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MGT 221 group project overview Baldrige (1).docx

MGT 221: Supply Chain Management - Group research project Overview

Baldrige award winner group research project – You will be assigned to a group of 2-3 students, with each group representing one Baldrige award winning organization. Each group will prepare a 10-minute lesson plan to teach their assigned organization to the class. Each group should: (1) provide a history of the company

(2) explain the major products and/or services provided by the company

(3) why is the organization “award-winning”?

(4) detail the applicable primary Supply Chain functions of the company

· logistics and distribution

· quality initiatives

· lean implementation

· product and/or process innovations

· materials management processes

· sustainability initiatives

· other key Supply Chain information

(5) your team’s analysis of the of these processes; how do they compare with the textbook’s information?

Requirements:

· 10-15 ppt slides; including notes on each slide that details the “talking points” for the information presented

· 4-6 sources (not including the textbook); any source other than an academic journal needs prior approval from the professor

· May include short video clips, etc during the class lesson/presentation

· All team members must actively participate in the presentation

· Business casual or professional attire is expected

· To turn-in to the professor the day of your presentation:

· An outline of the presentation (include sources)

· A hard copy of the presentation (3 slides to a page)

· A breakdown of each team members contribution to the overall project

Recommended Supply Chain websites

http://www.nist.gov/baldrige/

www.supplychainbrain.com

www.apics.org

www.cscmp.org

www.ism.org

SFF_Application_Summary.pdf

Sunny Fresh Foods Quest for Excellence XII ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___

___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___

Application Summary 1

Business Overview Sunny Fresh Foods, Inc. (SFF), is a manufacturer

of food products within the egg further processing industry. SFF produces value-added, egg based food products serving primarily the food service industry.

SFF is a wholly owned subsidiary of Cargill, Inc. In 1985, Cargill, a privately owned company, purchased the Wrightco Company, located in Monticello, MN, and changed its name to Sunny Fresh Foods. In 1988, a strategic decision was made to exit the egg production and egg breaking portions of the business. This enabled SFF to position itself within the industry as a specialist in the production of value-added egg based products. The acquisition of Sunnytime, Inc., located in Panora, Iowa, in 1989, brought new value-added products, customers, expanded production facilities, and experienced personnel to the business. In 1994, as business grew, and to support the future needs of key customers, SFF acquired an egg further processing plant in Lake Odessa, Michigan. The corporate headquarters for Sunny Fresh is Monticello.

Products and Services Products include refrigerated and frozen liquid

pasteurized eggs and scrambled egg mixes, zero cholesterol and fat-free egg products, pre-cooked frozen entrees, pre-cooked frozen scrambled and diced eggs, and peeled hard-cooked eggs. Products are produced under the Sunny Fresh label as well as under private label for specific customers. Services include technical support, product development, and menu development. Sunny Fresh produces over 160 products and has a customer base of over 1200 throughout the United States.

Organizational Culture Each functional area of SFF is represented by

membership on the Management Team (MT). This team is responsible for all activities including, but not limited to: financial results, budgets and capital spending initiatives, employee relations, products and product mix, customers and customers’ business knowledge, industry knowledge, knowledge of grain and egg markets and egg contracts, corporate citizenship, and process improvement. Using their knowledge and experience, the MT developed the SFF Mission Statement in 1992 to provide the organization with a clear vision for our business.

Sunny Fresh Foods Mission Statement

"Sunny Fresh Foods will be the preferred supplier of quality, value-added egg based food products

serving primarily the foodservice industry. We will be a best-cost producer and a leader in developing

and implementing innovative products and processes to meet the needs of an evolving global

market place."

Ethical conduct in business and professional interactions is stressed throughout Sunny Fresh Foods. Relationships with employees, customers, suppliers, the communities surrounding SFF’s facilities and the business community follow the Cargill Guiding Principles.

Senior management takes an active role in the Quality Process at Sunny Fresh by serving as role models, participating in quality related activities, and through the focus and communication of our mission as well as core ideology. As Cargill implemented the Crosby philosophy in 1988, senior management and key supervisors attended the corporate training sessions. This group formed a formal quality improvement structure within SFF that included a Quality Policy and implementation of the Quality Process (Baldrige-based criteria) within Sunny Fresh.

SFF has used Baldrige-based assessments to improve our business practices and the overall health of our organization since 1993. Each of these assessments highlighted "things we do well" and identified opportunities for improvement that were incorporated into our strategic planning process.

Facilities, Equipment, and Technologies SFF has approximately 380 employees with

production facilities in Monticello, MN, Panora, IA, and Lake Odessa, MI. Principal types of equipment and technologies used are pasteurization, homogenization, extrusion cooking, cryogenic and mechanical freezing, steam and dry cooking. A variety of packaging formats and environments include modified atmosphere packaging (MAP).

Application Summary 2

Regulatory Environment Production operates under continuous USDA

(United States Department of Agriculture) inspection, FDA (Food and Drug Administration) guidelines, as well as OSHA (Occupational Safety and Health Administration) and EPA (Environmental Protection Agency) regulations, Kosher inspection guidelines, and applicable state and local statutes.

SFF’s MT made a strategic decision in 1989 to lead the industry in quality and food safety. Specific programs including the Quality Process and the implementation of a HACCP system have enabled Sunny Fresh to exceed USDA and FDA requirements.

Customer and Market Requirements Principle product users fall into several groups: • Foodservice

· Quick Service Restaurants (QSR) · Schools · Retail Delicatessens · Family Dining · Institutional Food Service · Health Care

• C-Stores (Convenience Stores) • Food Processors

SFF sales representatives, brokers, broad-line distributors, and specialty distributors manage these groups.

Key product and service requirements of all SFF’s customers include wholesome, food safe, refrigerated or frozen egg based products, acceptable shelf life, product availability, and access to Sunny Fresh Food’s Technical Support and Customer Service.

Supplier/Partnering Relationships SFF maintains unique relationships with its

regional egg suppliers. Unpasteurized, liquid whole eggs, egg yolks, and egg whites are purchased and delivered via insulated tankers to both the Monticello and Lake Odessa plants. Graded shell eggs are purchased separately for the Panora plant.

In order to assure the supply of liquid eggs and shell eggs are adequate for production needs and future growth, SFF has formed partnering relationships with its key egg suppliers. These relationships include sharing of information regarding projected growth as well as egg quality specifications.

Sharing of best practices, such as HACCP programs to assure food safety and technical expertise such as laboratory set up and analysis, assists our supplier partners in their continuous improvement efforts, and enables them to continue to increase their technical capabilities to help keep SFF competitive in the marketplace.

Other types of purchases include food ingredients (such as meat, cheese, and bread), packaging materials (such as cartons, case boxes, and plastic bags), and processing and packaging equipment.

Competitive Situation SFF’s primary market is the United States.

Beginning at number 14 in 1988, SFF currently ranks number two in share of market (SOM) in the U.S., of 35-40 similar businesses and has experienced positive trends in pounds sold for the past 10 years.

Strategic factors affecting the egg further processing industry and our business include: • a decrease in per capita consumption of shell eggs • an increase in the volume of further processed eggs • an increase in shell egg production and egg breaking • the agricultural market economy • consumer health awareness • issues related to food safety • changing lifestyles • expected changes in regulatory oversight such as USDA mandated HACCP programs • the global market place as the egg industry continues to evolve

Principle factors that will determine future competitive success are relationship building with key customers and suppliers, innovation in products and processes to support the future needs of our current and future customers, continued improvements in production processes while maintaining quality and food safety, and maintaining a highly skilled workforce.

Application Summary 3

1 Leadership Organizational Leadership

Sunny Fresh Foods (SFF) strives for excellence in all aspects of our operations. Senior managers have established values, set organizational direction and performance expectations, and continue to seek future opportunities for SFF.

The Leadership System demands, models, and assures continuous improvement in all business processes and promotes an environment for innovation in products and services through the use of the SFF Strategic Business Plan, annual Business Environment, annual Operating Plan, and weekly Key Indicator Report.

(1) Determine Requirements and Expectations of Key Stakeholders: Organizational values and direction are focused on the needs and expectations of our customers, stakeholders, suppliers, and the communities in which we have facilities. Although customers, suppliers, and communities are not a direct part of the Management Team, the needs and expectations from these key stakeholders are input into the Leadership System through the following means:

Customers: Partnerships are developed with key customers as part of the strategic business process. A key element of these relationships is the sharing of strategic initiatives. Senior leaders are a key part of our integrated customer contact process that has been developed with our key customers.

Stakeholders (Employees): Leaders at all levels are visible and accessible to the workforce. Information used to understand stakeholder needs and expectations is acquired from one-on-one interaction, informal meetings, departmental meetings, and stakeholder surveys.

Suppliers: Needs and expectations of suppliers are determined through the formation of partnerships with our key suppliers. The continued growth of SFF is dependent upon an assured supply of quality ingredients and other supplies.

Communities: Community requirements and expectations are gained through dialogue with community leaders and participation in community organizations and events at all SFF locations. The SFF Business Team (the MT plus their direct reports) takes active roles in the communities in which SFF has facilities which enables them to gain knowledge of current and future requirements.

Leadership System Communication and reinforcement of values

Communication of results, employee motivation, and process optimization

Communication of Expectations

Continuous business process improvement (2) Establish and

Communicate Clear Values

(1) Determine Requirements and Expectations of: Customers, Stakeholders, Suppliers, Communities

(3) Set Organizational Direction

(4) Monitor Performance Excellence

(5) Analyze Organizational Performance

(6) Recognize, Reward, Improve

(7) Continuous Business Process Improvement

Application Summary 4

Information gained from our current and potential customers, the egg further processing industry, our customers’ industries, stakeholders, suppliers, and communities are reviewed on a weekly basis during the Management Team meetings. This continual communication ensures the Management Team has a thorough knowledge of the factors that affect our organization and can balance the needs of all of our key stakeholders in the decision making process.

(2) Establish and Communicate Clear Values: The needs and expectations of stakeholders form the basis for the SFF’s Mission, Core Purpose, and Core Values. The SFF Business Team (BT) and stakeholders at various levels of the organization articulated our core ideology - our core purpose and core values that guide and inspire stakeholders throughout the organization. By definition, core ideology does not change, regardless of changes in the marketplace or business climate.

Sunny Fresh Foods Core Purpose

To be the supplier of choice to our customers worldwide

Core Values Quality

Safety (food and worker) Customer Focus

Stakeholder Focus Ethics

Managers at all levels of the organization are responsible for communicating and reinforcing SFF's Mission, Core Purpose, Core Values, and quality values to stakeholders throughout the organization. The Management Team serves as role models for this communication. Communication takes many forms: new stakeholder orientation, stakeholder meetings and quality training, articles in the SFF newsletter, The Eggceptional News, presentations to customers, suppliers, and community leaders. In everyday business operations, all decisions are based on how the outcome will align with the SFF mission, purpose, and values.

(3) Set Organizational Direction: Under the “umbrella” of SFF’s Mission, Core Purpose, and Core Values, the MT is responsible for setting organizational direction through the SFF strategic

planning process. The strategic planning process involves participation by the MT, BT, and stakeholders at other levels of our organization. Broadly stated, its purpose is to be the "Roadmap" in pursuit of being "the best egg further processing company in the industry”.

Organizational direction is communicated to customers, suppliers, and the communities in which we have facilities in the same way as the organizational mission, purpose, and values. Key strategies and short- and long-term action plans are communicated to stakeholders through stakeholder meetings and by inclusion in SFF’s Performance Management Process (PMP).

(4) Monitor Performance Excellence: Key Indicators were selected because they have the greatest financial, operational, or human impact on SFF. These indicators are measured and charted on a weekly basis to demonstrate improvements over the course of the fiscal year and progress toward goals. Key Indicator Charts are posted throughout the facilities and a weekly Key Indicator Summary is e- mailed to stakeholders and is shared at departmental meetings. This process facilitates decision making at lower levels of the organization by keeping stakeholders informed of progress toward goals.

(5) Analyze Organizational Performance: SFF Balanced Scorecard (see page 5 for a summary of our Balanced Score Card) identifies six Key Business Drivers (KBD). These KBD’s are the characteristics that we must do well to compete in the marketplace. Our KBD’s are directly linked to SFF Core Purpose, Core Values, and Mission; our Key Indicators support our KBD’s. Weekly MT meetings and monthly Business Reviews by the MT are designed to analyze progress toward goals, implement actions necessary to respond to changes in the marketplace and industry, and address issues that require immediate attention and cannot be resolved at lower levels in the organization.

(6) Recognize, Reward, Improve: Results of organizational performance, customer focus, and organizational learnings are communicated through bi-monthly Recognition Meetings and other plant gatherings, weekly supervisors’ meetings, and departmental meetings throughout the year. Organizational learnings are shared with stakeholders to improve overall performance and to create an organization capable of continued growth with opportunities for advancement of its stakeholders.

In addition, our recognition programs (e.g.

Application Summary 5

Balanced Score Card Summary

Technical Achievers, Quality Achievers, President’s Club), Performance Management Process, and our incentive programs, recognize, reward, and encourage empowerment and innovation.

(7). Continuous Business Process Improvement: The Management Team has created an organization capable of adapting to changing opportunities and requirements of all key stakeholders. SFF evaluates its business processes on a yearly basis using Baldrige-based criteria. Feedback reports are reviewed by the BT, and areas for improvement are incorporated as inputs into the strategic planning process.

Fact-based decisions are made based on the analysis of data collected from sources including: visits to key customers, involvement in professional and trade organizations, supplier interactions, stakeholder interactions, participation in community development and community activities, and an awareness of public concerns. All of these sources of input contribute to an effective communication system that enables SFF to be flexible and responsive to changing needs and continuously improve business practices.

Improvement priorities are deployed through the organization, suppliers, and key customers through the Leadership System. Each member of the MT is responsible for ensuring improvements trends

continue. Cross-functional and inter-plant teams, customers and suppliers, as well as other external resources are included in the improvement process as required. Alignment is assured through measurement of Key Indicators and the Operating Plan as well as the weekly Management Team meetings.

Public Responsibility and Citizenship SFF senior management addresses the current and

potential impacts on society of its products, services, facilities, and operations through the establishment of key practices, measures, and targets. This commitment is incorporated into the organization through the Strategic Planning Process in the Public Responsibility and Corporate Citizenship Category.

SFF's Hazard Analysis Critical Control Point (HACCP) Program, Good Manufacturing Practices (GMP’s), and Test & Hold Programs have ensured that our food products are safe.

In a cooperative effort with a customer, SFF improved the packaging configuration for one of their products from the original 2-pound foil-lined carton, to a poly-lined carton, and most recently, to a 1-kg juice-board carton. These changes were designed to reduce cost and to minimize impact of packaging and transportation on the environment.

SFF partners with suppliers who share similar values regarding public responsibility. Visits to

Key Business Driver

Measurement Analysis Deployment User or User Group(s)

Work Process Improvement

Line Efficiencies Yield ASI Audits

Trend analysis, comparison to previous years

Weekly, Yearly MT/BT, Operations, Key Customers, Key Suppliers

Competitive Advantage

TBR, ROBNW, SOM Comparison to previous years and to plan

Weekly, Monthly, Yearly

MT/BT

Positive Work Experience

Safety Performance Absenteeism Employee Survey

Trend analysis, comparison to previous years

Weekly, Monthly, Yearly

MT/BT, Human Resources

Customer Focus and Satisfaction

Customer Claims Sales Growth (Pounds)

Comparison to previous years and to plan

Weekly, Monthly, Yearly

Sales & Marketing, Key Customers, Operations, MT/BT

Supplier Relationships /Performance

Egg Supplier Claims Non-egg Supplier Claims

Comparison to previous year’s and to plan

Weekly, Monthly, Yearly

MT/BT, Operations, Suppliers

Support Services

Days Purchases in A/P LTL On-time Delivery

Comparison to previous years and to plan

Monthly, Yearly MT/BT, Functional Areas, Sales & Marketing, Distribution

Application Summary 6

suppliers by senior management and technical services, the sharing of key strategies, and a focus on GMP’s and HACCP’s, reinforce SFF’s focus on corporate citizenship practices with our supply chain.

SFF anticipates public concerns by actively participating in community organizations, keeping current on industry and environmental trends, and listening to customers' and suppliers' concerns. Methods used include participation on industry, trade, and community boards. The Management Team uses its resources to assess the potential impacts and implements appropriate actions. The evaluation and improvement of environmental initiatives are incorporated into the yearly Environmental Health and Safety Plan. Specific improvement goals are established for safety and environmental impact each year.

Stakeholder participation in professional and trade organizations enables SFF to maintain a proactive approach to gathering information and data regarding future public concerns. Professional organizations include, but are not limited to, the UEA (United Egg Association), IEC (International Egg Commission), IFT (Institute of Food Technologists), University of Minnesota Department of Food Science & Nutrition Advisory Committee, Refrigerated Foods Association, National Restaurant Association, International Foodservice Manufacturer’s Association, ASQ (American Society for Quality), ACS (American Chemical Society), the Minnesota Quality Award process, and the Malcolm Baldrige National Quality Award process.

Key communities are defined as the communities in which we have facilities and SFF is committed to supporting organizations that support community development. In addition, community involvement is also encouraged in those communities in which we live.

SFF stakeholders actively volunteer their time and talents to community organizations, including the Boy Scouts, Girl Scouts, American Red Cross, Lions, area schools and school boards, Walk for Parks, and the Chamber of Commerce. In a recent informal survey, SFF stakeholders identified over 45 different organizations to which they donate their time. These activities help to strengthen our organization and the communities in which our facilities are located, and the communities in which we live.

2 Strategic Planning Strategy Development

The annual Strategic Planning process (see page 7), under the umbrella of SFF’s Core Purpose, Core Values, Mission Statement, and Sunny Fresh 2005 incorporates information from all areas that have an impact on the abilities of SFF to continue to grow and be a valuable part of our communities and the egg industry.

SFF’s key steps in strategic planning are as follows: • Review Mission, Core Purpose, Core Values • Review of Strategic Planning Process and timelines • Review of current business climate – discussions of the current business climate vs. the projections in previous year’s Business Environment Review of input from all areas – discussions regarding information from task forces; competitive environment within the egg further processing industry; competitive environment of our customers’ industries; expected challenges from our customers; raw material sourcing; human resources factors including low unemployment rates; environmental, health and safety factors; information technology factors; significant events of the past year; potential changes in governmental regulations; and international influences. • Development of the Business Environment – group consensus and writing of a document that summarizes the current and future business environment • Development of Key Strategies – discussions, formulation, and consensus of Key Strategies to address business environment issues and to continue to move toward our long-term strategic position and vision • Development of Budget which includes capital spending to reinforce our quality standards, food safety and worker safety core values, and future customer needs • Finalization Financial Plan by all functional departments • Development of Operating Plan and Key Indicators by functional areas to support Key Strategies and short- and long-term goals • Development of Critical Actions and inclusion in KRA’s (Key Results Areas) of all salaried stakeholders • Distribution of Financial Goals book and updating of results charts to include monthly goals for year

Application Summary 7

In 1997, the Business Team developed SFF 2005 (replacing SFF 2000). SFF 2005 provides the company with the vision of what SFF will look like in 2005. This vision provides a framework for all stakeholders to develop congruent planning/direction that is reflected in our annual Business Plan and Operating Plan.

Specific 3-5 year strategies have been established to meet the objectives and goals of SFF 2005. The 5- year Strategic Plan documents each function’s Strategic Intent, Milestones (short- and long-term goals), and Critical Actions Strategies for SFF. Each key area of our business is aligned with each other, through agreement by BT members on Milestones, and has one or more BT member(s) responsible for accomplishment of the established Milestones. We believe executing our strategies to achieve our milestones will fulfill our Mission and Core Purpose. The evaluation of options to meet our long-term goals is done through open discussions and analysis of potential outcomes.

By analyzing each input area and projecting the performance required to attain SFF's goals, gaps are identified and specific process improvement

strategies are implemented.

The strategic planning process is evaluated each year by the BT. The effectiveness of the strategy development process is evaluated based on results such as SFF’s ability to meet short-term action plans. Strengths and opportunities for improvement in the planning process are identified and incorporated into

the planning cycle for the following year. This is facilitated by the Quality Process Facilitator.

Strategy Deployment The Business Plan is the collection point for all inputs. After the development of the Key Strategies and the Financial Plan, the Operating Plan (critical actions), is developed by the BT to support Key Strategies.

SFF’s strategies are incorporated into the SFF Operating Plan which is divided into functional areas. Within each functional area, Critical Actions, Person(s) Responsible, End Results, and Measurements are defined and coordinated with other areas to support specific Key Strategies. The Operating Plan is the basis for writing our KRA’s

I N P U T S

Customer Needs and Expectations

Sunny Fresh Capabilities

Supplier Input and Capabilities

Trends in Egg Consumption

Trends in Egg Processing Industry

Competitive Research

Consumer Research

Human Resources Research

Domestic / International Markets

Stakeholder Needs and Expectations

Community Needs / Public Concerns

Core Purpose, Core Values, Mission

Business Plan and Budget

Key Strategies

Formal Quarterly Review

Critical Actions Inclusion in KRA’s

Operating Plan, Key Indicators

Financial Plan

Sunny Fresh 2005

Application Summary 8

(Key Results Areas of the Performance Management Process). These KRA’s throughout the organization cascade using SFF organizational structure. KRA’s at all levels of the organization can be linked to applicable areas of SFF Operating Plan. This assures conformance to business objectives and goals and alignment with Key Business Drivers.

Resources are allocated by the MT as a part of the yearly Business Plan. Resource allocation (including skills) is balanced based on supporting our Core Values, the best return based on our core competencies and competitive advantages, and the needs of our customers.

The BT is responsible for ensuring SFF strategies, action plans, and performance measures are communicated throughout the organization. Communication to SFF stakeholders is accomplished through deployment into KRA’s and departmental goals, recognition meetings, departmental meetings, the Eggceptional News, distribution of the Key Indicator Summary, and the posting of Key Indicator Charts throughout the facilities. Deployment is measured through group and one-on-one discussions and via the Employee Survey.

Customer "Business Reviews" and other customer and supplier presentations are used to communicate specific SFF short-term and long-term goals and plans to customers and key suppliers. These presentations include demonstrations of alignment of SFF Key Strategies and Action Plans to customers’ key strategies and value drivers.

The SFF Management Team evaluates the process by which plans are deployed throughout the organization. This team identifies strengths of the process and areas for improvement, which are incorporated into the next year's strategic planning cycle.

3 Customer and Market Focus Customer and Market Knowledge

SFF uses the industry's approach to market segmentation. The egg further processing industry is well organized, with details regarding each category provided by the national and international egg associations. Within the egg further processing industry, there are three distinct categories:

· Value-added · Dried · Commodity (bulk)

SFF’s MT made a strategic decision in 1989 to focus our efforts and resources on the value-added

category. Through our Core Purpose, we only target markets where we can address their value drivers by creating product/service differentiation. These segments and customers then become the principle targets for SFF to fully understand their current and future needs. Within the value-added category, the following are the market segments:

• Foodservice · Quick Service Restaurants (QSR) · Schools · Retail Delicatessens · Family Dining · Institutional Food Service

• C-Stores (Convenience Stores) • Food Processors who incorporate Sunny

Fresh egg products into breakfast items

New targeted markets have been added as the needs of these segments change. For example, SFF was the first in the industry to develop an innovative program for schools. The USDA began purchasing commodity egg, in 30-pound pails or 5-pound cartons, for school systems with the advent of the school breakfast programs many years ago. However, due to changes in funding and in response to the need for more convenient packaging and nutritious food safe breakfast products, SFF established the “Breakfast ClubTM”. This innovative program enables the schools to ship their commodity egg to SFF for processing into breakfast egg entrees that students enjoy eating. Although competitors entered this segment the year after SFF, we continue to maintain a dominant share of the school reprocessing market.

The determination of current and future requirements is an on-going process in the egg further processing industry. Products have varying life cycles. Some products such as pasteurized liquid and frozen egg products are staples of the industry; others, geared toward the retail world, have shorter life cycles. Product development is a continuous process.

Current and future customer requirements are derived from customer specifications, active participation in the National Restaurant Association, International Foodservice Manufacturers Association, American Dietary Association, American School Foodservice Association, International Dairy Deli Bakery Association, and an awareness of consumer dietary trends.

Knowledge of food safety and food safety practices at the restaurant level gives SFF an advantage in the market place. SERVSAFE®, is a

Application Summary 9

training and certification program for foodservice personnel. All sales & marketing, technical, and quality assurance personnel are required to complete, successfully pass, and acquire certification in the SERVSAFE® course.

In addition, life cycles of products and customer preference are driven by a number of factors (e.g. age of population, nutritional trends (serum cholesterol), and food safety issues both within and outside of our industry).

Key information from current and potential customers and markets and changing needs are shared throughout the organization. Initial discussions by the MT determine how new product and service features align with our core competencies. If needed, more information is collected for a formal analysis of the benefits to the customer and SFF. Longer-term projects and potential needs are included in the “Inputs” part of the strategic planning process.

The egg further processing industry is continually changing. Emerging markets such as schools and C- stores (convenience stores) as well as acquisitions and changes in existing segments require the rapid accumulation of information about customers and their needs. Participation in egg further processing industry organizations, as well as our customers’ industry organizations is used to gather information regarding changes within these industries.

SFF’s evaluation and improvement of listening and learning strategies are tied to SFF’s Core Purpose, Core Values, and culture and behavior norms. Customer contact personnel interact with customers on an on-going basis to assure that their changing needs are met. Interaction of customer contact personnel at sales meetings (which includes sales representatives, customer service representatives, cost accountants, and the MT), as well as monthly conference calls, enables the sharing of successes and challenges in their specific areas.

Customer Satisfaction and Relationships Customer contact requirements and key access

mechanisms for customer contact are based on identification of customer needs and expectations. SFF provides an "800" phone number and web site for customer service, technical support, and quality assurance.

SFF's expectations for customer contact performance are rooted in our Core Values of Customer Focus, Quality, and Ethics. Customer

expectations are identified by key contacts and deployed to all stakeholders who are involved through meetings, e-mails, telephone contact, and written specifications.

In addition to dedicated sales representatives and customer service representatives, our integrated customer contact approach enables our customers to directly contact specific stakeholders within our organization. From purchasing, technical services, product development, operations, and R&D, to senior management, SFF provides resources to meet or exceed the expectations of our customers.

Partnering relationships are built as a result of SFF’s customer driven philosophy and to ensure congruency with our Core Purpose. Listening to customer needs and expectations as well as learning as much as possible about the food segment in which they compete, provides the basis for partnering relationships. Ethical conduct, quality products and services, assured supply, and an internal support staff to deal with questions from all levels of the customer’s organization are key to maintaining customer partnerships. Relationships with staff at all levels of the organization ensure that all customers’ needs and expectations are identified. This integrated customer contact process has been developed with several of SFF's key customers.

SFF monitors customer satisfaction and dissatisfaction through the use of an internally generated survey that is correlated to customer claims. This correlation formed the basis for the customer claims data to be used as an "indicator" of customer satisfaction and dissatisfaction.

In addition, SFF receives formal scorecards from many of its customers. Audit scores and feedback reports from customer audits are used to improve processes and to improve customer satisfaction.

4 Information and Analysis Measurement of Organizational Performance

Data are selected based on its ability to support key processes, key performance indicators, customer behavior, and key initiatives, strategies, and action plans.

The main types of information and data are associated with the Key Business Drivers and the Key Strategies of the Business Plan. This information and data (including Key Indicators) are charted and analyzed for trends, variation, and

Application Summary 10

progress to goal on an established schedule.

Data are collected and analyzed by respective functional groups. Based on user need, daily, weekly, monthly, quarterly, or yearly reports are generated. Additional data may be collected as changes in business, products, or processes occur. The goal of all process and service measurements is to optimize processes while maintaining superior quality and customer service.

Primary criteria for seeking sources of appropriate comparative information and data is to select organizations that hold similar core values or by using systems which take an objective view of organizational health (Value Based Management).

Needs and priorities for selecting benchmark and comparative data are to select companies that are most similar to our business, have the greatest impact on our business, provide a means to assess our performance, evaluate the effects of improvement efforts, and set goals.

Within the food industry, specifically the egg further processing industry, competitive benchmarking is very difficult to obtain. We have therefore developed a process to benchmark between our facilities. SFF uses Statistical Process Control, reducing variation, and process optimization in areas of our business where benchmark data are unavailable.

The Management and Business Teams review types of data that are used for benchmarking. Benchmarking enables SFF to document its improvements over time and set stretch goals for the future.

The egg further processing industry continues to increase in competitiveness, and as business conditions warrant, data are collected to accommodate specific needs. Resources, both human and physical, are allocated to assure SFF's ability to meet new information management challenges. The evaluation and improvement of information and data management is a continuous process.

SFF uses cross-functional teams to evaluate and improve the process of data analysis. This approach to looking at ways to improve SFF's data analyses has led to the use of databases, linked files, regression analyses, and specific types of charts which allows ease of interpretation. User groups assess the ways data and information are acquired and how they are presented. Usability, timeliness, and accuracy are primary focuses of these assessments.

I/T (Information Technology) Systems are developed and improved with input from cross- functional teams. Business requirements, user requirements, customer and supplier requirements, ease of data access, and timeliness of the data are a few of the basic types of information reviewed by the teams. Flowcharting the processes of data collection through data use and validation has ensured the needs of all users are met and appropriate resources allocated.

Analysis of Organizational Performance Each member of the Management Team is

responsible for the performance of a key area of the business. Formal weekly, monthly, quarterly, and yearly reviews of company performance are conducted to review progress relative to goals, plans, and changing business needs. As data are analyzed and charts are updated, any adverse trends are analyzed for root causes. Areas for improvement are prioritized, resources allocated, and deployed throughout the organization via Management Team members through the organizational structure. Organizational capabilities, human resources and facilities are evaluated and improved as customer needs and requirements change. As appropriate, suppliers and those customers with whom SFF has formed partnering relationships are included in the improvement process.

SFF's sustained growth over the past 10 years, has necessitated systematic reviews to refine the analysis of and use of the business unit's data, as well as enhance the processes used to identify and improve the types of data collected. Functional groups, cross- functional teams, or individual users perform these reviews. Data analysis skills are taught to the stakeholders generating the data to facilitate analysis of trends and shifts in performance. This in turn has led to innovative ideas from the stakeholders on how other data can be better managed. Examples include the use of databases for customer complaints, product samples and literature, customer and employee survey information, and human resource data. Shared computer drives and linked computer files enable data analysis charts to be updated as results data for day-to-day operational measures are entered into the system.

Yearly Baldrige-based assessments are also used to assess the overall health of our organization. These yearly assessments enable SFF to continuously improve business processes as we progress to our strategic objectives.

Application Summary 11

Results of organizational level data are linked to work groups and functional-level operations through the distribution of the Key Indicator Report, Key Indicator Charts, and the Key Indicator Summary. This access of data and information at all levels of the organization supports an environment that is based on factual decision making, utilizing analysis and review of key company data.

SFF’s organizational results are also linked to functional level operations by the use of the Performance Management Process. Key Results Areas of individual PMP’s are linked to SFF Operating Plan. As a result, progress toward completion of individual and departmental KRA objectives is reflected in organizational results.

Statistical analyses of data and data sets and the use of statistical process control (SPC) have enabled SFF to make fact-based decision real time. Examples of areas where SPC is used real time are the analyses of product microbiological results and operation’s functions such as weight control and product attributes.

Performance data from all parts of the organization are integrated and analyzed to assess performance in key areas. Measures support organizational performance reviews, strategic plans, and action plans.

5 Human Resource Focus Work Systems

SFF’s approach to Human Resource focus is derived from our Core Values and Strategic Planning Process. Work systems are designed to emphasize safety, quality, compensation and recognition, and stakeholder development in support of individual development and SFF’s long-term goals.

From the Management Team to each department and shift, work systems are designed to facilitate optimum efficiencies, productivity, and cooperation by all departments enabling all stakeholders to achieve their maximum potential.

BT members work together, on an organizational level, to devise work systems that best meet our customers’ and SFF’s expectations. This team approach ensures consistency of procedures, products, and services throughout the organization, rapid responses to the changes in marketplace and requirements, as well as providing information systems, education, and appropriate training to ensure that the information flow supports job and work designs.

Twenty-minute rotation schedules throughout production processes ensures that team members understand and can respond to product quality issues at any stage of the process. It also ensures that team members understand their internal customer in the production process. Line operators and crew leaders provide hands-on leadership to facilitate this process and provide a higher level of problem solving. This enables stakeholders to be preventative rather than reactive in their approach to meeting customer requirements – each and every time.

While the egg further processing industry, under USDA-FSIS regulations, must follow specific procedures in production areas, stakeholder input as related to their work areas, is gained through Critical Task Reviews, discussions with management, cross- functional teams, departmental meetings, the employee surveys, and the use of OFI (Opportunity for Improvement) Boards located throughout the facilities. Stakeholder input is analyzed by respective BT members to improve work systems and to support SFF strategic objectives

Many of our work systems designs are unique to the industry: • Ramp-in: Stakeholders are put on a “ramp-in” (work hardening) schedule upon hiring – they are only allowed to work for a specified number of hours daily during the ramp-in process. This practice conditions stakeholders and minimizes potential for repetitive stress injuries (RSI’s). • Rotation System: Each production department is organized into specific work or task areas. Every 20 minutes, stakeholders rotate to another station. This practice has several advantages: 1. Minimizes RSI’s 2. Fights boredom 3. Reinforces the Quality Process: everyone knows

their internal customer and takes pride in the quality of their work.

4. Learning system Sunny Fresh has led the industry with a rotation

program since 1990. Developed recently, OSHA standards will mirror our rotation system. In addition, during the design stages of process improvement or new equipment evaluation, the Environmental, Health, and Safety Coordinator and stakeholders in the production area work closely with the engineers and project leaders to assure ergonomic evaluations and Critical Task Reviews are completed.

SFF utilizes the “Buddy” system. New stakeholders are matched with high performing,

Application Summary 12

experienced stakeholders who serve as role models for operational excellence and behavioral competencies. SFF encourages stakeholder development/learning by offering employee reimbursement for stakeholders pursuing additional external education.

New stakeholders receive a 30-day and 90-day review to ensure they are on-track in job performance and to determine if they need additional resources to help them meet high performance expectations. Job rotation, cross-training, redesign of work and equipment layout, and cross-functional work teams encourage a transfer of knowledge and learning increasing flexibility, cooperation, and rapid response. Changes in customer requirements or operational requirements are reviewed with stakeholders during departmental meetings.

SFF's approach to developing and maintaining a work environment conducive to the well-being and development of all stakeholders is to give stakeholders the skills and tools to succeed in their jobs thereby, supporting the success of SFF. We have aligned department and individual goals with strategic objectives to promote an environment of high performance.

The SFF Performance Management Process (PMP) is an on-going process of setting performance expectations, coaching, and reviewing performance. The PMP process is a written record of performance expectations that are developed at the beginning of the performance period between stakeholders and their supervisor and serve as a “living” document to be referenced and revised. Performance planning inputs are Key Results Areas (KRA’s), Behavioral Competencies, and Skill Development. Sources of input for performance plans are SFF Key Strategies and Operating Plan, job descriptions, direct report feedback, and previous year’s performance review.

Effective communication is accomplished through meetings, conference calls, e-mail, postings, publications in the Eggceptional News, and other discussions. Team participation also fosters effective communication and sharing of skills and knowledge, such as Quality Teams (such as Recognition and Awareness), corrective action teams, project teams, and departmental teams. This level of stakeholder participation on teams also reflected positively in the Employee Survey in the areas of Work Environment and Commitment to the Quality Improvement Process.

SFF’s Core Values of stakeholder focus, safety,

and ethics ensure that our actions and decisions are based on fair work practices as we perform our daily functions and how we hire and deal every day with our fellow stakeholders.

Employee Education, Training, and Development

Stakeholder focus is one of our Core Values, and

as such, development of current and future stakeholders is an integral part of achieving SFF long-term goals. Training is linked to the Operating Plan as a key element of achieving the goals of SFF and to assure allocation of resources and time. Training also is key to the career advancement of stakeholders through IDP’s (Individual Development Plans), KRA’s, and cross-training.

Education and training are linked to the strategies of the organization through the strategic planning process and strategies and are developed to meet the operational, administrative, and technical needs of each functional area. Education and training are based on specific competencies required for each position. These competencies are included in performance reviews or as a part of organizational or operational requirements.

New stakeholder orientation includes training by in-house trainers in company policies and procedures,

Key Strategies Operating Plan

Min-year Progress Update Multiple Sourcesof Feedback

Input to Career Development

Process

Input to Pay Process

Skill Development

Performance Management Process

Application Summary 13

safety, food safety/hygiene, and quality. On-the-job training is given by supervisors, line operators, and the new stakeholder's "Buddy".

Training needs assessments are performed by various functional groups, including management, human resources, and steering committees, and these assessments are coordinated through plant or department management assuring deployment to all who need it. Assessments are made based on job or process requirements, process improvements, regulatory compliance (i.e. United States Department of Agriculture guidelines), or SFF management focus (e.g. HACCP training).

SFF measures the effectiveness of its training in increased efficiencies, yield, or improved product quality rather than in hours in training or dollars- spent on training. SPC training is an example of how training directly affects efficiencies and yields.

Specific skills are reinforced on the job through: observation and encouragement by supervisors, Food Safety and GMP audits, performance appraisals, skills tests, incentive programs, the “buddy” system, and 30-, 60-, and 90-day and yearly reviews of safety procedures. In addition, training is also reinforced through recognition of team accomplishments, i.e. exceeding departmental performance standards.

Employee Well-being and Satisfaction As SFF grew in quantity of product sold, our

number of stakeholders increased. This growth poses significant challenges due to the need for additional and more highly skilled stakeholders, low unemployment rates in the communities surrounding our plants, and good regional economic conditions. Maintaining a safe and healthful work environment that supports employee well being, satisfaction, and motivation is paramount to maintaining a stable workforce.

Stakeholder input, used to identify improvements in the work environment, is sought through the use of Safety Committees, Ergonomics Committee, OFI Boards, 1:1 contact with stakeholders, and the Hazard Hotline. Input from stakeholders at all levels of the organization is used to write the annual Environmental, Health, and Safety Plan. This document details: Monthly Safety Meetings, Stakeholder Involvement, Environmental Goals/Objectives, Health and Safety Goals/Objectives (Monticello, Panora, Lake Odessa, Drivers, Administration), Incentives, and

Recognition.

Contractor health and safety is as important as SFF stakeholder health and safety. Contractor work- related goals are established based on past statistics. The goal is to continue zero incidents for contractor workers. Any contract worker incident is investigated according to SFF incident investigation policy. The Contractor Program includes: Pre-bid Qualification, Pre-project Meeting/Orientation, Daily Inspections, Weekly Safety Meetings, Post Project Review, and Annual Evaluation.

Safety is a "way of life" at SFF. All stakeholders are acutely aware of the need to work safely. From orientation to monthly departmental meetings to the yearly Safety Dinner, safety is emphasized and safe work is continually rewarded. Safety Incentive Programs (part of yearly Safety Plan) encourage safe work practices and an awareness of overall company results.

The diversity of our communities is reflected in our workforce – in fact, we have had continued to see increases in the number of minority stakeholders over the past three years. Currently, minorities represent 12.9% of our workforce: Asian – 3.7%, black – 0.8 %, Hispanic – 6.8%, Native American Indian – 1.6%. To address the training and developmental needs of our non-English speaking stakeholders, SFF has instituted programs translating training materials into Spanish and has used interpreters to ensure understanding.

Orientation and safety training utilize literature in Spanish, and interpreters are used whenever needed. SFF sponsors and encourages English as a Second Language classes. These classes are available to all stakeholders who wish to participate and provided during work hours.

Key factors determining stakeholder well-being, satisfaction, and motivation are gathered on an on- going basis through a variety of sources. These sources include the Employee Satisfaction Survey, performance reviews, exit interviews, absenteeism, turnover data, and one-on-one discussions with stakeholders. Data from these sources serve as input in the strategic planning process.

The eight areas of the survey are: Customer Focus, Work Environment, Commitment to the Quality Improvement Process, Communication, Leadership, Shaping Excellence, and Benefits (added in 1998).

Data are segmented and analyzed by plant and

Application Summary 14

stakeholder group which allows for "tailoring" of initiatives by management at each plant. All survey results are tabulated and compared to previous years’ data.

Information for the evaluation of Human Resource planning and practices comes from a variety of sources including data from turnover, absenteeism, safety, and workers' compensation costs. Indirect input comes from exit interviews, 30- day orientation reviews, and one-on-one discussions with all stakeholders during open enrollment for benefits each November.

Human Resource plans are evaluated for potential improvement based on the current business climate, demographic data, and the short-term and long-term goals of SFF. The addition of Key Indicators and inclusion of Operation Plan Critical Actions in KRA’s provide areas to assess the overall effectiveness of Human Resource plans. Since Human Resource plans are formulated from the business unit's strategic and business directions, and is included in the Operating Plan, alignment is assured and formally reviewed on a quarterly basis.

6 Process Management Product and Service Processes

The New Product Development Team works with customers, Sales & Marketing, Operations, R&D, suppliers, and Accounting to design and introduce new and/or improved products and services. The Design Process utilizes the Product Development Flowchart.

New and/or improved products and services fall into four categories: • Customer Driven New Products • Concept Driven New Products • Consumer or Marketplace Driven

New Products • Customer or Marketplace Driven

Improved Products

Inputs into the product development process are customer requirements, changes in customer product specifications, customer and market research, research on new technologies or processing systems, and innovative ideas generated by customers and stakeholders.

Innovation is encouraged through a customer driven, rather than through a production driven, mindset. Innovation in operations focuses on optimizing processes to maximize yields and

efficiencies, reducing variation, and creating value- added products that fulfill customer requirements. Many of our production lines are unique in the egg further processing industry. Innovation in services provided by SFF also focuses on customer requirements and enhancing customer relationships.

SFF’s customer driven rather than production driven focus enables rapid response to changes in customer/market requirements. Our integrated customer contact approach brings changes in requirements back to the cross-functional team very quickly. Changes in customer or market requirements and changes in customer product specifications are brought into the start of the product development process

Notification to appropriate departments is a critical step to assure a trouble-free launch of a new or improved product. QA/Food Safety works closely with New Product Development (NPD) to establish a HACCP program for the product. NPD works with Operations to assure a smooth transition from "test runs" to production.

Upon completion of the New Product Development Process, the following documentation will have been completed with formal approvals given:

• Cost Analyses • HACCP plan • QC Check Lists • Product Specification Sheet • Standard Operating Procedures (SOP’s) • Initial SPC charts (when applicable) • Label approvals The above documentation assures that the

products, delivery, and service have been designed to prevent non-conformances in production and delivery processes.

Product released for distribution is transported by SFF truck, contract trucking, or by customer pickup. Regardless of the shipping method used, specific requirements for trucks and trailers must be met before product is loaded. These are a part of HACCP compliance.

All manufacturing processes follow Good Manufacturing Practices (GMP’s) and are under continuous USDA inspection and FDA guidelines.

Key performance requirements are met through Good Manufacturing Practices (GMP’s), Hazard Analysis and Critical Control Point (HACCP) plans, Standard Operating Procedures (SOP’s), and USDA or FDA guidelines, all of which have specific checks

Application Summary 15

during the production process.

Key measurements and requirements are determined during the product development process. Input and approval from customers (product specifications and product performance), USDA requirements, and SFF internal requirements (food safety and GMP compliance) are established before a product is considered for test markets or for "salable" product. Each production line has specific product and process requirements.

As SFF brought on new high volume production lines in 1995, processes were optimized using statistical process control. Processes are considered “optimized” when there is no benefit (in product quality, operational costs, or customer satisfaction ) associated with improvement.

The results charts are presented in a statistical format. No comparison data is presented because comparison data within the industry is not available and comparison data outside the industry does not apply. SFF benchmarks its two plants against each other, thereby creating an environment for continuous improvement.

Key indicators of quality were selected as indicators to predict customer satisfaction and operational key indicators were selected as those having the largest impact on the bottom line of the company. These indicators are also important to our customers who have reported fewer claims.

The standardization and management of SOP’s (Standard Operating Procedures) enables SFF to implement improvements in a timely and efficient manner.

Self-Audits, Cargill Food Safety HACCP Audits, and external audits document conformance to processes and procedures and indicate areas for improvement. In addition, many of our customers audit our plants. The results of these audits are used in our continuous improvement process.

As efficiencies and yields improve and as the market becomes increasingly competitive, cost continues to be an important factor in customer purchasing decisions. Continuous improvement in process management enables SFF to remain competitive in strategically selected markets.

Support Processes Key support processes include Accounting,

Purchasing, Sales & Marketing, Information Technology (I/T), Distribution, Research and

Development (R&D), and Laboratories. An MT member is responsible for each support process. This support process leadership ensures alignment with strategic plans, performance reviews, and design and delivery processes.

Support processes, vital to the success of SFF Foods, are treated in the same manner as design of processes and products. Cross-functional or departmental teams identify internal and external customer requirements, design support process system (suppliers and customers may be included in the process), test process, evaluate results – if acceptable use process – if not, redesign to assure conformance to requirements and support of overall company performance.

All support processes are centralized at the Monticello facility, except for Laboratories. Each production facility maintains its own laboratory to assure the most rapid turn-around time for test results.

Since each support process has representation on the MT, changes in external and internal customer requirements can be integrated quickly into the support process. Changes in internal customer requirements are made in much the same way. SFF’s use of cross-functional teams to meet customer requirements ensures the tranfer of knowledge throughout the organization.

Supplier and Partnering Processes SFF's major purchases fall into these categories: • Liquid Eggs (whole eggs, egg whites, egg yolks) • Graded Shell Eggs (for hard-cooked facility) • Meats and cheeses • Breads • Packaging materials

Supplier and partnering processes are designed to mutually benefit SFF and the supplier. Purchasing, New Product Development, Operations, and Quality Assurance work closely with suppliers to maintain a consistent supply of high quality ingredients used in SFF products.

SFF uses a Supply Quality Control Program and a Supplier Certification Process to ensure that performance requirements are met. The written specifications for each ingredient are shared with suppliers. Only suppliers who can demonstrate conformance to requirements are considered as potential suppliers.

Purchasing and Quality Assurance administer the Supplier QC Program. Only products from those

Application Summary 16

companies on the Approved Supplier lists can be used in regular production. The main elements of this program are: • Approved Supplier Lists • Formalized policy for supplier approval • Written specifications for each ingredient • Written QC receiving policy checklist • Formal sampling program for receiving • Computer system that retains ingredients until

released by QA • Formal supplier complaint system

The Supply QC Program enables SFF to minimize costs associated with inspection and testing of ingredients. Ingredients that are accompanied by appropriate documentation are released for use in production. Ingredients that do not have appropriate documentation are retained until appropriate test results and documentation are obtained. Suppliers are then contacted and corrective action is implemented to assure compliance with Supply QC programs.

All ingredients and packaging materials used in production must comply with the specifications. Ingredients that do not meet specification are recorded on Supplier Claim forms that are filled out by Quality Assurance and forwarded to Purchasing and shared with suppliers on an on-going basis.

Liquid eggs are transported to SFF from breaking facilities via USDA sealed, insulated tankers. Upon arrival at SFF, USDA inspectors break the seals and each tanker is analyzed for organoleptic, microbiological, and physical characteristics. To assure the quality of the egg used in our products, SFF will continue to test each an every tanker received. All test results are entered in the Egg Supplier Database. On a weekly basis, Purchasing sends the test results from the previous week's loads to our egg suppliers.

SFF’s Technical Services Manager works with suppliers to resolve supplier quality issues. For example, we have assisted our egg suppliers in establishing or improving their in-house testing laboratories. The Monticello Laboratory Supervisor has trained suppliers in USDA approved methodology and recommended equipment to best serve their needs, and as a consequence, the needs of SFF.

SFF's technical and operational personnel are also available for use as a resource for suppliers. Recently a supplier noticed adverse trends in their microbiological assays. SFF personnel, upon

inspection of the plant, were able to identify potential causes and recommend corrective action. The recommendations were followed and the microbiological assay results returned to normal levels.

SFF has required all egg suppliers to have a functioning HACCP program. SFF’s Technical Services Manager ensures all key liquid egg suppliers are audited for HACCP compliance on a yearly basis. These formal audits include compliance to programs, inspection of facilities, and a written feedback report with strengths and opportunities for improvement.

SFF has frequent communications with all of its suppliers and has formed strong relationships with our key suppliers. Industry changes, as well as changes in customer and SFF requirements, are thoroughly communicated with our suppliers on an on-going basis by our procurement department. These strong relationships have benefited SFF and our key suppliers. In a recent egg industry publication, all of our larger egg suppliers moved up on the “top 10” egg breakers in the U.S. list – one made the list for the first time.

7 Business Results Customer Focused Results Supplier Awards and Cargill Customer Focus Recognition: Over the years, SFF has received many prestigious supplier awards from our customers. These awards are an indicator of customer satisfaction. In addition, Cargill has recognized SFF for its focus on customer solutions and has shared SFF’s practices throughout Cargill.

1998 Cargill Customer Focus Recognition Divisional – Technical Achiever’s Award

Grilled Pattie Line Team Worldwide – Technical Achiever’s Award

Risk Management Team

Application Summary 17

Better

Better Core Customer Claims Comparison to Customer Satisfaction Survey Data

74.46

93.38

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00

94-95 95-96 96-97 97-98 98-99 99-00 TD

N um

b er

0 20 40 60 80 100 120

P er

ce nt

Claims per Million Pounds Produced Overall Percent Satisfied Six Sigma

100

Product Performance

Product Freshness

As Expected/ On Tme

Technical Support

Customer Service Access

Customer Satisfaction Survey Results Percent Satisfied or Very Satisfied

1995 1999

Partnering Relationships: The following chart demonstrates SFF’s abilities to form partnering relationships with key customers.

Core Customer Claims: SFF correlated the results of its Customer Satisfaction Surveys with Customer Claims. The following chart demonstrates improvements in customer claims correlated with overall customer satisfaction. Because of the number of products produced and the variation in case sizes, claims are indexed to the number of pounds produced. Core Business Claims exclude those high volume products (see next chart) produced for specific customers. In addition, all claims are compared to the number of claims per one million pounds produced (Six Sigma).

Customer Satisfaction: SFF administered a Customer Satisfaction Survey in 1999 to verify the correlation between an improvement in customer claims and customer satisfaction, as well as a decrease in customer dissatisfaction. Key product and service requirements are compared from 1995 to 1999.

Financial and Market Results After Tax Profit: SFF measures its financial performance in a variety of ways. A/T Profit is measured on a weekly basis, and compared against goal and previous year.

Number of Partnering Relationships Cumulative

94-95 95-96 96-97 97-98 98-99 99-00 TD

After Tax Profit Cumulative Percent Increase

0 20 40 60 80

100 120 140 160

95-96 96-97 97-98 98-99

P er

ce nt

SFF Actual Goal

Application Summary 18

Value Based Management (VBM) is used to assess the overall health of the organization through a series of measures that focus on creating value for our stakeholders. VBM has several advantages over traditional measures. VBM: • is used by 50% of Fortune 500 companies • helps determine which strategic options or plans create value and how much • encourages appropriate reinvestment and growth • tracks the marketplace better than other measures • allows managers to compare performance against competition

Value Based Management Comparison: VBM (Value Based Management) has a series of measures that judge the performance of a company. Sunny Fresh compares itself to those determined to be Values Leaders in North America.

ROGI (Return on Gross Investment) measures operating performance by comparing ROGI cash flow to gross investment. ROGI Spreads are the difference between an absolute number and its hurdle value.

U.S. Share of Market: Sunny Fresh’s market performance is based on SOM (Share of Market) and Total Pounds Sold, as well as performance in new markets such as schools.

Return on Gross Investment Cumulative Increases from '94-95 Baseline

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50

95-96 96-97 97-98 98-99 99-00 YTD

M ul

tip lie

Sunny Fresh Goal

Better

U.S. Egg Further Processing Industry SOM (Share of Market)

20%

40%

60%

80%

100%

94-95 95-96 96-97 97-98 98-99 2003*

Sunny Fresh All Other * = Projected

Sample of Value Leaders in North America

Company NameCompany NameCompany NameCompany Name Sales GrowthSales GrowthSales GrowthSales Growth

Cardinal Health 44.87%

Intel 33.65%

Microsoft 30.19%

Sunny Fresh Foods 25.08% Walt Disney 23.96%

Hewlett-Packard 20.89%

Merck & Co. 19.06%

Southwest Airlines 16.17%

Mirage Resorts 13.68%

Herm an Miller 13.24%

5-Year Average Annual Performance5-Year Average Annual Performance5-Year Average Annual Performance5-Year Average Annual Performance Ranking Basis Sales GrowthRanking Basis Sales GrowthRanking Basis Sales GrowthRanking Basis Sales Growth

VBM

Source: Value Based Marketing

Application Summary 19

Total Pounds Sold: Sunny Fresh has experienced increases in market share for the past five years. SFF currently supplies four of the top 10 further processed food service egg users with 76% of their total pounds.

Human Resources Results Absenteeism: Absenteeism is reported over time and against goal. Sunny Fresh has instituted several programs over the years to reduce absenteeism and currently is better than industry average.

Safety Statistics: The Sunny Fresh Safety Index has consistently improved over the years.

Deployment of Core Values: The Employee Survey demonstrates stakeholder perceptions and measures of deployment of processes throughout the organization. Deployment of Core Purpose, Core Values, and Strategies:

Percent that Agree or Strongly Agree: Question: 1996 1997 1998 1999 I understand how my job affects the customer.

96.7 95.9 98.1 98.0

I understand the goals my company is trying to achieve.

78.0 89.9 93.7 96.1

Management and employees at my location feel that safety is a high priority area.

83.4 90.3 92.5 93.6

Management at my location communicates the importance of continuously satisfying the customer

77.0 88.8 91.2 93.3

Cumulative Perc ent Inc rease in Volume Sold vs. Baseline 93-94

100

120

140

160

94-95 95-96 96-97 97-98 98-99

P er

ce nt

SFF Actual Goal

Better

Average Monthly Absenteeism

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Panora Monticello Lake Odessa

94-95 95-96 96-97 97-98 . 98-99 Goal 98-99 Benchmark

Better

Safety Statistics Safety Index Comparisons

94-95 95-96 96-97 97-98 98-99

US Sunny Fresh Benchmark SF Goal

Better

Application Summary 20

Employee Survey: Overall results of the Employee Survey have improved over the years.

Percent that Agree or Strongly Agree: Survey Category: 1996 1997 1998 1999 Customer Focus 65.45 79.45 86.24 88.54 Work Environment 72.94 78.96 79.97 79.10 Commitment to Quality Improvement Process

67.84 81.60 83.54 85.59

Communication 51.32 69.32 74.30 75.14 Leadership 52.46 64.24 70.34 71.32 Shaping Excellence 57.47 77.32 79.47 78.86

Organizational Results Supplier/Partnering Results Non-egg Supplier Complaints: Due to the nature of the egg further processing industry, Sunny Fresh has been unable to obtain comparison data for egg suppliers. Non-egg suppliers provide such things as packaging, bread, milk powder, and citric acid. Non- egg supplier claims are indexed to 1,000,000 pounds produced.

ASI Audit Scores: overall measures of the effectiveness of Sunny Fresh’s Operational Management are the scores received from ASI (American Sanitation Institute) audits. This independent auditing group performs 3rd party audits of food manufacturing plants. Only 15% of all plants audited by ASI score over 850 points and the highest score ever given was 989.

Operational Results Line efficiencies are charted for each plant and each machine. Product mix and length of runs have an effect on line efficience. In addtion, yield has a significant impact on costs. The following chart is an example of reduction in variation and improved yield over time.

ASI Audit Scores

1994 1995 1996 1997 1998 1999 750

800

850

900

950

1,000

Panora Monticello Lake Odessa Highest Score ever

given by ASI

Excellent

Good

Fair

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1995 1996 1997 1998 1999 TD

N um

be r

Number Goal Six Sigma

Better

Non-egg Supplier Claims per 1,000,000 Pounds

Produced

Yields Fiscal Year Key Indicators

0 10

20 30

40 50

60 70

80 90

100 110

120 130

140 150

160 170

95 96 97 98 99

100 101 102

Week Number

P er

ce nt

UCL LCL Average LSL

1st half FY'96-97 2nd half

FY'96-97 FY'97-98 FY'98-99

Cpk= 3.64

Cpk Goal = Greater than 1.33

FY'99-00 TD

Sunny_Fresh_Foods_Application_Summary.pdf

Organization Profile Organization Description: Sunny Fresh Foods, Inc.

(SFF), headquartered in Monticello, MN, is a manufac- turer within the egg further processing industry, of value-added egg-based food products. SFF primarily serves the food service industry. SFF is a wholly owned subsidiary of Cargill, Inc. In 1985, Cargill purchased the Wrightco Company, located in Monticello, MN, and changed its name to Sunny Fresh Foods. SFF has posi- tioned itself as a specialist in the production of value- added egg-based products. The acquisition in 1989 of Sunnytime, Inc., in Panora, Iowa, brought new value- added products, customers, facilities, and experienced personnel to the business. In 1994, SFF acquired an egg further processing plant in Lake Odessa, MI. In 2000, SFF constructed a plant in Mason City, IA. In 2005, SFF acquired a facility from Cargill in Big Lake, MN. Since SFF received its first MBNQA in 1999, it has grown value for its customers and all stakeholders through its focus on continuous improvement and per- formance excellence

Products and Services: SFF produces over 160 products and has a customer base of over 2000 through- out the United States. Products are produced under the Sunny Fresh brand and under private label for specific customers. Products include zero cholesterol and fat- free egg products, pre-cooked frozen and refrigerated entrees, precooked frozen scrambled and diced eggs, refrigerated and frozen liquid pasteurized eggs and scrambled egg mixes, and peeled hard-cooked eggs. Products are delivered to customers through specialty distributors, broadline distributors, or by direct delivery arranged by customers or by SFF. Services provided to

customers include technical support, product use assis- tance, menu and recipe development, product develop- ment, supply chain management, and vendor-managed inventory.

Organizational culture: SFF’s Core Purpose, Core Values, and Mission define its culture and are used by its leaders in establishing and communicating direction, and in reinforcing the alignment and integration of all SFF activities. SFF’s senior leaders comprise the Management Committee (MC). The MC established SFF’s Mission in 1992 to guide the organization with clear direction. Because Customer Focus and Stakeholder Focus are Core Values, the MC based the Mission Statement on the needs and expectations of SFF customers and suppliers, knowledge of the egg further processing industry, and knowledge of customers’ indus- tries.

The Business Leadership Team (BLT) established SFF’s Core Ideology — Core Purpose and Core Values. This Core Ideology does not change, regardless of changes in the market-place or business climate. The Core Purpose is SFF’s fundamental reason for being:

Core Values are timeless guiding principles that require no external justification; they have intrinsic value and importance to SFF stakeholders. They are a clear, concise set of values that are integrated through- out the business. Every aspect of the business can be linked to one or more of the Core Values:

Mission Statement “ Sunny Fresh Foods will be the preferred supplier of quality, value-added food products serving primarily

the foodservice industry. We will be a best-cost produc- er and a leader in developing and implementing inno-

vative products, processes, and services to meet the needs of an evolving global marketplace.”

Core Purpose To be the supplier of choice to our

customers worldwide

2 0 0 5 M a l c o l m B a l d r i g e N a t i o n a l Q u a l i t y Aw a r d

A p p l i c a t i o n S u m m a r y

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Core Values • Customer Focus • Safety (personal and food safety) • Quality (products, processes, services) • Stakeholder Focus •Ethics

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Employee Profile: SFF’s employees (called stake- holders) come primarily from the communities sur- rounding its plants. Stakeholders have diverse skill lev- els, educational back-grounds and work experiences.

Technologies, Equipment and Facilities: Sunny Fresh has production facilities in Monticello, MN, Panora, IA, Lake Odessa, MI, Mason City, IA, and Big Lake MN.

Principal types of equipment and technologies used are pasteurization, homogenization, extrusion cooking, steam and dry cooking, cryogenic and mechanical freez- ing. Packaging formats and environments include modi- fied atmosphere packaging (MAP).

Regulatory Environment: SFF facilities operate under USDA (U.S. Department of Agriculture) inspec- tion, FDA (Food and Drug Administration) require- ments, OSHA (Occupational Safety and Health Administration) and EPA (Environmental Protection Agency) regulations, and state and local statutes. Sunny Fresh’s senior leaders made a strategic decision in 1989 to lead the industry in quality and food safety. Continuous improvement throughout business processes, and the early implementation of assurance programs such as HACCP systems have enabled Sunny Fresh to exceed USDA and FDA requirements.

Organizational structure: As a subsidiary of Cargill, SFF is governed by Cargill policies, reporting requirements, functional accountabilities, and Cargill’s leadership structure. SFF’s governance system is value- based, and includes Cargill’s oversight of strategy and leadership, monitoring of performance, and ensuring compliance.

SFF is incorporated and functions as a distinct busi- ness unit, with a President. SFF’s President is account- able for all SFF activities, including the protection of stakeholder interests. The MC includes the President and his direct reports. Each area of SFF is represented by membership on the MC, which is responsible for all business activities including: financial results, budgets, employee relations, products and product mix, cus- tomers and customers’ business knowledge, industry knowledge, purchasing, corporate citizenship, and process improvement.

As with all Cargill companies, SFF operates under the Cargill Guiding Principles. Ethical conduct in busi- ness and professional interactions is stressed throughout SFF. Relationships with employees, customers, suppli- ers, the communities surrounding its facilities, and the business community follow the Cargill Guiding Principles.

Customers, market segments; relationships and requirements: Principle product users fall into several market segments in the food service industry, including

the Food Service Segment and Industrial Segment. Key product and service requirements of all SFF’s

customers include wholesome, food safe, refrigerated or frozen products, acceptable shelf life, assured product availability, supply chain security, and access to SFF’s technical support and Customer Service stakeholders.

SFF Sales and Customer Service representatives are the primary contact points for customers. Many mecha- nisms are used to communicate customer requirements and customer feedback to the SFF organization, and to relay SFF performance information back to customers.

Suppliers and supply chain requirements: SFF includes key suppliers in its value creation process by building partnering relationships. Relationships involve sharing of information regarding egg specifications and projected growth. SFF purchases liquid whole eggs, egg yolks, and egg whites and graded medium shell eggs. Other types of purchases include food ingredi- ents, packaging materials, and equipment.

Competitive environment: SFF’s current market is the United States. Factors affecting the egg further pro- cessing industry include the impacts of 9/11 on security, avian diseases in international markets, U.S. per capita egg consumption trends, the agricultural market econo- my, consumer health awareness, and issues related to food safety.

Performance Improvement: As Cargill implement- ed the Crosby philosophy in 1988, SFF’s senior leaders and key supervisors attended corporate training sessions. This group formed a formal quality improvement struc- ture and established a Quality Policy. SFF continues to use Crosby’s “Four Absolutes of Quality,” its Quality Policy, and Core Values as the foundations for its cus- tomer focus and the principles on which stakeholders focus as they continuously improve business process- es.

On an annual basis SFF uses Baldrige-based criteria to assess the effectiveness of business processes, performance improvement efforts, and the overall health of the organization

Organizational Learning: SFF promotes organizational learning

Quality Policy “Sunny Fresh Foods will safely provide our

internal and external customers with products and services that meet all requirements. Our company will represent quality to our customers, suppliers,

and ourselves, by doing it right the first time through Total Quality Management.”

as it communicates and guides organizational values,

direction, goals and performance. Learning approaches include the orga-

nizational structure and work systems that are designed to promote cross-business and

cross-functional knowledge and skill sharing. An integrated learning approach supports the phi-

losophy that “when SFF does well, everyone does well.”

1.0 Leadership 1.1a Vision and Values SFF’s Leadership System is the process by which the MC (SFF’s President, and his direct reports) balances the needs of all key stakeholders in establishing and communicating SFF’s Core Ideology (Core values, Core Purpose), and Mission, sets and communicates short- and long-term strategic direction and performance expectations, maintains controls for effective over-sight, monitors and guides performance, promotes stakeholder accountability, engagement and innovation, and evalu- ates and improves all business processes. By focusing the organization on its Core Purpose, Core Values and Mission, and by using the Strategic Planning Process (SPP), annual Business and Operating Plans, Key Indicators (KI’s), and the individual Performance Management Process (PMP), the Leadership System ensures the sustained alignment and integration of all business activities as SFF pursues its long term Vision.

(Step 2) Establish and Communicate Clear Values: SFF’s values and direction are focused on the needs and expectations of its customers, stakeholders (employees), suppliers, the communities in which it has facilities, the public, and Cargill (Leadership System Step 1). The MC considers alignment with the Core

Ideology and Mission in balancing the diverse needs and expectations of all key stakeholders as these needs and expectations are integrated with the strategic plan- ning process (Step 3). MC members are directly involved in deploying the Core Ideology and Mission to all key stakeholder groups.

Stakeholders (Employees): Department meetings are held with all stakeholders throughout SFF in which MC members communicate the annual business plan, reinforce the Core Values, Core Purpose, and Mission, capture concerns, and answer questions from stakehold- ers. MC members also reinforce the Mission, Core Purpose and Core Values by role modeling — “walking the talk” in day-to-day activities. Managers at all levels of the organization are responsible for communicating and reinforcing the Mission, Core Purpose, and Core Values to stakeholders. Communication takes many forms, and frequencies vary by method: discussions with new stakeholders during orientation, interactions during meetings, presentations during Continuous Improvement training which include SFF’s Core Ideology and the Four Absolutes of Quality, articles written by the President for The Eggceptional News (SFF’s internal newsletter), and bi-monthly Recognition Meetings held for all stakeholders.

Customers: Customer Focus and Quality are Core Values of SFF. “Conformance to Customer’s Requirements” is how Quality is defined; therefore, SFF’s approach to deploying its values to customers is to deepen relationships by continuously improving the alignment of business processes, competencies, and strategic goals with the needs of customers.

Suppliers: The Purchasing and Risk Manager com- municates SFF’s values, direction, and strategic objec- tives to key suppliers during the development of busi- ness relationships between organizations, and in defin- ing contracts. Values and expectations are also shared through ongoing supplier performance analysis and reporting.

Communities: Through dialogue with community leaders, focus groups of stakeholders who are communi- ty residents, participation in community organizations, and participation in community events at all sites, MC and BLT members take active roles in the communities in which SFF has facilities. This enables them to repre- sent and communicate values and gain knowledge of current and future requirements.

Cargill: SFF’s Governance Structure serves as the primary method by which SFF’s President and the MC maintain two-way contact with Cargill.

SFF’s key strategies align with its Core Values, Core Purpose, and Mission, and are linked by its balanced scorecard approach to business performance measure-

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Four Absolutes of Quality

1st Absolute of Quality Quality is defined as

Conformance to Customer’s Requirements

2nd Absolute of Quality The System for Improving Quality is Prevention

3rd Absolute of Quality The Performance Standard – Zero Defects, A commitment to conform to requirements

each and every time

4th Absolute of Quality The Measurement of Quality is the Price of Non-conformance

ment and review, and linked by its SPP to individual KRA’s (key results areas) through the PMP process.

Through ongoing personal contact with key cus- tomers, suppliers, stakeholders, communities, regulators, and Cargill, MC members capture feedback regarding the effectiveness of methods for deploying its vision and values. SFF uses community leader focus groups to assess the effectiveness of its methods for listening and sharing with its key communities. Feedback from all of these inputs is continuously used by the MC to evaluate the effectiveness of the Leadership System, and of indi- vidual actions in deploying SFF’s values and directions to all key stakeholders (Steps 6 and 7).

MC members create and systematically sustain an environment for legal and ethical behavior by deploying SFF’s Ethics Core Value. MC members create and sys- tematically sustain an environment for improvement, innovation, agility, and organizational and individual learning, through orientation and training programs, the alignment and integration of business, department, and individual performance objectives, business perform- ance reviews and progress updates of Key Indicators, the individual performance review process, SFF’s recog- nition programs, and by Continuously Improving.

SFF works to understand and meet customer require- ments – whether internal customers or external cus- tomers (Step 1). All stakeholders are trained in SFF’s Core Ideology, and in The Four Absolutes of Quality (Step 2). These concepts are used by all levels of man- agement to continuously reinforce the alignment of SFF’s direction, expectations, and strategic goals with its performance measurement balanced scorecard approach (Steps 3 and 4).

SFF leaders use the Performance Management Process (PMP) and ongoing and annual individual per- formance reviews to promote high-performance behav- iors amongst SFF stakeholders (Steps 3 and 6). These behaviors align with SFF’s Core Values and are linked with individual accountability, improvement, agility, learning, and innovation. The individual performance review process includes a skill development planning component for each stakeholder. Through formal recog- nition programs leaders encourage, reward, and sustain individual and organizational learning and agility, and the sharing of innovations and improvements (Step 6).

Another element in the creation of an environment that promotes a focus on organizational objectives, learning, improvement, agility, and innovation is the ongoing evaluation and improvement of the Leadership System itself. The annual stakeholder survey captures stakeholder feedback regarding individual learning and development, the organization’s environment for inno- vation and continuous improvement, the organization’s communication processes, stakeholder understanding of

SFF goals, and perceived support for change. MC members use survey feedback to assess the effectiveness of their leadership (Steps 6 and 7).

(Step 7) In Continuous Business Process Improvement, SFF evaluates its business processes yearly using Baldrige-based criteria. 1.1b Communication and Organizational Performance

Because MC members represent each functional area with-in SFF, it is through the management of their departments and functions that they provide the frame- work for alignment and for cascading communication, empowerment, recognition and motivation through the organizational structure, and for bringing stakeholder input into the Leadership System.

The MC uses the SPP to establish and communicate organizational direction and performance expectations. Through the SPP senior leaders empower and motivate the entire organization by developing long- and short- term strategies, time-lines and goals. From the annual Business Plan and key strategies, performance expecta- tions cascade via the Operating Plan (SFF’s integrated action plan) and its Critical Actions that link and align department/function and individual KRA assignments through the PMP process.

Because the MC uses a balanced scorecard approach to establish and align KI’s, ongoing performance reviews and the deployment of KI analyses (Leadership System Steps 4 and 5) serve to communicate and rein- force alignment of organizational direction and perform- ance expectations.

Two-way communication with individual stakehold- ers occurs through personal contact. SFF has an Open Door Policy that encourages any stakeholder to approach any MC member at any time to discuss any concern.

MC members are actively involved in SFF’s reward and recognition processes. MC members serve as role- models everyday by using behaviors and words that demonstrate the importance of customer focus, high per- formance, and of recognition and stakeholder focus in their interactions with stakeholders. MC members rein- force high performance and customer focus through informal practices such as holding department and busi- ness-wide recognition celebrations. MC members fur- ther reinforce high performance, customer focus, and empowerment through direct participation in formal recognition processes by submitting stakeholder nominations to various stakeholder awards, by attending and leading discussions at bi- monthly Recognition Meetings, and by attending and interacting with stake- holders at annual recognition events.

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SFF’s annual stakeholder survey captures feedback regarding the organization’s communication and recog- nition processes. This feedback is used by SFF and MC members to evaluate and refine both formal recognition processes and the ways in which MC members are involved.

In the Leadership System Step 3 (Set Direction), through their direct involvement, MC members ensure that the SPP balances and creates value for all key stakeholders. Step 3 aligns and synthesizes the needs of key stakeholders (Step 1), and the organization’s Core Ideology and Mission (Step 2). The SPP involves the MC, BLT, and stakeholders at many levels of the organi- zation in the collection of requirements, expectations, needs and other inputs from all areas within SFF and from external sources. 1.2a Organizational Governance

Sunny Fresh Foods, Inc. is a wholly owned sub- sidiary of Cargill, Incorporated, and is governed by Cargill policies, reporting requirements, functional accountabilities, and leadership structure.

Cargill Oversight is value-based in that it ensures SFF’s business practices and plans for value creation include the balancing of value and needs of key stake- holders through the open assessment and communica- tion of financial risks.

Transparency in communicating and reporting busi-

ness performance results is the element in the gover- nance structure that integrates all other elements, and further ensures the interests of all key stakeholders are understood and supported. Each MC member is respon- sible for ensuring that performance expectations and plans are deployed through the organization and to key stakeholders. The transparency of business performance results aligns with the Core Value of Ethics. 1.2b Legal and Ethical Behavior

SFF senior management addresses the current and potential impacts on society of products, services, facili- ties, and operations, and prepares the organization to address these concerns, through the SPP, and during MC meetings as new information is acquired. The annual Business Plan, key strategies, and Operating Plan align with and link to the long-term plan, and these linkages cascade via the SPP and Leadership System to depart- ment and individual KRA’s. In this way processes that control and/or eliminate risks associated with SFF prod- ucts and services are aligned and improved.

The MC and BLT anticipate public concerns by par- ticipating in community organizations, continually learning by staying current on governmental, industry and environmental trends, and listening to all key stake- holders. The MC assesses potential impacts, balances risks and resources, and implements appropriate actions via the SPP and Leadership System.

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Leadership SystemLeadership System (2) Establish &

Communicate Clear Values:

Core Values, Core Purpose, Mission

(1) Determine & Balance Stakeholder Requirements

& Expectations

(3) Set Direction: Strategies & Goals Allocate Resources

Operating Plan PMP/KRAs

(4) Monitor & Guide Performance: Key Indicators,

Balanced scorecard Oversight(5) Analyze

Organizational Performance: Balance value,

Resource reallocation

(7) Continuous Business Process Improvement

Communication and reinforcement of

values

Communication of results and review

findings

(6) Recognize, Reward, Improve

Stakeholder Development & Recognition

Process Improvements

A lign

Synthesize & Align

Align

Engage Communicate

Integrate & Learn

Figure 1.1-1

Align Engage

Communicate

Reinforce Model

Align

Al ign

A lig

Align

Ethics is one of SFF’s Core Values, therefore all of the processes and communication methods used in Leadership System Step 2 “Establish and Communicate Clear Values” are used to create an environment that promotes and requires ethical and legal behavior. Behavioral expectations and compliance requirements are communicated to stakeholders in meetings, orienta- tion, and training for work process and job assignments.

Methods used by SFF to promote and ensure ethical and legal practices in all interactions include:

(1) Open Door / Open Floor policy; (2) Orientation training for all new stakeholders; (3) “Continuous Improvement at Sunny Fresh” training for all stakeholders; (4) The Cargill Guiding Principles; (5) Annual business plan reviews; (6) Ongoing and annual individual performance reviews and the PMP process; (7) Job and department accountabilities and reporting requirements; (8) Ongoing business performance reviews; (9) Transparent and broad communication of business performance results; (10) Cargill oversight; (11) Supplier approval requirements, audits and contracts; (12) The “ethics hotline,” that is available 24-hours per day to all stakeholders.

1.2c Support of Key Communities SFF has defined its key communities as those in

which it has facilities, because most stakeholders and their families reside in or near them. Awareness teams made up of stakeholders at each facility organize activi- ties and manage SFF’s charitable contributions to sup- port and strengthen these communities. Each team has a budgeted allocation, and assesses where contributions and efforts will have the most benefit for their commu- nity. These teams qualify requests from local organiza- tions for contributions, disburse, and track these funds. Awareness teams work with stakeholder Safety and Wellness teams in coordinating activities that support wellness and safety, such as food drives and bike helmet give-aways.

MC and BLT leaders are actively and visibly involved in key communities, and with charities and associations of importance to key customers and key suppliers.

Corporate Citizenship is evaluated each year by the MC using Baldrige-based assessments, adoption of best- practices, and comparisons to benchmarks. Refinements are incorporated into the SPP and deployed via the Operating Plan.

2.0 Strategic Planning 2.1a Strategy Development Process

SFF’s long-term Strategic Business Plan is devel- oped to define long-term strategic objectives and goals for the organization. During the long-term planning process, the BLT affirms the Core Ideology (Core Purpose, Core Values), and reviews and potentially refines the Mission, and convenes research teams, led by MC members. Then the BLT develops, aligns and integrates short- and long-term goals and long-term strategies for all departments and functions.

In the annual SPP, under the umbrella of its Core Purpose, Core Values, and Mission Statement, the long- term plan provides the framework for stakeholders to define strategies that are captured in the annual Business Plan, and align Critical Actions and measures that are integrated in the Operating Plan.

Key steps in the annual strategic planning process follow:

a) Review Mission, Core Purpose, Core Values, the long-term Strategic Business Plan;

b) Review Strategic Planning Process; c) Review current business climate; d) Review input from all areas; e) Develop annual Key Strategies; f) Develop Budget and Goals; g) Develop the annual Operating Plan; h) Cascade Critical Actions; i) Develop the Monthly Scorecard and KI’s; j) Distribute the annual Financial Goals book. The SPP is evaluated and refined each cycle by the

MC and BLT as necessary to ensure effective learning, alignment, integration and execution of plans and activi- ties. 2.2a Action Plan Development and Deployment

The annual Operating Plan is the strategic action plan for SFF. Critical Actions, Person(s) Responsible, End Results, and Measurements are defined and inte- grated with other areas to support specific strategic objectives. Critical Actions are the basis for writing KRA’s in the PMP process for salaried stakeholders. In this way the Operating Plan is integrated across SFF, and all deployment areas are aligned.

The BLT allocates resources based on key strategies necessary to develop or strengthen competencies required to achieve SFF’s goals and to meet aligned customer needs. Financial resource allo- cation decisions by the MC and BLT are a part of the process for developing the annual Business Plan, which includes financial performance goals.

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Communication to SFF stakeholders is accom-

plished by deployment into depart- ment goals and KRA’s, Recognition

meetings, meetings at which MC members present the annual business plan and

Operating Plan summaries, and The Eggceptional News. Process and performance changes that result from

the accomplishment of Critical Actions and KRA’s are sustained through the MC’s review of associated KI’s during the performance review process and by integra- tion of changes into work process design, training and process performance requirements.

SFF’s Core Ideology is fundamental to Human Resource (HR) planning in creating and sustaining a high performance organization and in developing stake- holders. HR planning is a fundamental part of the development of the long-term Strategic Business Plan, the annual Business Plan and Operating Plan.

Through the SPP and its integration into the Leadership System SFF ensures that the overall per- formance review and performance measurement systems reinforce alignment, and are deployed to all areas and stakeholders.

3.0 Customer and Market Focus 3.1a Customer and Market Knowledge

SFF stakeholders use the egg further processing industry’s approach to product categories:

· Value-added (where SFF operates) · Dried / Immediate consumption · Commodity (bulk). Sales and Marketing stakeholders use the food serv-

ice industry’s approach to market segmentation. SFF focuses on fully understanding the current and future needs of targeted segments and customers so as to create and provide product and service differentiation. Market segment and key customer account sales growth results are reviewed on an ongoing basis by Sales and Marketing stakeholders, weekly and monthly by the MC, and quarterly by the BLT.

The determination of current and future requirements is an ongoing process that involves Sales, Marketing, Customer Service, Product Development, Purchasing, R&D, Technical Services, and Distribution stakeholders.

Access to, and relationships with staff at all levels of SFF ensure that customers needs and expectations are identified. As the relationship with a customer grows,

methods for determining requirements become more integrated. 3.2a Customer Relationships

SFF uses a systematic, multifunctional approach to developing and maintaining customer relationships that focuses on customer intimacy. Sales Representatives provide the foundation for developing intimate customer relationships. These stakeholders are knowledgeable about SFF’s business processes, and leverage this knowledge in determining how best to bring value to customers.

Ethical conduct, quality products and services, SFF’s commitment to assure supply, and an internal support staff to address questions from all levels of the cus- tomer’s organization, are key to maintaining customer relationships.

Key access mechanisms for customer contact are based on customer needs and expectations. Modes for exchanging information are diverse. SFF provides an “800” telephone number and a website for customer service, sales, technical support, and QA: 1-800-USA- EGGS; www.usaeggs.com. Customer contact require- ments are identified by key contacts and deployed to all employees who are involved, through meetings, e-mails and electronic distribution lists, telephone contact and voice-mail distribution lists, written specifications, writ- ten procedures, and shared databases.

Customer complaints may be received by any cus- tomer contact personnel. All complaints are forwarded to Customer Service Representatives for entry into data- bases as soon as they are received. Reports from the databases are distributed by Customer Service to desig- nated stakeholders for prompt follow up and corrective action.

SFF’s stakeholders are Continuously Improving their work processes. Using this approach, customer com- plaint management methods have been evaluated and improved several times by cross-functional teams. 3.2b Customer Satisfaction Determination

SFF believes that its most important performance assessments are those from its customers, therefore SFF monitors customer satisfaction and dissatisfaction through direct feedback from its intimate customer rela- tionship management approach. Sales Representatives follow up with customers on an ongoing basis to assess satisfaction with products, services and relationships. SFF receives formal scorecards from several of its key customers.

SFF conducts a customer satisfaction survey each year to validate that its listening methods for assessing customer satisfaction and dissatisfaction are effective. Results of surveys, comparison to previous years’ results

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and benchmarks, and correlations to customer claims are distributed to Sales and Marketing members of the MC and BLT to be used in Continuously Improving prod- ucts, services, and processes.

Information about customer relationship manage- ment and satisfaction is fed back to the Leadership System and SPP.

4.0 Measurement, Analysis, and Knowledge Management 4.1a Performance Measurement

The MC guides and reviews organizational perform- ance using a balanced scorecard approach. This approach identifies Key Business Drivers (KBD’s) that are areas in which SFF must do well to successfully per- form in the marketplace. Within each KBD are several areas of performance measure-ment, and KI’s that link to the annual Operating Plan and key strategies.

The frequency of collection and integration of KI and performance data and information varies with process and cycle times. Data may be analyzed and integrated into reports by stakeholders in source areas. Data and reports are collected and may be further ana- lyzed and integrated as appropriate for particular indica- tors.

Data and information for tracking daily operations

are selected by department, function, and work process owners, and data users, based on their ability to support customer needs, work process control and improvement, organizational KI’s, and Operating Plan Critical Actions.

Data and information from many sources are collect- ed, integrated, and in some instances analyzed, by respective departments or functional groups, then deployed to users to provide timely information in sup- port of decision-making and day-to-day management. Operational data are used at various levels in decision- making to support improvement and innovation. Based upon user need, daily, weekly, monthly, quarterly, or yearly summaries and reports are created. As appropri- ate, results (including KI’s) are charted and analyzed for trends, variation, and progress to goal, on established schedules.

MC and BLT members select appropriate bench- marks for their areas of accountability. Comparative performance measures such as capability indices (Cpk), and comparison to Six Sigma levels (world-class levels at 3.4 defects per million opportunities) are used in processes where benchmark data are not available.

The MC, and BLT through the SPP, assess how SFF collects, uses, and deploys compara- tive information to assure that data are meaningful and add value. Comparative information and data

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These Stakeholder

Users

Receive these results &/or

information

Which have been analyzed and integrated by

Using information collected & integrated

from To do these things:

Management Committee

Guide & review organizational performance; reinforce alignment & performance expectations; adjust priorities & modify goals; adjust resources; select & act on improvement & innovation opportunities; inform SPP

BLT

Weekly KI Report, Weekly P&L, Weekly KI Charts,

Monthly Scorecard, Monthly charts

Annual stakeholder survey results

Source departments & functions;

Accounting; IT; Continuous

Improvement (CI) Facilitator

Production processes; all departments & functions;

HR; Cargill Review organizational performance; reinforce & support alignment; suggest & support adjustments in priorities & goals; adjust resources; suggest & act on improvement & innovation opportunities; inform SPP

Supervisors, team leaders

cross-functional teams

Weekly KI Charts, Monthly charts

Annual stakeholder survey results

CI Facilitator Financial results; complaint databases; spreadsheets;

Inventory Control

Review organizational performance; reinforce & support alignment; suggest, support & act on adjustments in priorities, goals & resources; suggest, support, & act on improvement & innovation opportunities;

All SFF stakeholders

Posted Weekly KI Charts;

Incentive scorecards; Annual stakeholder survey

results

EHS, Plant Managers,

CI Facilitator

Weekly KI Reports; Tech Services;

HR; EHS; Plant operations

Review organizational performance; support alignment; suggest, support & act on adjustments in priorities, goals & resources; suggest, support & act on improvement & innovation opportunities; monitor leadership performance & effectiveness

Figure 4.1-2 Organizational Performance Data/Information

that no longer serve the purpose to improve the per-

formance of SFF and its products, processes, and services are discontin-

ued from use. 4.1b Performance Analysis and Review Formal weekly, monthly, quarterly, and yearly

reviews of company performance are conducted to analyze progress relative to goals, trend comparisons

to goal, correlations, plans, and changing business needs. The frequency of analysis varies based on process cycles (e.g. annual audit scores). As results are analyzed, adverse trends are analyzed for root causes. These analyses and results support performance re- views, strategic plans, and action plans.

Operational performance results from key stakehold- ers and business processes are included in the Weekly Key Indicator Report. Results are reviewed weekly by the MC. Organizational effectiveness results are reviewed during day-long monthly business review meetings. Weekly and monthly MC meetings are forums in which members analyze performance success and progress toward short- and long-term goals (Leadership System Step 4), consider and develop actions to respond to opportunities for improvement, key stakeholder requirements, the marketplace or indus- try. Areas for improvement are prioritized using the Mission and Core Ideology as guides. The Weekly Key Indicator Report and KI analyses are used to make fact- based decisions and to ensure that measures and results continue to support accomplishment of SFF’s objectives.

In quarterly two-day meetings the BLT addresses progress made toward accomplishing the Operating Plan. The BLT considers financial, operational, depart- ment, function, and leadership performance.

Weekly, monthly, quarterly, and yearly results are summarized, analyzed, charted, and deployed to the organization. SFF’s integrated approach to organiza- tional performance review and prioritization of improve- ment opportunities ensures it makes decisions based on facts, and monitors changes in customer, stakeholder, supplier, and community expectations and capabilities.

The MC develops modified actions based on the needs of all key stakeholders involved, and resources are allocated as needed to ensure improvements can be achieved. 4.2a Data availability

Data access requirements are set by the functional group generating and delivering the data, and the end users of the data, and are aligned with data needs to sup- port KI’s and individual and process performance. The frequency of data distribution depends on cycle times of

processes, and the needs of end users. Analysis of each functional area’s data is primarily the responsibility of that function – stakeholders are monitoring their work processes, and measuring and analyzing process per- formance data, and have real-time access.

Accessibility of data and information is Continuously Improving. SFF includes several items on its Stakeholder Survey that address the availability and use of business related data, which are used to identify improvement opportunities.

Data owners define access requirements for their information. Application and security controls are implemented on all SFF developed, purchased, and licensed computing applications to ensure that users have access only to the functionality and permissions that are required for their job. SFF uses formal Information Protection practices to assure IT hardware and software systems are protected from theft or access breaches. Work station security and information protec- tion procedures are communicated to all users. Regular compliance audits are conducted by the IP Coordinator.

IT system backup procedures are well implemented and documented. Backups are stored in a secure loca- tion, remote from the Data Center. Routine system maintenance occurs throughout the year based on busi- ness needs. 4.2b Organizational Knowledge

SFF’s knowledge management approach is value- based. SFF refers to its knowledge assets as Intellectual Capital (IC), because these assets have value to key cus- tomers, key suppliers, SFF and its stakeholders. SFF’s IC management approach balances the learning needs of all key stakeholders with their IC protection needs. These efforts are guided by the IC Review Team.

5.0 Human Resource Focus SFF’s approach to Human Resource management is

founded in its Core Values, Core Purpose, and Mission, which promote the alignment and integration of all SFF activities. Integration via the Leadership System and the SPP ensures that SFF is refining its HR practices to carry it to the next level. 5.1a Work Systems

Work systems are organized to emphasize the needs of SFF’s customers, safety, quality, compensation and recognition, and stakeholder training and development, in support of SFF’s long term goals. MC and BLT members are responsible for specific work systems. At the organization and the work unit level, these individu- als are responsible for ensuring that work systems align and link across the business to promote cooperation,

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SFF’s culture, and enable business growth. They pro- mote and support individual and work unit initiatives in response to opportunities arising from business perform- ance results and reviews, and from work unit and indi- vidual performance results and reviews. They coach and empower work units and stakeholders to manage work processes to meet requirements and improve. Accountability is directed and reinforced via the Leadership System, business performance reviews, and the PMP process.

Work unit managers and supervisors work together, and as appropriate with HR and HS personnel, to devise safe and effective work systems. Work processes, posi- tions, and job tasks are developed and work procedures may be developed or modified as appropriate. Position Content Summaries (PCS) are created or modified by managers and supervisors, with HR and MC-level approval, to ensure continued relevance of positions with the organization’s action plans and to ensure ade- quate resources. Resources used to develop or modify work systems include: HR; Health and Safety; Engineering/Process Systems; Stakeholders; Technical Services; IT/Admin/Accounting; All other departments and functions as appropriate.

This cross-functional approach ensures consistency of procedures, and rapid responses to changes in key stakeholder requirements, the business, and the market- place.

SFF has been innovative in many work system designs:

Ramp-in: New production stakeholders are put on a “ramp-in” (work hardening) schedule that limits the number of on-line hours during the ramp-in process so as to condition muscles and minimizes potential Cumulative Trauma Injuries.

Buddy Program: New production stakeholders are partnered for three weeks with a “buddy” who works to assure knowledge, skills and culture are transferred. The Buddy System leverages the diverse work history, experiences and cultures of SFF’s workforce.

Rotation System: Each production department is organized into specific task areas. Every 20 min- utes stakeholders rotate stations. This practice pro- motes cooperation, agility, knowledge transfer, and capitalizes on the diverse experiences of all stake- holders involved.

Innovation, agility, and empowerment are reinforced by the alignment and linking of work systems with busi- ness, department, and individual performance goals, metrics, and reviews. SFF uses formal recognition methods to promote cooperation, empowerment, and innovation in the development of work systems.

Processes for managing individual performance are the annual Hourly Stakeholder review process and the PMP process for salaried stakeholders.

SFF uses a Compensation Committee of MC members to design and approve incentive plans, review and commu- nicate the compensation philoso-

Page 10

Recognition or Reward Type Individual or Team Recognition or Rewards Support: Quality Achiever Formal Individual and Team Core Values and High Performance Safety Employee of the Year Formal Individual Core Values - Safety

President’s Club Award Formal Individual Core Purpose - Customer FocusKey Strategies – High Performance Eagle Award Formal Individual Core Values and High Performance ACTION Award Formal Team Innovation, Collaboration, Learning Employee of the Month (plant based) Formal Individual Key Strategies – High Performance Recognition Meetings Formal All stakeholders Key Strategies – High Performance Spring Flings Formal All stakeholders Core Values –- Safety Winter Parties, Drivers’ Banquet Formal Formal All stakeholders Core Values – Safety Annual Turkey Day Formal All stakeholders Core Values — Stakeholder Focus Thank Q Cards Informal Individual and Team High Performance Eggceptional News Articles Formal Individual and Team Stakeholder Focus, Community Involvement Day-to-day verbal, e-mail Informal Individual and Team Day-to-day high performance Incentive Plans Formal Individual and Team Core Values – Safety and High Performance Anniversary Gifts Formal Individual Individual Core Values – Stakeholder Focus Achievement Celebrations Informal & formal All stakeholders Key Strategies – High Performance

Figure 5.1-1 Recognition

phy, and develop com- pensation guidelines. SFF’s

total compensation philosophy comprises base pay, incentive pay, and

indirect pay or benefits. SFF has many methods for recognizing

the achievements of individuals, teams, and the entire organization. These reward and recognition

methods reinforce Core Values, key strategies, and desired behaviors such as working safely and high per-

formance. SFF uses a three-fold approach to recogni- tion and reward: day-to-day, informal, and formal. Examples of formal recognition include Safety Employee of the Year, and Quality Achievers. Informal day-to-day recognition includes such things as direct verbal recognition and lunch provided by a Plant man- ager to thank stakeholders for working weekends.

SFF celebrates whenever extraordinary accomplish- ments are achieved. Examples include: receiving the Cargill President’s Health and Safety Award in 1995, 1997, 1999, 2000, 2001, 2002, and Environment, Health and Safety Award in 2003; receiving the MBNQ Award in 1999, and the Cargill Spicola Business Excellence Awards in 1999, 2002 and 2004.

Using its continuous improvement approach SFF evaluates and refines its recognition processes on an ongoing basis.

SFF uses a formal succession planning process as a means to support long-term organizational direction and to plan for growth. The process is used by the HR Manager and the President to identify and align poten- tial high performing individuals who would be able to continue the SFF tradition of performance excellence. The succession planning process provides information that is used in human resources planning in support of leadership development. The process also has a career development planning (CDP) component.

SFF uses its Leadership Development Program for hourly stakeholders who are interested in developing leadership skills and benefiting from opportunities to become Supervisors. SFF uses its Job Posting Policy to promote career development for all stakeholders. 5.2a Employee Education Training and Development

SFF’s approach to training and development has gone through many refinement cycles. In the early stages of its quality journey, Step Teams at each site facilitated the development and deployment of training programs. As quality deployment continued, training and development became an integral part of every busi- ness function.

At the organization, and department/function levels, education and training requirements are determined and aligned with SFF’s long-term strategic goals.

Courses and training identified through Impact Mapping become the bases for curriculum management through Sunny Fresh University (SFU). SFU is a con- ceptual tool (not brick-and-mortar) through which the training and education needed to sustain SFF’s culture and achieve its goals are managed. Eight SFU “cours- es” exist as part of an organization-wide curriculum required for SFF stakeholders.

Specific training requisite to successfully accom- plishing specific tasks is developed and standardized throughout the organization on an ongoing basis by appropriate MC and BLT members, supervisors or man- agers, and stakeholder groups in departments and func- tions. This is facilitated by the use of cross-functional teams, the standardization and ready access of SOPs, and formal review protocols for changes.

ISDP’s are used to manage individual training, edu- cation and development during the individual perform- ance review process and are developed on a yearly basis by each stakeholder and supervisor. They focus on skills needed in the short-term and identify knowledge or skills needed to continue within a function or depart- ment career path.

Training is designed to take into account adult learn- ing styles, various work shift schedules in SFF facilities, production schedule time constraints, diverse activity levels, and language barriers. New employee orienta- tion includes training by in-house trainers and business leaders in company policies and procedures, safety, food safety and hygiene, and quality. New employee orienta- tion is designed to introduce SFF’s Core Ideology, goals, and Mission. SFF’s expectations of new stake- holders are part of orientation, and new stakeholders share their expectations of SFF.

As SFF grows and the diversity of its workforce

Page 11

Mid-year Progress Update

Multiple Sources of Feedback

Input to Career Development

Input to Pay Process

One Up Review

Figure 5.1-2 Performance Key Strategies,

Operating Plan, KRA’s

Skill Development

increases, training is provided to assure stakeholders with differing backgrounds are welcomed into the organization. At Monticello SFF contracts with the local community education program to provide English as a Second Language (ESL) classes at the production facility free-of-charge to stakeholders. Spanish in the Workplace classes are also offered on site.

SFF complies with OSHA safety training require- ments for all stakeholders. Some positions require addi- tional specific safety training that may include annual retraining and/or certification. Safety training for all stakeholders is overseen by the HS Manager and site Safety Teams.

Training needs are assessed by HR and function or department managers, assuring deployment to all from whom input is needed such as individuals and cross- functional committees. Managers determine training needed to support job or process requirements and improvements, regulatory compliance, or leadership development. Managers and supervisors may request specific training be given, based on strategies and goals as well as the competencies of stakeholders.

Stakeholders may also request specific types of train- ing via cross-functional teams at each facility or through the HR department. Some training, such as safety and HACCP training, are mandatory. SFF’s approach to work system design and improvement also provides stakeholders opportunities to identify and inform SFF of training needs, and to share their knowledge.

Organizational knowledge is leveraged in the devel- opment and the delivery of training. Internal knowledge area experts are often used to support the development of materials, and to deliver training. Stakeholders have many opportunities to share and learn across the organi- zation.

Training may be delivered by knowledge-area experts (e.g. food safety training by Food Safety Coordinators), external trainers brought to SFF, or through participation in external seminars and work- shops. Delivery methods depend upon the expertise of in-house personnel, numbers and locations of employees to be trained, concepts and content to be taught, the edu- cational histories and language abilities of recipients, and stakeholder comfort. Techniques and technologies used include lectures, presentations, demonstrations, observation and coaching, video, computer conferenc- ing, hands-on participation, and some computer-based.

Education and training are designed to address the skills and competencies necessary for positions. Specific skills are reinforced on the job through: observation, encouragement and coaching by supervisors, Food Safety and GMP audits, HS and housekeeping audits, skill tests, performance reviews, the “Buddy” system,

and 30-, 60- and 90-day, and annual reviews of safety procedures. If non-conformances are identified, retrain- ing is scheduled as needed to correct deficiencies. Training is also reinforced via recognition of accom- plishments.

Stakeholders responsible for conducting education and training use various methods including direct feed- back from participants in post-class evaluations, individ- ual performance in practical tests, and individual, daily operational, and organizational performance measures and indicators. These stakeholders and MC members reevaluate training and education if outcomes or improvements are not demonstrated and, if needed, bring recommendations into SFF’s performance review process.

SFF supports development and learning by offering reimbursement for stakeholders pursuing external edu- cation linked to an ISDP or CDP. 5.3a Work Environment

Safety is a “way of life” at SFF. Stakeholders are acutely aware of the need to work safely. From orienta- tion to monthly department meetings to the yearly Winter Safety Parties, safety is emphasized and safe work is recognized and rewarded. Maintaining a safe, healthful, secure work environment that supports well- being, satisfaction, and motivation is paramount to maintaining a stable workforce.

Employee input, used to identify improvements in the work environment, including ergonomic improve- ments, is sought through the use of Safety, Ergonomics, and Wellness teams, one-on-one contact with stakehold- ers, and the Hazard Hotline. Input from stakeholders at all levels is used by the HS Manager to write the annual Health and Safety Plan. This documents:

• Monthly Safety Meetings, and topics; • Employee Involvement; • Health and Safety Goals/Objectives, which vary by

group – Plants, Drivers, Administration; • Incentives; • Recognition. Goals are based on previous years’ statistics, bench-

marks, and projected estimates of person-hours for each location and stakeholder group. Result reports are gen- erated by location that are included in each month’s edi- tion of The Eggceptional News and posted in each facil- ity. Hourly incentives are based in part on achieving safety goals.

Security at SFF is overseen by the Security Task Force which identifies and addresses potential security risks associated with sup- plies, production, storage, and delivery of food products at all locations.

Page 12

The team uses SFF’s Security Policy to integrate

many workplace and supply chain security requirements including facility

access, control of movements of contrac- tors, vendors and delivery drivers, protocols

for mail or parcel receipt, and ensuring safe water supplies to facilities. The security of stake-

holders who travel is also addressed. Effective implementation is ensured through audits.

SFF ensures the preparedness of the organization for emergencies or disasters in several ways. The Emergency Action Plan (EAP) details chains of com- mand, actions, and notifications required for emergen- cies. The EAP includes requirements for resumption of operations after an event. Regular drills are conducted, with local emergency response professionals as needed, to ensure effective training.

Key factors affecting stakeholder well-being, satis- faction, and motivation are determined by gathering information from a variety of sources including: the stakeholder survey, performance reviews, exit inter- views when possible, the analysis of data (turnover, retention, etc.), focus groups, and Open Door discus- sions. SFF’s stakeholder survey is administered annual- ly. Survey data are segmented by stakeholder groups. Results are statistically treated to identify varying fac- tors affecting stakeholder well-being and satisfaction in SFF’s workforce.

SFF offers its employees the following benefits: health, life, disability, and dental insurance; educational reimbursement; 401K retirement plans; ESOP Plan; medical and child-care flexible spending accounts. Benefit options are discussed at orientation. HR reviews benefits each year with every stakeholder.

The annual stakeholder survey is the primary assess- ment tool SFF uses to measure employee well-being, satisfaction, and motivation. All survey results are tabu- lated and compared to previous years’ results and to benchmarks. Segmented data are analyzed, thereby allowing for “tailoring” of initiatives by management at each SFF site, and in each functional area. Formal pre- sentations are made to the BLT as inputs to the SPP. In this way, areas for improvement are integrated into KRA’s across the organization. Survey results are for- mally presented to all stakeholders via multiple meet- ings conducted by the Continuous Improvement Facilitator. Location-specific cross-functional Survey teams develop action plans to address opportunities for improvement.

The annual survey process includes a refinement step in which input is solicited from Survey teams, HR per- sonnel, HS, and the Director of Manufacturing. These

inputs are used to refine the survey, its deployment, the analysis and presentation of results, and the action plan- ning process.

Information for the evaluation of HR planning and practices comes from a variety of sources including turnover, absenteeism, safety, and stakeholder survey results. Indirect input comes from exit interviews, ori- entation reviews, and one-on-one discussions with stakeholders that may occur at any time, and are held with all stakeholders during open enrollment for bene- fits. Improvements in employee well-being, satisfac- tion, and motivation are correlated with improvements in other areas. Improvements are also tracked through the stakeholder survey process, from year to year. Survey teams study SFF and site-specific survey infor- mation and develop action plans to improve the work environment based on the “top ten opportunities for improvement.”

6.0 Process Management 6.1a Value Creation Processes

Customer Focus is a SFF Core Value, so SFF defines its key value creation processes from the customer’s perspective. Value creation processes are those that are most important to building, sustaining, and deepening customer relationships, and creating or adding the great- est value for customers and SFF. SFF’s value creation processes include Sales and Marketing, New Product Development (NPD), New Service Development (NSD), and Production.

The design of new value creation processes is linked to the SPP. In Steps 1 & 2, SFF studies the Value Drivers of the food service industry and of its key cus- tomers. SFF uses inputs from the Leadership System and the outcomes of SPP research and analyses, to eval- uate how processes may be developed or enhanced to better align with Value Drivers. In Step 3, via the SPP, SFF allocates resources necessary to develop new processes. In Step 4, a cross-functional development team is created by the MC. Team size and composition will vary depending upon the process being developed. New production process development may include stakeholders from nearly all departments. Using resources from all departments and functions as needed, the team develops and tests the process, including work systems, jobs, and tasks, and control and performance measures. In Step 5, the team ensures that any training needed to support process deployment is developed and deployed. Controls and measures are evaluated to deter- mine opportunities to improve the efficiency, productivi- ty, or outcomes of the process. The process is then opti-

Page 13

mized, either by the development team or the work group that “owns” the process. In Step 5 and Step 6, the work of the development team is monitored closely by the MC.

Methods and quality tools used in the development of value creation processes are continuously being improved (Step 7) to ensure that SFF is capturing all relevant external and internal inputs, and improving the effectiveness of its methods for designing processes to meet requirements.

Sales and Marketing: Item 3.0 describes how the Sales and Marketing process is managed to meet key requirements.

NSD: The process used for creating new services is the same as that for Business Process Design with the exceptions that new services are specifically linked to external customer needs and/or requests, and NSD out- comes are extensions of current value creation or sup- port processes. Ideas for developing new services may come from customers or any stakeholder who identifies an opportunity for innovation. NSD projects may be large scale and tightly linked to the SPP with key phases incorporated into the Operating Plan, or they may be small scale, generating new services that are incremental additions to processes.

NPD: NPD Team members work together on an ongoing basis and meet in support of active projects to develop new or improved products. For long-term development projects requiring capital or human resources, the NPD process may link to the SPP, and phases may be included in the Operating Plan. Products are designed to provide best value and to meet

customer timelines. Timelines vary greatly, especially with large customers whose focus on new products may shift with their market conditions.

The NPD Team ensures smooth transitions from “test runs” to commercial roll out. The Team establish- es product specifications, control limits for process attributes that affect product quality, sampling plans, and HACCP plans. Where applicable, SPC charts are estab- lished during “test runs” for use in commercial produc- tion. Recipes, cooking instructions, and training are available to customers.

Production: Production processes are standardized across locations. In addition, ingredient receiving, order fulfillment, and delivery methods are standardized throughout SFF. Orders received by Customer Service are entered into the computer system.

All production processes comply with FDA guide- lines. All pasteurized liquid products, child-nutrition labeled products, and products containing meats are pro- duced under USDA inspection. Key performance requirements are met through GMP’s, HACCP plans, Standard Operating Procedures (SOP’s), and USDA or FDA guidelines, all of which have specific checks dur- ing the production process.

SOP’s define line control parameters. Specification limits and process control limits are used to assure food safety, maximize throughputs, and minimize quality defects. Line Operators (those closest to the work) are empowered to control their processes to remain within these limits.

Production personnel review performance informa- tion from the Weekly Key Indicator Report and from

Page 14

Business Process DesignBusiness Process Design (2) Align with

Core Values, Core Purpose, Mission, and Vision

(1) Determine & Balance Customer & Business

Requirements & Potential Value

(3) Integrate with Business Planning & Resource Allocation to Support

Development

(4) Develop Process, Controls & Measures,

and Test

(5) Deploy and Monitor Performance

(7) Continuous Design Process Improvement

(6) Analyze, Adjust, and

Validate

Al ign

Align

Com mu

nica te

Le ar

Figure 6.1-1

Align Engage

Optimize

Align

Al ign

A lig

Align

A lig

other sources and Continuously Improve when

opportunities are identified. Improvement plans and cost/benefit

analyses are prepared and may be submit- ted to the MC for approval and for resource

allocation. Process documentation, root cause analyses, corrective action, and continued perform-

ance monitoring are performed, and results analyzed to assess the success of improvements. Via specifica-

tions, HACCPs, and SOPs, improvements are docu- mented, standardized, and sustained. 6.2a Support Processes

Key Support Processes play key support roles for other processes, and ensure that processes are perform- ing effectively. A MC member is responsible for each support process. Process requirements are determined by the MC member and department stakeholders. Process requirements are reviewed as new needs and expectations are identified, and as opportunities for innovation and improvement arise. Measures are estab- lished to monitor performance. Measurement frequency depends on process cycle time, and needs of internal customers and data users. The Leadership System and SPP ensure processes are aligned and linked with SFF’s goals and activities.

The design of key support processes is tightly linked to the SPP and is done in the same manner as the design of value creation processes. Cross-functional or depart- mental teams (1) identify requirements, (2) align requirements with SFF’s Core Ideology and business direction (3) acquire necessary resources, (4) design the process including key performance measures and indica- tors, test the process and evaluate results, (5) deploy the process, (6) assess performance.

Performance requirements are met through the stan- dardization of work within each key support function. These include Good Lavoratory Practices (GLP’s), SOP’s and standard documentation, Generally Accepted Accounting Practices, shared databases, certification where appropriate, use of daily measures, and use of audits. Key measures are included in the MC’s business reviews.

By Continuously Improving, support processes are refined. Since each key support process has representa- tion on the MC, changes in requirements are integrated quickly into the process. Resources are allocated as necessary to ensure alignment with the needs the busi- ness. Feedback and improvements are shared via the Leadership System.

7.0 Performance Results SFF received the Malcolm Baldrige National Quality

Award in 1999 (SFF’s fiscal year June 1999 to May 2000). Since that time, SFF has continuously assessed and improved operations and performance. Since 1999, SFF has grown value for its customers and all stake- holders through its commitment to continuous improve- ment and performance excellence. The following results indicate sustained high performance or improved performance from SFF’s 1999-2000 performance levels. 7.1 Product and Service Results

Figure 7.1a1-1: Percent Satisfaction with Product, Service Attributes shows high levels of satis- faction with product quality and service, and overall value. In all areas SFF is performing above the bench- marks — two Baldrige Award recipients (BAR).

On time delivery (OTD) is one service attribute that SFF tracks for its trucks and contract carriers. Figure 7.1a1-3, On Time Delivery shows SFF’s OTD com- pared to OTD for a Baldrige Award recipient (BAR). 7.2 Customer Focused Results

Page 15

100

QU AL

ITY All

Cu sto

me rs

BA R

DE LIV

ER Y

All Cu

sto me

rs BA

SE RV

ICE All

Cu sto

me rs

BA R

VA LU

E All

Cu sto

me rs

BA R

2001 2002 2003 2004 2005

Percent Satisfaction with Product, Service Attributes

Figure 7.1a1-1

BAR 2003 BAR 2002

On Time Delivery

100

'01 '02 '03 '04 '05 '06 YTD

% O

n T

im e

SFF OTD BAR OTD

Figure 7.1a1-3

Nationwide truck shortage due to FEMA demand after hurricane Katrina.

Figure 7.2a1-1, Customer Satisfaction, Overall, shows how SFF is sustaining high satisfaction levels. Benchmarks are three different recent Baldrige Award recipients, all of whom are manufacturers.

Satisfying customers means prompt follow up when

there is a problem. At SFF, if a complaint cannot be immediately resolved by Customer Service, a follow-up call is requested. Technical Service stakeholders promptly make these calls to resolve complaints. Figure 7.2a1-2, Days to Customer Complaint Resolution, indicates ‘days to resolution’ has improved, while customer satisfaction with Technical Services has also increased. The benchmark is a Baldrige Award recipient.

7.3 Financial and Market Results Figure 7.3a1-3, Sales and Profit per Employee,

indicates that SFF’s profit per employee has kept pace with the food manufacturer benchmark. SFF’s sales per employee is also shown.

7.4 Human Resources Results Prior to 2002, SFF’s hourly stakeholder turnover rate was over 30% per year. SFF has focused on reducing turnover. SFF’ has determined its optimal turnover rate. Figure 7.4a1-1, Stakeholder Turnover and Retention Rates, shows that turnover has improved and retention has increased. The comparator is a Baldrige recipient.

Among many process refinements undertaken by SFF to improve retention and reduce turnover was the evaluation and improvement of the hourly stakeholder performance review process. Figure 7.4a1-2, Individual Performance Review Effectiveness, shows that SFF’s hourly stakeholders agree that the effective- ness of the individual performance review process has improved since 2001. The benchmark is a manufac- turer from an analogous food industry.

Page 16

Customer Satisfaction, Overall

0 10 20 30 40 50 60 70 80 90 100

2001

2002

2003

2004

2005

Percent

Customers BAR BAR BAR

Figure 7.2a1-1

Days to Customer Complaint Resolution and Satisfaction with Technical Services/Resolution

'97 '98 '99 '00 '01 '02 '03 '04 '05 '06TD

Da ys

Avg. Days APQC Top Quartile Days Days Goal

100%

90%

80%

Sa tis

fa ct

io n

Percent Satisfied

Figure 7.2a1-2

BAR

Sales & Profit per Employee, Million $

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.5

0.55

0.6

'01 '02 '03 '04 '05 '06YTD, annualizedFiscal Year Ending

Sa le

s pe

r E m

pl oy

0.005

0.015

0.025

0.035

Pr of

it pe

r E m

pl oy

SF Sales/EE SF Profit/EE Benchmark Profit/EE

Figure 7.3a1-3

Stakeholder Turnover & Retention Recruiting Effectiveness

'02 '03 '04 '05 '06YTD

Tu rn

ov er

P er

ce nt

100

R et

en tio

n P

er ce

SF Overall Turnover SF Hourly Turnover SFF 1-Yr Retention SFF Hourly Turnover Goal BAR 1-Yr Retention

Figure 7.4a1-1

SFF Overall Turnover Goal

Page 17

Figure 7.4a1-4, Work Process Improvement, shows improving stakeholder agreement with several Stakeholder Survey items regarding work environment. SFF segments and analyzes its survey results by loca- tion, department, tenure, etc. The Hourly stakeholder results demonstrate improving performance that resulted from efforts to decrease hourly turnover. The bench- mark is a manufacturer from an analogous food indus- try.

SFF’s Engagement survey has several items that address factors affecting motivation and satisfaction with development opportunities. Figure 7.4a2-2, Motivation and Development, shows SFF results for salaried stakeholders (exempt and non-exempt). The item about managers providing motivation to contribute more is a recent addition to the survey; consequently

Individual Performance Review Effectiveness:

0 10 20 30 40 50 60 70 80 90 100

2001

2002

2003

2004

Percent Agreement

SFF All SFF Hourly Benchmark All

Figure 7.4a1-2

only two years’ results are available. The first bench- mark is a recent Baldrige recipient (BAR) in the educa- tion category that surveyed its staff; the second bench- mark is salaried-exempt results from a manufacturer from an analogous food industry.

Safety is a Core Value at SFF. While its Injury Frequency Rate (IFR) has improved since the 1999-00 fiscal year in which SFF received the MBNQA (Figure 7.4a3-1, Safety Indicators) SFF will continue to focus on improving. The majority of SFF’s stakeholders work in its manufacturing plants, as reflected in its overall IFR result. Also shown is the IFR for non-plant stake- holders (Office/Admin) and SFF’s Distribution AFR (accident frequency rate). The benchmark is a Baldrige recipient.

SFF stakeholders’ satisfaction with benefits, and with programs that assist them with work-life balance, have increased. Figure 7.4a3-3, Satisfaction with Benefits and Programs to Manage Personal Life, shows SFF results from both its internal survey and its Engagement Survey compared to a recent Baldrige Award recipient in the health care sector.

Work Process Improvement

78.2

76.6

0 10 20 30 40 50 60 70 80 90 100

2000

2001

2002

2003

2004

Percent Agreement

SFF All Benchmark All SFF Hourly

Figure 7.4a1-4

Motivation and Development: SFF / Managers provide...

0 10 20 30 40 50 60 70 80 90 100

2001

2002

2003

2004

Percent Agreement SFF: Development opportunities SFF: Support for my interest / goals SFF: Motivation to contribute more SFF: Effective tuition reimbursement Benchmark: Development opportunities BAR: Development Opportunities

Figure 7.4a2-2

Safety Indicators

'99 '00 '01 '02 '03 '04 '05 '06YTD

Fiscal Year End

In ju

ry F

re qu

en cy

R at

e (IF

SFF Alt Duty / EE SFF Overall IFR . Office/Admin BAR Overall IFR

Figure 7.4a3-1

Page 18

7.5 Organizational Effectiveness Results SFF’s Customers Won/Lost ratio has been above 10-

to-1 for nine of the last eleven years, indicating effective customer relationship approaches. Figure 7.5a1-1, High Performance in Sales, shows year-to-year percent increases in related sales dollars and volume, from the fiscal year 1999-’00 baseline (the year SFF was a Baldrige Award recipient).

SFF uses capability indices to demonstrate that its production processes are optimized. Because many of SFF’s processes are unique, and therefore not possible to benchmark, capability indices can be used to show that improvements and innovations have been effective. Figure 7.5a1-3, Entree Process Yield, shows how by focusing on continuous improvement, variability has been reduced in this process, generating consistent and higher yields.

Product rejections at all four SFF plants have declined markedly. Figure 7.5a1-5, Rejected Product Reduction, shows declining rejected pounds as a per- cent of pounds produced, along with SFF’s year-to-year percent rework reduction. Stakeholders are focusing on “doing it right the first time.” The benchmark is the five-year cumulative rework reduction percent from the best performer in a 2002 benchmarking comparison of analogous food manufacturers – over a five year period ending in 2002, the benchmark had reduced rework by 80%. In one fiscal year (2003-04) SFF was able to reduce its rework by over 60%.

Figure 7.5a2-1, Inventory Days, shows days in inventory for non-egg ingredients, packaging, frozen finished goods. Quality and Food Safety are Core Values. SFF will not release product for shipment to customers until all product tests are complete and acceptable.

Satisfaction with Benefits, And Programs to Manage Personal Life

100

'01-02 '02-03 '03-04 '04-05

P er

ce nt

SFF Stakeholders, Benefits SFF Stakeholders, Personal Life

SFF Engagement, Benefits BAR, Benefits

Figure 7.4a3 -3

High Performance in Sales

-25

125

175

225

275 Fiscal Year Ending

P er

ce nt

o f 1

99 9

B as

el in

Pounds Sold % Sales $ %

‘01 ‘02 ‘03 ‘04‘00

Figure 7.5a1-1

’05

Entree Process Yield

100

'01 '02 '03 '04

Y ie

ld P

er ce

n t

Process Average UCL LCL

Figure 7.5a1-3

Cpk > 1.33

Rejected Product Reduction

0.2

0.4

0.6

0.8

1.2

'01 '02 '03 '04

Re je

ct L

bs %

o f T

ot al

L bs

Ye ar

to y

ea r R

ew or

k %

re du

ct io

n Rejected Lbs % SFF % Rework Reduction from prior year

’01-02 Benchmark, 5 yr cum % reduction

Figure 7.5a1-5

Page 19

Supplier performance is measured by SFF, as shown in Figure 7.5a2-2b, Non-egg Supplier Complaints. SFF uses the Six Sigma performance level as the benchmark for supplier complaints.

7.6 Leadership and Social Responsibility Results One key measure indicating leaders are effective in

setting and communicating clear values and direction is that stakeholders understand the goals of the business. In Figure 7.6a1-2, Leadership Effectiveness, percent agreement results are provided for two key survey items: “I understand the goals of Sunny Fresh” and “I understand how my job affects the customer.” The benchmark is a Baldrige Award recipient.

Item 7.6a4 Regulatory and legal compliance: • All SFF production facilities comply with FDA

requirements, and undergo unannounced FDA inspections. SFF has never had a product recall due to a food safety incident.

• SFF’s liquid egg processing facilities operate under continuous USDA inspection, and comply with all USDA GMP guidelines, mandatory HACCP requirements, and quality control requirements for Child Nutrition labeling for commodity and school breakfast products.

• SFF facilities comply with OSHA requirements and are subject to unannounced OSHA inspections.

• SFF plants comply with EPA requirements and are subject to unannounced EPA inspections. Since 1989, SFF has had zero EPA reportable releases to the environment.

Environmental stewardship also means focusing on reducing energy use, thereby helping to minimize the production of green-house gases. Figure 7.6a5- 2, Reducing Energy Use, Cost, shows how SFF is reduc-

Inventory Days

'00 '01 '02 '03 '04 '05

D ay

s in

In ve

nt or

SFF Non-egg Ingredients

Frozen Finished Goods

Analogous Benchmark

BAR

Ingredient Goal

Finished Goods Goal

Figure 7.5a2-1

Non-egg Supplier Claims

Co m

pl ai

nt s

pe r M

illi on

un ds

P ro

du ce

YT D

Av g.

'01 '02 '03 '04 '05 '06 YTD ’06 Goal

Figure 7.5a2-2b

6-Sigma

Leadership Effectiveness: "I understand the goals of Sunny Fresh." "I understand how my job affects the customer"

40 50 60 70 80 90 100

2001

2002

2003

2004

% Agreement

Salaried, Goals All, Goals New EE's, Goals

BAR, Goals All, Customer New EE's, Customer

Figure 7.6a1-2

Reducing Energy Use, Cost

0.2

0.4

0.6

0.8

1.2

'01 '02 '03 '04 '05 Fiscal Year Ending

E n

er g

y $

C o

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Figure 7.6a5-2

Page 20

ing both its energy costs and usage. While fuel costs have gone up, SFF’s energy costs per $100 sales and energy usage (Giga-Joules per $1,000 sales) have been driven downward.

Figure 7.6a5-3, Sunny Fresh Foods, Charitable Giving, shows growth in SFF’s charitable giving. One measure of the effectiveness of SFF’s community out- reach and Awareness activities is the percent of before- tax profit (BTP) donated. Site-based Awareness teams began managing local outreach and community giving for SFF in 2000-2001 in response to a need for develop- ing a systematic approach for the business.

Sunny Fresh Foods, Charitable Giving

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Monetary and Product Donations Benchmark

Figure 7.6a5-3

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Sunny_Fresh_Foods_Profile.pdf

Sunny Fresh Foods, Inc. Headquartered in Monticello, Minnesota, with plants in

Minnesota, Michigan, and Iowa, Sunny Fresh Foods, Inc., is a wholly owned subsidiary of Cargill, Inc. The company provides more than 160 egg-based food products to more than 2,000 customers, including quick-service restaurants, business and institutional food services, schools, and the military. The company’s 620 stakeholders produce and package products ranging from refrigerated and frozen liquid pasteurized eggs to precooked egg entrees to scrambled egg mixes, cholesterol-free and fat-free egg products, and peeled hard-cooked eggs.

SFF also received a Baldrige Award in 1999. Since then, the company’s revenues have risen 93 percent, and, while its competitors’ market shares have decreased by more than 10 percent, SFF’s market share has grown. Today, the company meets 75 percent of the product needs of four of the country’s top users of value-added further processed egg products.

Quality through Leadership SFF ensures quality through leadership that continually

focuses people and business processes on the company’s Core Purpose (“to be the supplier of choice to our customers worldwide”) and Core Values (Customer Focus, Safety, Quality, Stakeholder Focus, and Ethics). These tenets guide all company activities from customer service and stakeholder training to strategic planning and new product development. The company’s leadership structure—a Management Committee, comprising SFF’s senior managers, and a

Business Leadership Team that includes representatives from all functional areas of the company—ensures that everyone in the organization knows how to apply the company’s tenets in daily operations.

To build and maintain channels of communication, Management Committee members hold small group and department meetings throughout the company each year to discuss the annual business plan, capture concerns, and answer stakeholder questions. Internal communication also is fostered through the orientation program, presentations during Continuous Improvement training, bimonthly Recognition Meetings, and the SFF internal newsletter, The Eggceptional News.

The results are clear. From 2001 through 2004, more than 90 percent of stakeholders agreed with the statements: “I understand the goals of Sunny Fresh,” “I understand how my job affects the customer,” and “My managers demonstrate and communicate focus on the customer.” This far exceeds the national Hewitt Associates engagement database of 82.5 percent.

External communication is equally important. SFF brings value to customers through a variety of personal interactions that aim to build long-term business relationships based on trust and understanding. The same philosophy guides communication with suppliers, local communities, regulatory agencies, and others.

2005 Award Winner

National Institute of Standards and Technology ● Technology Administration ● Department of Commerce Baldrige National Quality Program

Highlights • Since receiving the Baldrige Award in 1999, SFF

revenues are up 93 percent.

• In the past four years, SFF’s market share has increased, while competitors’ market share has decreased by more than 10 percent.

• From 2001 to 2005, sales per stakeholder (employees are called stakeholders in acknowledgement of their integral roles in the business) and profit per stakeholder increased by 19 percent.

• More than 90 percent of stakeholders understand the goals of SFF and how their job affects the customer.

Planning Based on Measurement Strategic planning is based on continual measurement of

performance through a Balanced Scorecard approach that focuses on the Key Business Drivers of work process improvement, competitive advantage, stakeholder focus and performance, customer focus and satisfaction, and supplier relationships and performance.

SFF monitors customer satisfaction through direct feedback. Several key customers regularly provide formal scorecards, and sales representatives follow up on delivered orders to assess satisfaction with products, services, and relationships. By measuring specific performance items and designing action plans to improve performance, SFF has achieved remarkable results. The rate of On-Time Deliveries reached 99.8 percent in 2005, and customer complaint levels are maintained well below the Six Sigma world-class level. Even as product complexity has increased, customer satisfaction from 2001 to 2005 remained near 100 percent. For all products, the length of time to resolve customer complaints has declined from 2.8 days in 1997 to 0.8 days in 2005. Resolution satisfaction climbed from 92 percent in 1997 to 100 percent in 2002 and has remained there.

Such achievements are the result of continuously feeding performance results into both the long-term and short-term planning processes. SFF’s Strategic Vision 2010 provides the long-term view, and its long-term Strategic Business Plan provides a department-level blueprint for reaching it. Stakeholders throughout the organization participate by serving on task forces and cross-functional teams to research and explore opportunities for improvement and innovation.

Short-term planning centers around the Annual Business Plan. SFF uses a one-year short-term planning cycle to remain current in an industry subject to rapid changes due to factors such as raw material availability, new skill requirements, regulatory changes, technological advances, and even seasonal variation in egg consumption. Data from these and other areas are compiled into a Business Environment document that serves as the basis for developing annual key strategies, financial plans, operating plans, and monthly scorecards.

In both long- and short-term planning, customer needs and expectations are paramount. SFF leaders analyze sales and marketing data, customer purchasing and consumption patterns, and consumer research, as well as dietary trends. This serves not only to refine current products and processes but also to develop new ones, such as constructing additional process lines, which anticipate customer requirements.

Focus on Training and Work Processes

SFF devotes significant resources to training and to implementing safe and efficient business processes. Sales stakeholders are certified by the Culinary Institute of America to advance their understanding of food service

operations. Production personnel receive ongoing training to develop, maintain, and advance their skills.

Personal safety and food safety are of primary concern. SFF meets or exceeds all Occupational Safety and Health Administration personal safety-training requirements and provides specialized safety training related to specific production tasks, such as lift truck operation and working with refrigeration and ammonia systems. The result is an exceptional company-wide safety record. Injury frequency rates have dropped from 15 in 2000 to about 6.8 in 2004. The plant in Lake Odessa, Michigan, has gone five years without a lost-time accident; the plant in Panora, Iowa,14 years.

All sales and technical personnel are certified in food safety through the National Restaurant Association’s ServSafe® program, and all production personnel receive personal safety and food safety education, including Hazard Analysis and Critical Control Point (HACCP) program training, which has enabled the company to surpass the U.S. Department of Agriculture’s and the Food and Drug Administration’s requirements.

SFF also has pioneered a number of innovative production work systems, including 20-minute rotations of stakeholders among workstations and programs that ease new stakeholders into physically demanding tasks and partner them with experienced “buddies.”

In addition to improved personal and food safety records, these intensive efforts are paying off in other ways as well. Throughout the company, the amount of rework dropped 15 percent from 2001 to 2002, 61 percent from 2002 to 2003, and 75 percent from 2003 to 2004. And, between 2001 and 2005, sales per stakeholder and profit per stakeholder increased by 19 percent.

A Sense of Community SFF’s emphasis on ethical practices and its concern for

public health and the environment earned respect and loyalty not only from customers and suppliers, but also from the local communities from which it draws its stakeholders. SFF supports these communities largely through Awareness Teams, made up of stakeholders at each facility, which organize activities and manage SFF’s charitable contributions. SFF stakeholders are involved in more than 160 local organizations as members, contributors, and volunteers, and SFF’s charitable giving has increased from $485 per stakeholder in 2001 to more than $700 per stakeholder in 2004.

For more information: Sunny Fresh Foods, Inc. 206 West 4th Street Monticello, MN 55362 Telephone: (763) 271-5999 Fax: (763) 271-5714 Email: [email protected] Web site: www.sunnyfreshfoods.com

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/PTB 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/ITA 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setdistillerparams << /HWResolution [2400 2400] /PageSize [612.000 792.000] >> setpagedevice