Strategy February 24, 2020
Hershey executive says the company’s investment in supply chain efforts has helped it see growth and innovation.
One of the reasons for The Hershey Co.’s continued success has been its ability to successfully launch new candy bars such as Kit Kat Duos and Reese’s Thins—both introduced in 2019. These new products wouldn’t have been successful, however, if the company had not made significant investments in its supply chain, according to Susanna Zhu, vice president and head of U.S. supply chain.
Speaking at the Retail Industry Leaders Association (RILA) Link2020 supply chain conference, Zhu described her company’s efforts to implement “supply chain 2.0.” Over the past five years, the company has invested $800 million in improving its manufacturing capability. It has also focused on making its fulfillment operations more agile by increasing automation in its fulfillment centers and implementing late-stage differentiation.
Another key part of the supply chain 2.0 vision is what Zhu called “smart complexity.” “As we grow and meet changing consumer demands, complexity is inevitable,” she explained. “But how do we balance that complexity versus efficiency? How do we make sure it does not slow down the manufacturing network and slow down the supply chain.”
One way the company addresses this issue is by evaluating the profitability of each stock-keeping unit (SKU). By doing this, Hershey has been able to increase efficiency for itself and productivity for its retail partners.
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