Factors for Kellogg's Sustainable Growth - Case Study Example

Name Course Lecturer 28th April, 2016. Question 1 It is clear that, in order to attain a sustainable growth which will propel the attainment and the execution of Kellogg’s business strategy, the consumer, the company customers and the communities have to be appealed. Kellogg’s is doing this through, engaging in corporate social responsibility (CSR), in the community, for instance, the promotion of breakfast clubs which provides to school going children in the UK with breakfasts and therefore appealing to the community. Acting responsibly through; having respect and gaining the trust from consumers and governments at large. Acting responsibly and ethically through such initiatives as, reducing the environment and social impacts that the company has while in its day to day operations, for instance, a reduction in the amount of carbon dioxide emissions, water wastage and waste management. In so doing, the company gains respect from its consumers, customers, communities and governments and hence the sustainability of its business strategy. Satisfied customers, consumers, governments and communities at large will translate to the execution of the three business strategies identified by Kellogg’s. That is, it can expand to other areas for it will already have government and community certification through its CSR initiatives, diversify the snack business through the certification of the consumers that, Kellogg’s is not only after profits but also the welfare and interests of the consumers, and also engage in specific growth opportunities. Question 2 For a company to remain in market competition, its supply chain management should be enhanced in such a way it reduces on the cost of manufacturing, avoid wastage, resulting to increased profits and a better environment. Demonstration of good supply chain management in the primary sector is through the use of some products as the way they are, that is direct from the producer, the selling of some of the products like coal to other companies and the use of the products to further the production of Kellogg’s products. In the manufacturing stage, the company has successful minimized the cost of production by ensuring their factories are located in close proximity to their suppliers of raw materials. Kellogg’s factory sites are located close to supply channels and consumers thus reducing on transportation cost. Their factories are tailored to accommodate incoming raw materials and outgoing refined goods which are packaged awaiting instant distribution saving on the cost of storage. Liaising with a logistics specialist, who deals with distribution of the finished goods, reduces environmental impacts caused by gases emitted by the cars and in turn increases energy efficiency. Companies, such as TDG, offers transport and storage services to Kellogg’s allowing it to specialize in the manufacturing process. By outsourcing specialists, the company ensures that the products are delivered on time to the customers and cost of storage of good is not incurred . This is also done by using computerized systems in the warehouse which keeps records of stock and spaces to be restocked hence eliminating warehouse charges where goods are produced when there is demand for them. When consumers get goods on time they become happy and their loyalty increases. Question 3 Kellogg’s should not be complacent with its current status in the market. Assuming its success in the supply chain management will be unchallenged in the long run, may be its downfall, if the organization does not focus on new strategies to improve its competitiveness. Improving on its supply chain management requires the company to carry out a swot analysis, identify the challenges it faces and strengthen what is already working. Strengthening its corporate social responsibility in the community through expanding it to other countries enhances market competitiveness. A larger number of consumers will be enticed to buy their products and their loyalty might be equally stronger like in UK. The company should also bring on board the employees of the primary sector especially the farmers (Kellogg’s 2014 Corporate Responsibility Report, 22). They should be empowered through training of better farming practices that would impact positively to the environment. Farming practices that take into consideration the amount of water used impacts of farm chemicals on the environment and consumer should be adopted. Production of raw material should be in line with fair labor practices and business procedures that are ethical (Kellogg’s 2014 Corporate Responsibility Report, 23). This will encourage the farmers through poverty reduction and motivation by capacity building. Apart from the suppliers of raw materials, Kellogg’s should also effectively involve other stakeholders to reinforce team spirit. If the supply department, manufacturing department and the service providers are able to understand their specific roles in achieving the company’s goals, the company can integrate these roles in a way they feel responsible collectively. They can also strengthen team spirit through encouraging innovative ideas from the employee, capacity building and recognizing outstanding performance. When the employees are actively involved, channels of communication are opened and this enhances human capital leading to high productivity. Question 4 Incorporating service providers at all levels of product value chain, increases manufacturers competitiveness in the global market. Kellogg’s has ‘partnered’ with various service providers such as, banking, retailing, logistics and transport. The transport and logistics services promote dispersion of Kellogg’s supply chains by offering services such as containerization which enables the trucks to carry heavy loads from point of manufacturing to the retailer’s chain. This enhances efficiency in the supply chain as goods are delivered to the retailers on time. Kellogg’s also benefits from the transport sector as they are able to open supply chains in different locations. Dispersion presents an opportunity to Kellogg’s to move their production work, which require low skills to areas where labor is easily available and cheaper while still relying on transport services to move their products. Banking services provide financial services which are central to the daily operations of Kellogg’s. Banks act as points of payment for the services delivered by the companies at tertiary level. Prompt payment of these services, increases confidence and reliability of Kellogg’s to its ‘partners’. Building trust at every level of the supply chain increases competence as it is a form of intrinsic motivation. Kellogg’s as a manufacturer of consumer products should have a very good relationship with the tertiary sector for instance, the warehouses. This is because; it is from the warehouses that retailers come to pick the products that they want. The information of what retailers want can help the company to tailor make its products because the retailers are the ones who are in constant contact with the clients or customers and hence are aware of what they want. Question 5 TDG offers warehousing services to Kellogg’s. These warehouses, if owned by Kellogg’s would mean the cost of production would increase due to warehousing charges incurred .TDG specializes in providing quality warehousing services which if left entirely to Kellogg’s together with other activities that the company specializes in, would mean that, they would not be as specialized as TDG specializes. Specialization in one service ensures that, the company, Kellogg’s engages in what is best at and hence quality while at the same time, TDG also engages in what they are also best at, warehousing (Rodriguez – Clare, 5). Computerized stock taking increases efficiency whereby the stock is updated regularly and relayed to Kellogg’s. Kellogg’s replenishes the stock immediately and by so doing customers’ needs are met without any delays while the company manages to keep its product prices competitive. Happy customers are loyal to Kellogg’s and its products which will translate to more sales. The warehouse heating system is also computerized whereby heat produced is regulated according to need. This minimizes wastage as fuel cost is low. TDG also offers distribution services to Kellogg’s by transporting its products from warehouses to retailers. Transporting trucks are fully loaded and this minimizes cost as Kellogg will only have to pay for the spaces its goods occupy. Timely delivery is ensured by TDG and this makes the manufacturer and retailer satisfied. Conclusively, Kellogg’s collaboration with TDG reduces the cost of production, maintains its competitive edge and minimizes waste. Work Cited Kellogg’s 2014 Corporate Responsibility Report. Nourishing Families so they Can Flourish and Thrive. Adopted from, http://www.kelloggcompany.com/content/dam/kelloggcompanyus/corporate_responsibility/pdf/2015/Kelloggs_CRR_2014_FINAL.pdf, on 28th April, 2016. Rodriguez – Clare, Andres. The Division of Labor and Economic Development. Journal of Development Economics. Vol. 49 (1996). 3 – 32. Read More