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Kellogg’s Supply Chain Management Essay


Kellogg’s incorporation of specialist transportation and storage companies to cater for the logistic aspects of the business is a good mix within the Supply Chain Management. This has helped in the reduction of distribution costs and also ensures that consumers receive goods in time.

Incorporation of major retails within the system assists in distribution purposes and also maintenance of good relationships with customers. Just-in-time system assists in the management of the inventory ensures balance is maintained at each section of the supply chain. This is done through efficient distribution system brought about by the relocation of warehouses (Kotler and Keller, 2007).

There is elaborate restriction on companies within the supply chain allowing them to concentrate within their line of specialization. Also the incorporation of computerized warehousing enables efficient manufacturing and distribution of products, eliminating the sense of delay.

Kellogg’s organization within the supply chain ensures easy identification and implementation of necessary solutions towards marketing opportunities. The idea of incorporating appropriate computerized measuring tools assists them in the process of gaining full control of supply chain.

This has enabled the company to easily partner with efficient retailers, technology and processes towards improvement of competitive advantages (Godsell et al, 2006).

Improvement can be made in the management of inventories within the supply chain. This requires involvement of adequate technological processes and incorporates proper management of supplies from manufacturing processes to delivery.

Implementation of right kind of inventory determines profitability levels, since inventory velocity plays integral role in the success any business (Kotler and Keller, 2007). At the same time efficiency can be reinforced within manufacturing by the use of Business Score Card which assists in making important changes within human resource and manufacturing.

This implies that the overall efficiency of the processes should be improved by more than 10%. Besides focusing on quality expectations from consumers, the various aspects of production should encompass cost of production and nature of delivery. The use of supply chain order matrix should be implemented to reveal the real nature of the company’s organization (Godsell et al, 2006).

Table1: Supply chain Order Matrix

Metrics Reliability Responsiveness Flexibility Cost Assets
Perfect Order Fulfilment z
Order fulfilment Cycle time z
Upside Supply Chain flexibility z
Upside Supply Chain Adaptability z
Downside Supply Chain Adaptability z
SCM Cost z
Cost of Goods Sold Z
Cash-to-Cash Cycle Time z
Return on Supply Chain Fixed Assets z
Return on Working Capital z

Importance of companies like Kellogg’s in building good relationships with businesses in the tertiary sector

Big companies such as Kellogg’s operate under influence of central management for the purposes of capturing national and global markets. Kellogg’s require good relations within the tertiary sector since Supply chain management comprises of various activities from operations, marketing management, economics and logistics of which needs other parties for full implementation of the supply cycle (Hagel and Brown, 2005).

There are considerable sources of competition within the food industry from established companies. This has been enhanced through improved technology and the rising demand for quality goods. There is tremendous shift of power downstream where much focus is set on end-users of the manufactured products (Kotler and Keller, 2007).

It is easier for Kellogg’s to satisfy consumer needs by reaching them through the various distribution channels such as supermarkets. Hence every process undertaken by Kellogg’s should focus on customer satisfaction.

In order to address competitive issues there is need for integration and coordination of supply chains at tertiary level. It is also easier to evaluate various consumers’ challenges and their effects within organizations at tertiary level (Kotler and Keller, 2007).

Relationship at tertiary level assists in the creation of foundation, where the organization is capable of initiating appropriate mobilization of right resources. Pull models created in the process of supplying products assists in addressing increasing uncertainties.

There is possibility of improving the level of creativity based on the knowledge of local participants enabling elaborate satisfaction of immediate needs (Hagel and Brown, 2005). Incorporation of tertiary channels encourages teamwork, whereby innovative ideas capable of solving the rising demand for products are shared.

Pull models used by the Company at the tertiary level addresses rising opportunities such as supplying goods to surrounding supermarkets and retail shops. Tertiary outlets provide necessary services capable of treating consumers as creative entities with abilities towards solutions and creation of opportunities (Kotler and Keller, 2007; Godsell et al, 2006).

Kellogg’s should be very vigilant on customer centric issues since they become more demanding concerning their expectations, hence the company should aspire to customize their products and services.

Players within the value chain should form integrated network capable of providing differentiated segment products as well as upgraded customer services. Well coordination within the supply chain and responsible actions from the companies assist them in winning consumer confidence and trust (Kotler and Keller, 2007).

Figure 1: Level 1 SCOR model of the supply chain operations

Level 1 SCOR model of the supply chain operations

Evaluation on at least three benefits for large manufacturers like Kellogg’s in handing over the logistical side of their business to specialist companies like TDG

There are several problems within supply chain logistics of multi-site companies like Kellogg’s. This at times remain complex, since there is involvement of multiple stakeholders across the entire enterprise. Such complex nature of the supply chain demands that some services be outsourced since extra costs are incurred by companies in the process of reaching consumers with quality products and information.

Such logistical activities range from determination of appropriate raw materials means of transport, manufacturing and process facilities involved in processing and incorporation of appropriate business components (Harrison and van Hoek, 2008). There is need for outsourcing logistical services for the purposes of maintaining supply hubs which at times remain in the verge of extinct due to the escalated operation costs.

Handing over company logistics to specialists like TDG assists smooth integration and coordination of activities across the organization and throughout the supply chain. This allows for internal and external integration of management creating the relevance of differentiating the role of supplier and supply management practices.

Delegating the logistical side of the business enables the company to concentrate specifically in manufacturing activities. Elimination of such costs also contributes towards profit margin (Harrison and van Hoek, 2008). Outsourcing logistical side helps in leveraging the company’s global presence and at the same time benefit from synergies within its premises.

At the same time enabling provision of opportunities through which appropriate models capable of delivering results within the supply chain are initiated. The resulting specialization and division of activities within multiple locations makes operations easier and improves efficiency.

Such mode of operations results into reliance on provisions from the end markets (Harrison and van Hoek, 2008). The element of logistics can also be used in determining potential partners within supply chain and at the same time assists in the development of crucial processes with ultimate response to consumer requirements.

Supply chain management should be considered as an essential component of multi-national businesses. However, this should be related to company’s strategy concepts. Outsourcing logistics enables effectiveness within the supply chain assisting in elimination of uncertainties which makes the company comply with various adaptive processes within the changing environment.

The idea also enables easier participation in community development programs which gives clear indication of Kellogg’s approach to Corporate Social Responsibility. Consumers are currently identifying with companies that are environmentally sensitive. Increase in the percentage of sales within the various market segments indicates high level of customer satisfaction based on quality and prices.

Key elements of the marketing mix showing how an organization can improve its overall marketing strategy

Competitive strategy within the company should focus on providing customers with superior products through their outlets. Such strategy can be reinforced by use of modern technology which makes it possible for customers to confidently follow respective deliveries. Development of brand image grants the company a strong position on the global market, hence capable of controlling a considerable market share.

Application of good public relations within the market is an added advantage since there is an assurance of good coordination between customers and the organization. This can be done through internet and other digital communication services which prove advantageous within competitive market environment where majority of the players apply modern technology (Kotler and Keller, 2007).

The target market has to be defined appropriately for the realization of effective results. Service companies like TNT targets household and office deliveries within the global market, and this has made them upgrade their supply chain for consumer conveniences (Kotler and Keller, 2007).

Customer centric measures such as lead times, on-time delivery services, and customer index and consumer satisfaction levels can uniformly be identified through the use of BSC system

Product strategy requires that the product offered should be capable of satisfying current consumer needs. For service companies marketing should be based on relationship and value. Such distinctions are based on defined qualities such as intangibility, inseparability and heterogeneity.

The nature of competition within food and beverage industry demands production of high quality products in line with consumer needs. Excellent services within target markets ensure that customers maintain their loyalty to company products for fairly longer time. However, it is often easier to satisfy consumer needs when the markets are sub-divided into segments.

This would also determine the kind of machineries used for monitoring and delivery purposes. Wider market coverage is done through multichannel distribution (Omera and Bernard, 2007). Positioning of a strong brand within the market place, like McDonald’s, enables the company to command considerably large share within the global market.

Pricing strategy is used by most companies in the process of determining consumer loyalty to company’s products. Nature of pricing applied by various companies determines the percentage of consumer base they are able to attract.

Pricing methods normally used in the market place include; geographical, psychological, zone pricing amongst others. Companies such as TNT adopted the use of segmentation pricing for their services, whereby services are priced based on distance and nature of the products on delivery (Kotler and Keller, 2007).

Reference List

Godsell, J, Harrison, A, Emberson, C & Storey, J 2006, ‘Customer responsive Supply chain strategy: An unnatural act?’ International Journal of Logistics, vol. 9, no. 1, pp. 2-35.

Hagel, J, & Brown, J 2005, ‘From Push to Pull Emerging models for Mobilizing Resources’, Working paper, vol.10, no. 1 pp. 2-48

Harrison, A & van Hoek, R 2008, Logistics Management and Strategy: Competing Through the Supply Chain, Prentice-Hall, London.

Kotler, P & Keller, K 2007, Marketing Management, Pearson, Upper Saddle River.

Omera, K & Bernard, B 2007, ‘Risk and supply chain management: creating a Research Agenda,’ The International Journal of Logistics Management, vol.18, no. 2, pp. 197 – 216

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