Numico

Selling the vitamins business enabled Mr Bennink to slash Numico's debt and
reinvest in the baby-foods division, which had been starved of cash. He replaced
70% of the top managers and shook up the firm's corporate governance, recruiting a
new board and scrapping its anti-takeover poison pills. The supply chain was
overhauled and working capital reduced. Mr Bennink insisted that Numico should be
only in markets with both high growth and high margins. So he sold low-margin
baby-foods operations in Mexico, India and South Africa, while buying businesses in
markets such as Italy and China, which promise to grow more strongly. Above all, Mr
Bennink invested in innovation, an unusual move in the stodgy baby-food market.

We achieved an 11.6% reduction in our global inventory

levels. We also implemented our global payables project and
have seen significant improvements. Payables are now more
than financing our inventory levels by 2.9%.
Recognising our suppliers
External partnerships allow us to rapidly introduce innovation
to the market without taking on related capital investment.
Our teams have further developed key partnerships with
external partners and constructed the necessary supply chains
to support delivery of major innovations to the markets, and
sowing the seeds for sustained profitable growth in 2006
and beyond.
From internal innovation to open innovation
Most CEOs put a top priority on responding to customers. In the new post-crisis environment, listening to suppliers
can be just as important. Customer satisfaction remains a priority, but insight and innovation can also come from
the supply side.
In 2002, the Dutch firm Royal Numico, a leading producer of baby food, tackled a highly competitive, shrinking
market by turning to one of its suppliers, Babynov, a former yogurt company, headed by Roger Beguinot, a French
entrepreneur. Beguinot had developed an ingenious plastic packaging concept that let mothers save time by
preparing easy-to-serve babyfood at ambient room temperature. Beguinot realized that mothers, pressed by hectic
schedules, would feel guilty at spending less time with their infants, and would consequently be ready to pay extra
for a premium brand as compensation. The product innovation enabled Numico to increase its profits dramatically,
despite a declining birthrate. Numicos emphasis on innovation led French competitor Danone to buy the company
in 2007 for 12.3 billion roughly 22 times Numicos earnings.