This assessment will cover certain questions which are like:
- What are the effective concepts, principles and process for supply chain with their logistics and distribution.
- Evaluate the stakeholder perspective and the physical information with cash flow.
- Provide the importance in demand management with procurement policies for Kellogg’s.
- Justify the effective supply chain strategy in Kellogg’s.
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.
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 includes raw materials, components, manufacturer, retailer and consumer. All the concepts helps 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 on the basis of 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 needs 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 needs 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 :
- 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 to reduce 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).
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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).
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.
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).
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.
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).
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 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 is able to 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 is able to reduce its costs and earn huge profits on its sales of products to customers.
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).
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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 sufficient 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 use 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 hepled 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 the 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. 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 a large number of 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.
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.
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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