Concept of Supply Chain Management of Kellogg's


  • Unit No: 26
  • Level: High school
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Question :

Some of the important questions needed to be answered are like:

  • What are the concepts for supply chain.
  • Give the effective evaluation process and also the perspective for customers and suppliers.
  • What is cross functional approach and methods of Kelloggs.
Answer :
Organization Selected : Kellogg's


Supply chain management refers to the process of handling the entire flow of goods and services that start from procurement of raw material component till its final delivery to the customers. The whole system helps to create the strong network and link the chain from suppliers till final customers. It basically encompasses the systematic planning, functioning as well as execution of the processes material to derive the best possible value and maximize the interest of customer within the marketplace (Almeida Marodin and Saurin, 2015). This whole process broadly include demand forecasting, proper management of inventory, warehouse and logistics in order endeavours competitive advantage. For better understeering Kellogg's company of USA has been selected that provide the healthy cereals in order to improve the diet of people. This is world leading company in terms of manufacturing the breakfast and has expanded its operations in the 19 countries and come with different brands like Corn Flakes, Pringles, Special K and so on. This report cover topics like application of supply chain management concept as well as principles. Determine the importance of effective supply chain management and interrelationship between supply chain and other areas of an organization. Further, recommend the improvement of supply chain management strategy.


P1: Demonstrate the Supply Chain Concept, Principle as Well as Processes

Supply chain management:

Focuses on the activities like planning, purchasing, storage, product assembly, processing and distribution in order to meet the requirement of target customers. The systematic way to transform the raw material into processed good and offer the services to the customers helps the company to gain competitive advantage. In context to the Kellogg's company makes significant effort to prepare the right product based on market research which is done to evaluate the needs of customer in competitive market. They mainly focuses on the Just in time inventory management under which they they bind effective supplier supply relationship for effective sourcing, design and development of product. This is the useful technique that help to store the large inventories which can add up further cost on company (Behera, 2015). Thus, it is time and cost effective method that is successfully used by the Kellogg's company.

Principles of Supply chain management:

There are certain essential principle of SCM that help in effective handling and moving of product to the ultimate consumer. This helps to establish the effective network for the better performance of different processes. Hence, explanation of different principles for supply chain management are demonstrated below:

Adapt supply chain to meet customer's need:

The company segment the mass market into small groups to understand the need of specific group. Oncer the company understand the need of customer as or the changing preferences the supply chain function to align the need of target market. For instance, the Kellogg's understood the significance of servicing the healthy and tasty breakfast in order to link with the need of huge market.

Customize the logistics network:

Once the segmentation is done the other step is to build the logistics network so that irrespective of the large distances the product reaches to the target market effectively (Christopher, 2016). Kellogg's employee in terms of logistics has done the partnership with logistics specialist like TDG that can easily transport the manufactured cereals or other products to the customer.

Conduct demand planning:

On the basis of past sales and the data gained by supply chain professionals helps to forecast the demand effectively in order to avoid the chances of keeping the unnecessary stock. As Kellogg's operate in different parts of the country and gained huge acceptance to it make special precaution to build effective relation with the professional so that they get the vital details and carry out functioning by maintaining the balance between demand and supply.

Develop effective IT skills:

It is vital for different food companies like Kellogg's to adopt technical skills and use specialised software in order to manage the customer base. Along with that this can help them to manage the innovative product design, and carry out the innovation effectively.

Stages of supply chain management processes:

There are different steps on the basis of which supply chain management process need to function in a sequential manner. Explanation of different stages are defined below:

Customer relationship management:

As per supply chain management this process helps to plan out effective process under which data is accessed and maintain the interaction with customer in order to develop effective relationship.

Customer service management:

Here the business builds the contract which are associated with the product and services.

Supplier relationship management:

It guide the efficient relation that is shared between the company as well as supplier. This helps the Kellogg's company to get the quality material at preferable cost and within stipulated duration.

Manufacturing flow management:

It refer to the flow or movement of the semi finished and finished product within or outside the factory. There are certain actions such as inventory handling that help to maintain the flexibility and effective functioning of business.

Demand management:

This encompasses the existing need of customer based on which company van fulfil it and bring certain amendments (Copacino, 2019).

Order fulfilment:

To satisfy the need of customer logistics network are build that help in successful transporting the product to the ultimate user.

Product development and commercialization:

This include the frameworks which is usually developed by the firm in order to enhance the sales of new product within specific geographical area. This also help to spread the awareness amongst the customer for the new product.

Return management:

It is used to manage the upstream as well as downstream movement or the flow of goods in the best possible manner. It refer to the adequate flow of the inventory for systematic functioning.

Thus, the systematic use of preferable concept, principle as well as processes can assist the Kellogg's company to carry out the different process like product design, resourcing, logistics as well as distribution effectively. Amongst the different method of managing inventory Kellogg's has adopted the most significant platform that is just in time principle under which the company does have to bear the storage cost. Due to the effective relation with the supplier they can order the raw material as per the demand of the customer (Fahimnia, 2015). Along with that to strengthen the relationship with ultimate customer respected company have collaborate with the TDG logistics that is specialised in dealing with the customer and transporting the different items within specific duration. They are more prone to use the technology so that all the vital details are stored in the electric form and help to track the inventory at different levels. Hence, lean production system is used by the company in order to minimise the chances of error or waste at different level of the product. Thus, optimum utilisation of the resources helps to attain the long term sustainable position of the firm.


P3: Evaluation of Effective SCM from the Perspective of Customers, Suppliers, Distributors and Retailers

Supply chain management is the process of managing goods and services through out the supply chain so that business goals could be achieved successfully. In order to satisfy all the stakeholders such as customers, suppliers, retailers and distributors it is very important for to make sure that the SCM is effective. It will help to fulfil all their requirements in systematic manner (Gold, 2015). Effectiveness of SCM from the perspective of all the stakeholders is as follows:

Effective SCM from the perspective of customers:

Customers are the buyers of the products and they want that they should get all the products at right place and right time. If an organisation is not able to manage the supply chain then it may leave negative impact upon mindset of its clients. With the help of effective SCM an enterprise will be able to reduce the cost of different products which are supplied to the consumers as it may decrease expenses which have taken place in transportation and storage. For Kellogg's it is also very important to make sure that its supply chain is managed properly so that it can satisfy its customers. If they are not able to get the desired products at right time due to ineffective SCM then it may result in bad image of company in their mind.

Effective SCM from the perspective of retailers:

All the sellers in the market which are responsible to sale the products to customers are known as retailers (Hugos, 2018). Main responsibility of them is to provide the items to end consumer so that an organisation can reach to its goal of maximising profits and satisfying clients. Kellogg's is one of the largest companies in the market which is required to manage its supply chain for its retailers because it will help them to sale all the products to the customers appropriately. If supply chain will not be managed properly then it will create problems for organisation as well as its retailers because they wont be able to sale it and it will result in reduced profits of the company.

Effective SCM from the perspective of distributors:

The external parties which are distributing the products in the market are known as distributors. For all the companies it is very important to maintain the supply chain because it can help to deliver good to them on time so that they can distribute them in the market successfully. In Kellogg's managers try to deliver the goods to the distributors on time by managing the supply chain in systematic manner. It is also beneficial in reducing the possibility of losses for company as on time delivery to them results in higher sales.

Effective SCM from the perspective of suppliers:

The parties which are supplying material to the companies are known as suppliers. For them it is very important that the supply chain of the organisation is managed properly because it can help enterprise to manufacture the products appropriately and on time. Kellogg's is a manufacturing company of different products such as corn flakes therefore it is very important to manage its supply chain so that material could be received on time. If it is not able to focus on effective SCM then it may result in higher losses for the organisation as goods will not be received that will stop the company to perform all the operational and executional business activities (Luthra, 2015).


P4: Evaluate the Cross Functional and Integrated Approach of SCM With Other Areas of an Organisation

An organisation can only function with the help different department as well as areas that function together by coordinating the efforts with one other in order to carry out effective functioning. Similarly, intergeneration of the supply chain management with other functional area helps to maintain the flexibility in terms of effective functioning of firm. Along with that this help while carrying out the better production SCM integrate the performance with other areas in order to carry out the functioning effectively (Meixell, 2015).

Interrelation between supply chain management and production department:

As supply chain management is the broad term that is associated with the different activities of business like planning, procurement, analysing demand forecasting etc. So they pass all the necessary information to the production department which together are responsible to transform the goods and services into the quality material with the objective to cater the need of people. The integration of both the units help to maintain the balance between the demand as well as supply of the product. Herein, Kellogg's company is efficient enough to cater the right need of the customer at right time to attain the objective of firm suitably.

Interrelation between SCM and distribution department:

The distribution department of the organisation is responsible to deliver the final commodities that is fit for consumption to the customer. Basically it fill the distance gap between the organisation as well as customers so that they get the company's product at each and every corner of the world. So the SCM of the Kellogg's company helps in the efficient transformation of the raw materials into desirable product via just in time method. This is the effective way as it make the company potential enough to deliver the product to customer with the help of strong distribution channel so that the products reaches the shelves of different retail store.

Interrelation between SCM and finance department:

The financial department of the company is responsible to manage all the financial transaction of the company. They even prepare the cash flow statement so that they can record the inflow as well as outflow of the cash transaction. This helps the company to mitigate the unnecessary expenditure so that they gain more profitability (Monczka, 2015). Budget preparation is the most valuable part of the Kellogg's department that is followed by different department like SCM in order to monitor the internal processes associated with preparing of final good. This determine the team member that how much resources they need to use in order to prepare the quality material for the better functioning of an organisation.


P5: Evaluate a Supply Chain Strategy Within an Organisation and Present Proposals For Improvement

The supply chain strategy is effectively designed by the Kellogg's company by managing all the aspect of business such as procurement of raw material, production process as well as logistics effectively. Being one of the top most brands, all the elements of business are properly designed so that they can serve the potential market in best possible manner. This has finally helped the company to establish the potential image by serving the large market effectively. Along with that it has effectively collaborated with the well known logistics such as TDG that deliver the potential product to the customer within stipulated period of time (Wisner, J. D., 2014). Their inventory management method such as lean production system has favourable helped the company to earn favourable amount of revenue. Moreover, to build the positive image the Kellogg's company invest in the CSR activities like uses the economical packaging and reduce the emission of carbon by taking the effective measures fro sustainable development.

Hence, certain recommendations that can help the firm and can bring the improvement in the existing processes are defined below:

  • There are various companies such as Kraft Heinz and Quaker Oats company that constantly come up with healthy products along with various variants. So on the basis of the competitive pressure Kellogg's company too need to make the special precaution in order to extend its product line and maximise the market share. This can favourably help to retain the potential employee for the adequate functioning of business.
  • Kellogg's should use the online platform in order to spread the awarenesses about its products amongst the customer. As most of the people both male and female work outside so they require the healthy as well as quick breakfast to have. Hence, all the requirements are effectively met by the company thus they just need to focus on its advertisement technique in order to grab the large audience effectively.
  • Along with lean production system, Kellogg's company should use the total quality management technique. This can help the company to continuously bring the modifications in the existing product. As the requirement and taste of customer can different on the regular basis so this helps them to serve the existing need of the market effectively.
  • Kellogg's should make the vital effort in order to differentiate their product from the other competitors. This is the effective basis that help to maintain the interest of the existing customer as well as attract the potential market. This is the effective strategy that can help the company to enhance its market reach also they can set the premium prices because of the attritional attributes and significance associated with the components of product. Although the company operate in the different market but most of the people can comprise the prices but not the quality of product so they need to focus on it effectively.
  • There are various digital media tool like the website of company, use of SEO, SEM and affiliate method by which Kellogg's can promote its product. It can offer the smaller packs for the first time buyers of the company along with that sales promotion technique can help the company to build up the taste amongst the consumer fro its new product.


From the above project report it has been concluded that supply chain management can be defined as the process which is followed by the companies for the purpose of delivering goods to different retailers which are retailer, customer, suppliers and distributors. There are various supply chain principles which are required to be focused by all the organisations for effective SCM. Some of them are customising logistic network, outsourcing in strategic manner, adopting service and financial metrics, differentiating products to be close to the clients. For all the organisations it is very important to manage the supply chain effectively so that all the stakeholders could be satisfied. The cross functional and integrated approach of SCM is related with other areas of organisation as it helps to perform operations appropriately. If an enterprise is willing to make improvement in the supply chain then it is very important for it to evaluate the SCM and then find the errors in it.


  • Almeida Marodin, G. and Saurin, T.A., 2015. Managing barriers to lean production implementation: context matters. International Journal of Production Research .53(13). pp.3947-3962.
  • Behera, P., 2015. Understanding construction supply chain management. Production Planning & Control . 26(16). pp.1332-1350.
  • Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
  • Copacino, W. C., 2019. Supply chain management: The basics and beyond. Routledge.
  • Fahimnia, B., 2015. Green supply chain management: A review and bibliometric analysis. International Journal of Production Economics .162. pp.101-114.
  • Fredendall, L.D. and Hill, E., 2016. Basics of supply chain management. CRC Press.
  • Gelei, A., Losonci, D. and Matyusz, Z., 2015. Lean production and leadership attributes–the case of Hungarian production managers. Journal of Manufacturing Technology Management .26(4). pp.477-500.
  • Gold, S., 2015. Modern slavery challenges to supply chain management.Supply Chain Management: An International Journal. 20(5). pp.485-494.
  • Hugos, M. H. , 2018. Essentials of supply chain management. John Wiley & Sons.
  • Luthra, S., 2015. An analysis of interactions among critical success factors to implement green supply chain management towards sustainability: An Indian perspective. Resources Policy. 46. pp.37-50.
  • Meixell, 2015. Stakeholder pressure in sustainable supply chain management: a systematic review.International Journal of Physical Distribution & Logistics Management. 45(1/2). pp.69-89.
  • Monczka, 2015. Purchasing and supply chain management. Cengage Learnin
  • Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and advanced planning. (pp. 3-28). Springer, Berlin, Heidelberg.
  • Wisner, J. D., 2014. Principles of supply chain management: A balanced approach. Cengage Learning.
  • Yin, S. and et. al., 2016. Fault detection for nonlinear process with deterministic disturbances: A just-in-time learning based data driven method. IEEE transactions on cybernetics .47(11). pp.3649-3657.

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