Kellogg’s Case Study

1. Draw a flow diagram outlining Kellogg’s Supply Chain.

Kellogg's ensures customer and supplier satisfaction by maintaining an effective and cost-
efficient supply chain (Figure 1). Raw materials are sourced from several regions and shipped to
the manufacturing plant in Trafford Park, Manchester, one of the biggest cereal production
plants, via cargo. The cereal is produced in Trafford Park and transported to a warehouse to be
stored. The warehouse is located less than 2 kilometers away from the manufacturing plant, and
it is operated by a logistics company, TDG, that Kellogg’s has partnered with. Lastly, the cereal
boxes produced are delivered by either TDG or another distribution company, Kimberley, to
Kellogg’s partners such as ASDA, TESCO, and other hotels. (Maastricht School of Management
Kuwait, 2022)

Figure 1: Kellogg’s supply chain process.

2. What kind of information would Kellogg’s need from its partners to manage its business
effectively?
This section discusses the information communicated between Kellogg's and its partners (TDG
and Kimberley) to improve the company's operations. Kellogg's relies on its partners to provide
information for its immediate distribution approach. The flow of information is a two-way
communication, and Kellogg's primarily needs information on inventory, delivery, customer
behavior, and satisfaction.
Information on the warehouse storing and inventories help Kellogg’s manage its spendings,
achieve high standards of customer service, promote sustainability, and minimize waste. TDG
has supplied a computerized system to their warehouses which helps keep track of inventory and
alerts Kellogg’s when products need to be restocked. The system automatically calculates the
amount needed to restock the inventory and sends it to the manufacturing plant via a notification.
This system is a key aspect of their "lean manufacturing" strategy, which aims to reduce waste
and streamline their process. Furthermore, Kellogg’s receives data on the temperature at which
the products are kept at in the warehouse, which helps Kellogg’s refine their supply chain
process. Sharing this information between Kellogg’s and its partners helps Kellogg’s manage
unforeseen circumstances, such as unexpected change in demand, change in the quality of a
product or increase in waste production. (Maastricht School of Management Kuwait, 2022)

To ensure shipments are delivered on schedule and to avoid delays, Kellogg's is provided with
crucial transportation and finances. Both TDG and Kimberely must provide Kellogg’s with
information on delivery schedules, order processing time, invoices, changes or cancellations, and
contracts. This helps Kellogg’s manage effectively and provide a fast delivery of top-quality
products, cereal, that satisfy their customers. (Bsaikrishna, 2016)

Other information shared with Kellogg’s include costs for storage in the warehouse,
transportation, and packaging. Furthermore, customer behavior forecasting is conducted and
shared with Kellogg’s to manage and avoid the “bullwhip effect”. To guarantee that customers
receive a speedy delivery and are satisfied, Kellogg's can also be given access to the best routes.
Other crucial information shared with Kellogg’s’ include GPS delivery tracking and delivery
updates, order confirmations, information on personnel handling the transportation, and RFID
tags to manage inventory. (Logistiikan Maaima, 2022)

3. Draw an information flow diagram between partners.

Figure 2: Supply chain process with information flow.

Information shared:

● Delivery schedules
● Invoices
● Order fulfillment time
● Changes and cancellations
● Temperature in the warehouse
● Contracts
● Costs: warehouse, transportation, and packaging
● Customer behavior forecasts
● Optimal delivery routes
● RFID tags
● GPS delivery tracking and status updates

4. Outline some of the key advantages that Kellogg’s reaped through collaboration
networks.
Kellogg's has been able to gain a competitive advantage through its partnerships. Kellogg's
outsources its logistics through partnering with TDG and Kimberley to focus on increasing
profits, reducing costs, and having a cutting-edge marketing strategy. They conduct market
research to study consumer behavior and control its distribution networks to remain cost-efficient
and maintain competitive in terms of pricing and handling time. Thanks to its partnerships and
efficient information flow, Kellogg's was able to improve stock turnover while still meeting
customer needs. Its effective distribution approach, that was set in partnership with TDG, helped
keep inventory low for both Kellogg's and its customers, such as ASDA and TESCO, which
gives Kellogg’s credibility. (Maastricht School of Management Kuwait, 2022)

These partnerships and collaboration networks help Kellogg's by overcoming any potential
problems with its supply chain such as excessive inventory growth, delivery problems, high
demand, and problems in restocking inventory. It has established an efficient transportation plan
with its partners, making sure the trucks are fully loaded to save on transportation costs. With its
collaboration network, Kellogg's can address these issues and focus on improving its brand and
increasing profits. (Koppelman, 2019) (Maastricht School of Management Kuwait, 2022)

Kellogg's has gained from its collaboration network by strengthening its brand and reputation
through maintaining social responsibility and responsible business practices. For example, the
company has established a "Better Days Program" which includes humanitarian goals such as
providing food for 3 billion people by the year 2030 and a donation of $375 million to feed the
poor. Kellogg's has also been able to set ambitious environmental targets such as reducing CO2
emissions, minimizing plastic footprint, and recycling packages. In comparison to its rivals, it
had the smallest plastic footprint, and almost 80% of its packaging was recycled. Also,
partnering with Kimberley has resulted in cutting its CO2 emissions by sharing delivery trucks
and not transporting not fully loaded trucks. Without the collaborations with TDG and
Kimberley, Kellogg’s would have had to direct their sources and efforts on optimizing the supply
chain process rather than improving their brand and reputation. (Kellogg's, 2022) (Maastricht
School of Management Kuwait, 2022)

In conclusion, Kellogg's reaped enormous advantages from their networks of collaboration. It

succeeded in having a strong marketing strategy, eliminating the majority of the supply chain's
challenges, and concentrating on optimizing their manufacturing strategy. By providing food and
donations to millions of hungry poor people through the “Better Days Program”, it was
successful in fulfilling social responsibility which positively impacted its reputation. It was also
successful in implementing significant environmental goals by sharing means of transport with
Kimberley and recycling.
References
Bsaikrishna. (2016, March 26). The Five Majors Flows in Supply Chain . Retrieved from
Brandlyzer: https://brandalyzer.blog/2016/03/23/the-five-major-flows-in-supply-chain/

Kellogg's. (2022). Kellogg: 100% sustainable packaging by 2025. Retrieved from Kellogs:
https://www.kelloggs.com/en_US/sustainability/sustainable-packaging.html

Kellogg's. (2022). 2019/2020 Sustainablity Report. Battle Creek : Kellogg's. Retrieved from
Kelloggs: https://www.kelloggs.com/en_US/sustainability/sustainable-packaging.html

Koppelman, L. (2019, December 30). 7 reasons why you should outsource your supply chain.
Retrieved from 6 river systems: https://6river.com/reasons-why-you-should-outsource-
your- supply-chain/

Logistiikan Maaima. (2022). Information, flow, and material flow. Retrieved from
Logistiikan Maaima: https://www.logistiikanmaailma.fi/en/logistics/logistics-and-supply-
chain/information-money-and-material-flow/

Maastricht School of Management Kuwait. (2022). Supply chain from manufacturing to shelf.
The Times 100: Business Case Studies.