Kellogg’s Case Study
There are three key sectors of the supply chain, namely; primary, secondary and tertiary sectors. The former encompasses all processes and activities geared towards transforming natural resources into primary products which are then to be used in manufacturing finished products (Choi, 2011). For instance, the forestry industry falls under the primary sector bearing in mind the fact that it focuses on transforming a natural resource, i. e. rees, into a primary product (timber). On the other hand, the secondary sector is concerned with transforming the primary products generated from the primary sector into finished products. For instance, Kellogg’s is a secondary sector entity considering that it relies on raw materials, such as cocoa, sugar and wheat, which it obtains from its primary suppliers to manufacture different consumer goods like snacks and porridge flour (Kellogg, 2013).
The tertiary sector is normally regarded as the final stage of a given supply chain exercises, whose major emphasis is on facilitating the efficient provision of services to customers. Among the numerous firms which are part of this supply chain sector include those operating within the banking, transportation and insurance industries, among others. There are two main occasions under which certain sections of the primary sector may end up operating as retailers, one of these being when there is a lot of concern about the nature of the products being offered to customers (Lawrence et al, 2011).
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For instance, a fisherman may decide to sell fish directly to customers at the shores of the lake where he had gone fishing if he is convinced that there is no way he is going to preserve the fish well for a few days before he decides to sell them in the market. Secondly, players within the primary sector may be compelled to deal directly with customers in situation when there is increased demand for their products. A good example of this is that of a farmer who decides to sell his milk directly to consumers as opposed to first taking it to a rocessing plant when the demand for this commodity increases significantly. Question Two: One way through which Kellogg’s demonstrates good supply chain management is that of its decision to locate its manufacturing plants near its distribution channels or markets where the demand for its products is high. This is of great significance in making the company’s operations to become more efficient, more so through enhancing its ability to undertake its business activities in a faster and cost effective manner (Lawrence et al, 2011).
The effectiveness of Kellogg’s supply chain can also be depicted by its decision to establish partnerships with other companies, an aspect that has continued to put it in a better position of realizing the benefits associated with the concept of economies of scale (Kellogg, 2013). The agreement that the entity managed to get into with other corporations has also impacted positively on the company’s drive to cut down its carbon emissions, with this subsequently ensuring that it not only keeps on complying with the existing regulations but also continues to strengthen its corporate image.
Kellogg’s is also fully committed in ensuring that its products reach different markets within the shortest time possible, an aspect that is an integral component of good supply chain management. This can be evidenced by its decision to enlist the assistance of many intermediaries as a way of increasing the scope of its transportation and distribution channels. Nevertheless, Kellogg’s should consider substituting the use of fuel energy with that of solar energy while purporting its manufacturing exercises.
Doing this will enable the firm to not only minimize the huge manufacturing costs which it currently incurs but also to ensure that its production processes become more environmental friendly. Question Three: One of the major reasons as to why Kellogg’s maintains strong relationships with businesses in the tertiary sector is that doing this creates a concrete platform for the corporation’s products to appeal well to its consumers.
This gives a candid explanation as to why Kellogg’s entered into an agreement with Tesco meant to allow its products to continue being displayed in the latter’s stores. Kellogg’s collaboration with tertiary sector entities can also be attributed to its allure in ensuring it continues to purport successful business activities. For instance, maintaining good relationships with banks makes it possible for the entity to acquire additional funds to finance its operations or investment activities (Leeman, 2010).
Question Four: The major benefit that can be realized from the decision of large manufactures like Kellogg’s to outsource some its activities to specialist companies like TDG is that of making the former’s supply chain and distribution channels to become more efficient. The achievement of this objective is usually facilitated through the emphasis of these specialist entities to employ computerized systems while purporting stock handling and logistic functions for their clients, with this enhancing the timely and cost efficient delivery of stock in the larger manufacturers’ retail stores (Choi, 2011).
Moreover, these specialists assist larger firms such as Kellogg’s to minimize the wastages which normally occur within their supply chains, more so through streamlining their transportation, distribution and storage systems (Leeman, 2010). For instance, TDG enables Kellogg’s to avert from experiencing wastages while transporting products to different markets through ensuring the corporation observes the principle of optimal lorry capacity.