About this video

• Video Title: PFS Executive Leadership Series: Holistic Margin Management
• Channel: Partners in Food Solutions
• Speakers: Jeff Dykstra, Magdaline (Magdaline), John Church, John Barton, Charles, Tom Hammond, Christian, Johnson
• Duration: 1:22:25

Overview

This video features an executive leadership series by Partners in Food Solutions (PFS) focused on Holistic Margin Management (HMM). The session includes an introduction to PFS and its origins, followed by a panel discussion with experts who share insights and practical applications of HMM. The goal is to help food companies on the African continent improve profitability, reduce waste, and drive growth through strategic cost management and a customer-centric approach.

Key takeaways

• PFS Origins and Mission: PFS was founded from a meeting between Kofi Annan and Ken Powell (former CEO of General Mills) to address food insecurity and economic development in Africa. PFS focuses on supporting food companies in the middle of the value chain.
• Holistic Margin Management (HMM): HMM is a disciplined approach to cost savings that considers all aspects of a business (holistic), focuses on profitability (margin), and requires active management.
• Consumer-Centric Approach: Understanding and prioritizing consumer value is crucial for successful HMM. Waste reduction or process changes should not negatively impact the consumer's perception of value.
• Cross-Functional Collaboration: Effective HMM requires bringing together different teams within a company (e.g., marketing, supply chain, operations) to identify opportunities and brainstorm solutions.
• Financial Discipline and Details: Small savings (pennies) accumulate significantly. Detailed financial analysis and understanding the "why" behind costs are essential for identifying savings.
• Tools and Implementation: Tools like process mapping, financial analysis, and customer feedback mechanisms (e.g., surveys, sales team input) can help identify waste and brainstorm solutions. HMM implementation should be tailored to each organization's specific needs and culture.
• Lender and Investor Perspective: Robust HMM practices demonstrate strong financial discipline, operational efficiency, and a clear understanding of the market, making a company more attractive to lenders and investors.
• Continuous Improvement: HMM is an ongoing process. Companies can find new savings opportunities year after year, as exemplified by General Mills' long-standing commitment to the practice.

Based on the transcript, the following individuals are involved in the discussion and application of Holistic Margin Management (HMM):

• John Church: A pioneer in HMM, formerly General Mills' chief supply chain officer, who worked on HMM for 34 years.
• John Barton: CFO of Ardent Mills, who discusses HMM's importance for profitability and sustainability, especially during economic challenges.
• Charles: Head of advisory services at Root Capital, who provides a lender's perspective on how HMM makes companies attractive to investors.
• Tom Hammond: Former General Mills employee who led global HMM cost savings and now consults companies on cost savings and supply chain improvements. He also conducted training for PFS staff on HMM.
• Jeff Dykstra: CEO and founder of PFS, who provides context for the HMM discussion and the PFS origin story.
• Magdaline: Facilitator of the panel discussion.
• Christian: Regional Program Director at PFS, who sees significant potential for HMM among PFS clients.
• Johnson: Regional Program Director at PFS, who encourages clients to engage with program managers to implement HMM.

Additionally, the video implies that many other individuals within the participating companies (CEOs, teams, employees, sales teams, manufacturing staff, etc.) are involved in the practical application and execution of HMM principles. The emphasis is on cross-functional collaboration.

General Mills obtains consumer insights for HMM through several methods:

• Consumer Insights Team: They have a dedicated team focused on consumer insights, which allows them to invest in data and research.
• Direct Consumer Contact: When consumers contact the company (e.g., via email or phone) with feedback about products, this information is shared with the team.
• Online Sales Platforms: They analyze customer reviews and feedback on platforms like Amazon.com, noting specific comments on what consumers liked or disliked about products.
• In-Person Consumer Engagement: They organize opportunities to talk to consumers directly, such as inviting them to try new product flavors or test new formulations and provide feedback.
• Sales Team Feedback: The sales team, being in direct contact with customers, provides valuable insights on customer preferences, product packaging, and shelf presence.
• Observation: They observe consumer choices in retail settings, noting purchasing decisions and the reasons behind them.

The key takeaway is that while larger companies like General Mills have more resources, smaller companies can still gather valuable insights through simpler, more direct methods.

While the video doesn't explicitly list all the specific tools General Mills uses for HMM, it does mention several approaches and types of tools that are foundational to their HMM practices, drawing from Tom Hammond's experience:

• Financial Analysis: A fundamental tool is using financial data to understand where money is being spent. This involves breaking down financial statements and potentially using "activity-based management" to understand the costs associated with specific activities within the business.
• Process Mapping: This involves visually mapping out the steps in a process (e.g., a manufacturing line) to identify inefficiencies, complexities, and areas for improvement. Tom Hammond mentions doing this virtually with a mentee's manufacturing line.
• Ideation Sessions (Pain Points/Headaches): Encouraging teams to identify "pain points" or "headaches" – aspects of their job or processes that are frustrating, time-consuming, or inefficient. This is a way to generate ideas for improvement.
• "Why" Questions: A simple yet powerful tool is repeatedly asking "why" to understand the root cause of issues, inefficiencies, or costs.
• Observing Waste: Literally looking for waste, for example, by examining what is thrown away or identifying spills on the factory floor.
• Cross-Functional Teams: While not a "tool" in the software sense, the establishment and active participation of cross-functional teams are critical for the application of HMM tools and generating insights.
• Supplier and Customer Dialogue: Engaging with suppliers and customers to understand their perspectives and identify areas where processes or requirements might be adding unnecessary cost or complexity.

Tom Hammond also notes that they trained country managers on five basic HMM tools and that further specialized tools can be employed depending on the identified opportunities. The emphasis is on starting with a few key tools and mastering them.

The transcript highlights that cross-functional teams are crucial for the success of Holistic Margin Management (HMM), and their organization is geared towards collaboration and shared accountability. Here's how they are described as being organized:

• Inclusion of Various Departments: Teams are formed by bringing together people from different areas of the business. This includes:
  • Business teams
  • Research and Innovation teams
  • Sales teams
  • Marketing teams
  • Supply Chain and Operations (including manufacturing)
  • Finance
• Shared Understanding and Accountability: The primary goal is to ensure that everyone understands the company's profitability and feels accountable for it. This is achieved by:
  • Putting people in the room: Literally bringing representatives from these different functions together to discuss challenges and solutions.
  • Focusing on shared problems: Instead of viewing issues as belonging to one department, HMM encourages seeing them as collective problems that need a unified solution.
  • Collaborative goal-setting: Teams work together to identify savings targets and strategies, rather than having individual departments set their own siloed goals.
• Addressing Interdependencies: The organization of these teams helps reveal how decisions in one department (e.g., adding product variations by sales/marketing) impact another (e.g., manufacturing costs, complexity, or supply chain requirements).
• "Voice of the Consumer" Representation: Sometimes, a specific role is assigned within the team to represent the consumer's perspective, ensuring that solutions align with customer value.
• Moving Beyond "Productivity" Silos: The shift from traditional "productivity" programs (often siloed within specific departments like supply chain) to HMM emphasizes broader, cross-functional involvement and a focus on profit.

Essentially, the organization of cross-functional teams for HMM is about breaking down departmental silos and fostering a shared responsibility for the company's financial health and growth by aligning everyone's efforts towards common profitability goals.

Decisions within Holistic Margin Management (HMM) are guided by a structured, collaborative, and data-informed process aimed at maximizing profitability and consumer value. Here's how decisions are typically made, based on the transcript:

• Cross-functional Collaboration: Decisions are not made in isolation. They emerge from discussions and brainstorming sessions involving representatives from various departments (sales, marketing, operations, finance, R&D). This ensures that all perspectives and potential impacts are considered.
• Consumer and Customer Focus: The primary driver for decisions is understanding what consumers and customers value. Decisions are made to enhance or preserve this value, and to eliminate aspects that do not add value but increase cost.
• Data-Driven Insights: Decisions are informed by financial data, process mapping, customer feedback, and waste observation. Analyzing where money is spent and identifying inefficiencies provides the basis for decision-making.
• Prioritization: With multiple ideas generated, a prioritization process is used to select the most impactful initiatives. This involves evaluating potential savings, feasibility, and alignment with business goals.
• Setting Targets: HMM involves setting specific targets for cost savings or margin improvement. Decisions are then made to achieve these targets.
• Iterative Approach: The process is not a one-off event. HMM requires ongoing management, meaning decisions are continuously revisited and refined. Teams that consistently manage HMM make small, incremental decisions over time, leading to significant results.
• Resource Allocation: Decisions are made about allocating resources (time, budget, personnel) to HMM initiatives, viewing these as investments rather than costs.
• Asking "Why": A fundamental decision-making technique involves repeatedly asking "why" to uncover the root causes of costs or inefficiencies, leading to more effective solutions.
• "We're not leaving this room until...": In some cases, particularly in challenging situations, a decision-making approach involves keeping stakeholders in a meeting until a solution is reached, fostering a sense of urgency and shared commitment.

In essence, HMM decision-making is about a holistic, data-driven, and collaborative approach where the focus is on what truly benefits the consumer and the business's bottom line, leading to sustainable growth.