Kellogg's Supply Chain Management: Strategy, Concepts, and Efficiency

This report provides a comprehensive analysis of Kellogg's supply chain management (SCM), examining the application of key concepts, principles, and processes across various stages, including resourcing, product design and development, logistics, and distribution. It explores the integration of SCM to enhance organizational efficiency, emphasizing effective logistics practices within Kellogg's operations. The report also evaluates SCM from diverse stakeholder perspectives, highlighting the significance of physical, informational, and financial flow management, as well as demand management and procurement policies. Furthermore, it delves into the cross-functional and integrated nature of SCM with other organizational areas, discussing the implications of interrelations with functional departments. The evaluation of Kellogg's supply chain strategy is presented, with recommendations for improvement and a justification of the current strategy. The report concludes by summarizing the key findings and offering insights into optimizing Kellogg's SCM for sustained competitive advantage.

Supply Chain
Management

Table of Contents
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................3
Application of supply chain concepts, principles and processes at all the stages of resourcing,
product design and development, logistics and distribution..................................................3
Integration of supply chain concepts to improve organisational efficiency...........................5
Effective logistics in Kellogg's...............................................................................................6
LO 2.................................................................................................................................................6
Effective SCM from various stakeholder perspectives..........................................................6
Importance of physical information and financial flow management in supply chain..........8
Importance of demand management and procurement policies.............................................8
LO 3.................................................................................................................................................8
Cross functional and integrated approach of SCM with other areas of organisation.............8
Implications of interrelation of SCM with other functional departments............................10
Supply chain concepts, principles and processes and their interrelation with other departments
..............................................................................................................................................10
LO 4...............................................................................................................................................10
Evaluation of supply chain strategy and recommendations on improving it.......................10
Justification on the supply chain strategy.............................................................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Supply chain management relates to managing the flow of goods and services through all
the stage from their conversion from raw materials to the final products so that they can be made
available to customers which can help in their satisfaction and the company can gain a
competitive advantage in the market. Supply chain management is an important concept which
needs to be managed in an efficient manner so that the cost of supply of products and services to
the final customers can be reduced (Copacino, 2019). In this report Kellogg's is taken which is an
American multinational food manufacturing company established in 1906 and is headquartered
in Michigan, US. The company manufactures cereal and convenience foods and markets its
products under the brand name Corn Flakes, Special k, Pringles, Eggo etc. in this report the key
concepts, principles and processes of supply chain which helps the company in improving their
efficiency will be discussed along with the importance of effective SCM. Further
recommendations on improvements that can be done in SCM will also be given so that the
strategies related to supply chain can be improved.
LO 1
Application of supply chain concepts, principles and processes at all the stages of resourcing,
product design and development, logistics and distribution
Supply chain management relates with managing all the stages through with the raw
materials are converted into final products so that supply can be made as cost efficient as
possible. The concepts of supply chain management include raw materials, components,
manufacturer, retailer and consumer. All the concepts help in acquiring the right kind of raw
materials so that these can be sent to the manufacturer who will convert them into final products
which are then supplied to the wholesalers or retailers so that finally the products reach to the
end consumers. There are 7 principles of supply chain management which are described as
follows : Apply supply chain based on customer needs : This can be done by segmenting the
customer based on ABC analysis which is based on sales volume or profitability that is
linked to the customer segments (Christopher, 2016). Customize logistics network : This means that different logistics networks need to be
applied to serve the needs of different segments.

 Align demand planning across supply chain : This means that the inventory must be
maintained only as per the requirements of products in the market so that storage costs
can be reduced. Differentiate products close to customers :This means that the company products need to
be differentiated from other products so as to attract more customers to the products. Outsource strategically : It means that outsourcing should only be done if the company
cots gets reduced because of it like labour cost, cost of storage and transportation etc. Develop technology to support decision-making : This should be done so the decision-
making can be made cost efficient (Fredendall and Hill, 2016).
 Adopt both service and financial metrics : This will help the companies in making their
supply chains cost efficient so that customers can be provided with supply of goods and
services on time.
The supply chain management includes the following steps :
Stage 1 : The first stage of SCM is procurement of raw materials from the suppliers. For this the
best suppliers are chosen so that quality materials can be procured at best prices which will help
the company in providing high quality goods to its customers. Kellogg's obtain its raw materials
of wheat, corn, cocoa and sugar from primary suppliers around the world.
Stage 2 : After procuring raw materials the final products are manufactured, designed and
developed sop as to be delivered to the customers. Kellogg's largest manufacturing plant is in
Trafford Park in Manchester.
Stage 3 : After production the company supplies its raw materials to the distributors so that the
products can be available to customers through retailers. Kellogg's collaborates with TDG which
is a logistics specialist and helps the company in managing its logistics so that timely supply of
goods can be done.
Stage 4 : The last stage of SCM are the retailers who finally make the goods available to
customers. Kellogg's provide its products in shelf ready units so that the products can be
effectively displayed to attract the customers to make purchases of Kellogg's. Customer relationship management : It means building long-term and strong relations
by maintaining, controlling and assessing customer interaction and data. Customer service management : It means providing products and services to customers
according to their needs and wants (Supply Chain Management Processes .2019).

 Supplier relationship management : It means building good relations with the suppliers
who provide raw materials which is of good quality and reliable and is available at best
costs. manufacturing flow management : It relates to managing activities related with the
movement of goods inside and outside the factories. Demand management : It is related with understanding the customer demands so that
they can be provided with appropriate goods and services. Order fulfilment : It means identify the customer needs, frame the logistics network so
that orders can be fulfilled. Product development and commercialisation : It relates to developing and introducing
new products in the market in accordance with customer demands.
 Returns management : It means managing the flow of goods in the best possible manner
using organisational resources (Jasti and Kodali, 2015).
All the concepts, principles and processes when applied in the supply chain can help
Kellogg's throughout the stages of resourcing, product design and development, logistics and
distribution. Kellogg's apply system of just-in-time so that enough products are produced to fulfil
orders and limited stock is kept reducing storage costs. The company collaborates with TDG and
Kimberley Clark so that its distribution and transportation costs can be reduced which helps it in
providing customers with products at low prices than its competitors. The company also uses
computerised stock holding system so that the orders are efficiently fulfilled thus managing the
inventory of the company. Lean production system used by the company also helps it in reducing
wastage son that the cost of the products can be minimized thus ensuring the loyalty of
customers.
Integration of supply chain concepts to improve organisational efficiency
The supply chain concepts, principles and processes can help in improving the efficiency
of organisations as the company will be able to deliver right products to the right customers and
on the right time. This helps in reducing the costs of the organisational products and the system
of distribution can be made efficient along with managing the cost of their products. This helps
in fulfilling the orders and managing the supply in markets effectively. The customer demand
analysis can be efficiently made so that they can be provide with the products they actually need.
It also help Kellogg's to maintain better relations with the customers and its suppliers so that the

supply of products can be managed which helps in building the brand image of the company
(Almeida Marodin and Saurin, 2015).
Effective logistics in Kellogg's
In order to effectively manage the logistics of the company so that raw materials can
reach to the company for getting processed and then reach to the retailers the company uses
computerised systems which helps in monitoring the inventory. The company also send its items
to other countries through ships for which it tracks that movement of ship carriers through
satellite systems so that the stock can reach to the dealers. The company tracks the orders which
help it in managing the orders so that they can reach on time to the right dealers and in right
quantity, shape and features.
LO 2
Effective SCM from various stakeholder perspectives
Effective supply chain management helps the company to improve the flow of products
by accurate demand and supply forecasting so that adequate supply in the market can be
maintained and products can be supplied to customers at right time and at right place.
Effective SCM from customer's perspectives
Customers expect the products they want and need to be delivered to them at the right
time and at the right place so that they do not face any inconvenience and the customer
satisfaction can be maximized. Effective supply chain management helps in reducing the cost of
the products that are supplied the company as the transportation and storage cost of the products
can be reduced through effective SCM. Kellogg's is able to apply the SCM techniques efficiently
which helps the company in making its products available to customers on time and also at
reduced costs as compared to its competitors. Collaboration with TDG and Kimberley Clark has
helped the company in reducing its distribution cost and the company uses computerised
warehousing system so that the products are manufactured efficiently so that they can be
transported directly to retail customers (Gelei, Losonci and Matyusz, 2015).
Customers are important in SCM as they help the company in identifying how they feel
about the company's products and services. For Kellogg's it is important to consider how the
customers can be attracted to purchase their products and also evaluate their changing tastes.

Kellogg's provides corn flakes, Special K, Nutri-Grain cereal bars etc. in order to attract more
customers to buy their products.
Effective SCM from supplier's perspectives
Suppliers are important in effective SCM so that the supply of material though various
stages of conversion of raw materials into final products can be well maintained and good
quality, quantity of the required products can be maintained. From the supplier's perspective
Kellogg's is efficiently able to apply its SCM as the company applies research so that the
customer needs can be studied which helps the company in analysing the type of raw materials it
need to acquire and in what quantity. The company establishes its factory at the locations which
are near to the suppliers of materials so that the cost of transportation can be reduced which
ultimately reduces the cost of products for customers.
The suppliers of the company are raw material providers which are used by the company
to manufacture its products. For Kellogg's the suppliers of raw material are the primary sources
which help the company in gaining cereals, cocoa etc. so as to manufacture its products.
Effective SCM from distributor's perspective
From the perspective of distributor effective SCM helps the company in reducing its cost
of distribution of products to the various places where the products can be made available to the
end customers. For this Kellogg's has been able to effectively apply its SCM by collaborating
with TDG who is a logistics specialist which helps in reducing the cost of transportation and is
energy efficient. This way Kellogg's is also able to reduce its costs and carbon-footprint as the
the number of part-full or empty vehicles can be reduced on the road. This helps in the reduction
of fuel consumption and carbon emission (Kirchhofer, VCE Co LLC, 2016).
The distributors are important as they help the company to supply their products to the
customers on time. Kellogg's has collaborated with TDG and Kimberley Clark so that its
products can be well transported to the customers which help in decreasing the cost of
transportation and increase the efficiency.
Effective SCM from retailer's perspective
This means that the products must be delivered to the retailers who are ultimately
responsible to sell the products to end consumers. Kellogg's has been able to build strong
relations with supermarkets such as Tesco, ASDA and wholesale sector such as Makro which
helps in building good relations with the customers so that they buy the products. Kellogg's is

involved in adding value to the retailers like it manufactures shelf-ready units which are ready to
be displayed on the shelves of the shops which reduces the labour work in setting up the display.
Thus by building good relations with the retailers it is able to supply its products in the market
and is also able to fill the orders quickly by applying just-in-time technique which helps it in
producing and supplying the products which is sufficient to fulfil the requirements of market.
The retailers are important for the company so that the products can be provided to
customers. Kellogg's delivers it products to the retailers that are present worldwide so that the
customers can easily purchase its products. Kellogg's pack its products in Shelf ready units so
that they can be displayed attractively on shelves.
Importance of physical information and financial flow management in supply chain
Physical information and financial management are important in the supply chain
management so that the information about bills of materials, product data, inventory levels,
customer and order information, delivery schedule etc. can be collected which will help in
coordinating with the suppliers, distributors and other parties can be efficiently done. Financial
flow management is important so that cash and funds flow can be well managed so that the
supply chain can be well managed (Kapoor and et. al., 2015).
Importance of demand management and procurement policies
It is important to recognize the demand of goods and services of company in market so
that the required number of items which can fulfil the demand can be made available which do
not let the customers to switch to competitor's products due to shortage of company products.
Procurement policies on the other hand help the managers of Kellogg's to purchase the required
amount of raw materials which are important to manufacture goods in accordance with demand
in the market.
LO 3
Cross functional and integrated approach of SCM with other areas of organisation
It is important for the companies to integrate the SCM with other functions of the
organisation so that the manufacturing process can be optimized, flexibility in manufacturing
process can be managed and waste can be eliminated which will help the companies in reducing
their costs and attracting more customers. The profits of the company therefore increase as a
large number of customers can be attracted by providing them with goods at low prices. The

integration of SCM will help in manufacturing of the products that are required by the customers
in the quantity and quality that they want. Interrelation of SCM with production department : SCM helps the production
department to produce the goods that are required in the market with the appropriate
quality and quantity needed. This will help in producing the products that are needed by
the customers. Kellogg's can integrate both its departments and is able to manufacture the
products as per the demand and supply analysis so that the products can be made
available to customers on right time and at right place (Yin and et. al., 2016). Interrelation of SCM with distribution department : SCM helps in managing the
distribution of products efficiently so as to be made available to customer as per their
requirements. Kellogg's uses just-in-time and computerised stock holding system so that
the delivery of the products can be well maintained and the orders can be delivered on
time. This also helps the company to reduce its costs by distributing the goods on time
and as per the requirement. Interrelation of SCM with finance department : SCM needs to integrate with the finance
department so that the costs that have been incurred by the company can be monitored
and controlled. This also helps in managing the bills and cash flows related to the supply
chain of the company. Kellogg's is efficiently able to integrate both the departments
efficiently as the company can reduce its costs and earn huge profits on its sales of
products to customers. Interrelation of SCM with technology department : Technology department plays an
important role in monitoring the availability of stock in the company through
computerised system so that company logistics can be used in order to maintain required
levels of stocks. In Kellogg's computerised stock holding system so that the stocks can be
managed efficiently and manufacturing can be done to produce the required amount of
stocks to be available to the customers. This helps the company in managing efficient
SCM so that right amount of goods can be made available to right customers and at right
time. Interrelation of product life cycle and SCM: In the highly competitive marketplace it is
important to engineer the supply chain of company with the product life cycle so that
customer satisfaction can be achieved. It is important that the product life cycle of

Kellogg's is analysed so that an estimate of how supply chain is to be managed can be
estimated. This helps the company in saving inventory costs thereby increasing its profits.
 Interrelation of SCM with marketing department: The marketing department of the
company is responsible for making loyal customers and building long-term relations with
them so that company sales can increase. The increase in sales due to marketing means
that sufficient stock needs to be managed which can help in dealing with the demand of
market. SCM on the other hand help in knowing about the demand of products according
to region so that appropriate marketing strategies can be used to increase sales.
Implications of interrelation of SCM with other functional departments
Interrelation of SCM with other functional department is important so that the supply
chain of the company can be well managed which will help in in supplying the goods to
customers at as low costs as possible and also the goods that are required by the customers can
be provided. Kellogg's apply just-in-time and lean production system so that the supply can be
managed and the customers can be provided with gods on right right time and the wastages that
are eliminated by the use of lean production helps in reducing the cost of products.
Supply chain concepts, principles and processes and their interrelation with other departments
The various concepts, principles and processes of SCM can help in managing the flow of
products through various stages of the supply chain. These can be integrated with other
functional departments so that the production of products, distribution, financial management
etc. can be efficiently carried out in the company which will help in effective delivery of the
products to the customers at the right time, at right place and to the right customers. This will
also help in reduction of distribution costs so that the brand image of the company will also
improve in the market (Furterer, 2016).
LO 4
Evaluation of supply chain strategy and recommendations on improving it
From the case study which is given it can be analysed that the supply chain strategy
which is used by Kellogg's helps the company in providing the customers with the products they
want and at reduced prices than its competitors. This helps the company in building a strong
brand image and the customers are ready to buy the products because they have trust on the
company's products. Kellogg's is a large-scale secondary sector business and receives its raw

materials of wheat, corn, cocoa, rice and sugar from the primary suppliers. It stores enough
stocks so as to meet the customer orders which can help it in reaching to the customers on time.
The company does not directly sell its products to the customers rather it uses intermediaries like
wholesalers, supermarkets etc. Kellogg's has collaborated with TDG so that the distribution of its
products can be improved as TDG is a logistics specialist. This reduces the cost of transportation
considerably and is also energy efficient (Jasti and Kodali, 2015).
The company has also signed an agreement with the FDF so that the wastage can be
reduced, CO2 emissions can be cut, water efficiency can be improved. This has helped the
company to reduce its water bills by £60 million each year. This also helped the company in
reducing its product costs. The company also collaborated with Kimberley Clark so that the
delivery services can be shared which helped in further reducing the product costs. The company
is also involved in initiatives which helps in creating value for the retailers like the Kellogg's
provide its products in the shelf-ready units which reduces the labour efforts and time in setting
up the display. The company also use correct marketing-mix strategy so that right product is
made available to right customers and at right time. The company uses the research method and
also focuses on cost effective system so that goods can be provided to their customers at low
prices (Wang and Alexander, 2015).
Kellogg's uses just-in-time strategy so that an efficient stock inventory system can be
maintained which helps it in providing sufficient products to fulfil orders and also limited stock
needs to be maintained. This helps the company in reducing its storage costs and also the
customers can be made available all the time with sufficient quantities of product. The company
also use computerised stock holding system which ensures that the shelves are always full and
orders are delivered on time which helps in minimum storage of stocks by the company.
There are eight key processes that make-up core of supply chain management which are :
 Customer relationship management
 Customer service management
 Demand management
 Order fulfilment
 Manufacturing flow management
 Procurement
 Product development and commercialisation

 Returns
All these processes when efficiently monitored helps the company in managing efficient
supply chain so that it can make right quantity and quality of products available to the right
customers on time. This helps the company in managing good and long-term relations with the
customers so that the reputation of company in the market can get enhanced through
maximization of customer satisfaction. Kellogg's manages effective relations with its customers
and provides best qualigty of products to them which helps it in making its SCM most efficient.
Kellogg's also use lean production system which streamlines all the processes and
eliminates waste which helps in further reduction of costs.
TDG keeps the warehouse costs low through computerised heating and specialist
transportation skills which helps the company in minimizing the costs and earning huge amount
of profits. The company can improve its processes through the following ways to further
improve its SCM system :
 The company can collaborate with some of the suppliers so that the raw materials
obtained from them are of good quality and are available to the company at low costs .
This will also help the company in building good relations with the suppliers.
 Kellogg's can also use online platform so that the customers can directly place orders to
the company which will help it in reaching to many customers and increasing its sales.
 The company can also use TQM (total quality management) so that the quality of
products can be managed as the employees of company will continuously improve their
ability to manage the quality of the products.
 The company can also use six sigma which is a continuous improvement method which
helps in eliminating the defects in the products so that the customers can be provided
with best quality of products and services.
 The company can also develop a computer system which will help it in managing its
stock so that the company can maintain accurate amount of stock which is required to
meet customer's demand and also save the company from inventory cost.
Justification on the supply chain strategy
An effective supply chain strategy helps the company in manufacturing the products in
accordance with the demand in the market so that the quality of products can be maintained and
continuous supply can be maintained in the market. The strategies that are applied by Kellogg's

helps the company in maintaining continuous supply of its products in the market and also
reducing the cost of supply chain so that the ultimate price of products can be reduced for end
consumers. Also the recommendations given can help the company in maintaining the quality of
its products so that the trust of customers can be gained and brand image can be created.
CONCLUSION
From the above report it can be concluded that companies need to apply effective SCM
so that a continuous supply of products and services to the customers can be ensured. The
delivery of products to customers can also be made efficient so that right products are delivered
to right customers and at right time. Strategic planning and effective collaboration can be done
by companies so that the distribution costs can be reduced which ultimately reduces the product
cost. Also, effective SCM helps in benefiting the company and also the environment and other
businesses.

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