638: The Path to Being Cost Smart | Jim Gray, CFO, Ingredion

It's the type of business restructuring capable of striking envy in the hearts of many a company board member—and particularly those known to favor one oft-repeated bit of business wisdom: Never waste a recession.

At food ingredient maker Ingredion, where the recession’s bite is directly linked to the eating habits of consumers, a 2-year-old restructuring strategy dubbed “Cost Smart” has begun to deliver on its cost savings promises.

In fact, last month, the maker of sweeteners and starches announced plans to increase its Cost Smart run-rate savings target from $150M annually to $170M—a $20M uptick that led certain analysts to believe now might be the right time for the food giant to step on Cost Smart’s accelerator.

Not so fast, says Ingredion CFO Jim Gray, who reports that he already likes what he’s seeing in Ingredion’s rearview mirror.

The opportunity around remote work environments and online collaboration has accelerated toward us,” observes Gray, who over the past 2 years has replaced the dated architecture of Ingredion’s finance function with a new shared services model and a mandate for greater online collaboration.

The restructuring involved the relocation of 107 finance and accounting employees to shared services location in Tulsa, Oklahoma, and Guadalajara, Mexico. The movement of this part of Ingredion’s workforce is expected to be followed by that of a number of other functional areas within the company.

“This was not about lowering head count—it is about holistically redesigning processes to have a lasting impact on cost,” says Gray, who last month—along with Ingredion CEO Jim Zallie—briefed investors and analysts on COVID-19’s impact on the business. After having experienced a significant drop in demand for different ingredients in April and May, advised Zallie, the company had seen “sequential improvements” in June and July as shelter-in-place restrictions had eased.

These improvements were more than likely first detected by a member of Gray’s finance team, which had been working to better expose how the pandemic is altering the buying patterns of Ingredion customers.

“With the pandemic, there has been a change in consumer behavior that’s impacting the pull of our customer products. Then you also have the effects of a recession, in which there is less personal income, so this changes how they shop in grocery stores and how often they dine out,” comments Gray, who credits the company’s widening use of technology for helping to track and monitor customer activities.