak & Johnson, Spring 2003)
Lilian Tam (MBAM 613.18)
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Campbell Soup Company: Supply Chain Management
Works Cited
Demand Sensing. (n.d.). Retrieved from Terra Technology:
http://www.terratechnology.com/en/solutions/index.php
Kopczak, L. R., & Johnson, E. M. (Spring 2003). The Supply-Chain Managment Effect. MIT
Sloan Management Review , 27-34.
Terra Helps Campbell's Sense Demand, Optimize Inventory. (2008, July 9). Retrieved from
SupplyChainBrain.com: http://www.supplychainbrain.com/content/nc/industryverticals/food-beverage/single-article-page/article/terra-helps-campbells-sense-demandoptimize-inventor/
Lilian Tam (MBAM 613.18)
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