Kraft to slash supplier base

Despite the proposed purchase of Cadbury, Kraft Foods plans to halve its supplier base to save more than $300 million a year.

The company aims to consolidate everything from ingredients to packaging materials to improve productivity and as a result to simplify purchasing processes that has arisen from the numerous acquisitions over the years.

The review of purchasing and expected savings from cost cuts come before any potential Cadbury deal. Purchasing is the largest area where the company feels it can cut costs, spokesman Michael Mitchell said.

Kraft informed its suppliers in March that it was conducting the purchasing review. That review puts existing suppliers not only in competition with each other for Kraft’s business, but also with potential new suppliers. Currently, Kraft has more than 40,000 different specifications for its supplies throughout the world.