As its parent company pursues a wide range of ambitious strategic initiatives, the ADM Milling and Baking Solutions team is moving forward as a full participant in the effort, embracing change to position the business and its customers for success, the division’s top executives said.
In an interview with bake's sister publication, Milling & Baking News, conducted at ADM headquarters in Decatur, Ill., Christopher M. Cuddy, president of the ADM Carbohydrate Solutions business, and Tedd Kruse, president of Milling and Baking Solutions, reviewed their plans for the nation’s second largest flour milling company and discussed changes that have transpired at the company since a 2019 move of the flour business’s headquarters to Decatur from Overland Park, Kan.
ADM operates 19 US mills with a combined 264,500 cwts of daily flour production capacity. The company is the largest milling company in Canada where it operates seven mills with 75,500 cwts of total daily capacity, is the second largest in the Caribbean where its three mills have 16,500 cwts of daily capacity, and is the second largest in the United Kingdom with six mills.
Smaller than the company’s oilseeds or corn processing businesses, flour milling since the 1970s stood out at ADM as the only significant division that was not based in Decatur. Mr. Cuddy said milling has not become a “small fish in a big pond” with its relocation to Decatur. Instead, the move has been viewed as an opportunity for milling to leverage deep and synergistic resources ADM’s North America headquarters offers that the milling business lacked when it was based in Kansas.
“We’re as committed to the business as we ever were, and moving here, I think, says a lot about that,” Mr. Cuddy said.
At the heart of the Decatur complex is a trading floor where hundreds of associates with a wide range of responsibilities conduct business and mill about.
“The connectivity here is incredible, whether you’re the wheat buyer, you’re selling coproducts from corn or wheat or soy, whether you’re in the textured protein business or you’re in barge freight, everything that we do happens in this building,” Mr. Cuddy said.
Beyond the value the collective expertise of the company’s professionals bring to the business, Mr. Cuddy spoke with passion about intangible benefits to the physical setup.
“The fact that there are no walls and no cubicles helps that connectivity, and it’s super powerful,” he said. “The energy out there is incredible, and it’s addictive. For me, it’s what brings me to work every day for the last 24 years. It’s like a shot of adrenaline coming here and seeing what’s going on.”
As ADM has intensified its focus around corporate-wide strategies targeting food security, sustainability and health and well-being, the importance of having brought milling into the fold increased, Mr. Cuddy said.
“Tedd’s business, milling — sustainability is a big part of what he’s doing,” Mr. Cuddy said. “Health and well-being is a big part of what he’s doing, and obviously food security is a big part of what he’s doing.
“We’re growing fast, and I wanted milling to be part of this ADM growth engine. They needed to breathe the air we breathe. It’s not just one business that has the excitement, it’s all of them collectively that drives this machine.”
Flour milling at ADM falls under Carbohydrate Solutions, one of three business segments at the company together with Agricultural Services and Oilseeds and Nutrition. Agricultural Services and Oilseeds includes grain merchandising and oilseed processing while Carbohydrate Solutions includes wet and dry corn milling together with wheat milling around the world (beyond North America and the Caribbean, ADM operates mills in the United Kingdom and has a mill in Central America). Falling within the Nutrition segment are two units, one focused on human nutrition and the second on animal nutrition.
The integration of milling in Decatur has given ADM the opportunity to offer many baking customers the ability to procure their ingredients from a single ADM salesperson.
“For example, our sweetener business,” Mr. Cuddy said. “If it’s being sold into the milling and baking area, Tedd’s group carries the water for them, so they’re our face to the market. We lean on Tedd’s team to be our experts in the milling and baking space.”
Mr. Kruse added, “We’re talking basic baking ingredients, that bakery pantry. Our team oversees the large bakery focused accounts. So you could have a salesperson, and they could be selling sweeteners, could be selling starches, could be selling flour. Could be selling bakery mixes, whatever it might be.”
He explained, “To Chris’s point, one of the great things of getting milling and baking solutions based in Decatur is the connectivity that we do have now and the access to subject matter experts who are more familiar with some of the newer and more complex nutrition solutions in that portfolio right now.”
Layering ADM’s priorities over flour milling, Mr. Cuddy particularly emphasized sustainability.
“This journey of sustainability is long and complicated and multifaceted,” he said. “The first step that Tedd took was deciding we’re going to have a carbon neutral milling footprint. It’s certainly very important for us, and we’re proud of that.”
The carbon neutral designation for the company’s mills was first announced in August 2021 and was described at the time by Mr. Cuddy as an “industry first of its kind and scale.” Covered by the designation are ADM’s wheat flour mills, dry corn milling facilities and its sorghum mill in the United States.
Going forward on the journey, Mr. Cuddy said partnering with ADM’s Agricultural Services and Oilseeds group has been and will be crucial, especially related to regenerative agriculture.
“Agricultural Services and Oilseeds has complete touch points throughout the entire supply chain, starting with the growers all the way to the finished solutions we’re providing to the customers,” he said. “What I think is a true differentiator, we are able to leverage at a scale that others just aren’t able to replicate.”
The carbon neutrality status was achieved with company-wide carbon capture and sequestration with credits going to the milling group, together with what Mr. Cuddy called “big energy treasure hunts.”
“Essentially we have a utilities group that travels around the world going into plants looking for inefficiencies, particularly on energy and water usage,” he said. “Their work is done in ways that allows them to take best practices to all of our 850-plus locations.”
The teams review the plant schematics and look for ways to reduce energy costs, perhaps addressing a vapor leak where heat may be escaping. The efforts have led to reuse of heat and water across ADM’s plants, efforts that have paid dividends with the escalation of energy costs.
“It’s good business, and it’s also a sustainable way to get ahead,” Mr. Cuddy said.
He estimated the efforts have generated 25% savings in energy use over the past decade.
“And then of course if they find something in one mill, then they go to the other 45 that we have,” Mr. Cuddy said. “It’s certainly an advantage that we have when you can spread that wealth of knowledge for that sustainable journey around being better on energy usage, water usage.”
Among the efforts around carbon sequestration, Mr. Cuddy said ADM has been pumping carbon dioxide into the ground for over 11 years, long before such activity attracted much interest.
“We are operating the only Class 6 well in the country, meaning we’re putting CO₂ underground just to put it underground … forever,” he said.
Mr. Cuddy said ADM’s experience has taught it invaluable lessons about sustainability commitments. First, objectives always must be science-based. Additionally, the company will not make a sustainability commitment “until we have a path to achieve it.”
In looking to bring nutrition solutions into the menu of milling offerings, Mr. Cuddy said ADM is seeking opportunities to move beyond just providing “flour FOB our plant.”
“We are looking to the health and nutrition group to help us penetrate even further into that customer to help them with their other needs,” he said.
For his part, Mr. Kruse said the company’s track record of developing innovative solutions for customers was central both in his decision to join the milling business as president and the company’s decision to move the milling business from Kansas. Mr. Kruse said innovative solutions stands atop a list of five strategic pillars that have been established for Milling and Baking Solutions.
Mr. Cuddy said he and ADM chief executive officer Juan Luciano had noted success Mr. Kruse enjoyed building the business of Stratas Foods, a joint venture (50/50 owned by ADM and ACH Food Companies) focused on the specialty category of customized oils and shortening products for bakers and other customers.
“I was at Stratas, and the message I heard from Chris is we have a phenomenal opportunity with our milling business,” Mr. Kruse said. “We have a phenomenal opportunity with the existing portfolio but also with the broader portfolio within ADM, particularly around the nutrition business. The opportunity is to take a lot of these great functional ingredients they’ve created around heart, health, digestive health, cognitive health, incorporate those into flour blends, incorporate those into bakery mixes. We haven’t done that before for whatever reason. We’ve got the teams together now. We’re centralized. They said ‘We want you to lead that and make that happen.’ They got me very excited because that’s what I get passionate about is providing those types of solutions to our customers because it really changes the whole conversation that you have with the customer. Those aren’t the transactional discussions about price. You have strategic discussions about how you’re really going to partner to provide these value-added solutions.”
ADM also has ongoing efforts around innovation and productivity. Flour milling is now included in a 200,000-square-foot innovation center in Decatur that has 30 laboratories, 3 piloting areas and a staff of about 300. The facility is in the midst of a major expansion that will add an additional 40,000 square feet of space.
Also an area of innovation, the company’s second pillar is around sustainability.
“I truly believe that we as ADM are the clear leaders when it comes to sustainability when it comes to regen ag, when it comes to carbon neutral and the initiatives that we have around that,” Mr. Kruse said. “And we’re going to continue to drive that. That is going to be an area of focus, a priority for us for as long as I’m in my role within milling.”
Over the last 10 years ADM has stood out within the milling industry for the magnitude of the capital investments it has made in its network of flour mills, and Mr. Kruse identified internal capabilities as the third pillar of Milling and Baking Solutions strategy. He said driving efficiency both by replacing older mills and modernizing others will be key for the company.
“You’ve heard a lot about the labor challenges,” he said. “That’s not specific to the milling industry, but we’re going to continue to invest in the automation at our facilities, to continue to try to streamline that and continue to drive higher consistency of higher output in those mills and higher efficiency. Again, to service our customers in a more effective, more consistent fashion.”
The fourth pillar of ADM Milling and Baking Solutions is sales and operations planning and supply chain. Much as the company is using technology and automation to enhance plant operations, ADM is using data to optimize its sales and production scheduling.
“We have a lot of resources, a lot of data, a lot of analytics that we’re leveraging to drive that to be a more effective, more efficient process,” Mr. Kruse said. “We think that will benefit our customers as well, and we’re really excited about that. On the logistics side, we’ve seen huge challenges over the last couple of years. Having dedicated resources, collaboration and leveraging what we have within this building — how we partner with the rest of ADM. We have dedicated teams within Agricultural Services and Oilseeds — whether it’s trucking or rail or the barges and the vessel companies.”
Mr. Kruse said the Agricultural Services and Oilseeds group has responded enthusiastically to the opportunity to partner with milling in a way that has not happened in the past.
“They’ve said there’s a lot of low hanging fruit, and again, it’s making us much more effective and efficient with our customers and how we’re servicing them,” he said.
With the company’s efforts around innovation, sustainability, operations and logistics, ADM has identified marketing and rebranding as a fifth pillar. More than just touting what the company is accomplishing, ADM’s Milling and Baking Solutions group is addressing a proliferation of flour brands that became part of the company amid its many acquisitions in the 1970s, 1980s and 1990s. The company has unveiled a new brand — HarvestEdge and has begun marketing its core line under the brand.
“Commander and all these other brands have been out there forever, and that’s great,” Mr. Kruse said. “There is value in those brands, but what we’re doing now is we’re using this opportunity to streamline and refresh those brands. That’s led to SKU (stock-keeping unit) rationalization, which will set those mills up to be more effective at what they’re doing, pushing through a lot fewer SKUs.”
In working to better coordinate and optimize sales and operations, ADM Milling and Baking Solutions is charting a fundamentally different course than in the past, Mr. Kruse said.
“Historically ADM milling, when we looked at the business, we looked at it with a very singular mindset,” he said. “By that, I mean that each one of the mills really was worried about their mill. And so utilizing some of the analytics and the data that Chris mentioned, we built an optimization tool, an optimization model. As we’ve leveraged that model, it has enabled us to leverage the network of mills we have to operate it more effectively. Trying to better service our customers is the ultimate goal. So the more product we can get to them, the better quality product we can get to them, the more consistency we can provide to them, the better partner we are.”
Key among these mills have been some of the company’s larger and most strategically located, including Mendota, Ill.; Beech Grove, Ind.; Enid, Okla.; and Camp Hill, Pa., Mr. Kruse said.
“Those really are kind of at the heart of the network, and then we have the auxiliary mills throughout the nation that we’re leveraging, too, which gives us and our customers redundancy,” he said. “It gives us a good backup. A lot of the customers we deal with, they say, ‘We can’t afford to have just one mill that can supply us.’ Well, we’ve got you know 20 mills in the US. That we have the opportunity to leverage that entire network to be able to supply you and be that reliable, consistent partner. I can be your multiple supplier. I can do that. We can be that partner without having to go to a different supplier. I think that’s a monumental shift for us from an ADM milling perspective. And looking at that entire network and how we best manage that network of mills to be the best possible partner for our customers.”
Mr. Kruse said the coordination with customers has been key to rolling out this new approach.
“We’ve partnered with them every step of the way,” he said.
With the move from Overland Park to Decatur, the milling business experienced turnover across management. The company’s current leaders include a mix of executives like Mr. Kruse with experience at ADM and a number of others with experience in the flour business from other companies. While it resulted in a challenging transition, Mr. Kruse said starting with a nearly clean slate has brought important benefits.
“One of the great things, the team within the milling group is still new to the milling industry, so they’re always willing and able to question and challenge the legacy way that we did things,” he said. “And so as we continue to get closer and closer to our customers and get better insight about what they want and what they need that creates an opportunity for us to look at doing more, doing something else. Then we absolutely will evaluate that opportunity and see if that makes sense.”
Mr. Kruse said both Mr. Cuddy and Mr. Luciano have been receptive to exploring ambitious projects for the milling group.
“What I like about where we’re at now is knowing that from a carb solutions perspective we have that support,” he said. “We have that willingness to explore those opportunities, and whether it’s with Juan or Vikram (Luthar, senior vice president and chief financial officer) or whoever else, the support that we have for carb solutions and specifically for milling and baking is phenomenal.”