Effective Supply Chain Management: Principles, Processes, and Integration

This document provides a comprehensive guide on effective supply chain management, covering principles, processes, and integration with other areas of an organization. It explores the impact of SCM on customers, suppliers, distributors, and retailers.

Supply Chain
Management

Table of Contents

INTRODUCTION
Supply chain management refers to the process of handling the entire flow of goods and
services that start from procurement of raw material component till its final delivery to the
customers. The whole system helps to create the strong network and link the chain from
suppliers till final customers. It basically encompasses the systematic planning, functioning as
well as execution of the processes material to derive the best possible value and maximize the
interest of customer within the marketplace (Almeida Marodin and Saurin, 2015). This whole
process broadly include demand forecasting, proper management of inventory, warehouse and
logistics in order endeavours competitive advantage. For better understeering Kellogg's
company of USA has been selected that provide the healthy cereals in order to improve the diet
of people. This is world leading company in terms of manufacturing the breakfast and has
expanded its operations in the 19 countries and come with different brands like Corn Flakes,
Pringles, Special K and so on. This report cover topics like application of supply chain
management concept as well as principles. Determine the importance of effective supply chain
management and interrelationship between supply chain and other areas of an organization.
Further, recommend the improvement of supply chain management strategy.
TASK 1
P1: Demonstrate the supply chain concept, principle as well as processes
Supply chain management focuses on the activities like planning, purchasing, storage,
product assembly, processing and distribution in order to meet the requirement of target
customers. The systematic way to transform the raw material into processed good and offer the
services to the customers helps the company to gain competitive advantage. In context to the
Kellogg's company makes significant effort to prepare the right product based on market
research which is done to evaluate the needs of customer in competitive market. They mainly
focuses on the Just in time inventory management under which they they bind effective supplier
supply relationship for effective sourcing, design and development of product. This is the useful
technique that help to store the large inventories which can add up further cost on company
(Behera, 2015). Thus, it is time and cost effective method that is successfully used by the
Kellogg's company.
Principles of Supply chain management:

There are certain essential principle of SCM that help in effective handling and moving
of product to the ultimate consumer. This helps to establish the effective network for the better
performance of different processes. Hence, explanation of different principles for supply chain
management are demonstrated below:
Adapt supply chain to meet customer's need: The company segment the mass market
into small groups to understand the need of specific group. Oncer the company understand the
need of customer as or the changing preferences the supply chain function to align the need of
target market. For instance, the Kellogg's understood the significance of servicing the healthy
and tasty breakfast in order to link with the need of huge market.
Customize the logistics network: Once the segmentation is done the other step is to build
the logistics network so that irrespective of the large distances the product reaches to the target
market effectively (Christopher, 2016). Kellogg's employee in terms of logistics has done the
partnership with logistics specialist like TDG that can easily transport the manufactured cereals
or other products to the customer.
Conduct demand planning: On the basis of past sales and the data gained by supply
chain professionals helps to forecast the demand effectively in order to avoid the chances of
keeping the unnecessary stock. As Kellogg's operate in different parts of the country and gained
huge acceptance to it make special precaution to build effective relation with the professional so
that they get the vital details and carry out functioning by maintaining the balance between
demand and supply.
Develop effective IT skills: It is vital for different food companies like Kellogg's to
adopt technical skills and use specialised software in order to manage the customer base. Along
with that this can help them to manage the innovative product design, and carry out the
innovation effectively.
Stages of supply chain management processes:
There are different steps on the basis of which supply chain management process need to
function in a sequential manner. Explanation of different stages are defined below:
Customer relationship management: As per supply chain management this process
helps to plan out effective process under which data is accessed and maintain the interaction with
customer in order to develop effective relationship.

Customer service management: Here the business builds the contract which are
associated with the product and services.
Supplier relationship management: It guide the efficient relation that is shared between
the company as well as supplier. This helps the Kellogg's company to get the quality material at
preferable cost and within stipulated duration.
Manufacturing flow management: It refer to the flow or movement of the semi finished
and finished product within or outside the factory. There are certain actions such as inventory
handling that help to maintain the flexibility and effective functioning of business.
Demand management: This encompasses the existing need of customer based on which
company van fulfil it and bring certain amendments (Copacino, 2019).
Order fulfilment: To satisfy the need of customer logistics network are build that help in
successful transporting the product to the ultimate user.
Product development and commercialization: This include the frameworks which is
usually developed by the firm in order to enhance the sales of new product within specific
geographical area. This also help to spread the awareness amongst the customer for the new
product.
Return management: It is used to manage the upstream as well as downstream
movement or the flow of goods in the best possible manner. It refer to the adequate flow of the
inventory for systematic functioning.
Thus, the systematic use of preferable concept, principle as well as processes can assist
the Kellogg's company to carry out the different process like product design, resourcing, logistics
as well as distribution effectively. Amongst the different method of managing inventory
Kellogg's has adopted the most significant platform that is just in time principle under which the
company does have to bear the storage cost. Due to the effective relation with the supplier they
can order the raw material as per the demand of the customer (Fahimnia, 2015). Along with that
to strengthen the relationship with ultimate customer respected company have collaborate with
the TDG logistics that is specialised in dealing with the customer and transporting the different
items within specific duration. They are more prone to use the technology so that all the vital
details are stored in the electric form and help to track the inventory at different levels. Hence,
lean production system is used by the company in order to minimise the chances of error or

waste at different level of the product. Thus, optimum utilisation of the resources helps to attain
the long term sustainable position of the firm.
Stage 1: Raw Material: This is the initial stage of the supply chain management process
as here the firm with the help of supplier get raw material which they utilises to carry out their
processes. It simply assist the firm to transform material into the finished good with the
perspective to satisfy the needs of end consumer.
Stage 2. Product Design, Development and Manufacturing: Product development is
the core objective of firm that help to carry out the diverse activities. It involve different
functioning like market analysis, marketing sales as well as customer support which reflect the
generation of revenue for different activities of firm. Along with that product design is the part of
product development that to understand the existing experience of the customer and modification
in the product that can help to meet the untapped needs effectively. Further, Kellogg's immensely
focuses on the different customer behaviour and actually provide them what they need that is
healthy and easy to make meal. Along with that they have added up various variants to
successfully target the needs of different people effectively.
Stage 3: Transportation and Distributors: It is simply the process by which company
transfer the material from their warehouse or manufacturing area to the customers place. This is
relatively different from the movement as here all the activities take place outside the
organisation. Kellogg's collaborate with other companies like Kimberley Clark as well as TDG
in order to enhance their storage and distribution process.
Stage 4 Retailers: Finally the company make efforts to present their different variant of
the products at the retail outlet where different customer can explore diverse variants and take
the product based on their taste and preferences. Product merchandising is the essential part that
need to be concentrated by Kellogg's company in order to appeal the interest of customers.
TASK 2
P3: Evaluation of effective SCM from the perspective of customers, suppliers, distributors and
retailers
Supply chain management is the process of managing goods and services through out the
supply chain so that business goals could be achieved successfully. In order to satisfy all the
stakeholders such as customers, suppliers, retailers and distributors it is very important for to

make sure that the SCM is effective. It will help to fulfil all their requirements in systematic
manner (Gold, 2015). Effectiveness of SCM from the perspective of all the stakeholders is as
follows:
Effective SCM from the perspective of customers: Customers are the buyers of the
products and they want that they should get all the products at right place and right time. If an
organisation is not able to manage the supply chain then it may leave negative impact upon
mindset of its clients. With the help of effective SCM an enterprise will be able to reduce the
cost of different products which are supplied to the consumers as it may decrease expenses
which have taken place in transportation and storage. In order to mitigate the chances of
unnecessary cost and carry out effective supply chain management Kellogg's operate the
factories near the farms to minimise the delivery cost. This even help the product to reach out the
shelves and fulfil the demand of customer within stipulated time. Along with that company to
enhance the distribution system the company has formed partnership with logistics company like
TDG to reach the product to the customer and at desirable cost. For Kellogg's it is also very
important to make sure that its supply chain is managed properly so that it can satisfy its
customers. If they are not able to get the desired products at right time due to ineffective SCM
then it may result in bad image of company in their mind.
Effective SCM from the perspective of retailers: All the sellers in the market which are
responsible to sale the products to customers are known as retailers (Hugos, 2018). Main
responsibility of them is to provide the items to end consumer so that an organisation can reach
to its goal of maximising profits and satisfying clients. Kellogg's is one of the largest companies
in the market which is required to manage the important supply chain relation with the retailers
because it will help them to sale all the products to the customers appropriately. If supply chain
will not be managed properly then it will create problems for organisation as well as its retailers
because they wont be able to sale it and it will result in reduced profits of the company.
Additionally, Kellogg's can manage the relationship with retailer by giving them profitable
margin in order to place their product at the appropriate shelves which directly seek the attention
of customer. The main advantage of maintaining the profitable relationship with retailer is that it
enhances the sales of company as the retailer remain involved to promote the product and
promote the diverse range of products to customer. On contrary, lack of this relation often gives

opportunity to competitor to grab the share of Kelogg's relation. This basically determine the
essence to maintain adequate relationship with retailer.
Effective SCM from the perspective of distributors: The external parties which are
distributing the products in the market are known as distributors. For all the companies it is very
important to maintain the supply chain because it can help to deliver good to them on time so
that they can distribute them in the market successfully. In Kellogg's managers try to deliver the
goods to the distributors on time by managing the supply chain in systematic manner. It is also
beneficial in reducing the possibility of losses for company as on time delivery to them results in
higher sales.
Effective SCM from the perspective of suppliers: The parties which are supplying
material to the companies are known as suppliers. For them it is very important that the supply
chain of the organisation is managed properly because it can help enterprise to manufacture the
products appropriately and on time. Kellogg's is a manufacturing company of different products
such as corn flakes therefore it is very important to manage its supply chain so that material
could be received on time. If it is not able to focus on effective SCM then it may result in higher
losses for the organisation as goods will not be received that will stop the company to perform all
the operational and executional business activities (Luthra, 2015).
TASK 3
P4: Evaluate the cross functional and integrated approach of SCM with other areas of an
organisation
An organisation can only function with the help different department as well as areas that
function together by coordinating the efforts with one other in order to carry out effective
functioning. Similarly, intergeneration of the supply chain management with other functional
area helps to maintain the flexibility in terms of effective functioning of firm. Along with that
this help while carrying out the better production SCM integrate the performance with other
areas in order to carry out the functioning effectively (Meixell, 2015).
Production department: As supply chain management is the broad term that is
associated with the different activities of business like planning, procurement, analysing demand
forecasting etc. So they pass all the necessary information to the production department which
together are responsible to transform the goods and services into the quality material with the

objective to cater the need of people. The integration of both the units help to maintain the
balance between the demand as well as supply of the product. Herein, Kellogg's company is
efficient enough to cater the right need of the customer at right time to attain the objective of
firm suitably.
Distribution and logistic department: The distribution department of the organisation is
responsible to deliver the final commodities that is fit for consumption to the customer. Basically
it fill the distance gap between the organisation as well as customers so that they get the
company's product at each and every corner of the world. So the SCM of the Kellogg's company
helps in the efficient transformation of the raw materials into desirable product via just in time
method. This is the effective way as it make the company potential enough to deliver the product
to customer with the help of strong distribution channel so that the products reaches the shelves
of different retail store.
Finance department: The financial department of the company is responsible to manage
all the financial transaction of the company. They even prepare the cash flow statement so that
they can record the inflow as well as outflow of the cash transaction. This helps the company to
mitigate the unnecessary expenditure so that they gain more profitability (Monczka, 2015).
Budget preparation is the most valuable part of the Kellogg's department that is followed by
different department like SCM in order to monitor the internal processes associated with
preparing of final good. This determine the team member that how much resources they need to
use in order to prepare the quality material for the better functioning of an organisation.
Marketing department: Marketing department is responsible to anticipate the changing
need of customer and accordingly help the SCM to prepare the plan in order to cater the need of
target market effectively. It is the wide platform that with the help of promotion technique appeal
the interest of customer and offer them the wide range of offering effectively.
Research and development department: It is the most essential department for large
companies like Kellogg's that operate in different parts of the country. So with the help of market
research they gather all the essential data which is then converted into the useful informations.
Thus, the supply chain management depend upon research department as all the essential
information are further utilised to bring the modification in the existing product and deliver
potential goods to the customer. This effective help to understand the market and sustain the
balance between demand as well as supply.

TASK 4
P5: Evaluate a supply chain strategy within an organisation and present proposals for
improvement
The supply chain strategy is effectively designed by the Kellogg's company by managing
all the aspect of business such as procurement of raw material, production process as well as
logistics effectively. Being one of the top most brands, all the elements of business are properly
designed so that they can serve the potential market in best possible manner. This has finally
helped the company to establish the potential image by serving the large market effectively.
Along with that it has effectively collaborated with the well known logistics such as TDG that
deliver the potential product to the customer within stipulated period of time (Wisner, J. D.,
2014). Their inventory management method such as lean production system has favourable
helped the company to earn favourable amount of revenue. Moreover, to build the positive image
the Kellogg's company invest in the CSR activities like uses the economical packaging and
reduce the emission of carbon by taking the effective measures fro sustainable development.
Supply chain improvement proposal: Explanation of certain recommendations that can
help the firm and can bring the improvement in the existing processes are defined below:
 There are various companies such as Kraft Heinz and Quaker Oats company that
constantly come up with healthy products along with various variants. So on the basis of
the competitive pressure Kellogg's company too need to make the special precaution in
order to extend its product line and maximise the market share. This can favourably help
to retain the potential employee for the adequate functioning of business.
 Kellogg's should use the online platform in order to spread the awarenesses about its
products amongst the customer. As most of the people both male and female work
outside so they require the healthy as well as quick breakfast to have. Hence, all the
requirements are effectively met by the company thus they just need to focus on its
advertisement technique in order to grab the large audience effectively.
 Along with lean production system, Kellogg's company should use the total quality
management technique. This can help the company to continuously bring the
modifications in the existing product. As the requirement and taste of customer can
different on the regular basis so this helps them to serve the existing need of the market
effectively.

 Kellogg's should make the vital effort in order to differentiate their product from the
other competitors. This is the effective basis that help to maintain the interest of the
existing customer as well as attract the potential market. This is the effective strategy that
can help the company to enhance its market reach also they can set the premium prices
because of the attritional attributes and significance associated with the components of
product. Although the company operate in the different market but most of the people can
comprise the prices but not the quality of product so they need to focus on it effectively.
 There are various digital media tool like the website of company, use of SEO, SEM and
affiliate method by which Kellogg's can promote its product. It can offer the smaller
packs for the first time buyers of the company along with that sales promotion technique
can help the company to build up the taste amongst the consumer for its new product.
CONCLUSION
From the above project report it has been concluded that supply chain management can
be defined as the process which is followed by the companies for the purpose of delivering goods
to different retailers which are retailer, customer, suppliers and distributors. There are various
supply chain principles which are required to be focused by all the organisations for effective
SCM. Some of them are customising logistic network, outsourcing in strategic manner, adopting
service and financial metrics, differentiating products to be close to the clients. For all the
organisations it is very important to manage the supply chain effectively so that all the
stakeholders could be satisfied. The cross functional and integrated approach of SCM is related
with other areas of organisation as it helps to perform operations appropriately. If an enterprise is
willing to make improvement in the supply chain then it is very important for it to evaluate the
SCM and then find the errors in it.

REFERENCE
Books and Journal