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General Mills Takes a 24/7 Approach to Manufacturing Due to Increased Demand

By Daniel B. Kline - Updated Mar 19, 2020 at 2:28PM

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The company has increased its full-year outlook.

Social distancing apparently involves eating a lot of cereal. General Mills (GIS 0.47%) has seen demand shift since the early days of the coronavirus and it's operating what it calls a "control tower" to manage capacity versus demand across the globe, according to the Star Tribune.

An ever-changing situation

CEO Jeff Harmening explained this unique situation to the newspaper:

Maybe you've seen photos of empty store shelves. But food continues to flow. We continue to make it. Stores continue to stock. The change in consumer behavior are the likes of which we have never seen.

Basically, the first week of mass social distancing was marked by people stocking up on cereal, soup, and other non-perishables. Now, demand has increased for perishable items as people hunker down for a long stay at home.

Harmening called the situation ever-changing. That's why the company has taken the unprecedented step of managing production on a 24/7 basis. Doing so allows it to shift its resources and manufacturing to the items with the highest level of demand.

A number of General Mills cereals.

General Mills saw demand spike for cereal. Image source: General Mills.

An increased forecast

While General Mills saw a dip in sales in China due to coronavirus, its sales have spiked in North America, which generates about 60% of its sales. It now forecasts overall 2020 sales growth in the 4% to 6% range from the previous prediction of 2% to 4%. The company did acknowledge in its earnings report that the impact of COVID-19 could cause changes to its performance.

Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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