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For General Mills, Shortages Lead to Price Increases

Ongoing supply chain issues have created material shortages and rising input costs for General Mills.

Disruptions of materials such as fats, oils, starch, and packaging have made it difficult to keep up with demand for General Mills’ ready-to-bake products, pizzas, and hot snacks.

General Mills resorted to changing its recipes to keep products on shelves.  Increased labor, transportation, and raw and packaging materials costs mean that the company will charge customers more for its products.


Video Spotlight:  


This post is based on the Star Tribune article, General Mills tweaks formulas to stay ahead of supply chain woes, by Brooks Johnson, March 23, 2022; the Supply Chain Dive article, General Mills reformulates products to combat ingredients shortages, by Sarah Zimmerman, April 21, 2022; and the YouTube video in the Spotlight. Image source: Javier Larrea/AGE fotostock.

Discussion Questions:

1.  What kinds of supply chain issues are impacting General Mills?

Guidance: Ingredient shortages and rising input costs are the supply chain issues impacting General Mills.  Disruptions of materials such as fats, oils, starch, and packaging cause ingredient shortages for General Mills’ ready-to-bake products, pizzas, and hot snacks.  Rising labor, transportation, and raw and packaging materials costs translate to higher input costs for General Mills.

2. What kind of aggregate planning strategy does General Mills use to respond to supply chain issues?

Guidance: General Mills uses a chase demand strategy to match supply and demand.  The strategy involves (1) recipe changes to keep products on shelves, (2) output reduction to account for materials disruptions, and (3) product price increases to lower expected demand.

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