Cadbury Schweppes PLC

Presented By:
Kulwant Dhillon
Micheal Elias
Junfeng Ma
Ramandeep Sran
Contents
 Introduction
 Operations Strategy of Cadbury
 Using Operations to Compete
 Recent Trends in Operations Management & Cadbury
 Process Strategy & Process Analysis
 Human Resource Management of Cadbury
 Capacity Planning & Constraint Management
 Lean Systems by Cadbury
 Supply Chain Design & Integration
 Resource Planning & Scheduling
 Location Planning
 Summary
 References
Introduction
Origin of Cadbury
 Cadbury is the brain child
of John Cadbury
 Starting in form of grocery
business in Birmingham in John Cadbury
1824
 In 1853, Cadbury became
the confectioner to the
British Crown.
 In 1860, Richard and
George took command and
expand it further.
 Today Cadbury operate
Globally
Cadbury Schweppes PLC: Overview
 Cadbury Schweppes PLC is a
British confectionary
company
 Headquarters in Uxbridge,
England.
 The oldest and largest family-
run businesses in the world
 In 1969, it merged with
Schweppes Limited
 Third leading producer of soft
drinks and fourth leading
confectionery manufacturer in
the World.
How large Cadbury Schweppes PLC ?
 Around 65,000
Employees
 35,000 direct and indirect
Suppliers
 Direct operation over 60
Countries
The Industry in which the Company
Operates
The Food and Beverage Industry:
Fiercely Competitive Marketplace
 Global market forces
 Consolidation
 Changing consumer preferences
 Increasing government regulations
Product and Major Brands
Three kinds of confectionery: Chocolate (55%), Gum(14%) and Candy(31%)

13 focused Brands 12 focus markets 7 focus customers

USA India

South Africa
China

Japan Brazil

Mexico UK

Turkey
France

Russia Australia
Operations Strategy of Cadbury
Operations Strategy
 Mission: Financial Scorecard,
judiciously reinforced by our
Priorities, Commitments and
Culture.

 Vision: to be the World’s

biggest and best
Confectionery Company

 Core Values: Performance,

Quality, Respect, Integrity and
Responsibility
Global Strategy + Mission Supportive
 Growth: Profitable Growth in
Emerging market (India, China,
Russia)
 Cost & Efficiency: Managing
brands on a global basis,
Outsourcing low value added
processes and Reconfiguring
Manufacturing Network.
 Disciplined Investment: In 2007,
Partnership with Barry Callebaut
(the world’s largest Cocoa
processing Company)
 Superior Returns: Strong Dividend
Growth, an Efficient Balance Sheet,
consistent improvements in ROIC
Using Operations to Compete
Cadbury’s Market Position and
Competitive Environment
Participates in the Global Competitive
Marketplace
Targeted Customers & How they are targeted?

http://www.youtube.com/watch?v=qHK-dzK-kS8
Core Processes to delivery the Final
Product
Internal and External Customers

Inputs Outputs
Processes and Operations
•Cacao varieties Delicious
•Milk Chocolate
•Processing
•Cocoa
•Blending , Gum and
•Palm Oil
•Cinching Candy
•Other
•Tempering And
Grocery •Storage
Products Beverages

Information on Performance

Source: Krajewski, Ritzman, & Malthora, 2010

Recent Trends in Operations Management
and Cadbury
Going Green…………..

 “Purple Goes Green” is the part of Cadbury’s Strategic Mission and

Vision ( Objective: reduce 50 % Carbon Emissions & 10 % reduction
in Packaging by 2020).

 Link with Singapore’s Sustainable Manufacturing Centre (SMC).

 Co-operation with United Nation Development Program (UNDP) and

Government of Ghana, the Company promised to invest $ 87 million
over next decade to support high-quality sustainable cocoa
production

 Bournville (The birth place of Cadbury Company), is still the

Greenest areas of Birmingham.
Other Recent Trends……

Productivity improvements:
 Replacing Air Compressors, Chilling system machines at
Manufacturing and Packaging lines.

Technological Changes:
 Ringwood, Victoria Plant Identifies many opportunities for
making innovation and technologies that will reduce the waste
from the Chocolate.

Diversity in the Workplace:

 “Diversity & Inclusiveness” is the punch line on its website
for creating a welcome Workplace for everyone.
Process Strategy & Process
Analysis
Flow Chart of Process Analysis at
Cadbury

Production
Packaging
processes

Research Consumer Modificatio Product

Production
& Design trials ns launch

Ingredients
Tasting
& recipes
Awards won by Cadbury for its
Performance & Quality
Cadbury Schweppes plc was awarded Business in the
Community's Jubilee Award

GOLD award for the "Best Insights and Strategic

Thinking"

Brammer Energy & Environmental Improvement Award , 2009

Cadbury's Gorilla Among D&AD Winners,

2008
Human Resources Management of
Cadbury
Human Rights & Ethical Trading
Policy (HRET) of Cadbury
Core labor rights and dignity at work:
 Respect the rights of employees to join legally recognized labor
unions.
 Children are employed only under circumstances which protect them
from physical risk and do not disrupt their education.
 Not tolerate any form of harassment in the workplace.

Health and safety in the Workplace:

 Healthy and safe work environment for each employee.

Fair remuneration:
 Working hours and remuneration are reasonable and comparable to
those offered by similar companies
Continue………

Diversity and respect for

differences:
 Manage diversity to create
competitive advantage

Opportunity for development:

 Opportunities of personal and
career development regardless
of their gender, age, marital
status, sexual orientation,
disability, race, religion or
national origin.
Non-traditional Training for
Employees
 Chemistry, Science, Food/nutrition, or Chemical Engineering
Degree holders are regular coached by managers.

 Managing an annual sensory screening program to develop

product knowledge and understanding of the Confectionery
Categories.

 Analytical Laboratories (Microscopy, DNA and Protein and

Investigative Analysis) provide training the Employees

 Newsletters, the Group website and about 250 local websites also
help employees to know what is going on within the business at
local, regional and Group levels.
Capacity Planning & Constraint
Management
Constraints Analysis in Cadbury

 External Constraints
 Market Extent (Bad)

 Ability of a producer to gain access to appropriate

resources (Good)
Constraints Analysis in Cadbury

 Internal Constraints
 The existing scale and capacity of buildings and machinery
used in the production process(Good)
 The skills and training of the labor force(Bad)
 The availability and flexibility of the labor force(Bad)
 Access to an abundant supply of parts and raw
materials(Good)
 Time(Good)
 Finance(Good)
Constraints Management in Cadbury
 Extent Market Chocolate Market share
 Many competitors:
36.2 34.1
▪ Thorntons Cadbury
Hershey
▪ Lindt & Spruengli Others
29.7
▪ Nestlé S.A.
▪ Ferrero SpA
▪ Hershey Company Gum Market Share

▪ Wrigley 34.4 23.5 Cadbury

Wrigley
Others
42.1 4th Qtr
Constraints Management in Cadbury

 Recent Possible Activities for Extent Market

 Market Penetration
▪ Try to achieve growth using existing products in there current market
segment, to try and increase its market share.
 Product Development
▪ Targets a new product at there current market segment.
 Market Development
▪ Seeks growth by targeting there existing products at a new market.
 Diversification
▪ Tries to diversify into new businesses by producing new products to
aim at a new market.
Constraints Management in Cadbury

 Labor Force

‘How can we engage our

new hires early so they
understand what’s great
about Cadbury and feel part
of our global organization?’
Constraints Management in Cadbury

 Some Key drivers for labor

 Improve the quality of new hire training by delivering a clear,
consistent message.
 Delivery a solution that is easy to use and maintain locally.
 Provide the ability to link to other resources such as the intranet for
more information on policies and processes.
 Develop the training in an engaging format.
 Include a mechanism for tracking completion of the learning activity.
 Introduce all new hires to the performance management process (part of
People Processes).
 Introduce newly hired and newly promoted managers to their role in
people processes such as performance management and development
planning at Cadbury.
Capacity Planning in Cadbury
 Three broad classes of Capacity Planning
 Lead strategy
▪ It is adding capacity in anticipation of an increase in demand. It is an
aggressive strategy with the goal of luring customers away from the
company's competitors. It often results in excess inventory, which is
costly and often wasteful.
 Lag strategy
▪ It refers to adding capacity only after the organization is running at full
capacity or beyond due to increase in demand. This is a more
conservative strategy. It decreases the risk of waste, but it may result in
the loss of possible customers.
 Match strategy
▪ It is adding capacity in small amounts in response to changing demand in
the market. This is a more moderate strategy.
Capacity Planning in Cadbury

 Cadbury Way

Lead strategy Match strategy

Inventory in Cadbury
 Service Level Optimizer 99+
Before After
Inventory buffered variability in supply and Inventory buffers variability in supply and
demand. Planners chased demand due to demand with much less manual
unreliable stocks. intervention

Safety stocks determined by historical values Safety stocks determined by algorithms

or by spreadsheets using basic statistics that model the natural uncertainty of
demand and supply

Used normal distribution, if anything Reliably defines correct relationship

between stock and service level at the
item/location level

Intermittent analysis and static results could Optimal inventory level for each
not keep up with dynamic changing SKU/location across the network
environment dynamically fed to R/3

Not integrated with R/3 — manually updated Highly automated. Direct interface to R/3.

Inventory management focused “Service-driven” inventory solution;

maintains and guarantees target
customer service level

Lag 2 Forecast Error at the SKU level Historical order/line item variability
generates safety stock. Considers not
only quantities, but also order frequency.
Lean Systems by Cadbury
Just in time benefits for Cadbury
 Reduce costs
 By using JIT product line, the inventory cost of Cadbury reduced from
$670,000 to $200,000
 Improve the productivity
 Because of reducing stock holding, Cadbury was able to cut the assembly
time by over 95%
 Improve the competitive advantage
 JIT creates a more flexible business that has better communication with
customers and suppliers, and can react more quickly to market demands,
which bring more competitive advantages for Cadbury
 Improve job satisfaction
 JIT demands active participation in the production process from employees.
It increases their skills, gives them greater responsibility and fosters an
interest in the performance of the whole company
Supply Chain Design &
Integration

Resource Planning & Scheduling

Cadbury Supply Chain

Raw Material Manufacturing and Sales and

from Farming Packaging Distribution

Wholesale &
70 %
Third Party
Ghana Stores

Cadbury
Manufactu
Cus
ring Plants tom
er
30 % Cadbury
Other Owned
Locations
Stores
Depending on Ghana for Supply

 Cadbury emphasizes responsibility both ethically

and environmentally. In their relationship with
Ghana farmers they promote fair wages and
support the country’s economy.

 Pros: Ghana is known for having the best

quality bean available. Having a good
relationship with the farmers ensures access to
the best ingredients.

 Cons: Farmers in Ghana have recently had

trouble with their crops and have delivered lower
outputs. This results in a smaller supply for the
company who is limited by their main
ingredient. This has effected Cadbury financially
and may continue to be a problem under Kraft.
Cadbury Customers
Cadbury Customers

 End Customer
 Needs Product to Be Available
 Needs Product to be Safe

 Wholesale and Retail

 Reliable Supply Chain
 Dependable Inventory Restocking
ERP SAP Integration

 Kraft has had great success with SAP systems to handle ERP.
Recently, in 2008, they upgraded to SAP ERP 6.0. Using the
SAP system they were able to reduce their operational costs
and see profitable results.

 Cadbury tried to implement SAP in 2007 resulting in reduced

operations performance over two years and cited as one of the
reasons they had to layoff employees.

 Kraft is now planning to integrate Cadbury into their ERP

system and add even more SAP applications.
Location Planning
Location
 Traditionally Focus area of
Location : Near Canal links,
Rail & main Roads

 Kraft has similar motives and

also does the same for their
office buildings. They locate
them near public transport
and save on items such as
parking facilities and security.
Location

 Cadbury is a British company and bases many of its

operations in Britain. This area has some of the highest wage
rates.

 Now that Kraft has bought the company, they are strategically
looking to phase out many operations in Britain for cheaper
areas of labor such as Eastern Europe and overseas countries.
Summary
It is a fascinating story of Industrial and Social Development.

 The story of a small family business growing up, and to become an

International World Leader.

A story of Technical Invention and secret recipes, marketing savvy

and the creation of great Brands.

A story of people who are passionate, principled, pioneering and

just love confectionery.
References
 http://www.cadbury.com/ourcompany/ourculture/Pages/ourculture.aspx
 http://www.cadbury.com/surveys/investors/ourvisionandstrategy/Pages/default.aspx
 http://www.cadbury.com/surveys/investors/ourvisionandstrategy/ourstrategy/Pages/default.aspx
 http://www.cadbury.com/surveys/investors/ourvisionandstrategy/ourstrategy/Pages/growth1.aspx
 http://www.cadbury.com/surveys/investors/ourvisionandstrategy/ourstrategy/Pages/costefficiency1.aspx
 http://www.cadbury.com/surveys/investors/ourvisionandstrategy/ourstrategy/Pages/investment1.aspx
 http://www.cadbury.com/surveys/investors/ourvisionandstrategy/ourstrategy/Pages/superiorreturns1.aspx
 http://books.google.com/books?id=8ujaV8YcLioC&pg=RA1PA141&dq=cadbury+chocolate+and+Environmen
t&cd=6#v=onepage&q=cadbury%20chocolate%20and%20Environment&f=false
 http://cadburyar2008.production.investis.com/~/media/Files/C/cadbury-ar-2008/pdf/cadbury_ra_13mb_compre
ssed.ashx
 http://www.cadbury.com/ourresponsibilities/ethicaltrading/ourhretpolicy/Pages/ourhretpolicy.aspx
 http://www.cadbury.com/careers/ukgraduaterecruitment/industrialplacements/scienceandtechnology/Pages/scie
nceandtechnology.aspx
 http://www.cadburylearningzone.co.uk/business_studies/16to19/production/production_facts.asp
  http://www.globalbusinessinsights.com/content/rbcg0145t.pdf
 http://www.cadburyindia.com/cadtoday/awards.asp
 http://www.foodbev.com/news/cadbury-energy-projects-win-brammer-awards
 http://www.adweek.com/aw/content_display/creative/news/e3i9b83c368b14067225d850b87c79093cb
Questions…???????

Thanks