Q: What is the biggest supply-chain challenge that consumer-packaged goods providers face today?
A: Clearly it's to maintain a balance between cost and customer focus. We must set priorities that can grow the business, which are customer-oriented. At the same time, our senior management is requiring us to deliver the cost savings that they have come to expect over the years.

Q: How does this differ from the way you've always done business?
A: We have more of an emphasis on the customer now, with the rise of Wal-Mart and the fact that their business model is built at least in part, if not in large part, on logistics and supply-chain capabilities. That has in turn put pressure on their competitors. The needs of these large retailers are different than those of the mom-and-pop corner grocery store that we had come to see as the core customer base for so many years.

Q: What about Campbell Soup? Any particular supply-chain challenges that make you unique?
A: Not really. We do have challenges, but I don't think they're necessarily unique. Product format, product differentiation, product customization and service customization by channel are clearly key issues for us. But I would imagine they're relatively common issues.

Q: What changes have you seen over the last three to five years, in the way that CPG companies do business with retailers?
A: Industry consolidation has put more power into the hands of the retailers, relative to manufacturers that they've traditionally dealt with, like Campbell Soup. That balance of power is clearly shifting. Another major factor is that growth is becoming harder and harder to achieve. All sales come through some form of distribution channel - in our case, retailers for the most part - and the specific needs of those retailers have to be met.

Q: What changes have occurred within the supply chain - for example, in the way product or shipment information is exchanged with retailers, in order to adapt better to changing consumer needs?
A: The way we read it, retailers are looking to take labor and working capital out of their systems. These are largely supply-chain kinds of functions. That's how retailer pressures are manifesting themselves at our door. As we look across the supply chain, a big part of the way we will drive efficiencies is through better information flow and information sharing. Data synchronization is a part of that. So is CPFR [Collaborative Planning, Forecasting and Replenishment]. Pallet license plates, pallet bar codes - there are many different iterations. The hot one right now happens to be data synchronization. Case-size optimization is a way of maintaining product choice on the shelf, without adding a lot of inventory and maybe even reducing inventory. All of those things manifest themselves in the supply chain in one form or another.

Q: How has the presence of "big box" stores such as Wal-Mart in the grocery business affected your own supply chain, and the way it's managed?
A: The mass merchants such as Wal-Mart are already a large and rapidly growing part of our business. They approach the grocery business from a slightly different angle than traditional grocers do. A lot of that you could attribute to a sophisticated supply chain and IT. That is definitely putting demands on our supply-chain, and our organization in general, that weren't there before.

Wal-Mart has changed retailing in many different areas. They have a cross-supply-chain optimization kind of mindset, where they say, let's figure out how to take costs out of the entire supply chain, and share those benefits. Some will show up as lower prices to the consumer, which typically results in higher velocity and, obviously, higher sales. Some part of that could go to benefit Wal-Mart in terms of lower working capital investment, which allows them to expand more rapidly, or realize a higher profit for the same kind of product.

Q: What strategies are you implementing to improve the way you collaborate with retailers?
A: Right now we are really putting a lot of emphasis on data synchronization, because we see it as a building-block capability. In and of itself, it doesn't add a lot to Campbell. But it does open up possibilities in the area of potentially scaling up CPFR, and getting our invoice-accuracy rate significantly better than what it is today. It has an indirect impact, which we feel we must have in place as we look forward. If you look backwards into the supply chain, we're putting emphasis on things like e-procurement.

The common thread to what we're doing is that the efforts are part of our overall supply-chain strategy, and that in turn supports [CEO] Doug Conant's transformation vision for Campbell.

Q: Could you elaborate on strategies that you're implementing to improve collaboration with suppliers?
A: We started a procurement transformation, which began with a process called strategic sourcing. It was consultant-enabled, to begin with. We've made some organizational changes to accommodate this as a way of life, a way in which we're going to operate and do business. The last phase of that is a technology enabler, which generally we'll call e-procurement. Two phases of that are e-auctions, or internet-enabled negotiations, and e-procurement, including the search and transaction engine that most people think of along the lines of an Amazon book-buying experience. That allows us to collect data on what we've been buying in indirect materials much more efficiently than before. We had been doing it on a one-off basis, through POs that were handwritten. We're implementing that right now.

Q: What are your information-technology investment priorities today? On what part of the supply chain are you focusing?
A: E-procurement is a major project. So is data synchronization. Network optimization is a moderate-sized project. Another one that's coming up is optimizing our sales and operations planning. S&OP is a major project we're getting ready to kick off. Transportation management is something that we have been putting in place for the last year. We're really fine-tuning that right now.

Q: Do you control your inbound transportation?
A: It's something that we're looking into, to disaggregate the transportation cost of inbound materials. We are working to acquire a better understanding of that.

Q: What opportunities do you see for cooperation with other CPG companies - even competitors - to better serve the retailers you have in common?
A: Clearly, there are some enabling steps that need to be taken. Everybody talks about agreement on standards. UCCnet [a group of standards for electronic commerce, created by the Uniform Code Council] is one of those.

Q: What about with regard to the actual physical movement of goods to the retailer?
A: There's a big opportunity, and it has to do with logistics. You have co-sourcing on one end of the supply chain, and collaborative logistics on the other. Co-sourcing is aggregated purchasing, perhaps to drive an incremental benefit or lower the cost of raw materials. Mostly it's on indirect materials or utilities and the like. Collaborative logistics involves those manufacturers that ship a lot of LTL. They could get together and coordinate loads, and strive toward a truckload rate. Because we are predominantly truckload, this is something that others have more opportunity to do than we do.

Going a step beyond that, the idea that I think has huge possibilities is looking across the entire supply chain to the customer. We go from supplier to manufacturing site to DC to retailer's DC to store. In the industry supply chain, there are two DCs facing each other, and they're clearly redundant, at least in part. My thinking is that, as you look at the United States or North America, the way you locate your DCs is driven by geography and population. You want to be within, say, 400 to 450 miles, which is essentially one truck's maximum run in a day to the largest number of people possible. That's typically where the stores are. Depending on the model, what you end up with is five to 10 DCs across the United States. But everybody runs the same models. And they end up with the same five to 10 locations. Campbell Soup might look to have DCs in the same locations as Kraft and Procter & Gamble, which happen to be the same ones that national retailers, like a Wal-Mart, might have.

Q: Who's driving this innovation? The suppliers or retailers?
A: I don't think any one group is driving it. People are starting to realize what happens when you think across the supply chain, as opposed to optimizing within your own supply chain. You come up with creative ways of looking at how business is done now. Then the challenges are the same as those we have with collaboration in general.

Some alternative business models are popping up. We have a relationship with ES3, which is one of these near-market, mixing center DCs [for the grocery industry]. We don't have a DC in the Northeast. Obviously, quite a few soups and sauces are consumed in that region. Particularly in the winter months, we might want to have a near-market DC presence. So we've established a relationship there.

That is not a cost savings [for Campbell's]; it's a service improvement. Potentially, it could be a cost savings across the industry. I personally think that's one of the challenges we need to wrestle with as we look for collaborative solutions to some of these challenges that we're facing. One of the big issues is that the cost may be incurred on my side, and all the benefits are seen on the retailer's side. So what's the motivation for us to work together to make that happen? Only if we can identify the costs and benefits, where they're incurred, and how to share them so that everyone has a win-win.

Q: What is the real impact of the internet on your business and supply chain today?
A: Internet-based EDI [electronic data exchange] is a good example of information tools for B2B. You don't have to pay VAN [value-added network] charges. There's an opportunity to increase visibility across the supply chain in a relatively inexpensive way, because you don't need dedicated lines, protocols and systems. Transportation visibility is another good example. It doesn't take much to get the information loaded into a system that allows many different players to access.

Q: What about e-marketplaces and portals?
A: We just joined the WWRE [Worldwide Retail Exchange] earlier this year. Clearly we saw an advantage in getting closer to our customers by joining. This was a very strategic decision by us, and we utilized a strong cross-functional coalition to make it happen internally. WWRE is going to be important to us in the supply chain as we look to build new capabilities. They're very smart, and I think they're going to be the survivor as this thing shakes out over the next year or two.

The position that WWRE is taking in the market between manufacturers and suppliers can be very important in driving industry supply-chain efficiencies. Right now, they are playing a role in data synchronization and e-procurement for us. They also would like to play a role in CPFR. We would like to use them in that way, because it allows you to learn the process and interact with your customers without making substantial investments in software and technology.

Q: How are you retooling your supply chain to better manage promotions, new product introductions and product lifecycles generally?
A: It's an area of opportunity for us. One area we are emphasizing is sales and operations planning, which involves better coordination and communication of new products, when they're coming, and how we should plan to ramp up production. It also looks at the capabilities we have and whether there is any market demand [for those products]. Marketing strategy most certainly needs to consider the implications on the supply chain. To a large extent, that is just being recognized across many CPG companies. There needs to be an integrated view within companies, as well as across companies. The issue with some is whether or not the marketing plans are consistent with the supply-chain capabilities, and vice versa. But we are clearly getting much better all the time.

Q: What is the most important lesson you've learned in your years as a supply-chain executive?
A: Everybody talks about change coming, and the need to manage it - that it continues to increase in speed. At the same time, what we're finding is that there are more and more linkages needed to make those changes. It seems like there are very few times in business today, that if you do "A," then "B" happens and it's the result you're looking for. Particularly in the collaborative space, I need eight people to do some variation of "A," to get "B" to happen, so that when we accomplish "B," it enables us to do what is really our goal, which is "C."

In the case of data synchronization, we've got to get agreement within the Campbell Soup Co. that it's a good idea. Then we allocate the right resources, time, money and people. We also have to agree on the standards within our company and across other companies. And we have to do it within a relatively short timeframe. So if we get data synchronization to start happening on our side, it doesn't do us any good unless there are a number of retailers and manufacturers that want to see it, and there's some incremental benefit to doing it. But the real payoff will come because it's a building block that allows us to do other things.

Q: Is it really about selling the concept to the corporate culture? To get everybody thinking in the right direction?
A: Yes. A lot of this stuff is not well understood. People know what kind of benefits they're looking for, but a lot of this is very complex. There are people who talk in tech-ese very readily. We're fortunate that we have a good businessperson as CIO, and she's been a great help in getting these projects approved. But even if you get past the technical aspects and explain it in plain English, there are a number of steps that need to come together to make that end benefit happen.

The way I characterize it is this: We know we want to go to the top of the ladder. But we need to have a couple of people come together to hold the ladder, and then a couple more to put rungs in from the bottom to the top, before we can get to the top. And it all has to happen in a relatively short period of time.

Q: Do you feel you've achieved some success in selling that message, and doing your part to enact change in the organization?
A: We've been very successful in doing that here at Campbell's. One of the keys is having a new leadership team in place, which has brought a message of transformation. What that says to the organization is, we're going to do some things differently, and organize ourselves differently. We're going to have more of a matrix organization, because they have recognized that a silo-functional organization doesn't work in today's environment. What we've been able to do across the sales, marketing, supply-chain and IT organizations is come together and figure out how to deliver some of these things that our customers and consumers are looking to have.

Data synchronization is happening mostly on the back of IT right now, but it's because both sales and supply chain got behind the initiative. In other words, for one functional area alone, it's very difficult to make anything substantial happen nowadays. Everybody recognizes change needs to happen and is happening more rapidly, but the more we get to collaboration, what we're really talking about is coordination of a lot of different entities, both internally and across into our trading partners. And that level of complexity goes up dramatically. If you don't have clear communication, you don't necessarily have a clear alignment of interest. That's an extremely interesting topic, and it's what I think the role of the internet exchanges could be.