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 their goodness. Their philosophy was ‘improved diet leads to improved health.
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 Nutri-Grain cereal bars. Kellogg’s business strategy is clear and focused:
 to grow the cereal business there are now 40 different bowls of cereal
 to expand the snack business by diversifying into convenience foods
 to engage in specific growth opportunities.
Kellogg’s is a secondary sector business. It obtains its raw materials of wheat, corn, cocoa, rice, and sugar from primary suppliers around the world. These materials help make over 40 different breakfast bowls of cereal and snacks to sell to customers through the tertiary sector. It is a large-scale manufacturer and stores sufficient stocks to meet customer orders. As part of its Research and Development (R&D) programs, it develops recipes to extend its range of cereals and snacks.
Kellogg’s largest UK production plant is at Trafford Park in Manchester. One of its storage depots was 15 miles away at Warrington. Kellogg’s moved this storage to a new warehouse site in Trafford Park, only one mile away from its production base. This provides specialist energy-efficient warehousing of stock 24 hours a day. To improve its distribution, Kellogg’s collaborates with TDG, a logistics specialist. This reduces transport costs considerably and is energy-efficient. Kellogg’s has reduced both its carbon footprint and costs as a result.
Kellogg’s employs specialist transportation and storage companies to be responsible for all the logistics aspects of its business. One of Kellogg’s partners, TDG, stores and transports pallets of Kellogg’s cereals. This allows Kellogg’s to concentrate on its specialist area of manufacturing cereals and other food products.

Kellogg’s also shares transportation with another manufacturer, Kimberley Clark. This has reduced distribution costs, helping keep Kellogg’s products competitive. The system helps reduce the number of part-full or empty vehicles on the road. This saves time, and road miles and provides additional benefits of reducing CO2 emissions.
Kellogg’s has major relationships in the tertiary sector. These include the major retail supermarkets such as Tesco and ASDA and some of the wholesale sector such as Makro. Kellogg’s relies on retailers to help them promote a good relationship between the consumer and its products.
Kellogg’s uses a system called just-in-time to provide an efficient stock inventory system. Just-in-time means that just enough product is made to fulfill orders and limited stock is kept. Kellogg’s needs to get the balance right at each section of the supply chain. Late deliveries or inability to deliver due to a lack of products might make retailers buy from competitors. Through its collaborations with TDG and by relocating some of its warehousings, Kellogg’s now has a more efficient distribution system. Computerized stock holding systems ensure shelves are always full and orders are delivered on time. This helps Kellogg’s to keep stocks to a minimum. It also helps customers like ASDA and Tesco to reduce their stocks too.
This illustrates the effectiveness of Kellogg’s supply chain management (SCM). This was achieved by a collaboration of industries within the supply chain. Each company works within its specialist area to provide products and services to consumers.
Distribution has improved through the collaboration of Kellogg’s, Kimberley Clark, and TDG. Storage, in itself, is an investment without returns. Everyday materials or products are on a shelf, they are costing money without earning any profit. Retailers do not want a warehouse that is unnecessarily full and neither do manufacturers. When deliveries are made, lorries need to be full to minimize unit costs of transportation.
This collaboration has helped all of these aspects. Customers are guaranteed deliveries on time because stocks are monitored effectively. Deliveries are cost-effective as lorry capacity is used effectively. Retailers like ASDA and Tesco benefit as they are kept stocked without storage costs. Therefore their advertising yields good returns, as customers are always able to buy Kellogg’s products.
The lean production system streamlines processes and eliminates waste. Computerized warehousing means that products are manufactured efficiently, then transported straight from the warehouse to retail customers. This avoids delays for customers.

Answer ALL questions.
Question 1
Explain how materials and information flow in Kellogg’s supply chain.
Question 2
Describe the different stages of the life cycle for Kellogg’s products. Answer ALL questions.

Answer rating: 100% (QA)

Question 1 Kelloggs sources its raw materials of wheat corn cocoa rice and sugar from primary suppliers around the world These materials are used to m... View the full answer