ASI and Henkel Announce Commitment from Kraft Foods to Support Minority Owned Suppliers within the Consumer Packaged Goods Industry

The agreement between the ASI-Henkel Alliance and Kraft Foods is expected to go well beyond simple diversity spend, by improving the efficiency within Kraft Foods’ supply chain and improving procurement processes as well as delivering anticipated cost savings.

Oct 26 2010 --- In an industry first, alliance partners Adhesive Systems Inc. (ASI) and Henkel announced a new joint initiative with Kraft Foods that will support minority owned suppliers within the consumer packaged goods industry. Kraft Foods has committed to source the majority of the adhesives used to package its food products in North America from minority owned and operated adhesive manufacturer ASI and global adhesive technologies provider Henkel.

ASI and Henkel originally teamed up to form an alliance (the ASI-Henkel Alliance) in 2008 to better serve the increasing demands of their customers for an adhesives supplier that could provide diversity, innovative technologies, cost savings, and sustainable products. The decision of global food giant Kraft Foods to join forces with the two suppliers is a pioneering step, and Kraft Foods is anticipated to be the first of several consumer packaged goods manufacturers to benefit from this partnership.

The agreement between the ASI-Henkel Alliance and Kraft Foods is expected to go well beyond simple diversity spend, by improving the efficiency within Kraft Foods’ supply chain and improving procurement processes as well as delivering anticipated cost savings.

“Kraft Foods is committed to doing its part to ensure that we have a diverse workforce and supplier base, be a good steward of the environment, improve our communities, and deliver value to shareholders,” said Julia Brown, Senior Vice President of Procurement at Kraft Foods. “We believe this initiative with ASI and Henkel will deliver significantly against these commitments."

The incremental volume from this project with Kraft Foods in North America will allow the ASI-Henkel Alliance to bring capital investments and jobs (both technical and administrative) to the Detroit metro area. It is anticipated that the terms of Kraft Foods’ agreement with the Alliance also will include many functional benefits surrounding quality, cost effectiveness, process improvements and innovative packaging solutions backed by R&D collaboration between the Alliance and Kraft Foods. The agreement will enable Kraft Foods to harmonize its adhesive supply on a global scale.

The initial partnership between ASI and Henkel was inspired not only by each company’s commitment to making diversity a priority, but also by a strong customer desire to make diversity in the supply chain more of a priority as well.

According to Jerry Perkins, Senior Vice-President and General Manager of Henkel’s Industrial Adhesives business, “Henkel’s commitment to diversity is one of the key drivers behind the 2008 formation of the ASI-Henkel Alliance. The Alliance has already been well received by a number of major consumer-goods companies and this commitment from Kraft Foods demonstrates the value that ASI and Henkel can bring to the market. As Henkel, we are very excited about the opportunity to work with the Kraft Foods team to bring this grand vision to reality.”

The arrangement is unique because Kraft Foods will request both up-stream and down-stream vendors to attain sustainable social, economic and environmental objectives. The scope of the project is a testament to Kraft Foods’ broader commitment to diversity as the company has invested in supplier diversity for more than 25 years. It is likely other consumer products manufacturers will support the Alliance and further affirm the industry’s commitment to diversity.

George Hill, Chairman and CEO of ASI, stated that when it comes to a bold vision that accomplishes great value for the customer and an incredible level of diverse supplier development, Kraft Foods is clearly a change agent. By harnessing the agility and experience of a 15-year minority supplier like ASI and the scale and technology of a global supplier like Henkel, they have formed a strategic alliance that will have an enormous impact. As a result, ASI will invest with confidence in plant, property, equipment and personnel, thereby creating jobs and opportunities in Detroit, a hard hit labor surplus area.