A Tradition of quaility

by Teresa Acklin
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General Mills stands out as unique success story in U.S.

By L. Joshua Sosland

   While General Mills, Inc. is not nearly the largest milling company in the United States (although it once was), its flour is purchased by far more people than that of any other U.S. miller.

   This seeming anomaly is explained by the company's Gold Medal household flour brand, which has maintained the dominant market position for many decades. Gold Medal's reach into millions of homes is supplemented by General Mills' focus on bagged flour business to distributors, food service bakers and smaller bakers.

   Even within its bakery flour business, General Mills has maintained an inordinately large number of customers by concentrating on bagged flour, a policy that had its beginning in the mid-1960s when, in effect, the company decided to withdraw from bulk bakery flour.

   While the bagged business requires a considerably larger investment, not just at the mills but also administratively, in sales and in distribution, it is the company's experience that the bagged business — especially within food service where its brands have gained a preferred position — consistently has been more profitable than bulk flour business to large wholesale baking customers. As baking and customers change, though, the company in recent years has re-entered the bulk business.

   For many flour millers around the world with memories or histories extending back to the period prior to World War II, General Mills is still regarded as the pre-eminent flour milling company. This admiration grew out of General Mills' leadership in the creation of national flour milling companies during the 1920s, when its founding actually established the first milling business that produced hard winter, hard spring and soft wheat flour.

   The company gained fame not only for its creation and for its status as the nation's flour milling company until the 1960s, but its reach into international markets with Gold Medal flour enhanced its reputation.

   General Mills, from its headquarters in the Minneapolis suburb of Golden Valley, currently operates flour mills at seven locations in the United States: Kansas City, Missouri; Buffalo, New York; Avon, Iowa; Great Falls, Montana; Johnson City, Tennessee; and Vallejo and Los Angeles, California. Each of the plants manufactures household flour, except Los Angeles. Three of the mills — Vallejo, Avon and Kansas City — have mix manufacturing capability. The company also manufactures mix at St. Charles, Illinois.

   Overall, General Mills has daily capacity of 3,800 tonnes, ranking as the fifth-largest U.S. company behind ADM Milling Co., ConAgra Flour Milling, Cargill Flour Milling and Cereal Food Processors, Inc. With about 1,200 tonnes of daily milling capacity, the company's flour mill in Kansas City is the third-largest in the United States.

   A large part of General Mills' output is used internally for consumer products — the Gold Medal line of household flour; Bisquick, the top-selling baking mix in the United States; and an assortment of Betty Crocker cake mixes and other products — and also for making commercial mixes for bakers and for food service.

   The company's roots date back more than 130 years, to the Washburn Crosby Co., Inc. General Mills was incorporated in 1928.

   Today, with sales in excess of U.S.$6 billion, General Mills is much more than a flour milling business, it is one of the largest consumer foods companies in the United States. Including its share of sales from international joint ventures, General Mills' worldwide revenues total U.S.$6.8 billion. The company makes breakfast cereals, snack products, extensive lines of main dish and side dish products and yogurt as well as its line of flour, mixes and other baking items.

   The senior executive overseeing Betty Crocker Division operations at the company is Richard W. Sheldon.

   Mr. Sheldon, who spoke recently with World Grain, joined General Mills in July 1959, spending four years at the company's Keokuk, Iowa, and Minneapolis oat mills. The facility supplied internal General Mills requirements for its Cheerios ready-to-eat breakfast cereal, the top-selling cereal brand in the United States.

   The first flour mill at which Mr. Sheldon worked was in Wichita Falls, Texas. He was there in 1965 during a wrenching period of overcapacity and poor profitability for the U.S. milling industry. In reaction to dismal industry economics, General Mills announced it was shutting down eight of its 17 flour mills in a massive corporate restructuring. Wichita Falls was one of the mills that was closed by General Mills.

   While he acknowledges that the days following the announcement of the closings were very difficult ones for him and his fellow workers, Mr. Sheldon landed on his feet with General Mills in Kansas City, working as a project engineer. “When they shut down the mills, some of the family flour packaging equipment was moved from mills that were shut down and integrated into the mills that were left,” he said.

   After working at the company's large flour mill in Buffalo, New York, Mr. Sheldon moved to Minneapolis in 1973. He marked his 25th year at the corporate headquarters last year. In Minneapolis, Mr. Sheldon began as a flour production manager with assignments to work on all the company's mills with a variety of projects ranging from capital projects to budgeting to sanitation.

      FOCUS ON QUALITY.

   An emphasis on quality at General Mills is a tradition passed down from generation to generation of managers, Mr. Sheldon said, stating that he was deeply influenced by many, especially Charles Gill and William Mahoney. Both men retired in the past 10 years, and Mr. Gill was Mr. Sheldon's immediate predecessor in his current position. What made the greatest impression on Mr. Sheldon were aspects of operations that he said go hand in hand with quality.

   “Charlie Gill had a great leadership style,” Mr. Sheldon said. “He was very devoted to productivity and making us more competitive from a cost standpoint.”

   The focus on quality is not meant to come at the expense of profitability at General Mills. To the contrary, the company believes a dogged fixation on quality control is crucial for maximizing profitability, Mr. Sheldon said.

   “We've always thought that if you have the best quality, then in the long run you will be the low-cost producer from the point of view that you have less rework, fewer rejects and fewer customer complaints, less dissatisfaction,” he said. “It's just a matter of doing things right the first time.”

   Mr. Sheldon said the focus on quality at General Mills is no more than a consistent focus on the company's customers.

   “From a production standpoint, from a sanitation standpoint, we run our plants always keeping the end consumer in mind,” Mr. Sheldon said. “General Mills has a strong reputation to uphold, and we just don't want to put ourselves in a position that our customers could view our product in any way as unsatisfactory.”

    Mr. Sheldon suggested that the emphasis on quality, while being part of the company's history and tradition, is also driven by the corporate structure. General Mills, he said, is set up in a way that helps prevent quality issues from being ignored. Instead of reporting to operations managers, the quality function reports separately and directly to executive management.

   “In many respects, the quality function works like an independent auditor,” he said. “In some companies, the quality function reports to the production management, but that creates the possibility of inappropriate influence.”

   Because of the independent audit aspect of the quality control at General Mills, production people have a continuous and urgent sense of responsibility for maintaining the quality of product, Mr. Sheldon said.

   “The structure gives people making the product a greater sense of responsibility, so quality gets built into the product by the production people,” he said.

   Citing another example of how the company distinguishes itself within the milling industry, Mr. Sheldon recounted the 1992 crop year that was marked by the extremely low protein content in the spring wheat crop. In spring wheat states of the U.S. Upper Midwest, average protein fell to 13.7%, compared with 14.5% the year before. Only one-seventh of the crop had protein content of 15% and above, compared with a third the year before.

   In contrast with the many companies that reduced the protein level of their high gluten flour as a result of the crop reduction, General Mills' decision to maintain the protein was said to be “the only appropriate one” for the company.

   “I think our customers appreciated the fact that we hung in there, even if we had to adjust our price,” Mr. Sheldon said. “We would not sacrifice our protein for price. We would rather pay the premium for the better wheat.”

      FIRST NEW MILL IN A GENERATION.

   A new flour mill recently completed in Great Falls, Montana, was the first constructed by the company in a generation. This doesn't reflect any less commitment to flour milling, Mr. Sheldon said, but it does represent a careful economic analysis of returns, where General Mills imposes strict hurdle requirements on capital expenditures.

   According to Mr. Sheldon, an old mill is perfectly capable of milling quality flour, and a new mill is not guaranteed to yield top-quality product. “It starts with buying the right wheat and then making sure that in older mills, equipment is well maintained and replaced as needed,” he said.

   “Wheat procurement is a very big factor. We inspect all of our cars, and we reject wheat when necessary. We have gone to preferred supplier programs in some of our mills to be sure we get the kind of wheat we are looking for. Procurement plays a vital part.”

   No matter how committed he is to quality, Mr. Sheldon acknowledged that he, or anyone for that matter, would be unable to ensure that the company's mills all over the United States are running as they should. He said the company focuses on finding and training high quality, seasoned managers.

   “We give them a high degree of autonomy with basic directions and guidelines from the general office,” he said. “We make sure they all have General Mills philosophies in mind.”

   In addition, Mr. Sheldon said that maintaining ongoing and effective communications is crucial, with face-to-face meetings scheduled on a quarterly basis and telephone contact more frequently. At each mill, regular meetings are held between quality control, wheat procurement and sales people to discuss issues common to all.

   “We focus on three things,” Mr. Sheldon said. “First is serving the customers, next is quality and service reliability, and then cost containment and productivity.”

   To keep the company abreast of technical developments, operations managers all are members of the Association of Operative Millers. Many are active and serve on key committees. In addition, the company maintains ongoing communication with vendors to keep up on the latest equipment. One executive in Minneapolis is devoted entirely to milling technology, making sure that the company's mills stay current, Mr. Sheldon said.

   He described the relationship General Mills maintains with its vendors as a partnership. “We have to work very closely with them,” he said. “It's also incumbent on us to tell them what our needs are, to be sure they are developing equipment that satisfies those needs.”

   L. Joshua Sosland is the executive editor of World Grain's sister publication, Milling & Baking News.

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