Kellogg Co
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Application of Theory #1
Kellogg Co: Covid Era
Made by: Nikita Sakunov
Company Description:
The global food manufacturing firm Kellogg Co. (NYSE: K) is based in Battle Creek, Michigan, in the United States. Since its founding in 1906, Kellogg has expanded to become one of the world's leading manufacturers of
snacks, morning cereals, and convenience foods. Famous brands including Kellogg's Corn Flakes, Frosted Flakes, Rice Krispies, Special K, Pringles, and Keebler are among the products offered by the corporation. With operations in 180
nations, Kellogg employs over 33,000 people worldwide and brings in more than $13 billion in revenue annually
(Wunsch,n.d.)
.
Summary of Situation and Supply Chain Problems:
For Kellogg Co., the Covid-19 epidemic posed serious difficulties, especially for its supply chain management. The supply chain's several facets, such as planning, sourcing, production, distribution, and transportation, were all impacted by the complex disruptions.
Demand Fluctuations:
The pandemic caused unpredictable changes in the patterns of consumer demand, with panic buying at the start of the crisis and varying patterns of purchase behavior while lockdowns and economic uncertainty lingered. Due to Kellogg's difficulty properly estimating demand, inventory levels and manufacturing plans were out of balance.
Manufacturing Constraints:
Manufacturing activities were hampered by COVID-19 limits and safety standards, resulting in production slowdowns or shutdowns at many plants. The company's capacity was hampered by employee absences due to illness or quarantine.
Logistical Challenges
: Transportation interruptions impeded the timely flow of completed goods and raw materials across the supply chain. These included delays
in shipping, reduced freight capacity, and border closures. These difficulties increased transportation costs and made inventory management problems worse.
Supplier Disruptions
: The pandemic caused operational issues or vendor closures for a number of Kellogg's suppliers, causing interruptions in the company's supply chain. This led to shortages of essential chemicals and packaging supplies, which made production procedures even more difficult
(Silver, 2021)
.
Impacts on the Organization and Customers:
The issues with the supply chain affected Kellogg and its clients in a big way:
1.
Sales and Finances
Kellogg's sales and financial performance were negatively impacted by inconsistent supply chain performance and product availability. The firm struggled with rising expenses related to supply chain interruptions and mitigation initiatives, which resulted in revenue losses and pressure on margins.
2.
Logistics and Operations:
Kellogg's operations were interrupted by supply chain interruptions, which resulted in inefficiencies, longer lead times, and higher operational costs. In order to offset supply constraints, the firm had to
pay extra for quicker shipment, inventory write-offs, and alternative sourcing techniques.
3.
Customer Satisfaction:
Delays in delivery and inconsistent product availability have an impact on customer satisfaction scores. Customers' confidence and loyalty were damaged by Kellogg's slow response to demand, which might have resulted in market share losses and reputational harm.
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Comparison with Competitors:
In the food sector, Kellogg's performance during the Covid period was inconsistent with those of its rivals. Although the firm had comparable supply chain difficulties to its competitors, some of the negative effects were lessened by its high brand equity and diverse product line. More difficulties were presented by Kellogg's comparatively greater exposure to morning
cereals, a segment where customer preferences are changing in favor of fresher and
healthier choices.
Three Options for Possible Solutions:
1.
Invest in Supply Chain Resilience:
By diversifying its sourcing regions, fostering stronger connections with suppliers, and putting cutting-edge forecasting and inventory management systems into place, Kellogg might make investments to improve the robustness of its supply chain.
Positives: Enhanced customer satisfaction, more agility in responding to disturbances, and improved risk mitigation capabilities.
Cons:
Uncertain returns on investment, high initial investment costs, and possible difficulty in maintaining a more diverse supply base
2.
Digitize Supply Chain Operations:
Use digital tools like blockchain, IoT, and AI (Artificial Intelligence) to streamline supply chain operations, increase transparency, and allow for real-time tracking of stock levels, manufacturing schedules, and logistics of transportation.
Pros:
Better data-driven decision-making skills, decreased dependency on manual procedures, and increased supply chain operations transparency and efficiency. Cons:
Difficulties in implementation, cybersecurity threats, and possible employee resistance to change.
3.
Strengthen Collaborative Partnerships
Encourage tighter coordination between suppliers, distributors, and retailers as well as other important parties to improve information exchange, coordination of planning, and communication across the supply chain.
Pros
: better activity alignment and coordination, better market response, and
common risk reduction tactics.
Cons:
include possible conflicts of interest, reliance on partners' desire and ability, and difficulties coordinating goals and rewards.
Recommended Solution:
In order to better resist upcoming disruptions and maintain constant product availability and customer satisfaction, Kellogg is expanding its sourcing regions. A more robust supply chain has longer-term advantages over disadvantages, even though the initial investment costs might be high. Proactive supply chain resilience investments further support Kellogg's strategic goals and dedication to providing value to its stakeholders.
In conclusion, Kellogg Co. has found it difficult to navigate the Covid period; nevertheless, by taking proactive steps to address supply chain vulnerabilities, the firm may position itself for competitiveness and sustained development in the post-
pandemic environment.
References
Home - WK Kellogg Co®. (n.d.). https://www.wkkellogg.ca/en-ca/home.html IBISWorld - industry market research, reports, and Statistics
. IBISWorld Industry Reports. (n.d.). https://www.ibisworld.com/us/company/kellogg-company/9222/ Wunsch, N.-G. (n.d.). Topic: Kellogg Company
. Statista. https://www.statista.com/topics/1808/kellogg-company/#topicOverview Silver, S. (2021, January 25). How Kellogg’s, Nike, and HP handled 2020 Supply Chain Disruptions
. FM Magazine. https://www.fm-magazine.com/news/2021/jan/coronavirus-
supply-chain-disruptions-kelloggs-nike-hp.html
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