Days after Ardent Mills L.L.C. first began operating in June 2014, the company’s top executives expressed a commitment to “bringing a new approach” to the flour milling industry.
While creating a new and distinctive business has been a priority from the outset, Dan Dye, chief executive officer, recently said the words have deeper meaning at Ardent Mills now with more than a year’s experience under management’s belt.
“The first few days, it’s easy to say that,” he said. “Now, a year later, we’re much further into it. We see things much more clearly. We’re still on a journey, but we’ve come a long way.”
In a recent interview with Milling & Baking News, Mr. Dye and Bill Stoufer, chief operating officer, offered their thoughts on Ardent Mills’ first year of business and the company’s and milling industry’s future. The interview was conducted at the new headquarters in downtown Denver.
In many respects, the company blazed numerous new paths with its own creation. To begin, Ardent Mills is a far larger milling company than has ever before operated in the United States.
With 38 U.S. flour mills, Ardent Mills has a daily milling capacity that is 71% larger than the company that previously had been the nation’s largest milling business, Horizon Milling L.L.C. (with 18 mills). Second, while many large milling companies have been sold to new owners during the past 100 years, no major milling company has ever before been created through a spin off into a completely new company. Establishing a new milling enterprise by combining two existing, long-established milling companies — ConAgra Mills and Horizon Milling — and moving company headquarters into a new city were certain to pose challenges.
Still, against any measure, Mr. Dye graded the first year for Ardent Mills as a success.
“I think anytime you start something new there are always a lot of unknowns and uncertainties,” he said. “As we look back, this first year has been outstanding. We’ve definitely had some challenges, some things we wish would have gone differently. But if you sum up the first year overall, we’ve met or exceeded expectations across the board, and it’s because of the great people who have come together.”
Key to handling the challenges and bringing the company together has been a commitment to the values and vision established for Ardent Mills at the outset, Mr. Dye said.
“It helped to have the values, the vision that we set as really foundational at the beginning,” he said.
Four touchstone values cited by Mr. Dye were trust, serving, simplicity and safety.
“The values became something the Ardent Mills team could own,” he said. “They became ours. They were consistent. It didn’t matter what parent
company you came from. What your background was. If you were new to Ardent Mills altogether. We all operated under the same values.
“Think about trust as a value. Here we are competing in 2014 on May 28, and now we’re operating as one team on May 29. That value of trust right from the beginning — to build trust with each other, to build trust with our customers, to build trust with our communities as a new organization. The value of serving — serving our customers, serving each other as we build the organization and learn as we go. The value of simplicity, simplifying processes and creating the Ardent Mills way of doing things. And the value of safety — personal safety and food safety have been core to our identity since we started. These values have become real, they aren’t just words. These values, combined with our vision and brand essence of, ‘Nourishing what’s next,’ have provided a strong foundation for Ardent Mills to build a great and enduring organization.”
Mr. Stoufer added, “When you make your decisions through the lens of the values, it makes decision making easy. Choosing whatever process you are working on or system. I also think it’s a good rallying point about how you take care of your customers. It’s how we behave internally, and how we behave externally. Even though we had very successful companies prior, you still have to earn trust from day one with the customer.”
Among specific challenges facing the company was one Mr. Stoufer said management knew was coming — putting Ardent Mills on a single enterprise resource planning system.
“We knew we were heading into challenges with two operating systems,” he said. “What we found is that the only thing similar between the systems was the three-letter acronym. That moved up in the priority of how fast we wanted to get to one system. It presented some challenges internally and externally. It was cumbersome for everybody.
“Overall our integration is on schedule. Some things are ahead. Some are probably a little slower. We have begun our work to get on one operating platform. We have gone live with the first of four phases.”
Against the backdrop of internal integration, Mr. Stoufer said Ardent Mills unwaveringly is keeping its “eye on the ball” of meeting customers’ ongoing needs.
“We have a mantra, ‘ELEMEDS,’ which stands for ‘Every load, every mill, every day, safely,’” he said. “A year into it, we are a ‘heckuva’ lot smarter. We understand our footprint better and our capabilities better. We are aligning customers against the right capabilities to help deliver a lower landed cost to the customer that really helps drive the efficiencies in the business by utilizing the supply chain network we have.”
Large milling companies discuss the importance of providing top-flight personalized service to flour customers, and Ardent Mills executives are acutely aware of the challenges that come with being the industry’s largest company.
“Being big is no guarantee of success,” Mr. Stoufer said. “It’s almost like if you view that as a right to success, you are going to fail. We are trying to instill the sense of a nimble, entrepreneurial organization, even though we are big. We do operate a lot of plants. How do we behave small and react for the customer in the marketplace? That’s the most important thing. We’re finding new and better ways to do that every day.”
While seeking to meet customer needs today, Mr. Stoufer said Ardent Mills is looking to satisfy expectations that are still greater as a result of change transpiring outside of the flour milling industry.
“Our customers’ view of service is not driven by what Ardent Mills is doing,” he said. “It’s driven by other industries. Think about Google or Amazon or other great companies that have this very defined measure of expertise. Those are the ones setting the bar for Ardent Mills. We have to sit back and go, ‘What are the right expectations and metrics for the business to operate as world class?’ and then make sure we are working to deliver against it. And then, ‘What’s the appropriate timeline to do that?’”
To Mr. Dye, these different and higher aspirations are part and parcel of establishing Ardent Mills as a new and distinct company.
“It’s the things that are unique to Ardent Mills that define us as a new company,” he said. “We really tried to make that clear to our own people first, but also with our customers. It is Ardent Mills. That is our identity. We do it in everything from our signage to the way we present and talk about our business. We have really tried to put the legacy companies behind us and look forward as Ardent Mills. There are things that take time. We’re even just now doing some of the packaging changes, and doing other things that will evolve with the brand of Ardent Mills. But from the very first day we said ‘We are Ardent Mills.’”
Mr. Stoufer added, “It’s a lot of little things that develop culture. It’s empowering the people of Ardent Mills, and I think they’ve really embraced their ability to make decisions. They are the ones defining the culture. It isn’t anyone on the senior team. It’s how our people behave and the actions they take that define the culture.”
Even as Ardent Mills strengthens its corporate identity, Mr. Dye said the company continues to enjoy a “very positive” relationship with its three owners — Cargill, Incorporated; CHS, Inc.; and ConAgra Foods, Inc. He described the valuable wheat origination capabilities of CHS as a “highlight of the company’s first year.” Cargill, too, has been a help with origination but also a partner on food ingredients to similar customers.
“ConAgra Foods is a big customer of Ardent Mills and also a major partner in terms of thinking about the consumer differently,” Mr. Dye said.
ConAgra Foods and Cargill each own 44% of Ardent Mills with CHS owning the remaining 12%. Based on public filings, shareholders in Ardent Mills received a total of about $177 million in dividend payments following the company’s first year of operations.
While both Horizon Milling and ConAgra Mills devoted considerable sums to updating their flour mills in recent years, Mr. Stoufer said Ardent Mills, as an independent company, is positioned even better in this regard.
“We are committed to reinvesting in the facilities, making the right investments in the right facilities to help our customers and help our business,” he said. “The process stops with Ardent Mills. You aren’t competing for capital dollars with other businesses. Today we say, ‘What’s right for Ardent Mills?’ and that’s the end of the decision.”
Mr. Dye added, “As Bill says, we’re not competing for dollars with ConAgra Foods or Cargill, but we are competing among a lot of projects within our business. We still have to have priorities.”
Just 15 months old as an enterprise, Ardent Mills announced in August its intent to purchase the Mondelez flour mill in Mississauga, Ont. This transaction closed on Sept. 1 and represents the company’s first acquisition and mill in Ontario.
A year after moving to Denver, Mr. Stoufer and Mr. Dye gave the Ardent Mills chosen new hometown high marks.
The Denver headquarters has more than 200 team members, about 150 of whom moved from Minneapolis and Omaha. The balance are local, non-legacy team members.
“All have been very happy, very successful out here,” Mr. Stoufer said of those who have moved. “We’ve had no real issues with the movement of the people.
“It’s been a welcome move. If you have to move with the business, this was a good place to move to. Everyone has their own personal issues, but from a city perspective, this was a good place to choose.”
Mr. Stoufer tipped his cap to local and state government leaders who have actively worked to help integrate Ardent Mills into the Denver business community and to become involved in civic and charitable matters. He said the business community in Denver has been “phenomenal” in its welcome of the company.
“Denver was the right fit for Ardent Mills,” Mr. Dye said. “It turned out to be right on many counts. We talk about the goodness of grain. This is a great place from which to tell that story. . In a single day here, we can take someone to see a grower, to visit a mill and then to the Ardent Mills Innovation Center once it is completed at headquarters later this year. There is this healthy, active lifestyle, openness to innovation and new ideas and that local feel. There’s just a good energy, a good feel. It has been a good fit for our brand, our identity.”
With the creation of Ardent Mills and other industry developments, Mr. Dye said the time is right to step up efforts to change the narrative when it comes to how the public perceives flour-based foods.
“We have gone through more change in the flour milling industry in the past year plus than we have in some time,” he said. “I think there is that sorting out of all those changes, and to me the opportunities coming from that are the ability to bring great products and a great story to the marketplace. The milling industry has a unique opportunity to do that. Working with the baking industry, working with the growers and really trying to effectively be that voice that brings all that together. And I think we will have some unique opportunities to better tell that story This is a time when that is important. Partnering with organizations like NAMA, like the Grain Foods Foundation, and looking at different ways to effectively tell the story is one thing the milling industry must do in 2015.”
Mr. Stoufer added, “We have one of the best stories to tell about local, fresh, sustainable that’s out there. We’re going to be talking a lot more about the goodness of grains going forward. The story matches up well with how the consumer wants to eat today.”
Mr. Dye described efforts the company is taking to eliminate any shadowy mystery behind flour milling and misperceptions about the industry’s principal product.
“We talk about becoming more transparent with the process itself, the milling process,” he said. “It is not highly processed to make flour. We are opening our mills for people to see the process of turning wheat into flour. It’s a straightforward process. We need to let people see how good these products are.”
Mr. Dye highlighted unique ways Ardent Mills meets the needs of both the largest flour customers and the smallest.
“I think part of the beauty of our plant network is that it is made of individual local, community mills,” he said. “Because they are in a community, and we very much are local there. We’re bringing the wheat in and milling it locally. You have a local story but also a network across the U.S., Canada and Puerto Rico. You can provide a unique value proposition to a large customer with bakeries across a broad region or a small localized customer who has a specific need and do that effectively across the entire spectrum. The idea of the local community mill is important to us. It is what people are looking for today.”
Sustainability represents another way Ardent Mills is thinking about flour milling in different ways, Mr. Stoufer said. He cited incremental steps, mostly around the transport of bulk flour to customers, aimed at lightening the company’s environmental footprint.
“We’re changing the process of how we wash trucks to reduce the amount of water we use across our system,” he said. “We don’t use a lot to begin with, but we’ve cut enough to fill five Olympic-sized swimming pools.
“In terms of diesel and oil-based fuel, we’ve been running compressed natural gas trucks from our Chester, Ill., mill, which results in 23% less greenhouse gases. The trucks have driven 1.4 million miles over the past year, roughly the distance to the moon and back three times. It gives customers a sustainability story as well.”
Other Ardent Mills programs with a sustainability focus include using Smartway Carriers, a trucking certification program designed to use less energy. Ardent Mills also has a “Fills” program aimed at making sure the weight of flour loaded into bulk trailers is maximized.
“Innovation too often is just viewed as a great new product,” Mr. Stoufer said. “We’re thinking about innovation not just about products but also processes. Those are the neat things we are getting into our first year.”