Importance of Effective Supply Chain Management

Supply Chain
Management

INTRODUCTION
Supply chain management is related with managing the flow of goods and services for
the entire production process which includes supply of all the raw material to the delivery of the
finished product to the consumers. To ensure the continuous supply of the material a strong
network of suppliers need to be created by the company. The efficient supply chain management
helps in reducing the overall cost of the company which will help them to reduce the ultimate
cost to the customers. For this report the Kellogg's company is taken into consideration which is
an American company which manufactures cereal and convenience food. The company has been
operating in almost 180 countries. In this report the key supply chain concepts, various principles
related to it and the processes of supply chain is considered for the company. This will facilitate
them to bring efficiency in their operations. On the basis of this, recommendations will be
provided to them for the improvement required in the entire supply chain management.
LO 1
Application of key supply chain concepts, principles and processes in organisational context
Supply chain is a network between the suppliers and the company which the help of
which they manufactures and provides final goods to the customers. The process of supply chain
includes various people, activities, information, resources etc. To have a better understanding
various concepts of supply chain need to be considered by Kellogg's :
 Logistic management: It is the part of supply chain that helps in planning,
implementing and controlling the forward and reverse flow of goods, services and the
information of the company (Kapoor, 2015). The Kellogg's have an efficient logistic
management which help them to all the supplies at the point of production and
consumption both with which they efficiently meet with the demands of the customers.
This concept ensures the supply of the raw material to the company.
 Value Chain: The value chain helps the company to identify the competitive strategy. It
includes various primary and supportive activities that helps the company to enhance
value to the customers and to increase profitability of the company. Kellogg's analyse
their all the primary activities which includes inbound and outbound logistics,
operations, marketing and sales, and services. Also they consider all the support services
such as infrastructure, human resource, technology development and procurement. It

helps them to identify the problems in the process and thus eliminating them which
increase their profitability and reduces cost (Gelei, Losonci and Matyusz, 2015). This
concepts help the company in resourcing stage as it procure funds, human resources,
technology etc. with the help of this.
 Distribution Channel: The distribution channel manages the flow of goods and services
from the producer to the consumers. The Kellogg's has an efficient direct channels with
the intermediaries and the customers. This make the company to satisfy their customers
by fulfilling their demands through various stores, distribution channels etc.
the concepts of the supply chain helps them to procure the right material on right time but along
with that they need to consider various principles which helps them to manage their supply chain
efficiently. The 7 principle of supply chain are given below which can used by the Kellogg's: Apply supply chain based on customer needs : This principle suggest that the target
group must be segmented and on the basis of which the supply chain need to be planned.
It will facilitate the stage of distribution as finished goods will be provided to them on the
time at right place as per their needs. Customize logistics network : According to this principle the network of the logistics
need to be customised according to the service requirement of the customers. This will
help in the decision making at the logistic and distribution stage of the supply chain
management (Jasti and Kodali, 2015). Align demand planning across supply chain : The supply chain need to efficiently
planned on the basis of the demand. It will ensure the availability of the goods at the right
store. Also it will help the Kellogg's in their inventory management at the stores. Differentiate products close to customers : The product so offered by the company need
to be differentiated which can be done at the product design and development stage. It
will facilitate the organisation to be so close to the customers. Outsource strategically : This principle is applicable to the logistic and distribution stage
which suggest that the distribution must be outsources to third parties as this reduces the
total cost of the company. Develop technology to support decision-making : This principle can be applied at the
product development and design stage which will help them to improve the product and
will further facilitate the decision making.