OPER8340 Term Project: Kellogg's Global Supply Chain Management

This report analyzes the global supply chain management of the Kellogg Company, focusing on a recall situation involving contaminated cereal products. It examines stakeholders, including Kerry Incorporation and ARICAM, and their objectives, along with communication strategies employed during the recall. The report delves into the location of product contamination, shipping processes, and the potential impact of using Incoterms. It further explores risk mitigation strategies within Kellogg's procurement team, ethical risks related to contract manufacturing, and processing strategies used during the recall. The project also considers the recall within a circular economy model, transportation modes, legal and cargo security considerations. The report provides recommendations and identifies key success factors for improved supply chain management within Kellogg's.

Running head: GLOBAL SUPPLY CHAIN MANAGEMENT
GLOBAL SUPPLY CHAIN MANAGEMENT
Name of Student
Name of University
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Executive Summary
This report will discuss regarding the Global supply chain management of the Kellogg
Company. This report also discuss regarding various questions related to the Global
Supply Chain Management of the Kellogg Company.

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Table of Contents
Introduction..........................................................................................................................6
Discussion............................................................................................................................6
1.a) The recall situation..................................................................................................6
b) Stakeholders involved and their objectives...........................................................6
The two stakeholders of this company include Kerry Incorporation of Gridley
and ARICAM.....................................................................................................................6
c) Information communication to the stakeholders...................................................7
d.Communication of Kellogg’s with the other stakeholders....................................8
2 a. The place where the contaminated products are produced.............................8
c.Kellogg’s shipping in terms of the sale....................................................................9
d. Shipment of the contaminated products to the customers.................................9
e. What might have been occurred if an incoterm is used and why?.....................9
3. a) How the Kellogg’s procurement team have been migrated the risks
associated with the outsourcing of the product?....................................................10
b. Description of the ethical risks related to the contract manufacturing of the
Kellogg’s.........................................................................................................................11
4. Processing strategies followed by the Kellogg’s followed in conducting the
recall................................................................................................................................13
5. Recalling of the product related to the circular economy model......................14

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6. a)The mode of the transport, convenience and the equipment for the
shipment of the products related to the Kellogg’s...................................................15
b. Legal considerations related to the shipment......................................................15
b) Cargo security issues..................................................................................................18
8. Cargo security programs.............................................................................................19
Recommendations............................................................................................................19
Key success factors..........................................................................................................20
Conclusion.........................................................................................................................20
References..........................................................................................................................21

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Introduction
In the area of the commerce, the term global supply chain management is
described as the goods and services of the distribution throughout the entire tarns-
national companies and as well as the maximization of the profit and minimize the
waste.
The Kellogg Companyis the USA based food manufacturing company
(Christopher, 2014). It actually manufactures the cereal, cookies, toaster pastries,
crackers and many others.
This will discuss the regarding the different questions related to the Global
Supply Chain Management of the Kellogg.
Discussion
1.a) The recall situation
Government officers of the Guatemala are learning of the recall by using the
government Facebook account (Monczka et al., 2015). They had contacted with the
ARICAM and insisted them for the disposal of the food product in Guatemala.
Contaminated products were shipped from the USA (Hugos, 2018).
Administration of Guatemalan is firmed regarding the disposal of the contaminated
products from the United States of the America.
b) Stakeholders involved and their objectives
The two stakeholders of this company include Kerry Incorporation of Gridley and
ARICAM.
Kerry Incorporation is providing the Business to business solutions for the taste,
nutrition, functional innovation and many others (Seuring, 2013). This company will
provide this type of the solution to all the sectors of the pharmaceutical, taste and
nutrition and many others. This includes the retail and also the foodservice end-use-

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market of all the categories that is served by all the customers (Baron et al., 2014).
Their goal is to the nourishment and the delightment of all the customers at the entire
globe. They give the products to the people for the enjoyment and the feeling the
betterment. They provide the customers the products with the insights, expertise, and
the procedure of the delivery of the product which people can enjoy and feel better after
consuming these (Schröder et al., 2014). They also understands the science of the
taste and they are applying their insights for tasting with the food and the technology
and also the advancement of the knowledge which is related to the culinary for helping
their customers for creating the unique and the innovative products of the food and
beverage.
c) Information communication to the stakeholders
The communication of the Kellogg’s to the stakeholders includes the
transmission of the Information from the sender to the receiver. The efficient
communication of the needs to be ensured that the information which is not received
clearly will be very difficult to understand (Waters, & Rinsler, 2014). The information
should be sent in such a manner it can be understand by the stakeholders very easily
(Pagell & Shevchenko, 2014). It is involving the selection of the appropriate format to
transmit the messages. Examples of these includes that the media may be used include
the leaflet, the television, and also the personal letter. The feedback process of the
stakeholders is very vital because by using this feedback process the company comes
to know regarding the receivable of the information by the stakeholders (Stadtler, 2015).
For the effective transmission of the information barriers of the communication which is
also known as noise must be reduced or eliminated. Noise is used for preventing the

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user from getting the message. For example, noise may contain some jargons or some
languages for using a channel which may be either email or the internet at the time
stakeholder is involved him/her for both the internal and the external communication
(Seuring & Goldbach, 2013). Internal communication involves itself for the transmission
of the messages to the stakeholders, senior managers and many others.
Communication is in the range of the stakeholders which includes the stakeholders,
customers, suppliers, media and many others (Wang & Cullinane, 2015). An effective
communication can help the stakeholders a crystal clear direction within the Kellogg’s
and it is helping the motivation of the employees within the Kellogg’s. This can be used
to change the motivation of the public. The purpose of the communication of the
Kellogg’s to the stakeholders is to increase the commitment to the breakfast clubs in the
Cania.
d.Communication of Kellogg’s with the other stakeholders
The other stakeholders of the company include the different schools and the
Member of the Parliament (Monczka et al., 2015). The core objective of this type of the
communication is to increase the importance of the breakfast (Schaltegger, & Burritt,
2014). Awareness of the public will increase which will increase the growth of the
funding for the breakfast clubs by motivating the customers as well as the stakeholders
for buying the product of the Kellogg’s.
2 a. The place where the contaminated products are produced
The contaminated products of the Kellogg’s cereals are found in the Guatemala.
This is reported by the Kellogg’s ARICAM office at Guatemala (Turker & Altuntas,

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2014). They report that they found approximately one hundred forty pallets of the
salmonella contaminated cereal products cereal products in wholesale.
b. Shipping of the cereal products
They were shipped the product to the Mexico City. They were shipping these
kinds of the products with the help of the Kerry Incorporation in Gridley.
c.Kellogg’s shipping in terms of the sale
Kellogg’s sales 2.7 billon boxes in a year.
d. Shipment of the contaminated products to the customers
Kellogg’s very frequently ship the contaminated products to the customers. More
than thirty people are reporting as the sick after the Honey Smacks Cereal
contaminated with Salmonella (Schaltegger et al., 2014). The centre of the disease
control says that they are bringing the total 130 cases in Thirty six states in Canada. Till
date thirty-four people has sent to the hospital, but no deaths are reported yet. On
Tuesday, CDC said that, three more states are added and the illness is reported from
these states. In the month of June Kellogg had decided that they recalled the 1.3 million
cases of the contaminated Honey Smacks from more than 30 states situated at the USA
(Ivanov, Tsipoulanidis & Schönberger, 2017). This occurred due to the potential for the
contamination of the Salmonella.
e. What might have been occurred if an incoterm is used and why?
If the Incoterm is used for the Kellogg’s products then it will reduce the delivery of
the contaminated cereals to the many countries (Wang et al., 2016). These rules are

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implemented for reducing or removing the uncertainties which will arise due to the
interpretation of the rules applied over the different countries.
3. a) How the Kellogg’s procurement team have been migrated the risks
associated with the outsourcing of the product?
The risks involved during the outsourcing of the product of the Kellogg’s include:
Supplier risk, Risk related to quality, Risk related to the reputation of the company. For
overcoming the supplier related risk, the Kellogg’s company should investigate this
matter very seriously (Ivanov, Tsipoulanidis & Schönberger, 2017). They should
investigate the potential source of the suppliers and the customers and they make the
risk assessment in depth. Kellogg’s authority should check the practices related to the
business which is related to the potentials suppliers for identifying any possible
problems (Schaltegger et al., 2014). For minimizing the risks related to the quality of the
products of the Kellogg’s the company should prepare the specification of the products
in detail manner (Turker & Altuntas, 2014). It is for the suppliers and it is used to insist
for the independent quality control. To avoid the reputational risk on the Kellogg’s
product the human rights issues of the supplier should be investigated properly by the
Kellogg’s authority (Schaltegger & Burritt, 2014). It can be done for ensuring the
compliance for the global sourcing. This includes the following points:
 Time of transportation, cost and the risks related to the Kellogg’s cereal product
are much higher than with sourcing of the products which are related to the
domestic works are consequence of the large routes.

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 Differences of the culture may make the complicate the communication of the
business (Monczka et al., 2015). Otherwise it will be responsible for the delay in
the shipping procedure.
 Manual documentation of the industrial research is very complicated. It may
require some kind of the research (Wang & Cullinane, 2015). It includes the
costs related to the consultancy. Otherwise in many of the cases the
outsourcing may be a brokerage.
 Political instability might interrupt the work of the supplier and it requires the
choose of the alternative resources.
 Weather of a particular place can be a great factor in this case. It will may
create the delay in the shipping procedure.
Ideally for reducing the risk related to reputation the company should investigate
the above factors and the investigate upon the balanced sourcing strategy
(Seuring & Goldbach, 2013). It cans the mixture of the global and domestic
sources are used regarding this matter.
b. Description of the ethical risks related to the contract manufacturing of the
Kellogg’s
The ethical risks related to the product manufacturing of the Kellogg’s includes
Disconnection of the sourcing, contracting and the planning, Billing of the complexity of
the material, Issues related to the accuracy of the order.

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Disconnection of the sourcing, contracting and the planning: Once the decision of
the words is finalized the company needs to establish the contracts very quickly,
safely and in a very efficient way. Every contract policy should be signed in
proper manner and it should be stored in the database of the Kellogg’s (Stadtler,
2015). It can be easily accessed from the database for the execution of the
purchase order. When the sourcing and the information of the contract are not
integrated then the majority of the work has to be done manually. Then the work
will be very slow, inefficient and very worst (Pagell & Shevchenko, 2014). The
pricing and the terms of the contract must be negotiated during the process of
the sourcing that never be uploaded to the material requirement planning that
results in the leakage of the contract and it increases the selling of the cost-of-
goods.
 Billing complexity of the material: In this case, the challenge may occur
for the complicated and the bills having multiple levels (Waters & Rinsler,
2014). If the BOM is more complex for the company then it will be very
difficult for the commodity manager Kellogg’s company to confirm that the
correct suppliers are selected for all the items related to the BOM.
 Issues related to the order accuracy: The perfect example this
category includes the huge trend of the retailer who sends the order of the
customer and the details of the delivery directly to the stocking goods of
the suppliers. The supplier fulfills the order to the customer directly.

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c) The best Supplier Interaction model that exists between the Kellogg’s and the
Kerry Incorporation
Interaction model of the segment is the best suited model for Kellogg’s and Kerry
Incorporation (Schröder et al., 2014). This model suitable for this case because
segmentation is used for identifying the type of the customers who will response to the
particular offer. This model will identify the high spenders of the Kellogg’s and the Kerry
Incorporation for distributing among the consumers (Baron, Brouwer& Garbayo,2014).
The company authority will increase this type of the model for increasing the shopping.
Segmentation model is used to understand the specific profiles of the customers related
to the Kellogg’s and the Kerry Incorporation which will exist within the specific base of
the customers so that different actions related to the multiple marketing can be
personalized for each of the segment (Seuring, 2013). Segmentation on the
geographical regions is based on the influence and also life style related to the
consumers which are living in the different geographical regions so that distribution and
the sales strategies of the Kellogg’s and Kerry Incorporation can be done very
efficiently.
4. Processing strategies followed by the Kellogg’s followed in conducting the
recall
The processing strategies required for the Kellogg’s for conducting product recall
includes:
 Response strategy for the crisis
 Crisis and they Responsibility

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 Recalling of the product and the communication
 Severity related to the crisis
 Severity related to the emotions
 Spokesperson
 Spokesperson related to the emotion
 Framing related to the processing
 Interaction is used between the severity, spokesperson and the framing
 Severity and framing related to the processing
5. Recalling of the product related to the circular economy model
 The circular economy concept is used to foster the wealth and the
generation of the employment against the backdrop of the constraint of the
resources.
 The supply chains of the circular economy model are the up and the running
and they are going to the global.
 Supply chains of the circular economy model are the key unit of the action
and will join the change in the drive.
 The definition of the materials of the formulations is the key to the unlocking
change.
 Categories of the materials are the prime candidates for viability
demonstration.
 The future blockbusters of the company related to the circular economic
model.

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 Outcomes of the business which are tangible in nature can be achieved
through the joint action.
 Rough diamonds related to the business related to the circular economy
model.
 High potential of the business related to the circular economy model.
 Increasing the series of the tiger project in the circular economic model is the
most efficient procedure for reaching for achieving the tipping points for the
every category in the faster way.
6. a)The mode of the transport, convenience and the equipment for the shipment
of the products related to the Kellogg’s
The mode of the transport the Kellogg’s can use for the shipment of the product
includes:
 Air
 Road
 Sea
 Railways
The mode of the equipment related to the shipment of the product
includes:
 Vehicle
 Boxes/Packets
b. Legal considerations related to the shipment
 Transporting the hazardous materials

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The shipping of the hazardous materials is heavily depended on the due
cause (Hugos, 2018). The Kellogg’s can face this type of the legal issues.
Common problems which are arising due to this matter include:
 Assumptions of the false materials which are shipped become the
non-hazardous.
 The regulatory differences among the modes of transportation
includes the shipping through the highway versus the air are not
adhering.
 The in-efficient employees are making the mistakes.
 Managing the Heightened security at the port of the Savannah
The port at the Savannah is the second busiest port in the United States
of the America. As a result of that it will increase the number of the
container of the Kellogg’s (Monczka et al., 2015). The use of these kind of
technology helps to monitor the contents related to the safety within the
shipping containers and also for watching for the suspicious activity on the
premises of that port (Christopher, 2016). Inspection of the big shipping
containers are very difficult and also the time consuming processes.
 Improper documentation
For the proper shipment of the product proper documentation is required.
The Kellogg’s company should follow this process(Christopher, 2016). It
includes the bill lading, original certificates, and the license of exporting
the product (Hugos, 2018). It especially falls on the exporter for ensuring
all the documentation.

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 Inadequate Insurance
Depending on the shipment mode of the Kellogg’s company different kinds
of the insurance is required.
 Unclear Incoterms
The incoterms totally depends on the reaching of the cargo at the correct
time (Seuring, 2013). Sometimes the cargo may not reach to the
destination at the correct time. That is why sometimes it becomes unclear
for the Kellogg’s company. \

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7. a) Intermodal carriers for Kellogg’s
Intermodal carriers of the Kellogg’s involve the transpiration of the vehicle or the
container (Waters & Rinsler, 2014). It uses more than one number of the nodes of the
transport without the handling of the transportation during the changing. It may involve
the rail, ship, truck and many others (Pagell, & Shevchenko, 2014). By using the BNSF
railway the network from Gridley the company can move to Mexico City by using the five
US-Mexico gateways that includes Diego, Eagle Pass, Laredo, El Paso, and
Brownsville (Stadtler, 2015). The highway route from the Mexico to the Guatemala City
includes Mexico, Belize, and Guatemala. When the Kellogg’s company is trying to cross
the border of the USA in Guatemala then the shipment encounter can happen.
b) Cargo security issues

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In each year approximately $30 billion of the cargo is lost in the USA. According
to the report published by the Federal Bureau of the Investigation the theft of the cargo
was very high in the year 2012 in USA. In this scenario the most likely origin port for
ARICHAM in this scenario is the Los Angles (Seuring & Goldbach, 2013). The company
can reach to the Los Angles tom the Guatemala City by using the flight, car, bus, taxi
and train. By flight it will take eight hours forty four minutes. By bus it will take twelve
hours twenty eight minutes (Seuring & Goldbach, 2013). The Kellogg’s company can
use the Trans Caribe Express Shippers for the weekly shipping from the Guatemala. It
can start the journey at least three weeks before the delivery date. It will cross the Los
angles port in the time the journey. The company can reach to Gridley II via Canada.
8. Cargo security programs
Security in the critical element of the supply chain of the cargo security is very
crucial. The company as well as the regulatory authority is working jointly for the
protection of the supply chain and it also ensures the commerce flow. There are five
initiatives that can help the ARICAM, Kellogg’s USA, and Kerry Inc will get the benefit
(Monczka et al., 2015). It includes Information in advance, Standardization of the CSD,
Validation of the ACC3, and Building of the capacity. The company must provide the
information related to the cargo in advance so that the goods and other materials can
reach there at the proper time (Schaltegger & Burritt, 2014). The ‘Consignment Security
Declaration’ gives an idea of the audit. It also describes the procedure of securing the
cargo. The ACC3 validation gives the required information related to the generation of
the validation. By using the capacity building program the company can work with the

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other companies and also the regulatory authorities to make sure that the cargo is
protected.
According to the Customs and Border Protection Harmonized code in the USA is
the procedure of giving the name for the clustering of the products (Schaltegger &
Burritt, 2014). It will allow for classifying the branded materials on a general basis for the
need of the customs. The rate of the duty in USA is $1600.
Recommendations
It can be recommended to Kellogg’s that it should do the promotion of the idea
that breakfast must be done with the cereal (Schaltegger et al., 2014). It also decreases
the market value of the products. They should distribute the product in the market using
various sizes. They should spend more money in the advertisement.
Key success factors
This company sales approximately $12 billion in the year 2007. It was the leading
sales in the world (Ivanov, Tsipoulanidis & Schönberger, 2017). They are top producers
of the different kinds of the foods includes bars of the cereals, waffles of the frozen and
many more. The main success factors of the Kellogg’s lies in the management of the
Compensation and management of the performance.
Conclusion
It can be inferred that, this procedure will help the company to keep the details of
their customers as well as their stakeholders according to their demand. The supply
chain activities can be done by using the internet so that they can communicate with

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their stakeholders and the consumers very easily. Also some newly developed e-
commerce and e-business application can help them to improve their supply chain
management. This model completely describes the issues related to the changes in the
demand of the customers and the procedure adopted by Kellogg’s for giving the service.

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