Mondelēz International is embarking on a significant overhaul of its U.S. supply chain, deploying artificial intelligence and automation across its distribution network to bolster efficiency and reduce operating costs. The snack and confectionery giant, which owns major brands including Oreo, Ritz, and Cadbury, is targeting up to five distribution centers that support its direct-store-delivery (DSD) network—a system that serves 55 branch locations nationwide.
Leveraging AI for Operational Efficiency
As part of a broader modernization strategy, Mondelēz is integrating AI-enabled automation to streamline logistics and accelerate deliveries to retail outlets. According to EVP, COO, and CFO Luca Zaramella, these upgraded fulfillment centers are designed to reduce inventory levels and improve overall operational performance.
This move reflects a growing trend in the food and beverage industry, where “agentic” AI is being deployed across the product lifecycle—from resolving operational problems to originating development ideas. By utilizing machine learning and automation, Mondelēz aims to achieve greater speed-to-market and enhanced responsiveness to evolving consumer demands.
Reshaping Manufacturing and Internalizing Operations
Beyond logistics, Mondelēz is aggressively modernizing its manufacturing footprint. While approximately 60% of its U.S. network has already been updated, the company is shifting its strategy for the remaining 40%. Executives indicated that some facilities, previously reliant on highly complex, state-of-the-art lines, will transition to simpler, more focused production lines better suited to individual site capabilities to reduce waste and improve productivity.
A core pillar of this financial strategy is the “insourcing” of manufacturing and packaging operations. Mondelēz plans to bring lines currently managed by co-manufacturers in-house, a move CFO Zaramella noted would “save quite a bit of money”. Specifically, the company is internalizing packaging for mixed cookie and cracker packs—a high-priority category for warehouse club retailers—to remove system rigidities and address inefficiencies.
Long-Term Strategic Context
These updates are part of a multiyear, $1.2 billion overhaul of the company’s supply chain and ERP system, launched in 2024 and slated for completion in 2028. The initiative is expected to enhance capacity across biscuit, cake, and pastry businesses and increase network flexibility.
Despite economic headwinds and cocoa price volatility, Mondelēz remains committed to its long-term growth algorithm, which targets 3%–5% organic net revenue growth. By optimizing its DSD network and focusing on core snacking categories, the company aims to improve operating leverage and maintain its competitive edge in both developed and emerging markets.
Frequently Asked Questions (FAQ)
Q: Why is Mondelēz focusing on “simpler” production lines in some plants?
A: Management has concluded that some facilities were over-engineered, leading to high waste and productivity levels below expectations. By moving to simpler, focused lines that play to the specific strengths of each plant, the company aims to reduce inefficiencies.
Q: What is the benefit of bringing packaging in-house?
A: Internalizing packaging—especially for mixed packs sold in club channels—removes the rigidities and inefficiencies inherent in relying on third-party systems, providing Mondelēz with greater flexibility to meet channel-specific demand.
Q: Is AI being used beyond the distribution centers?
A: Yes. AI and machine learning are increasingly used across the food industry for product development, quality inspection through machine vision, and supply chain forecasting. Mondelēz is also investing in predictive technology to improve crop forecasting and ingredient supply accuracy.
Sources and References
- Mondelez International Expands AI Use in Distribution Centers to Reduce Supply Chain Costs (CargoConnect)
- Mondelēz taps AI for distribution centers to cut costs (Supply Chain Dive)
- The use of AI in food NPD is changing (Just Food)
- Mondelēz at CAGNY 2026: Strategies for Sustained Growth (Investing.com)
- Mondelez (MDLZ) Q1 2026 Earnings Transcript (The Motley Fool)
