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Business and Management Kellogg's Case Study

Questions 1. Name the three sectors of the supply chain. On what occasions could certain sections of the primary sector operate as retailers? The supply chain has three different main sectors that are primary, secondary and tertiary sector. These sectors have different roles in the supply chain and they need to work together in order to provide an efficient system for the company. The primary sector changes natural resources into primary products. Some examples of industries in this sector can be given as agriculture, mining, forestry, fishing etc. Products of this sector make up the resources of other sectors. Primary industries are important in the industries of underdeveloped and developing countries. The products are then sold to secondary sector in which the products become manufactured, and turned into finished. Goods. Some examples of companies in this industry can be car manufacturers of cars, buildings, food and drink manufactures. The tertiary sector is the final stage of the production chain in which mostly the services are provided. Some examples can be given as insurance and banking companies, delivery and transport companies, health and education services and retail industry. On special occasions the primary sector can operate as retailers supplying their products straight to the customer. I have seen fisher boats who have gone fishing, and have caught fish pull up to the shore and directly sell what they have caught, in this case fish, to people on the coast, who are customers. Similarly if a bee keepers who is in Marmaris sell his product, honey, straight to the people who live in that area, or who are tourists passing by, he will have served his primary product straight to final customer. A person living in the east of Turkey, raising live stock comes to Istanbul for the purpose of Kurban Bayram, religious Muslim tradition, and sells his animal straight to the customer. 2. Give three examples of how Kelloggs demonstrates good supply chain management. How can Kelloggs make improvements both for its business and for the environment? a) Kelloggs uses ingredients which are produced in many different countries. So they took the decision to situate the production and manufacturing sites close to their channels of distribution. They have moved their storage depot at Warrington to Trafford Park which is very close to their production plant. This has saved them energy and cost. b) Kelloggs have been concentrating on identifying and reducing their waste. They are using the inventory system called Lean Production which enables them to streamline and eliminate waste. They work on reducing waste constantly by studying their production processes. This helps them to be more competitive with process and reduce their overhead and unit costs. c) Kelloggs is a member of the FDF. They have signed agreements with 21 other big companies which will help them use less water and less energy for their operations, reduce their waste and cut carbon

dioxide emissions. This has reduced their bills by sixty million pounds each year. This has helped their computability and has increased their profits Kelloggs could make improvements by using solar energy for its production instead of other fuel energy. They could also use reusable/ recyclable material for the packaging. If they used recyclable paper derivatives they could save cost and help the environment.

3. Why is it important for Kelloggs to build good relationships with businesses in the tertiary sector?

Kelloggs is company operating in the secondary sector. They are very experienced in what they do, and they have won the trust of communities, customers and governments by acting responsibly. As they are doing what they are doing best, efficient production, they need to be collaborating with many companies of the tertiary sector in order to run their business successfully. They need services from banks, insurance companies, lawyer firms national and international, advertising companies and may be most importantly transport companies such as TDG, and the supply Chain of supermarkets and other retailers in order to be able to sell their products to the final customer efficiently. In the case that the retailers who sell Kelloggs products arent happy, they can immediately change their suppliers and this would cause a decrease in the profit of Kelloggs. Kellogg needs to work with a good transportation service company, and to keep good relationship with them in order to deliver their products to their customers in time. If Kelloggs cant maintain good relationships with its transporters, it cant get good prices on transportation or might even need to change the company it works with. In order to make most profit, Kelloggs needs to build good relationships with its tertiary sector.

) Evaluate the benefits of large manufacturers like Kelloggs handing over the logistical side of their business to specialist companies like TDG. For Kelloggs to be competitive in the market it has to have a competitive price as well. So they have to be very careful about managing their costs as well as thinking about the hazards of their operation to the environment. Big retailers want to reduce their costs of warehouse and stocks. They prefer to keep less stock but want to sell many pieces. In this case they need good management of their stocks and frequent deliveries of items sold. This means Kelloggs have to make immediate deliveries of pieces sold. Lorries which are not full meant high costs for the company and inefficient use of resources for the environment. So Kelloggs has made the collaboration with the transport company TDG. This has helped them to minimize the unit cost of transportation. TDG keeps the warehouse costs low as they work with computerized heating and they are more specialized in transportation. Kelloggs decision to work with a specialized transport company and share costs with another producer (Kimberley Clark) has a positive effect on the environment as it reduces the waste and the fuel is used. This helps reduce costs as well. Kelloggs customers are happy with the replenish of products in time, and this generates into more orders for Kelloggs and their profits rise as they sell more pieces at a lower cost