Supply Chain Concepts, Principles, and Processes for Kellogg's Report

This report offers a comprehensive analysis of Kellogg's supply chain management, exploring key concepts, principles, and processes. It examines how these elements are applied within the organization, with a specific focus on Kellogg's operations. The report evaluates the importance of effective supply chain management, its impact on customer satisfaction, supplier relationships, and distributor and retailer performance. It also delves into the interrelationship between the supply chain and other areas of the organization, such as sales, marketing, purchasing, and finance. Furthermore, the report provides a critical evaluation of supply chain analysis, offering recommendations for improvements and concluding with an overview of the findings. The report uses Kellogg's as a case study to illustrate these concepts, providing practical insights into how a major global company manages its supply chain to meet consumer demands and maintain a competitive edge.

PROJECT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Application of the key supply chain concept, principles and processes in an organizational
context-........................................................................................................................................1
Evaluation of importance of effective supply chain management (SCM)-.................................3
Interrelationship between supply chain and other areas of organization.....................................4
Critically evaluate the supply chain analysis...............................................................................6
Recommendations........................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Supply chain can be defined as a network between organization and its suppliers so that
their products can be produced and distributed for the final buyer (Quarshie, Salmi and
Leuschner, 2016). This network includes various kind of people, information, activities,
resources and entities. SCM is a supply chain management process that focuses on flow of
goods, raw materials and services in order to make raw materials into final products. It is one of
the most important part of an organization in order to fulfil their customers demand, needs and
requirements. This assignment will lay emphasis on main key supply chain principles, concepts
that can be applied throughout stages of designing, development, logistics and distribution,
importance and effectiveness of supply chain management, interrelationship between supply
chain and others areas of an organization, improvements to improve supply chain strategy of an
organization. Organization that will be focused on in this assignment is Kellogg’s. it is world’s
leading breakfast cereal manufacturer that manufactures their final products in 19 countries and
sell their products in more than 160 countries. This assignment will also focus on case study of
how Kellogg’s manage their supply chain.
MAIN BODY
Application of the key supply chain concept, principles and processes in an organizational
context-
Supply Chain Management includes the key process and activities which can be
completed in the efficient and timely manner. If the supply chain management is not properly
executed and implemented in business then the product will not be available to consumer when it
is required or demanded by them. The Supply chain activity are not the responsibilities of one
company or one person. Multiple individuals should actively participate in team process for
making it work. From the start to finish of supply chain which range of department or agency are
involved. It also includes quality, research, sales, purchasing, transport and distribution. The
supply chain consists of three sectors that are Primary sector, secondary sector and Tertiary
sector. Whereas in primary sector provides raw material that can be sold immediately for
consumption further (Hugos, 2018). The secondary sector includes industry which form,
assemble and build product. Tertiary sector do not produce goods they render services like
retailing and banking. Kellogg's is the secondary sector business. It gets their raw materials of
corn, rice, wheat and sugar from the primary suppliers across globe. With the help of these
1

materials they can develop various 40 breakfast snacks and cereals for selling their consumer by
tertiary sector. The process of the Supply chain management includes-
 Planning- The planning process focus on creating effective short and long range supply
chain strategies. The Kellogg's supply chain leader develop the SC strategies from design
to consumer demand prediction.
 Procurement-The purchase process of Kellogg's focus on buying of the needed
components, goods and raw materials. So consumer can easily purchase goods with
company.
 Production- The developing process involves manufacturing, assembling or conversing
of materials into finished goods and other product's parts (Copacino, 2019). Supply chain
manager of Kellogg render support to production and ensuring key materials are available
when it is needed.
 Distribution- Move procedure manage logistical flow of goods and services across
supply chain. Kellogg ensures that their goods are delivered safely and quickly to the
demand point.
 Consumer Interface- Demand process revolve across all of issue which are related to
consumer interaction planning, satisfying needs and demands of consumers and fulfilling
the order on time and perfectly.
There are various principles of supply chain management are as follows-
 Adapting Supply Chain to Consumer's Need- The supply chain and businesses
professionals understands the needs of consumer's. Customers are divided into various
groups which is known as 'segments'. The basis of profitability or sale volume, primitive
way for segmenting consumer is ABC analysis.
 Customize Logistics Network- After segmentation of consumer which is based on
various requirement the SCM manager of Kellogg have to tailor logistic network for
serving various segment. SCM manager has prioritized the delivery and making suitable
provision for quickly distributing products which are urgently marked.
 Align Demand Planning Across Supply Chain- Professionals of Kellogg supply chain
are trained for sharing data with their trading partner for avoiding unnecessary stock.
Demand data is utilized wisely by SCM manager.
2

 Differentiate Products Close to the Consumers- Differentiation and Standardization
are both completely dissimilar things. Due to the economy of standardization, sales which
can significantly bring down to the costing.
 Outsource Strategically- Although outsourcing is all range, manager of Kellogg should
outsource strategically. Core expertise would not be outsource ever. This principle of
SCM stands test of time.
 Developing IT Supports Multi-Level Decision-Making- IT projects should not done in
isolation and before the projects, business procedure re-engineering of Kellogg must be
done. So that they render proper understanding of procedure insufficiency and innovation
can be easily determined.
 Adapting both Financial and Services Metrics- Activity-based costing (ABC) is
applicable for determining consumer's profitability. But Kellogg uses Time Driven
Activity Based Costing for understanding change in process, activities, consumer and
product (Heizer, Render and Munson, 2017).
So, these seven principles can be used by supply chain management manager so that
business activities can be effectively rendered by company in their functional and operational
activities.
Evaluation of importance of effective supply chain management (SCM)-
Supply Chain Management has become the essential part of organization and businesses
so that they can gain success and huge consumer satisfaction. It has power for boosting up
consumer services, reducing operational cost and enhancing financial position of the company.
 Customer- Supply chain is helpful for boosting the consumer satisfaction. Kellogg
maintain their food products quality so that they can satisfy their customer. They also
ensure that their product cab reach to the consumer on time when it is required and
demanded by them. The supply chain plays a major role in providing better services to
their consumers (Mangan and Lalwani, 2016). If consumer will be satisfied then the sale
of company's product can also be enhanced and thus the company's revenue and profit
can be gained effectively and efficiently. The consumer service can be enhanced so that
they can render products to the right locations.
 Suppliers- Efficient supply chain management practices is helpful for suppliers in
declining inventory lugging cost. The business process can also be enhanced that can be
3

suppliers choice, warehousing, data accuracy, purchasing, decline in operational
complexity and distribution for their retailers etc., this is helpful for supplier that they
can directly render the product according to the target segment.
 Distributors- The supply chain distributors and merchants can render diversity of the
product mix at the reasonable price to consumer's. Thus, more and more consumer's can
be attracted towards company's product as the costing of product will be minimum. As
the other minimum costing is to be added in company's product which eventually
minimize the costing of product (Christopher, 2016). The lead time can also be reduced
by making their products readily- accessible to their clients and thus they can add these
products in their supply chain so that this can further sell in retail marketplace.
 Retailers- Kellogg uses different technologies in supply chain which is helpful for them
in acquiring advantage of maintaining good relations with the developers. The Kellogg
uses RFID so that inventory can also be tracked. ERP aids is helpful for company to
enhance their performance in supply chain. They can also easily render quality products
to the customers with effective sourcing. Effective supply chain management is also
helpful for managing several solutions for supply chain so that they can converse
transportation and operational cost in the retail market.
Interrelationship between supply chain and other areas of organization
Holistic and integrated approach to a supply chain management
Integrated approach to supply chain management: Integrated approach to supply chain
management focuses on creating alignment across all business processes throughout the
application suit of supply chain (Ahmadi, Kusi Sarpong and Rezaei., 2017). In other words,
Integrated approach to supply chain focuses on flow of information and materials throughout the
supply chain management in order to make it a unified process. There are various points that are
required to be considered in order to develop a integrated supply chain approach such as:
organizational objective, aligned business processes etc. these help the organizations to build an
integrated approach to supply chain management. Kellogg’s has segregated their supply chain
management in three different sectors and has integrated them according to their main objectives
and business processes. First is primary sector in which raw materials are provided such as
wheat, corn etc. Second is manufacturing secondary sector in which final product is made and
last is tertiary sector in which final good is transported.
4

Holistic approach to supply chain management: Nowadays more and more business
organizations are focusing on improving their supply chain management in order to gain
competitive advantage. Using Holistic approach organizations can enhance their visibility,
supply chain management risk prioritization and also helps in providing a roadmap to regulatory
compliance and revenue protection (Kaliani Sundram, Chandran and Awais Bhatti, 2016).
Kellogg’s focuses on handling, storage and transportation of their final products in order to
reduce costs and increase efficiency of their end-to-end supply chain management. Holistic
approach can help Kellogg’s to reduce their operating cost, improve product availability,
enhance services and reduce inventory. It can also be said that holistic approach focuses on all
the levels of supply chain management i.e. payment, inventory and receipts. Kellogg’s can use
holistic approach to supply chain management in various ways such as:
 Inventory planning: Kellogg’s should first of all identify all the fast moving, slow and
intermediate items so that they can enhance their service and transportation level (LeBaron,
Lister and Dauvergne, 2017).
 Effective procurement: it can impact supply chain management and its performance in a
drastic manner but it is still underestimated.
Implications and interrelationship between the supply chain and other business functions
using theories
It is extremely important for an organization to focus on enhancing their relationship
between supply chain management and other business areas (Bai, Dhavale and Sarkis, 2016).
Supply chain management related to entire procurement process of an organization. Effective
and proper relationship between other department of an organization with supply chain
management increases efficiency of an organization and also helps them to reduce their overall
coat. This can help organizations like Kellogg’s to enhance and understand their relationship
between SCM and other departments.
 Sales and marketing: Sales and marketing department need to present their next year budget
and forecast next year sales so that organization can focus on SCM and can further calculate
and plan coordination with other operations in order to med expected demand of products or
services. Sales department of Kellogg’s need to forecast next year sales so that SCM
department can work with operation depart and work on predicted sales.
5

 Purchase and selling department: In order to manage inventory sales department depends
upon purchasing department so that they can fulfil or complete their sales. Purchase
department also depends upon sales department they can understand time required between
placing an order and fulfilment date. This will help SCM to plan their purchases and send
estimated budget to the finance department.
 Purchasing and finance department: Relationship between both the department is
maintained with the help of ongoing feedback in both the directions. Purchase department
ask for feedback from finance department so that they can understand constraints that finance
department handles whereas finance department need to know when purchasing department
is planning to purchase raw material so that upcoming expenditure can be planned in a better
manner. Final decided budget is then allocated to SCM so that next year predicted sales
forecast can be fulfilled and production can be done accordingly.
 Human resource department: Relationship of SCM with human resource is extremely
important so that estimation of man power required to coordinate all the operations of SCM
can be explained to HR department so that they can plan their recruitment, training needs of
new employees accordingly. This also helps Kellogg’s to identify need of new staff members
and the department which require new staff members.
 Operations department: SCM on the basis of sales forecast coordinates with operation
department so that they can understand that whether within sales budget existing labour and
manpower will be sufficient to fulfil their estimated needs and requirements. SCM also need
to coordinate with Operations so that they can coordinate requirements of equipment,
additional purchases required to be made at right place at right time.
Critically evaluate the supply chain analysis
Kellogg is using the various strategies for evaluating the work in the effective way. It
would also include the areas of the organization which was linked to the other areas of the supply
chain. The company is focusing on the sales and the marketing department which would run the
business in the effective way. Both the departments are focusing on the sales and looking after
the strategies which would increase the sales as well. Purchase and the selling department would
be looking after the inventory of the products and these departments would manage the
production of the products and selling of the products. The production departments is preparing
the product as per the need of the customers which are buying the products. Purchasing and
6

finance department would be linked to each other by the way of the production budget and the
feed back forma which are filled by the customers regarding the products and these feed back
form are given to the production department for improving the products and for satisfying the
need of the customers. Human resource departments is not involved in the production and selling
of the products but it is involved in the satisfying the employees which are working in the
organization.
Recommendations
Kellogg would improve the supply chain management by the way of the strategic
planning in the correct way. In the strategic management plan it would include the designing and
evaluating of the supply chain model. These supply chain would be focusing on the location and
resources as well. The strategic planning would help to evaluate the suppliers which are
delivering the products to the company. Company would also use the demand planning would
include the forecasting of the strategies and the promotion planning as well. Forecasting would
be done on the basis of the various methods and it would be evaluating the work in the effective
way. Demand of products in market would be increased by the way of the marketing of then
products in the market (Cox and Atkinson 2018).
Company would use the supply planning for controlling then supply of the products in
the market. It would not be useful for the company if the supply is increased and if the supply is
not increased it would have effect on the company products. So supply of the products in the
market must be according to the need of the customers and demand of products in market.
Supply would be done only in the case of analysing the need of the customers. Warehousing
would be done in the case of the addressing the demand and the supply of the products. The
warehouse would contain the record of the inventory and the stock as well (Liou, and et.al.,
2016).
Supply chain management would be improved by the way of the distribution network and
it would improve the sales of the company on the large scale. The orders delivered form the
place must be tracked and it would be essential part of improving the supply chain management.
Software would be used by the company to solve the problems regarding the production of the
product. Good distribution strategy is resulting in the supplier chain management and also it
would improve the productivity and the increase the sales as well. Distribution strategy would be
sued and improved for improving the supply chain management. Cash given by the suppliers
7

would be resulting in the effective working because it would control the cash and payments
contracts would be identified and evaluated as well.
These factors would improve the supply chain management and also the operational cost
of the products and operational expenses would be identified in the effective way. These
unwanted expenses would be eliminated in the cost while working. Supply chain would include
the new technology which would ease the work of the company to work in the effective way.
These supply chain would have the effect on the manufacturing of products selling of the
products as well. One person cannot manage the all work of the product like the marketing and
selling of the products. Supply chain management must be multi functional and the work must
include the capacity of the workers in the organization (Tatoglu, and et.al., 2016).
CONCLUSION
From the above study it has been concluded that Supply Chain Management is very
helpful for company in gaining greater operational efficiency among organizations. The supply
chain management also boost up consumer services to them so that their sales and revenues for
company can be enhanced effectively. The company can render the product at right time so that
they can easily attract wide range of consumer to the company's product and services. The
operational cost of company can also be reduced as the supply chain can quickly distribute costly
goods so that expensive inventories can be avoided by company. The retailer suppliers and
manufacturers are depended on the proficient supply chain management for designing networks
so that the needs and demands of consumer so that their service goal can be achieved. The
financial position of company can be improved as supply chain management can control and
decline the expenditures which are related to the supply chain. This all helpful for company to
gain huge revenue and profit for company. The wide range of consumer can also be attracted
towards the company by which it can enhance its sales. The competitive advantage by company
can also be gathered so that they can easily compete with the rivals. Thus, it is very useful for
company in retail market as they render directly services to their clients.
8

REFERENCES
Books and Journals
Ahmadi, H.B., Kusi-Sarpong, S. and Rezaei, J., 2017. Assessing the social sustainability of
supply chains using Best Worst Method. Resources, Conservation and Recycling. 126.
pp.99-106.
Bai, C., Dhavale, D. and Sarkis, J., 2016. Complex investment decisions using rough set and
fuzzy c-means: An example of investment in green supply chains. European journal of
operational research. 248(2). pp.507-521.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Copacino, W.C., 2019. Supply chain management: The basics and beyond. Routledge.
Heizer, J., Render, B. and Munson, C., 2017. Operations management. Sustainability and Supply
Chain Management, 12th Ed., USA.
Hugos, M.H., 2018. Essentials of supply chain management. John Wiley & Sons.
Kaliani Sundram, V.P., Chandran, V.G.R. and Awais Bhatti, M., 2016. Supply chain practices
and performance: the indirect effects of supply chain integration. Benchmarking: An
International Journal. 23(6). pp.1445-1471.
LeBaron, G., Lister, J. and Dauvergne, P., 2017. Governing global supply chain sustainability
through the ethical audit regime. Globalizations, 14(6), pp.958-975.
Mangan, J. and Lalwani, C.L., 2016. Global logistics and supply chain management. John Wiley
& Sons.
Quarshie, A.M., Salmi, A. and Leuschner, R., 2016. Sustainability and corporate social
responsibility in supply chains: The state of research in supply chain management and
business ethics journals. Journal of Purchasing and Supply Management. 22(2). pp.82-97.
Tatoglu, and et.al., 2016. How do supply chain management and information systems practices
influence operational performance? Evidence from emerging country SMEs. International
Journal of Logistics Research and Applications, 19(3), pp.181-199.
Liou, and et.al., 2016. New hybrid COPRAS-G MADM Model for improving and selecting
suppliers in green supply chain management. International Journal of Production
Research, 54(1), pp.114-134.
Cox, S.R. and Atkinson, K., 2018. Social Media and the Supply Chain: Improving Risk
Detection, Risk Management, and Disruption Recovery.
9