Case Study

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Faculty of Business Studies
Tutor Marked Assignment
B203 A: Business functions in context I
Second Semester 2012 – 2013
Supply chain from manufacturing to shelf
Introduction
1 -The Kellogg's Cornflake Company began in 1906 with the Kellogg brothers who originally ran a sanatorium in Michigan, USA. They experimented with different ways to cook cereals without losing the goodness. Their philosophy was 'improved diet leads to improved health'.

2-Between 1938 and the present day Kellogg's opened manufacturing plants in the UK, Canada, Australia, Latin America and Asia. Kellogg's is now the world's leading breakfast cereal manufacturer. Its products are manufactured in 19 countries and sold in more than 160 countries. It produces a wide range of cereal products, including the well-known brands of Kellogg's Corn Flakes, Rice Krispies, Special K, Fruit n' Fibre, as well as the Nutri-Grain cereal bars.

3-Kellogg's business strategy is clear and focused:
* to grow the cereal business there are now 40 different cereals * to expand the snack business by diversifying into convenience foods * to engage in specific growth opportunities.

4-By acting responsibly, businesses win respect and trust from communities, governments, customers and the public. This enables the business to grow. In the community, Kellogg's is known for its approach to Corporate Social Responsibility (CSR). For example, its programme to promote the benefits of breakfast clubs has provided over one million breakfasts to schoolchildren throughout the UK.

5-Businesses focus primarily on the creation of profit but increasingly understand that their social and environmental impacts are important. Kellogg's believes in acting responsibly in all sections of the supply chain. This is a better long-term business model for both the organisation and its customers. Amongst other activities, it aims to do this by reducing energy and emissions in manufacturing and distribution and improving packaging.

6-Kellogg's Global Code of Ethics demonstrates a commitment to act respectfully and ethically. 'Our mission is to drive sustainable growth through the power of our people and brands by better serving the needs of our consumers, customers and communities.'

7-This case study shows how Kellogg's fulfils this mission in the later parts of the supply chain from manufacturing to shelf.

The supply chain

8-The industrial supply chain consists of three key sectors: 1. Primary (or extractive) sector - providing raw materials such as oil and coal or food stocks like wheat and corn. Some raw materials are sold immediately for consumption, such as coal to power stations. Others are used further up the supply chain to be made into finished goods.

2. Secondary (or manufacturing) sector industries make, build and assemble products. Examples include car manufacturers or bakers who use primary products. For example, Kellogg’s purchases rice for Rice Krispies and corn for Cornflakes.

3. Tertiary sector industries do not produce goods. They provide services such as in banking, retailing, leisure industries or transport.

9-From start to finish of the supply chain a range of agencies or departments are involved. These include research, quality, purchasing, sales, and transport and distribution. As part of their business strategy, companies need to consider how best to acquire and distribute raw materials. Businesses such as Kellogg’s recognise the importance of storing and transporting products effectively. Kellogg’s seeks to organise transportation and storage of materials and finished products to minimise costs and environmental impact. Increasingly governments are working to encourage businesses and individuals to reduce their carbon footprint and the effects of global warming.

10-In the supply chain, there are a number of areas where waste can be identified. Lean production is an inventory system enabling the streamlining of processes and elimination...
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