Unit 26: Supply Chain Management Report - Kellogg's Analysis

This report provides a comprehensive analysis of supply chain management (SCM), utilizing Kellogg's as a case study to illustrate key concepts, principles, and processes. It begins by defining the core concepts of SCM, emphasizing its role in both product and service-based organizations, and then delves into the principles that underpin effective supply chain operations, such as aligning with customer needs, establishing efficient logistic networks, and implementing demand planning. The report examines Kellogg's application of these principles across various stages, including resourcing, product design, and distribution. It also evaluates the importance of effective SCM from the perspectives of customers, suppliers, distributors, and retailers. Furthermore, the report explores the cross-functional and integrated approach of SCM with other areas of an organization, such as logistics, marketing, and production, highlighting the interdependencies and collaborative efforts required for successful supply chain operations. The analysis provides insights into how Kellogg's manages its global supply chain, including its sourcing, production, and distribution strategies.

Unit 26 Supply Chain Management
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Table of Contents
Introduction........................................................................................................................3
The key supply chain concepts, principles and processes in an organization..............4
Evaluating the importance of effective supply chain management...............................6
Evaluate the cross functional and integrated approach of SCM with other areas of
an organization...............................................................................................................8
Evaluate a supply chain strategy within an organization and present proposals for
improvement................................................................................................................10
Conclusion.......................................................................................................................13
Reference........................................................................................................................14
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Introduction
In traditional management supply chain is part of the marketing department. The
employees of the marketing department are also performing supply chain activities.
The organization doesn’t take a different strategy for the supply chain. But in the
modern management system supply has a different entity in an organization.
organizations have a supply chain department. This department has its employees,
they have their objectives and strategy to run an organization smoothly. Supply is a
long process. It starts with sourcing means raw materials (Chopra, 2018). Then an
organization bring the raw materials in the organization and deliver the raw materials
to the production department. Then the production department produces the product
and stores them in the warehouse. The distributors take a proper channel for
delivering the final products to the buyers for meeting the wants and demand s of the
customers. The whole process is known as supply chain management. The
assignment is based on the global supply chain of Kellogg multinational company.
This company produce breakfast cereal worldwide. This company has factories in 19
countries and sell the product in more than 160 countries. Their main products are
Corn Flakes, Rice Krispies, Special K, Fruit n' Fiber, and the Nutri-Grain cereal bars.
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The key supply chain concepts, principles and processes in an organization
Concepts of the supply chain
The supply chain is playing a crucial role in both service and product-based
organization. though there is a huge difference in process of supply in the service-
related industry and product-related industry but the concepts of the supply chain are
the same in both industries. Supply is the networking system. It starts with the
procurement process of a company then production, packaging, storing, distributing
the final product to customers. Every company prepare a supply chain strategy to
reduce the overall cost of the company and gain competitive advantages over the
rival or competitors (Chandra and Grabis, 2018). An organization need to set up a
good relationship with the suppliers for quality raw materials. The company also
need to set a good networking system with different entities such as producers,
vendors, warehouse, transportation companies and distribution companies. A
product-related industry supply chain requires physical activities in the resource and
a service-related industry supply chain required to establish an effective network with
the other entities.
Principles of the supply chain management
The supply chain management process builds on some core principles. The
principles are given below.
Align supply chain with customer needs
Marketing people assess the market and determine the needs and wants of the
customers. Then they provide the information to the supply chain department and
production. Both department keen to fulfil the demand and wants of the customers.
To fulfil the customer needs in an effective way a business divides the customers
into a different group with the same categories. This is called segmentation. The
supply chain tries to fulfil the demand and wants of every segment.
Logistic network
After dividing the customers into different segmentation than they approach the
customers to fulfil their needs. But they need to approach different segmentation with
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the different logistic network. The same logistic network may not work on every
segmentation. Kellogg uses a different production line and distribution channel in
different countries.
Demand planning process
In a supply chain network, every party need to share valuable information to avoid
store unnecessary stocks. Unnecessary stock Unnecessary increase the holding
cost which will eventually affect the total cost and the company lose the competitive
advantage. Kellogg compares its history data with retailer data to forecast market
demand.
Outsourcing
This is one of the most useful tools in supply chain management. Outsourcing
means using third parties for performing particular activities. Outsourcing reduces
the total operating cost. by outsourcing an organization hire a particular expert for a
limited period (Walker, 2015). But a company shouldn’t hire outsource for performing
the core activities of an organization. Kellogg hires nutrition expert whenever they
launch a new product in a market for a limited period.
Lean philosophies
An organization need to adopt lean philosophies. It refers to maximize resource
utilization, minimize the waste of resource and remove any kind of unnecessary
activities and add value-added service to the product. The example of lean
philosophies is just in time process, total quality management. Kaizen and so on.
Application in Kellogg throughout the stages of resourcing, product design
and development, logistics and distribution.
Resourcing
To gain a competitive advantage an organization need to select a proper
procurement supply network. For this reason, Kellogg also has a supply network in
different countries. They purchase raw materials such as wheat, corn, cocoa, rice,
salt, milk, sugar and many other ingredients from different countries. The company
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use customizes the software for listing suppliers name and calculates the holding
cost.
Product design and development
Kellogg company has their process and procedure for production. They have
factories in 19 countries. They manage their reason, factories with lean philosophies.
They use just in time process in their factories for managing the stock (Triplett,
2017). By using this method, they always maintain a proper limit of stock in their
warehouse. Kellogg company enter many markers with the same products but
different marketing method. They also adjust their product according to customer
needs and wants.
logistics and distribution
This is the last step of the supply chain process. An organization can produce a
quality product, they have an effective marketing policy. But their all activities will go
in a vein if they don’t deliver their product to the customer. For this reason, an
organization need to establish a proper distribution channel. Kellogg Company has
a distribution partner. TDG and Kimberley Clark company manage all kind of
distribution activities for the Kellogg company.
Evaluating the importance of effective supply chain management
The customer’s perspective regarding the importance of supply chain
Customers are the most valuable entity for an organization. every company has the
prime objective is gaining customer satisfaction, retain the old customer and gather
new customer from the market. The success and failure of a company depending on
customer behaviour. If the customer thinks the product of the organization is
accomplishing their wants and demands, the customers will again come to the
organization and buy products from the organization again. This is the only way to
maximize the profit and gain the market share as much as possible (Stone and
Young, 2016). The marketing department analyses the market and transfers the
available information to the supply chain department. The Supply chain department
produce the product based on the demand of the market and deliver the final product
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to the customer. TDG and Kimberley Clark is the distribution partner of Kellogg
company and Tesco and Asda company provide the warehouse benefits to the
Kellogg company. For this reason, the Kellogg company can focus on customer
satisfaction fully.
The supplier’s perspective regarding the importance of supply chain
Suppliers are the most important entity for a business to gain competitive
advantages over competitors. every organization need to set up a good relationship
with the suppliers. The organization should order raw materials just in times, pay the
due before the deadline, share trading information to build a good relationship with
the suppliers (Hughes, 2020). The potential suppliers can deliver quality raw material
at a low price. When an organization buy a bulk amount of raw material from the
supplier, it can achieve the economic scale. The production cost per unit will
decrease due to the economic scale. Suppliers also provide the stock benefit for this
reason the company also can reduce the holding cost. Kellogg company import their
raw materials such as rice, corn, paddy, sugar, salt and various ingredients from
various country. For this reason, they maintain every good relationship with their
suppliers.
The distributors perspective regarding the importance of supply chain
After producing the product, the organization need to deliver their product to the end.
For this reason, an organization need to depend on the distribution company. The
distribution company has done all types of distribution activities for the company.
They prepare the distribution channel, select the distribution route and follow the
proper distribution model. The distribution company also provide partial stock benefit
(Ross, 2019). Which helps an organization to reduce the total cost? Kellogg is
maintaining a good relationship with their distribution company TDG and Kimberley
Clark. The distribution company take responsibility from the Kellogg to distribute the
final product to various whole seller and retailers.
The retailer’s perspective regarding the importance of supply chain
Retailers are the last stage in the distribution channel. Customers buy their desire
product from retailers. Retailer buys the products from the whole sellers. Retailers
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also provide stock facilities of limited size. Retailers order the whole seller for the
products. The retailers get the idea of how much they should order the wholesaler
from the SCM of the company (Ody, 2018). The SCM calculate the demand and
wants of the market deliver it to the retailers. Then the retailers order the whole seller
of products. Kellogg company is an international brand. That’s why they reach the
customer by international retailers such as Tesco ASDA and Walmart. They also
provide adequate demand related information to the retailers for maintaining a good
relationship.
Evaluate the cross-functional and integrated approach of SCM with other areas of an
organization
The supply chain is a different entity from other areas of the organization. supply
chain management has its objective mission and vision. But they also need to align
with the other area of the organization for achieving the goal of the organization. they
need to align with the other area of the organization for effectively managing the
supply chain activities. Kellogg company has a supply chain department in the
organization. they are responsible for the supply chain network. But they also
maintain a good relationship with another department of the organization. the
relationship between other department and supply chain are given below.
Logistic
Logistic is a part of supply chain management. It includes the planning of
warehouse, transportation channel, delivers the finished products to the end-users
by using a proper distribution channel. The supply chain department of the Kellogg
company prepares the warehouse strategy (Quayle, 2017). Their third party TDG is
a warehouse management expert. The company knows how to manage the
warehouse of the company effectively. The company use a computerized way to
maximize the use of the warehouse and remove any kind of unnecessary stocks.
Kellogg company also use the Kellogg Kimberley Clark distribution company for
delivering their products to the end. The company prepare a transportation route and
select a transportation model for delivering the products and reduce the damage.
Marketing
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The marketing department is responsible for collecting data from the market about
customer needs and wants. They also perform promotional activities. Marketing
departments also have the responsibility for maintaining customer satisfaction. For
fulfilling their responsibility marketing department is dependent on supply chain
management. When the marketing department gave information about how much
product should be produced in the upcoming production session. the supply chain
department begins the process with resourcing. After resourcing the production
departments produce the products. The marketing department needs to do
promotional activities based on the progress of the production department. In
Kellogg marketing department find out that middle-aged people who are living a busy
life they are also like a cornflake. The marketing department delivers information to
the supply chain department. Then the SCM department takes the necessary step
for fulfilling the market demand.
Production
The production department mainly depends on the marketing and SCM department.
The marketing department determines the demand of the market and passes this
information to the production department. From this information production
department understand how much they should produce in a single session. After
determining the amount of production, the production department passes the
information to the supply chain department. Bow supply chain calculates how much
procurement they should resource (Lawlor, 2017). They need to give order to
suppliers for procurement. The SCM also need to manage the warehouse and set up
a distribution channel for delivering the finished good to end-users. In Kellogg
company the marketing department determine how much corn flake hey should
produce. Then the production department pass calculates how much raw materials
would be required. Then they pass this information to the SCM department. SCM
department import corn, sugar, rice from various countries and suppliers. Then the
SCM department uses the third-party logistics company for managing the warehouse
and set up a distribution channel.
Operation management
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It refers to the daily activities of an organization. These daily activities performed by
various department of an organization. the marketing department, finance
department, accounting department, HR department all are integrated for achieving
the goal of the organization. every department depends on the very department.
They need to share value for running the business effectively (Cooke, 2019). In
Kellogg marketing department pass the information about the wants and demands of
the market to the production. The production department passes this information to
the SCM for procurements. SCM pass this information to the finance and accounting
department for funding. The HR department needs to monitor the full process to
identify is there any kind of new employees is needed or not. By following the whole
process, the organization can run its business smoothly and can gain its completive
advantages and market share.
Evaluate a supply chain strategy within an organization and present proposals for
improvement
Assessing the supply chain strategy of Kellogg’s
Kellogg is a multinational company. It’s operating the business almost all over the
world. For this reason, the company need to prepare a global supply chain strategy
to achieve competitive advantages. Kellogg company use a 3p logistic system.
Kellogg produces its products in the factories. But the distribution activities done by
third parties. They use all known company the Kimberley Clark for managing the
distribution activities. By using a third party they can fully focus on production. They
also hire a warehouse management company the TDG company. This company is
responsible for managing the warehouse by using a computerized system. By using
these two companies the Kellogg company maintain a good business mix which
helps the company to reduce the distribution cost and the company can deliver the
product to the end-user in the fastest way.
Just in time is another tool for effectively managing supply chain management. Just
in time helps a company to balance the inventory of the business. Kellogg company
maintain a specific safety line before ordering the new inventories (Boone,
Jayaraman and Ganeshan, 2016). By balancing the inventory, the organization can
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maintain a good relationship with the suppliers and gain the satisfaction of the
customers.
Kellogg company maintain an effective supply chain process. The SCM help the
marketing department identify and implication the marketing opportunities and also
help the business to deal with the threat.
Kellogg Company also depends on retailer company such as Tesco and ASDA.
These are the supermarket. By this retailer, the company can reach the customers in
the fastest way. The company also use a whole seller company the Makro help
Kellogg by stocking the partial amount of the product.
Supply chain included with different types of model. These models are useful for
different kind of situation. The organization need to determine which model applies to
the organization. the models are an efficient model, continuous-flow model, flexible
model, fast model, customer-configured model, and agile model of the supply chain.
The company use the agile supply chain. Kellogg is a production-based organization
and an agile supply chain is applicable for the production-based organization. by this
model, the organization can determine the market demand and production capacity.
The organization also set up a production process and procedure by using this
model. The organization use the pull strategy for production. The organization
determine the order from the market then start the production procedure. The
production also aligns with the just in time method for balancing inventory. So, the
organization won’t face the stock problem.
Kellogg company use the predictive analysis method. By this method, an
organization can forecast the demand of the market. They can also intercept what
kind of change may come into the market. Then they prepare a plan for dealing with
this kind of change. By this method, the company predict that in COVID-19 19
pandemic people will fear to get out of the house. They will need some nutrition
product which will be last long. The cereal and cornflake have this kind of ability. For
this reason, Kellogg company increase their production and they found out that the
forecasting was true. So, predictive analysis helps the organization to see the future
and prepare for the future.
Recommendation for the company
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The Supply chain management process of the Kellogg company is an effective one.
The strategy of the supply chain in Kellogg can quickly reach the end-users. But the
company also have some point which should be improved in a certain time. They are
given be=low
 At first, Kellogg needs to their quality as much as possible. It is a growing
business industry. For this reason, the organization need to deal with total
quality management. There are so many methods for improving quality. The
methods are the kaizen Pareto principle, control chart, flow chart, histogram
checklist (Cao and Zhang, 2017). The organization need to determine which
method is suitable for the organization.
 The company can change the agile supply chain to the customer configures
model. This model is very helpful for determining the needs of the customer
and maintain the satisfaction of the customer. This method is very useful in
the long run. The organization also can forecast demand change of the
market and intercept the change.
 The organization can change the analytical tool. There are so many analytical
tools here for commercial use. They are Regression analysis Monte Carlo
simulation, Factor analysis, Cohort analysis, Cluster analysis, Time series
analysis. Nowadays the Monte Carlo analysis method is the most popular. In
this method, the company establish a different kind of scenario and determine
what types of there are facing. Then they find the solution to the problem and
implement the solution later when they face the problem.
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