Conagra Brands plans to invest $125 million in fiscal 2027 to strengthen its supply chain and lower costs by moving more production in-house, according to President and CEO John Brase. The company aims to improve supply chain resiliency, maintain high service levels, and reduce inventory and days of inventory.
The spending will contribute to the company’s goals, Brase said on a July 15 earnings call. He stated that the company needs to invest more in its brands and supply chain, which is why there is a significant increase in investment.
Conagra unveiled plans last year to increase investments to support supply chain resiliency as part of roughly $450 million in capital expenditures for the fiscal year ended May 31. The higher spending followed several supply challenges in the previous fiscal year, including stalled chicken production, a frozen-vegetable shortage, and tariffs on tinplate steel used to make canned-food containers.
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Today, Conagra is prioritizing supply chain resiliency as part of its plans to spend 4% to 5% of net sales on capital expenditures, according to Matthew Neisius, senior director of investor relations. They are evaluating projects to ensure a strong supply chain foundation while also pursuing initiatives in technology and artificial intelligence to streamline work within the company’s manufacturing facilities.
Conagra’s operational simplification plans include reevaluating the company’s 5,500 SKUs across its portfolio to ensure they are creating value for the enterprise, Brase said. He thinks making each item earn its keep is going to be important.
The company’s effort, unveiled last December as Project Catalyst, aims to reengineer and automate core business processes using technology. Brase believes complexity can be the enemy of execution, and they are going to simplify their organization and how they get work done.
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Other CPG manufacturers have also embarked on making critical changes to their supply chains. General Mills reported this month it planned to overhaul its aging supply chain, which was built for a lower-volume era, executives said.
Meanwhile, Procter & Gamble has fully rolled out its Supply Chain 3.0 initiative across the company as part of the underlying platforms and capabilities the company has been building for years.
