Supply chain from manufacturing to shelf
A Kellogg's case study

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Page 4: The supply chain - the tertiary sector

The final stage in the industrial supply chain is the tertiary sector. The tertiary sector provides services. It does not manufacture goods. This sector involves:

  • retailers like supermarkets that purchase manufactured goods from secondary sector businesses and sell them to the consumers
  • service companies who may deal in, for example, finance, computer systems, warehousing or transportation.

Storing stock and transporting it are key activities that link all three parts of the supply chain.

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, 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.

To drive sales, Kellogg's is involved in initiatives that help add value for retailers. An example of this is the Shelf Ready Unit that Kellogg's developed with Tesco. This displays Kellogg's products easily and effectively. This means that the supermarket uses less staff time (and cost) in setting up a display. The display is attractive and easier for consumers to choose from, increasing turnover for Kellogg's and Tesco.

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Kellogg's | Supply chain from manufacturing to shelf