Kellogg's_Case_Study

1) The Industrial supply chain consists of three key sectors they are i) Primary (or extractive) sector. ii) Secondary (or manufacturing) sector. iii) Tertiary sector. Certain sections of the primary sector operate as retailers for example some raw materials such as coal to power station which are sold immediately for consumption, where as others are used further up the supply chain to be made into finished goods. 2) Having the right marketing mix ensures businesses have the right product, in the right place, at the right time. Kellogg’s manufactures the right products based on research into consumer needs. It manages the distribution channels to place its products in stores. Its focus on cost- effective systems ensures its prices are competitive. It works with retailers to improve promotion of its products. Retailers want to hold limited stocks of products to reduce warehousing costs. Kellogg’s uses a system called just-in-time to provide an efficient stock inventory system. Just-in-time means that just enough product is made to fulfill orders and limited stock is kept. Kellogg’s needs to get the balance right at each section of the supply chain. Late deliveries or inability to deliver due to a lack of products might make retailers buy from competitors. Through its collaborations with TDG and by relocating some of its warehousing, Kellogg’s now has a more efficient distribution system. Computerized stock holding systems ensure shelves are always full and orders are delivered on time. This helps Kellogg’s to keep stocks to a minimum. It also helps customers like ASDA and Tesco to reduce their stocks too. The lean production system streamlines processes and eliminates waste. Computerized warehousing means that products are manufactured efficiently, then transported straight from the warehouse to retail customers. This avoids delay to customers. TDG keeps the warehouse costs low through computerized heating and specialist transportation skills. The computerized stockholding shows immediately when shelves are empty. This then automatically generates orders to the manufacturing base at Trafford Park to replenish stocks. This minimizes waste and the lower costs have increased Kellogg’s profits. By this Kellogg’s makes improvements both for its business and for the environment. 3) Kellogg’s has major relationships in the tertiary sector. These include the major retail supermarkets such as Tesco and ASDA and some of the wholesale sector such as Makro. Kellogg’s relies on retailers to help them promote a good relationship between the consumer and its products. To drive sales, Kellogg’s is involved in initiatives that help add value for retailers. An example of this is the Shelf Ready Unit that Kellogg’s developed with Tesco. This displays Kellogg’s products easily and effectively. This means that the supermarket uses less staff time in setting up a display. The display is attractive and easier for consumers to choose from, increasing turnover for Kellogg’s and Tesco. 4) Benefits of Kellogg’s handing logistical side of their business to TDG: i) It can concentrate on its specialist area of manufacturing cereals and other food products. ii) It reduces the distribution cost, helping keep Kellogg’s products competitive. iii) It helps reduce the number of part-full or empty vehicles on the road. iv) It saves time, road miles and provides additional benefits of reducing CO2 emissions.