The best way to counteract the “bullwhip effect” on business of the rapid recovery of the economy is to stay relentlessly in the hip pocket of customers in as many ways as possible, said the CEO of a B2B giant that serves more than 18,000 customers in 125 countries.
Jim Zallie told Chief Executive that Ingredion, a Chicago-based food-ingredients supplier with about $6 billion in annual revenues, is maintaining its bearings and coping with sudden growth by locking onto the eyes of its customers and relying on that focus to guide the company’s responses. One asset is that Ingredion has operations in 26 countries that make mainly sweeteners and starches for a huge variety of food and beverage applications.
“Clearly what we’re living through right now is unprecedented,” Zallie said. “There’s a bullwhip effect that is a confluence of a lot of things. You’ve got a snapback in demand that’s unprecedented; a system that’s been depleted of workers for a labor shortage; and all the transitory issues that you need to navigate. For us, the key here as a truly global company is to be communicative and close to our customers. That’s the most important thing with them – and internally.”
By that, Zallie means not only communicating with customers but fulfilling the extraordinary needs they may have as they also adjust to the bullwhip effect. For example, he said, as the global transportation system cratered and now as it has been sorting itself back out, Ingredion decided to airfreight some products to some customers “at a high cost. But that’s part of jumping through hoops to get them products by whatever means possible. You have to err on the side of being there for customers now, and they will recognize what you’ve done for them in extraordinary times.”
Strategically, Zallie said, staying close to customers has required “making sure our supply-chain organizations are very connected to customers’ procurement organizations as well as the marketing and R&D organizations at those companies. You have to use your intuition and your experience. Fortunately, we’re a company of many long-tenured experienced people. We make judgment calls and place some bets.”
There’s another aspect to staying responsive to customers, and that’s to draw them into what Zallie called “consumer-preferred innovation.” Ingredion works with customers “to bring customer co-creation. We’re an ingredient supplier, but our mantra is to help our customers deliver that consumer-preferred innovation.” This includes, for example, coming up with a way to communicate with customers that we all a ‘sweetabulary’ for sugar reduction. On behalf of our customers, we’re thinking about what consumers want. We look at the latest trends and connect those ideas to our customers, because our customer brand proposition is to ‘be what’s next.’”
Ingredion’s mainstay of products remained in huge demand during the pandemic, though its customers had to make endless adjustments for coming to market.
“Supply chains around the world were disrupted,” Zallie said. That put a premium on “planning for resilience and business continuity. Companies need to think about that in terms of what the future of work is going to look like, and their hiring strategy, as well as sourcing and the supply chain. One thing the pandemic taught us is how to plan for future disruptions that will come about, some of which you can’t predict.”
One major way Ingredion has added to its capabilities to co-create with customers was to establish what Zallie calls a “third leg” of the business, in addition to sweetening and texturing. The company has placed a $250-million bet on expanding its production of flours, concentrates and other ingredients from proteins from chickpeas, lentils, yellow peas and other crops, based on consumers’ burgeoning demand for “plant-based” alternatives to common animal products such as yogurt, milk and meats.
“This is a whole new platform that we think is completely on trend and aligned with our purpose and with our sustainability goals,” Zallie said. “We’ll be a major player.”