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Case Analysis of

Kellogg’s Supply
Chain
Production and Operations Management
(MGT 3224)
Section: E
Group Name: MASTERMINDS
Prepared For
Fahim Tasneema Azad
Course Instructor
School of Business and Economics

Prepared By
Noor-E-Sabah 111 141 167
Jerin Jahan Malik 111 141 111
Md. Hasnat Islam 111 142 166
Nazmus Sakib 111 131 155

Date of Submission: 27th December


Letter of Transmittal

Date:
26th December, 2016

To:
Fahim Tasneema Azad
Lecturer
School of Business and Economics
United International University
Dhanmondi, Dhaka.

Subject: Submission of Case Analysis.


Dear Madam,
It gave us an immense pleasure in presenting this assignment on case study, which was
assigned to us in Production and Operations Management course of the BBA program. In this
paper, we have tried our level best to portray the analysis of the case given on Kellogg’s
Cornflake Company.
We consider ourselves very privileged to prepare this assignment under your guidance. It has
provided us with a great scope of applying the gathered knowledge about a company’s
operation management and how analysis is done. We must mention here that we are
extremely thankful to you for your valuable guidance, tiresome effort and constant attention
whenever required.
We appreciate this opportunity to work under you. We are eagerly waiting for your feedback
on the overall assignment.

Thank you.
Sincerely,

Nazmus Sakib 111 131 155

Jerin Jahan Malik 111 141 111

Md. Hasnat Islam 111 142 166

Noor-E-Sabah 111 141 167

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Acknowledgement

We are really grateful because we managed to complete our Production and Operations
Management assignment within the time given by our lecturer Fahim Tasneema Azad. The
assignment would have not been completed without the effort and cooperation of the group
members-Nazmus Sakib, Jerin Jahan Malik, Md. Hasnat Islam and Noor-E-Sabah. We are very
much grateful to our senior friends for providing us with such bundle of information. Next we
would like to thank the advancement of technology i.e. internet for which we could google all
our necessary information of the given case.

Finally, I would like to thank our respected course coordinator Fahim Tasneema Azad for
teaching us this course with patience and helping to develop our research skills, which will be
invaluable for future business projects or research.

Thank you all!

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Table of Contents
Letter of Transmittal .............................................................................................................................. 0
Acknowledgement ................................................................................................................................. 2
Question 1 .............................................................................................................................................. 4
Question 2 .............................................................................................................................................. 5
Question 3 .............................................................................................................................................. 6
Question 4 .............................................................................................................................................. 7
Recommendations ................................................................................................................................. 8
Reference ................................................................................................................................................ 8

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Question 1

Name the three sectors of the supply chain? On what occasions could certain sections of
the primary sector operate as retailers?

Answer: The supply chain has three main different 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.

Generally, the businesses in the tertiary sector operate as retailers; however, in some cases,
certain sections of the primary sector can operate as retailers. For instance, if a customer
requests for an unmanufactured product, he/she will obtain it -the raw material- from the
primary sector; enabling this sector to operate as retailers. The raw material will be taken from
the suppliers, this trade making the suppliers who belong to the primary sector operate as
retailers without the need of the tertiary sector. Again, 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 keeper who is in Marmaris sells
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 customers.

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Question 2

Give three examples of how Kellogg’s demonstrates good supply chain management. How
can Kellogg’s make improvements both for its business and for the environment?

Answer: Kellogg’s uses a range of agencies and departments for research, quality, purchasing,
sales, transport and distribution to manage the supply chain more effectively and has built good
relationships with each sector.

First of all, Kellogg’s chooses the products to be manufactured according to its customer needs
based research, therefore makes sure that the product is right. Secondly, its “just-in-time.”
Means efficient delivery of the product to the consumer at the right price, in the right place and
at the right time, will result in good business for each link of chain. This system makes the
supply chain better since this system includes computer-based systems, which provide efficient
stock inventories. Thirdly they have effectual collaboration with all partners like TDG,
Kimberley Clark, within the supply chain and each company work within their expert area to
provide products and services to consumers. Fourthly, since their storage is 1 mile away,
Kellogg’s diminishes the transportation cost while naturally increasing the distribution rate. To
sum up, the reason why Kellogg’s has a good supply chain is that it can choose the right
product, keep stocks in the lowest level while keeping the distribution and customer satisfaction
at highest levels.

Moreover, Kellogg’s is a company that can both make profit and realize the importance of its
environment at the same time. It has 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. Therefore, to make improvements in these fields, it should achieve its
aims by reducing the energy to manufactured products, using solar energy for its production
instead of other fuel energy, producing recyclable packaging, lowering overhead unit costs and
reducing its carbon footprints. By performing these actions, Kellogg’s will be making
improvements for its business and the environment.

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Question 3

Why is it important for Kellogg’s to build good relationships with businesses in the
tertiary sector?

Answer: It is the final stage of supply chain that is tertiary sector. It provide services and
it does not produce or manufacture goods. Kellogg’s 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.

Building good relationships with businesses in the tertiary sector makes it easier for the
business to focus more efficiently on its specialist which is to manufacture cereals and other
food products. For efficient production, they need to be collaborating with many companies of
the tertiary sector in order to run their business successfully. Kellogg’s works with Kimberler
Clark to get transportation. This results in a decrease in Kellogg’s distribution costs thus makes
its products more competitive. Even more, relationships with other businesses also helps to
reduce the number of part-full or empty vehicles on the road so all of the products can be
reached to a certain place at the same time. The importance of this is that it saves time, road
miles and less gas is used which saves Money. All in all, building good relationships in this
sector results in an increase in turnover for Kellogg’s. Besides, 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.

Therefore having a high esteem, permanent and strong relationships with the retailers will
contribute to Kellogg’s and increase it’s sales proportion.

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Question 4

Evaluate the benefits of large manufacturers like Kellogg’s handing over the logistical
side of their business to specialist companies like TDG.

Answer: To improve distribution system, Kellogg’s collaborates with TDG-a logistics


specialist. The most important benefit of Kellogg’s collaboration with TDG is that it increases
the efficiency of Kellogg’s distribution system. By handing over the logistical side of their
business to specialist companies such as TDG, Kellogg’s can transport, distribute and store its
products much more easily.

Also, because it has a more efficient distribution system, Kellogg’s can focus on its
merchandise better, and therefore, be more successful. Additionally, the specialist companies
such as TDG which ensure that the shelves are always full and that more products are being
transported at the same time, provide Kellogg’s to keep stocks to a minimum and help
contribute to its environment by reducing the co2 emission since there are less vehicles carrying
the products. As a result the environment is less polluted since heating and fuel costs are
minimized. Another benefit is that TDG keeps the warehouse costs low through its specialist
transportation systems. This also prevents Kellogg’s to make unnecessary payments.

So overall it is understood that specialist companies like TDG increases Kellogg’s profits and
contribute to the environment.

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Recommendations

Before reading this case, we looked at Kellogg’s as only a cereal box. After reading it, we
discovered a whole new side of this huge company. We’ve depicted a picture in my mind of
how a good company should be managing the sectors, having good relationships with its
retailers while caring so much about the environment. At first, we were surprised to see that
such a big company needed other companies’ help. But after reading the whole article, I saw
that without the help of different companies in each sector, Kellogg’s could not manage to
become the biggest and most successful in its field. We realized that even a great company
needs support and consultancy, which actually made it become great. Thereby, with this
method, every company can focus on its expertise area and by combining these skills, the most
profits can be made.

Besides, we came to know that because of global warming, most of the companies were trying
to contribute to its environment. But we were a little bit surprised seeing the extra efforts
Kellogg’s was making, such as stocking its products in a close area to reduce the energy use,
or using lean production to eliminate the waste. We understood that even one company could
make a difference in this world, which made us more hopeful about the future of the earth.

But, though Kellogg’s is very successful on producing different kind of cereals, this company
hasn’t want to grow in other sectors alike producing cereals e.g. light foods which we think
they should. Again, as Kellogg’s is a well-known company it can go for selling its products
from its website too.

Reference

https://www.tradegecko.com/blog/supply-chain-management-factory-supermarket-shelves-
kelloggs
http://www.supermarket.co.za/SR_Downloads/S&R%202016-4%20Supply%20chain.pdf

http://businesscasestudies.co.uk/kelloggs/supply-chain-from-manufacturing-to-
shelf/introduction.html#axzz4TyoQenSm

https://www.ukessays.com/essays/business/supply-chain-management-and-elogistics-with-
kelloggs-business-essay.php
https://www.thefreelibrary.com/When+Kellogg's+met+Kimberly-Clark.-a0196224921

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