“You focus on what you can control”- Anheuser-Busch InBev chief supply officer Peter Kraemer

Peter Kraemer has been Anheuser-Busch InBev's chief supply officer since 2016 Just Drinks: You’re a fifth-generation brewer. Is it compulsory in your family? Peter Kraemer, Anheuser-Busch InBev chief supply officer: My father’s family came from Hungary - his great-grandfather ran a brewery there. When the borders were closed in 1945, the family moved to Germany and settled in a town north of Munich. After my father graduated, his uncle - who was the brewmaster in St Louis when this was our only Anheuser-Busch brewery – told him about a position here. My father came over in 1958 and worked here for 43 years. I've been around the place since I was a child, and I wanted to follow in his footsteps. Here I am today, 33 years later! JD: And now, you’re A-B InBev’s chief supply officer. PK: I'm still our chief brewmaster as well! I started in brewing - my first big project was a non-alcoholic beer. I was the brewmaster for eight years and after that I moved to the corporate office. When InBev and Anheuser-Busch came together, [then-CEO Carlos] Brito asked me to be the VP of supply for North America, which was basically what I was doing. But, I’m still responsible for the quality of the beer. JD: Given the increased profile of supply chain in recent months, is this one of the more colourful chapters of your career? PK: We certainly have a lot going on! It's a large company, so our supply chain reaches pretty far. We have to have raw materials, so we work with farmers. We have to make sure they're growing the right grain, so we have barley research. We have to turn that into malt so we have malthouses. Then, we have to get it to market, so we have the whole logistics operation. In some countries, we go direct to consumer, which is growing. On top of that, sustainability is critical as well. Resources are limited so it's important for us to use less in our operations. JD: What's been the biggest cause of sleepless nights for you amongst the post-pandemic supply chain headlines? PK: There are a lot of challenges out there. For example, climate change is affecting the availability of raw materials - commodity prices are rising. Barley is the largest raw material we buy, and prices are going higher because it's getting harder to grow barley. A solution for that is we breed varieties that are more resistant, not just to disease, but also to drought. That’s a perfect example of how there's a lot of stress in the marketplace, but there's also something we can do about it. We just need to do more and faster. There are more stresses out there - As a large company, we ship all over the world. Beer is mostly local, that’s the good news. The amount that we need to ship compared to other companies is probably less because our raw materials are generally local. But, not everything is available everywhere - a classic case would be aluminium for cans. As the availability gets tight and the demand for aluminium goes up - a lot of the automotive industry is using more - it becomes more difficult to manage. We use some very automated tools to manage our inventories to ensure we have good visibility into what we have, where it is, how much we need and when we need it. That enables us to plan better and to order things sooner, so that we can avoid variability in the supply chain and not have a disruption. We have taken our inventories up and we have good visibility into the shipping from end to end. We know exactly what’s where and that's enabled us to keep our products in stock. JD: What tools give you that improved visibility? PK: A few years ago, we put together what we call ‘logistics centralised processes’. These are 20 things you have to do to run a good logistics operation. One of the first things was planning - there are companies out there that offer very good planning software; we chose one called ‘09’. In every business unit - that's generally a country – we’ve built a physical planning room where everybody can meet. The first step in planning is to make sure every part of the business is together - commercial, procurement and logistics. You also have to have data with which to make decisions, which is where the software comes in. We start with demand - We have statistical tools for hands-off planning, which bases market demand on historical demand. That’s enhanced by other factors, such as weather and holidays. From there, we also get the data about what availability we have in our process - what capacity we have, what raw materials we need and so on. We bring this all together in a plan that shows you the things that are good and the things that are not good. Scenario planning is also critical – What happens if sales are a little bit more or a little bit less? It's been a game-changer because it enables you to bring all the teams together to know that you're working on the right things and to adapt your plan based on what you have and don't have. That’s been a major transformation for us. JD: How are you able to mitigate the pressures of aluminium shortages? PK: You focus on what you can control. The first thing is the planning - knowing how much you need and when and where you need it. Having the best possible forecasts is a good starting point. Once you see where your shortages are, there are a number of things you can do. The most obvious thing is increasing inventories. If it takes an extra five days to get a ship loaded and an extra two weeks to get it unloaded, then you have almost three weeks. Immediately, you know you need more inventory to cover this. The software helps us determine that and then we can make those changes. We have to do that for everything - a good inventory policy applies to every single thing you buy. If you do the planning, you can handle the changes in the supply chain. While you're building the inventory, you have to manage things more closely. That requires good working relationships and a lot of phone calls. Have the data, see what the issues are, manage things more closely in the short term, fix the inventory policy in the longer term, and then it works. For the most part, with a few brush fires here and there, we've been able to avert outages. It took a lot of planning, constant phone calls, shipping to new places and diverting to keep everything whole. It's been long enough now that the inventories are starting to build and things are starting to get better. JD: Is this a situation you could foresee a year ago? PK: It depends what it is. We have a large operation in China, so we saw COVID coming pretty quickly, along with the associated disruption. We could see what could happen, so that enabled us to do a lot of scenario planning. The thing that was harder to predict was, what are people going to consume in a partially closed world? In the US, for example, draft and bottles were less, cans were more. We needed more cans, so we turned bottle fillers into can fillers. It took some adjustments and we couldn't see all that coming. We saw it early enough to keep pretty good stock in the market. JD: Is this the new normal, or just a period of turbulence? PK: You'll find a million opinions! There's still a lot of congestion in the supply chain at different places in the world. Logic will tell you that the congestion will ease.We all learned a lot and built better systems to be able to deal with this. That will stay with us for a long time. Anheuser-Busch InBev Performance Trends 2016-20 – results data