1.Describe how Archer Daniels Midland can diversify its portfolio to protect itself from external forces?
2.How is Archer Daniels Midland staying ahead of demand for sustainable agriculture?
Case 14.2 ADM: The Link from Farm to Table Archer Daniels Midland (ADM), one of the world's largest agricultural processors, is a vital link between farm, factory, and table. The Chicago-based multinational rings up almost $62 billion in annual net sales of soybeans, com, gluten, and other agricultural products provided by farmers worldwide. ADM's focus on agriculture and energy requires the adjustment of organizational behavior while operating in a very dynamic and competitive environment. External forces such as changes in technology related to innovation in the supply chain, online purchasing, and digital marketing are complex and require changes in tactics and strategy to help its supply chain operate efficiently. Its vast network of processing plants and distribution centers as well as its extensive transportation network must all work together. ADM Katherine Welles Shutterstock. com ADM's clients include several well-known companies. Unilever, for instance, purchases oil from soybeans procured and processed by ADM. Unilever uses this oil to produce its mayonnaise products. As ADM's executives know, Unilever and other clients are concerned with more than just price. To stay ahead of demand for sustainable agricultural processes, ADM has partnered with Unilever to enroll its farmers in the lowa Sustainable Soy Fieldprint Project to monitor factors such as soil conservation and land use. In the project's first year. 43 farms with land totaling more than 44,000 acres were enrolled. ADM also introduced a cost-share initiative to soybean farmers in lowa to increase the pool of farms with sustainably grown soybeans and provide financial assistance to farmers. These efforts to deliberately structure operations and behaviors in anticipation of environmental forces are a Print Pindow good example of planned change. The initiative works hand-in-hand with Unilever's Sustainable Living Plan, which includes a commitment to source all agricultural raw materials sustainably in the coming years. These factors make ADM an ideal soybean oil supplier for Unilever's Helmann's mayonnaise. The emphasis on documentation allows companies like Unilever to measure progress and improvements, making it easier for all parties in the supply chain to communicate with customers and stakeholders. To support its global operations and growth, ADM buys from 220,000 suppliers and processes more than 2.5 million payments yearly. The company also manages a vast land, water, and rail transportation network to ensure that raw materials and processed products arrive when and where scheduled. Such a large organization requires ADM's management to make changes that may impact company stakeholders both positively and negatively. Recently. ADM announced internal organizational changes likely to encounter resistance. The firm planned a series of layoffs to streamline the company's efforts and redistribute resources as it struggled with its grain trading business. The agricultural giant employs about 32,000 employees in more than 170 countries, with more than 4,000 in Decatur, Illinois. ADM Chairman and CEO Juan Luciano spoke to shareholders about cutting costs and selling assets as a way to make a "strong recovery." Additionally, the company closed its energy trading operations and changed staff in its Switzerland office, which handles commodities such as wheat and soybeans. ADM emailed affected employees to tell them about the decision and claims it is handling layoffs respectfully with consideration for employees. One way it is trying to overcome resistance is by offering some eligible employees early retirement. If these changes continue, ADM will have to work hard to overcome resistance from employees as it introduces incremental changes and makes small adjustments to fine-tune the organization. An excess of com, soybeans, and wheat has disrupted the supply chain. Many farmers have chosen to store grain to wait for better profits, and some food companies are placing smaller orders because prices are low. In response to these changing external forces, ADM is also making changes to its product lines. As part of its ever-changing nature, the company recently introduced Nutriance, a new range of wheat protein concentrates that are vegetarian and vegan-friendly-a business market in which it sees great potential for future profit. The increase in consumers following a more holistic approach to their health has been an ongoing external force that has prompted ADM to expand its portfolio to meet the needs of health-conscious consumers. Looking ahead, ADM is exploring natural flavors and nutritional ingredients such as protein and vitamins. By recognizing potential new areas of profitability, ADM demonstrates that it is carefully monitoring the external environment and changing accordingly. &
