International Logistics: Challenges and Opportunities for Cadbury Dairy Milk - Case Study Example

INTERNATIONAL LOGISTICS: CADBURY DAIRY MILK Name Institution Professor Course Date Executive Summary Logistics entails the procedure of tactically managing the procurement, storage and movement of materials and finished inventory through a firm and its marketing channels. It is the process of planning, executing and controlling the cost-effective and efficient flow and storage of raw-materials, finished goods and linked information from manufacturers to consumers. Cadbury dairy milk holds an elaborate supply chain that helps in moving products from the place of origin to the place of consumption. The company uses train, ship, railways and trucks to transport its products to their consumption place. This report explores the challenges and opportunities linked to Cadbury’s dairy milk with specific focus to the logistics of dairy milk. Based on the temperament of the product, accessibility of raw materials, transportation modes, geographical locations, international economic integration and technologies, the company’s supply chain is flexible but it is affected by several international trade aspects. 1.0 Introduction Cadbury is a cosmopolitan company established in 1824. Cadbury dairy milk is a chocolate brand sold across the world. Cadbury established CRM in 1905 that sold old and established novel logistical problems. CDM chocolate emerged as the best selling product leading to opening of several plants. In 2010, CDM was integrated in the Kraft Foods. The integration promoted the Kraft Foods in relation to geographical market exposure. The integrated company is the global second biggest food company making products for billions of customers in over 160 nations. CRM is a popular brand consumed by 30% of consumers over 14 years. The commodity is sold across the world. The products are transported to diverse geographic locations through train, trucks and ships. However, globalisation and politics are major aspects that influence CDM logistics. 2.0 Cadbury Dairy Milk Supply Chain CDM has become a market leader in confectionery market and a major brand with a distinctively chocolate taste. The purple colour used in its packaging holds emotional importance and brings a sense of joy to consumers. According to Bradley (2010, p.1), CRM is the covertness success of the organisation and made from cocoa and fresh milk. The milk chocolate that required fresh milk, established a novel infrastructure for its storage, transportation, condensation, processing, collection and receipt. CDM prompted the growth of Cadbury business. CDM supply chain involves the flow of material, information and finances. The product’s supply entails planning, multi-sourcing, e-commerce and information sharing. Farm products are transported from the farm to the manufacturing plant, packaged and transported to distribution depots before they are transported to the consumer market. The products supply chain starts at raw material production and culminates with the processing and distribution of the end products (Frazzon 2009, p.2). CDM supply chain is complex given the movement of raw materials from farms, to the plant and then to back to the consumers. 3.0 Opportunities and Challenges Linked with CDM Supply Chain 3.1 Geographic Locations Cadbury sells its dairy milk across diverse regions. Its success in international competition relies on its competitive advantage. Cadbury’s distribution logistics provides the right goods at the right time and place, in the right quality, right price to the right people. This is achieved through accessibility of information and goods. However, pursing international sourcing is a procedure that takes time and involves scores of barriers (Arora & McIntyre 2014, p.85). Cadbury faces customs, trade regulations, language barriers and customs in different geographical regions. For instance, assessment and control of supplier’s business procedures are more complex given their diverse locations in the world. Logistics in international sourcing entails plenty of problems such as transportation delays, longer inventory management and border-crossing processes. According to Arora and McIntyre (2014, p.85), through employing global sourcing, Cadbury lowers costs, enhance quality and become more innovative and flexible. However, while price is a motivating aspect to source from low-costs nations, product’s quality becomes an issue. There are scores of other risks and challenges which includes ineffective management of inventory, foreign exchange rate fluctuations, duty regulations, trade regulations, foreign business activities ineptitude, nationalism and economic and political stability that affects Cadbury’s logistics. Other challenges include delivery performance, logistics and transportation costs, logistics competence and logistic infrastructure (Arora & McIntyre (2014, p.86). However, CDM holds effective management of inventory and competence workforce to manage its supply chain and logistics. 3.2 Transport: Train, Ship and Trucks Plunkett (2009, p. 1) defines logistics services as services included into regular transportation actions including freightforwading .Transportation managers identify the most viable transport model. For instance, Cadbury uses train, ship and trucks as its mode of transport. The company consult providers of logistics services to ensure flow movement of raw materials and products from the origin place to the consumers. The logistics challenges faced by Cadbury include poor quality of physical infrastructure services such as roads, waterways and port services. Other challenges include institutional and policy limitations such as practical red tape, insufficient contracts enforcement, poor description and rules of engagement enforcement, delay at ports and in customs, pilferage in transit, highly restrictive protocols on cargo movement, delay at border crossing and ports. Delayed delivery is prompted by lack of container trucks, overloading, defective containers, rough freight handling and differences of standards and lack of understanding amid logistics providers and shippers (Arora & McIntyre (2014, p.87). Sometimes traffic limitations ban weighty vehicles from entering major cities, local protection regulations and regulatory restrictions. Logistics ineffectiveness destroys the competitiveness of the firm through its impacts in cost and time (Arora & McIntyre (2014, p.87). The cost relates to direct products transportation costs and inventory holding costs. Notwithstanding all the challenges facing Cadbury’s logistics, CDM hold one of biggest logistics networks distribution across the world. CDM is distributed through numerous depots. The company has enhanced its distribution and logistics competitiveness through information technology. 3.3 Socio-economic Cadbury focuses on purchasing and supply management. The company centres on the basic aspect of their supply chain and embraces techniques that improve how it gets services and materials needed to create products and distribute them. The company coordinates and collaborates with its channel partners to enhance its sourcing production, logistics, customer relations and procurement (Katie 200, p.3). To ensure cost reduction the company hold a better way of transporting its raw materials. To prevent milk evaporation, the company takes cocoa to milk. This logistics strategy enhances milk quality besides allowing the company to engage in lean logistics where it eliminates and recognises wasteful practices from the supply chain to augment product speed and flow. CDM manufactures engage in the procedure of raw materials collection. The raw materials which include cocoa, milk and sugarcane come from suppliers and conveyed as finished goods to consumers. Retails shops get the products from wholesalers. Cocoa products move through a multifaceted and long supply chain comprising of collectors, exporters, processors, manufactures and traders. The world’s supply of cocoa is dominant in West Africa. Cadbury maintains good relationships with all the members of its supply chain, holds a fair-trade certification and tries to enhance the living standards of its cocoa suppliers (Katie 200, p.3). 3.4 Globalisation The ongoing procedure of increased economic interdependence among different nations known as economic globalisation is mirrored in the augmenting amount of cross-border trade. It is has been important for Cadbury to create an effective supply chain and capitalise on global resources to reduce costs, promote quality and impel innovation. Global sourcing strategies are a major differentiator of most thriving demand-driven international value chain organisations such as Cadbury. One of the major drivers and effects of globalisation is improved technology. Globalisation of CDM instigates transport technology and intermodalism, global trade expansion in the product, changing blueprints of international production of CDM and increasing global markets. Globalisation has also instigated the merging of Cadbury with Kraft Foods family and global sourcing of raw materials. 3.5 Technology Cadbury face the challenge of coordinating an lengthwise procedure and controlling the interplay with 3rd parties such as suppliers, ocean carriers, custom brokers, government agencies and customers. However, the company uses technology to support its supply chain and global initiatives. Software-as-a Service transportation control systems offer a multi-modal execution, planning, carrier connectivity and trade compliance. This innovative international logistic technology helps the company to manage all its transportation modes (Katie 200, p.3). In addition, technology has enabled production of novel lightweight containers and improved container tracking methods. It has also enhanced communication flow between suppliers and other members of the products value chain besides enhancing the procurement procedure. Technology used in Cadbury integrates logistics procurement, execution and planning with combined workflows. Technology in Cadbury logistics offers useful tracking information and shipment viability. Through integration, the company controls the uncertainty in economic global perspective. 3.6 International Economic Integration Economic development has instigated the establishment of intricate firm systems and networks of goods flow. Intricacy of international logistics systems in Cadbury has developed because of augmenting product differentiation. Economic integration lowers cost for both producers and consumers besides augmenting trade amid nations. International economic integration entails removal of barriers to trade and other factors of production. The 2010 integration of Cadbury group is transformational for both companies with respect to geographic market exposure. The integration promoted the presence of the Kraft Foods in the food industry. 4.0 Conclusion Cadbury is an international leader in confectionary among other firms functioning in peer market. CDM hold an elaborate supply chain but its logistic systems faces infrastructural obstacles in their daily business alongside global sourcing challenges. International sourcing issues includes product quality, production capability, information system ability, business culture and practices and communication infrastructure. Cadbury Company uses train, ship and trucks to transport its products to their consumption place. CDM logistics services hold the prospect to exploit and explore global interdependence and integration in diverse means. These services hold the ability to leverage global exposure besides leveraging logistics expertise and extend operations to attractive markets. CRM logistics supports global expansion of existing customers with logistic services and expertise in novel markets. 5.0 References List Arora, A & Mclntyre, J 2014, Global business transcendence: international perspectives across developed and emerging economies, Palgrave Macmillan, UK. Bradlwy, J 2011, Cadbury’s purple reign: the story behind chocolate’s best-loved brand, John Wiley & Sons, UK. Frazzon, E 2009, Sustainability and effectiveness in global logistic systems, GITO mbH Verlag, USA. Katie, J 2013, Supply chain management of Cadbury’s milk chocolate, GRIN Verlag, UK. Plunkett, J.W 2009, Plunkett’s transportation, supply chain & logistics industry Almanac 2009, Plunkett Research, Ltd, UK. Read More