The Story:
Cargill, with over 160,000 employees, is one of the world’s largest privately owned companies. Their core business involves the production and distribution of agricultural products and commodities globally. Despite their vast scale, Cargill has undertaken a comprehensive review of their packaging and ingredient procurement practices to identify opportunities for efficiency improvements and cost savings.
Situation:
Following numerous detailed internal studies, Cargill executives identified an over-reliance on small, medium, and large distributors within their global supply chain. This dependency had become the norm, as many distributors had been part of Cargill supply chain for years, some for over two decades. This reliance resulted in significantly higher costs and numerous pain points and “risk of failure points” that were beyond Cargill control and rested with the distributors. Essentially, the distributors held too much leverage.
Cargill decided to regain control of their packaging supply chain by disintermediating major packaging distributors. The goal was to establish direct sourcing solutions and supply chains between Cargill and their global packaging manufacturers and freight companies, all managed by MPKi teams and our supply chain management technology solutions.
Approach:
MPKi installed a project team that combined members from offices in the US, China and Europe. The team worked very closely with the client’s North American corporate office, to ensure consistent solutions with their corporate values, in addition to encompassing the firm’s business objectives-both globally, and in China.
The first step was to establish major warehouse solutions in core Cargill markets, including North America, Central/South America, and EMEA. These warehouses would serve as central hubs, replacing the inventory hubs previously managed by distributors.
MPKi formed various project teams comprising members from offices in North America, South America, Asia, and EMEA. These teams worked closely with Cargill North American corporate office and their India corporate office, which led the global initiative on behalf of Cargill.
Starting in 2023 and continuing through 2025 and beyond, the MPKi team collaborated with Cargill’s North American and global management teams to design, implement, and manage all aspects of the direct sourcing model. Key functions under MPKi’s direct management included:
Results:
This initiative significantly improved the cost structure and margins by dis-intermediating major packaging distributors from Cargill supply chain. Additionally, it created a more efficient and robust model that can be replicated across various categories beyond packaging on a global scale.
