Supply Chain Management in Kellogg: Strategies and Competitive Advantages

This document discusses the supply chain management strategies and competitive advantages of Kellogg, focusing on customer service, inventory management, transportation, warehousing, and capacity management. It explores how Kellogg utilizes various methods for customer service, adopts efficient transportation modes, collaborates with logistics service providers, and manages warehousing and capacity to ensure effective supply chain operations. The document also highlights the competitive advantages gained by Kellogg through its supply chain management strategies.

SUPPLY CHAIN
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................3
MAIN BODY.............................................................................................................................3
Customer service and inventory.............................................................................................3
Transportation & LSPs...........................................................................................................4
Warehousing & Capacity.......................................................................................................5
Strategy, competitive advantages and conclusion..................................................................6
RECOMMENDATION.............................................................................................................8
CONCLUSION..........................................................................................................................8
REFERENCES.........................................................................................................................10

INTRODUCTION
Supply Chain Management (SCM) refers to flow of products and services that
converts raw material into final goods. In addition to this, it is related with attaining
customers’ value and competitive advantages. In simple terms is the active management of
the supply chain task of the organization which helps in maximizing the customer value and
therefore, accomplishing the goal of sustainable competitive advantage. It incorporates
activities starting from product development, sourcing, production and transportation and the
system to keep track of all these activities. It is very important for the organization to
effectively understand the relevance of supply chain management in order to make sure that
things are going as per the plan and also helps avoiding unwanted cost by implementing
proper coordination with all the activities and stages of production.
Current scenario requires efficient transport facility so that it can meet market forces
such as demand and supply. Kellogg’s Cornflakes is world’s largest organization which
focuses on gaining higher profitability along with paying concentration to reduction on social
and environmental impact. Business strategy followed by firm is unique in industry that
enables it to grow. The current report will give emphasis on Kellogg’s customer service and
inventory management. Present case study will include mode of transportations and LSPs of
concerned organization. Warehousing capital and strategy for proper management of
inventory methods are used in order to obtain effective availability will be shown in report.
MAIN BODY
Customer service and inventory
In current scenario it is required to manage appropriate strategy for handling
customer’s queries and feedback. Customer service is continuous process which is done after
making sales also. Kellogg’s utilizes the various methods for reaching its customers and
meeting their requirement. Better supply chain is adopted by company for ensuring that its
products are delivered on time. For establishing customer relation management it utilizes
mobile strategy. It helps firm to analyze customer behavior and make personalized campaigns
so that better buyer engagement can be obtained. Location based strategy is also utilized for
building customer service more effective and strong. Real Time consumer Web portal
(RTCWP) and preference engine where customer can sign and communicate with company.
This information is widely used for making marketing programs more valuable. Digital plans
are use by business which not only reduce the cost but also provide desirable end outcome.
Kellogg’s connect with intermediately like wholesaler, supermarket and hotels. It ensures that

its manufacturing plants are nearby the demand areas. It helps business to deliver its products
efficiently through various distribution channels.
Inventory method utilized by Kellogg’s is FIFO method as they produce just in time
to meets its market demand. A large scale multi linear program is used for making
manufacturing and distribution decisions (Boon-Itt, Wong and Wong, 2017). Planning
structure comprise Kellogg Planning System (KPS) which ensures that cost regarding
production, distribution and storage is reduced. In addition to this, tactics decisions related to
capacity management, extension, etc. are widely utilized. By giving focus on supply chain
management Company can monitor its inventory which decline requirement of material
handling and storage equipments. Kellogg Also utilize Inventory information system which
makes process of management flexible for assembling changes according to demand &
supply (Kellogg supply chain from manufacturing to shelf, 2021). The specified method
make appropriate process which assures safety of stock by permitting company to use proper
manufacturing approach that reduces ideal time and storage cost.
For managing the company’s stock Kellogg make sure that products are not spoiled
and reach customers in standard quality (Case Study of Supply Chain Management and E-
Logistics with Kellogg, 2021). It reduces lead time which improves the inventory level. It is
managed by Kellogg by keeping in mind that uncertain buyers demand are meet with
controlling cost of warehouse. The appropriate supply chain management of its products so
significantly impact positively on cost of assets, goods and inventory. Economic Order
quantity can be stated that it is used for proper decision making regarding purchase of
inventory so that holding cost, storage and order all are maintained appropriately. It leads to
adopt lean production system in turn elimination of waste can be exerted which makes profit
margin of Kellogg stable. Company evaluates its production, distribution and inventory
management approaches for obtaining desire outcome regarding reduction of cost.
Transportation & LSPs
Modes of transport used by Kellogg’s and LSPs or 3PLs
In terms of transportation, the organization makes use of all ways of transportation for
delivering its products at the right place and time. The company makes use of land, road and
air modes of transportation which helps it in reaching wider audience group. Transportation is
the key activity which links all the parts of the supply chain the Kellogg’s have employed
specialist transportation and storage organizations who are responsible for all the logistics
aspects of its business. The customers of Kellogg’s vary in size and needs and in order to

serve this diverse customer base, Kellogg’s requires to improve the management and
distribution of its POS materials. In order to make this happen, Kellogg’s employed SEKO,
an Itasca, Illinois-based 3PLs provider for the purpose of guidance (Collaboration brings
savings for Kellogg’s and Kimberly-Clark. 2008). SEKO worked in collaboration with the
organization’s sales and marketing team for suggesting improvements. The outcome of this
3PL partnership with SEKO lead to improved speed to market for the POS materials by 60%
along with reducing the inventory level by 35%. The supply side transportation and the
demand side transportation are handled in the similar manner. In addition to this, Kellogg’s
also outsource its logistics activities to TDG as a LSPs and many other firms, which stores
and transports pallets of Kellogg’s cereals (3PLs & Shippers: In It For the Long Haul. 2018).
This allows the Kellogg’s to concentrate on its area of specialty of production. Along with
that, it also shares the transportation with other producers as well like the Kimberley Clark.
This helps it in keeping the products of Kellogg’s competitive and helps in decreasing the
number of half full or empty vehicles on the road.
Efficient supply chain transportation
The supply chain transportation of Kellogg’s is very efficient as every thing is
computerized and designed in such a way that it helps in meeting with the desired objectives
of the company along with benefiting in other ways. The distribution of the Kellogg’s
improved through its collaboration with the Kimberley Clark and TDG. This collaboration
assisted in mitigating unwanted storage and transportation cost. The deliveries are effective
as lorries are filled full for minimizing the cost of transportation. The TDG keeps the
warehouse cost low with the help of the computerized heating along with the specialist
transportation skills (Proverb, 2019). The electronic stockholding shows promptly when racks
are unfilled. This at that point consequently creates requests to the assembling base at
Trafford Park to renew stocks. This limits wastage and the lower costs have expanded
Kellogg's profits. This additionally assists the organization with keeping costs competitive in
nature, which keep clients upbeat and loyal. The impact on the surrounding is good too as the
heating and fuel costs are reduced.
Warehousing & Capacity
Contribution of warehousing to the supply chain of Kellogg’s and managing capacity
Kellogg’s largest UK production plant is at Trafford Park in Manchester and its
storage depot was 15 miles away from it and thus, Kellogg’s moved its storage depot to a
new warehouse which was only one mile away in respect to its production base. This resulted
into providing specialist energy efficient warehousing of stock twenty-four hours each day.

This helped the organization in overcoming the unwanted transportation cost. For further
improving its distribution, the organization collaborated with the TDG which resulted into
reducing the transport costs and attaining energy efficiency (Sumukadas, 2021). In respect to
managing capacity, at each stage is a difficult task which makes it important for the
organization to timely meet with the managerial team regarding it, determining how well the
existing system is meeting with the company’s requirement, identifying and analysing the
future needs of the company along with the potential opportunities available to the business.
At last is determining whether the current infrastructure would be able to effectively meet
with the anticipated growth. These all stages make it difficult and complex in regard to
effectively managing the capacity (Supply chain from manufacturing to shelf. 2019). Any
failure in identifying the future needs and demand of the company products might result into
incurring huge problem. Kellogg’s has implemented Just-In -Time to provide an effective and
efficient stock inventory system which helps in ensuring that just enough products are being
manufactured to fulfil the orders and therefore, limited stock is maintained.
Efficiency of Kellogg's in managing capacity
Kellogg’s is effectively and efficiently managing its capacity pertaining to its supply
chain. The computerised inventory management system has helped guarantee racks are in
every case full and orders are followed through on schedule. This assists Kellogg's with
keeping its products stocks at minimum. The lean production system smoothens out the entire
procedure and eliminates wastage (Jana, 2021). Automated warehousing implies that items
are fabricated proficiently, at that point moved directly from the distribution centre to retail
clients. This keeps away from postponement to clients. The company has effectively planned
its capacity which has assisted it in avoiding the situation of out of stock or inability to
produce the required level of order or to effectively meet with the changing demand of the
consumers. Kellogg's have ensured that it has relevant production and storage capacity which
will help it in meeting with the changing needs of the customers. Through effective decision
to collaborate with TDG as resulted into avoiding unnecessary cost in regard to the
transportation of products to the warehouse which was far away. Thus, all these strategies and
methods has helped the organization in effectively meeting up with the warehousing and
capacity of the supply chain.
Strategy, competitive advantages and conclusion
Competitive Advantages
The competition in industry is at peak level so deriving competitive advantages is
essential for company. Demand for the product of Kellogg is high in worldwide so it is

crucial for organization to adapt strategy which makes its business activities more effective
and efficient. LPS chosen by Kellogg is SEKO and TDG which provides several competitive
advantages to organization. The advantages that firm attain are getting more effective supply
chain which improves its market for POS materials. Transportation facility is handled by
SEKO in turn fast delivery of goods become possible. It outsources its logistics services to
TDG. This provides benefits like mitigating risk by sharing it with external firm as well
strong relationship building enhances market coverage speed. Delegation of roles and
responsibility allow company to pay more attention on its quality of product and marketing
plan for attracting buyers. In current scenario of industry competition has arrived at cut throat
position so SOKE & TDG aid Kellogg to drive more suitable planning and controlling of
inventory due to sustainable supply chain management.
SEKO designs the placing order process which reduces mistakes, returns and
duplication of activities. It enhances its visibility point of sale, instant ordering stock, etc.
significant advantage that company gets through this is enhanced speed for delivering
products to meet impulse purchasing behavior of clients. TDG allows firm to focus on those
areas that largely contribute in gaining growth and exceed revenue. The ways that can be
used by Kellogg for improving its current supply chain management is gaining data insights,
cost awareness, evaluating vendor company performance, relationship building, real time
inventory, standardizing process, return policies transparency, etc. it helps organization to be
very efficient while dealing with production, distribution and inventory management. With
respect to this, implementing research and development more responsive in terms of
identifying changing demand of customers. It will allow business to communicate for
getting information regarding most demanded segment of targeted market.
Supply Chain strategy used by Kellogg
Kellogg is large scale organization that severs its products to number of nations.
There are several ways that company has adopted in order to keep its current functioning
appropriate. Supply chain of company comprises range of agencies and department for proper
strategy regarding company development (Kellogg supply chain process from factory to
super market shelves, 2021). Lean production is given preference for meeting customers’
requirements as it manufactures by doing research and development so that storage cost can
be reduced. In addition to this, computerized system makes clarification for channel of
reaching products from warehouse to end buyer. It removes the situation of waste regarding
raw material in turn reduction of cost can be obtained. The company has adopted lean
production system for better availability of space in warehouse so that firm can decline ideal

time of all inputs and outputs. In and out bound strategy formulate environment of low risk
by deducting possibilities of changing preference of customer. The implemented current
approach helps Kellogg to derive the best outcome through matching with changing buyer
preference.
To meet estimated demand of clients from all over the world company uses proper
inventory management. In addition to this, the proper utilization of strategy makes available
of end products and input for both organization & customers. First in and usage creates
positive situation for elimination of irrelevant equipments and declination of transportation in
turn good profit margin can be expected by company. The implemented supply chain also
give emphasis on reducing impact on environmental practices that aid organization to meet
its corporate responsibility and gaining trust of stakeholders. Competitive merits derived
through implemented form of SCM are increase information sharing, positive impact on
environmental practices, fast delivery, low warehouse costing, error elimination, etc.
RECOMMENDATION
It is suggested to Kellogg for building adaptive and agile supply chain with accurate
planning and integrated production system. Kellogg will get various merits through this type
of action. Firm can execute it in integrated manner which will solve problem of data
analytics, barrier of failing, etc. It will enhance digitalization in whole process of SCM
(Russell and Swanson, 2019). Proper allocation of inputs and output can be ensured by
organization through this method. Operational speed and flexibility can be achieved with
usage of agile supply chain strategy.
CONCLUSION
From the above report it can be concluded that Kellogg is large multinational
organization which deals in several nations. The present report has given emphasis on
customer service and inventory management of enterprise. For providing appropriate
customer service firm has developed buyer engagement programs, RTCWP, business based
platform for responsive communication channel is adopted. The current inventory
management approach used by Kellogg is just in time that supports first in & out
methodology for managing stock of company. The transportation method used by Kellogg is
also mentioned in present report. It takes support from SEKO and TDG for having more
advantageous facility. In addition to this, current case study ahs show competitive benefits
and strategy of SCM utilized by organization such as instant ordering, minimize return and
errors, increased delivery speed, etc. Significance of warehouse for better SCM through

adopting five step processes is shown in current case study. SCM is playing important role in
contributing effectually management of capacity. Present report will provide findings based
on factors mentors mentioned above. The overall SCM competitive benefits have been given
in current case study.

REFERENCES
Books and Journals
Boon-Itt, S., Wong, C. Y. and Wong, C. W., 2017. Service supply chain management
process capabilities: Measurement development. International Journal
of Production Economics. 193. pp.1-11.
Jana, P., 2021. Lean supply chain management. In Lean Tools in Apparel Manufacturing (pp.
381-398). Woodhead Publishing.
Proverb, A., 2019. Diane M. Kellogg. Global Champions of Sustainable Development.
Russell, D. M. and Swanson, D., 2019. Transforming information into supply chain agility:
an agility adaptation typology. The International Journal of Logistics
Management.
Sumukadas, N., 2021. Are you ready for your next product recall crisis? Lessons from
operations and supply chain management. Business Horizons, 64(2), pp.211-221.
Online
3PLs & Shippers: In It For the Long Haul. 2018. [Online]. Available Through:<
https://www.inboundlogistics.com/cms/article/3pls--shippers-in-it-for-the-long-
haul/>.
Case Study of Supply Chain Management and E-Logistics with Kellogg.2021 . [Online].
Available through:< https://www.ukessays.com/essays/business/supply-chain-
management-and-elogistics-with-kelloggs-business-essay.php>
Collaboration brings savings for Kellogg’s and Kimberly-Clark. 2008. [Online]. Available
Through:< https://www.logisticsmanager.com/10361-collaboration-brings-savings-
for-kelloggs-and-kimberly-clark/>.
Kellogg supply chain process from factory to super market shelves. 2021. [Online]. Available
through: < https://www.tradegecko.com/blog/supply-chain-management/supply-
chain-management-factory-supermarket-shelves-kelloggs>
Supply chain from manufacturing to shelf. 2019. [Online]. Available Through:<
https://businesscasestudies.co.uk/supply-chain-from-manufacturing-to-shelf/ >.