Supply Chain of Cadbury Essay

INTRODUCTION:

Cadbury is a British confectionery company, the industry’s second-largest globally after the combined Mars-Wrigley. Headquartered in Cadbury House in the Uxbridge Business Park in Uxbridge, London Borough of Hilling don, England and formerly listed on the London Stock Exchange, Cadbury was acquired by Kraft Foods in February 2010, after integration the combined Cadbury and Kraft companies became the largest confectionery company in the world again The Company was an ever-present constituent of the FTSE. From the indexes’ 1984 inception until its 2010 takeover.

ELEMENTS OF THE SUPPLY CHAIN

A simple supply chain is made up of several elements that are linked by the movement of products along it. The supply chain starts and ends with the customer. * Customer: The customer starts the chain of events when they decide to purchase a product that has been offered for sale by a company. The customer contacts the sales department of the company, which enters the sales order for a specific quantity to be delivered on a specific date.

If the product has to be manufactured, the sales order will include a requirement that needs to be fulfilled by the production facility. * Planning: The requirement triggered by the customer’s sales order will be combined with other orders.

The planning department will create a production plan to produce the products to fulfill the customer’s orders. To manufacture the products the company will then have to purchase the raw materials needed . * Purchasing: The purchasing department receives a list of raw materials and services required by the production department to complete the customer’s orders. The purchasing department sends purchase orders to selected suppliers to deliver the necessary raw materials to the manufacturing site on the required date. * Inventory: The raw materials are received from the suppliers, checked for quality and accuracy and moved into the warehouse. The supplier will then send an invoice to the company for the items they delivered. The raw materials are stored until they are required By the production department

* Production: Based on a production plan, the raw materials are moved inventory to the production area. The finished products ordered by the customer are manufactured using the raw materials purchased from suppliers. After the items have been completed and tested, they are stored back in the warehouse prior to delivery to the customer. * Transportation: When the finished product arrives in the warehouse, the shipping department determines the most efficient method to ship the products so that they are delivered on or before the date specified by the customer. When the goods are received by the customer, the company will send an invoice for the delivered products.

SUPPLY CHAIN MANAGEMENT

To ensure that the supply chain is operating as efficient as possible and generating the highest level of customer satisfaction at the lowest cost, companies have adopted Supply Chain Management processes and associated technology. Supply Chain Management has three levels of activities that different parts of the company will focus on: strategic; tactical and operational. *Strategic: At this level, company management will be looking to high level strategic decisions concerning the whole organization, such as the size and location of manufacturing sites, partnerships with suppliers, products to be manufactured and sales markets.

* Tactical: Tactical decisions focus on adopting measures that will produce cost benefits such as using industry best practices, developing a purchasing strategy with favored suppliers, working with logistics companies to develop cost effect transportation and developing warehouse strategies to reduce the cost of storing inventory. * Operational: Decisions at this level are made each day in businesses that affect how the products move along the supply chain. Operational decisions involve making schedule changes to production, purchasing agreements with suppliers, taking orders from customers and moving products in the warehouse.

SUPPLY MANAGEMENT TECHNOLOGY

If a company expects to achieve benefits from their supply chain management process, they will require some level of investment in technology. The backbone for many large companies has been the vastly expensive Enterprise Resource Planning (ERP) suites, Such as SAP. Since the wide adoption of Internet technologies, all businesses can take advantage of Web-based software and Internet communications. Instant communication between vendors and customers allows for timely updates of information, which is key in * Reduction of backward and forward inventory levels without compromising the quality of the service. *Saving of a refrigerating warehouse, representing a profit of €76,500.

*Better growth management.
*Reduction of the finished products inventories by 5 days.
*Quick return on investment

Production:

The production function at Cadburys is responsible for providing sufficient goods to meet customers demand. The method of production is an important aspect in determining the amount of added value for Cadburys.

The following factors are used by Cadburys to achieved a high level of added value for the chocolate they produce:

• Maintaining and improving quality.
• Maintenance and control machinery and equipment.
• Meeting the specific needs for customers.
• Controlling costs and working efficiently

Controlling costs and working efficiently means that Cadbury employ specialist staff that would ensure that the end result of the product is of an excellent condition and the quality is also high. During seasonal times such as Easter and Christmas Cadbury need to produce for chocolate, and due to this Cadbury employ temporary staff so that Cadbury maintains sufficient work, the extra staff are needed due to the demands of chocolate increasing during the seasonal times and to achieve this more staff are needed so that the chocolate produced meets the customers’ demands both in numbers (the chocolate stays in stock) and quality.

Meeting specific needs for customers, chocolate is considered as a luxury item, and people enjoy eating chocolate however due to conditions such as diabetes, Cadbury need to make the chocolate so that it does not effect the diabetics that eat their products. The equipment used by Cadbury to make the chocolate needs to be fully utilised to be profitable, this depends on the form of production the business uses to manufacture its goods.

The form of production that Cadbury uses is batch production, this the most convenient way that Cadbury can manufacture its products due to there being a high demand of chocolate and the way that fixed amounts of chocolate is needed to make each individual chocolate bar, hence this is also a quicker method to make large amounts of chocolate. Cadbury is always improving the quality and taste of the chocolate it produces so that it can attract more customers and more people will eat and buy Cadburys chocolates.

Value added:

Value added is when the inputs (raw materials) are changed into outputs to produce goods that meet the customer’s demands. At each stage of the transformation to chocolate value is added to it. Below is a value chain chart that shows where value is added at each stage of production/value chain for Cadbury. [pic]

Production Process:
• Raw Materials: cocoa beans, sugar, Milk powder.
• Labour: Workers that can operate machines.
• Equipment: Steel pin mills, Machinery, packaging for chocolate,
• Land and buildings, chocolate.

Those are the factors of production inputs.

The physical transformation of the cocoa beans to chocolate. At first the cocoas are heated in steel pin mills until the heat and friction turns it into chocolate. Then the appropriate ingredients are added (milk, sugar caramel etc) depending which chocolate is been made. It is then left to dry and then moulded into the correct shape by the machines. It is then checked to see if the chocolate is good enough for customers. Then this is to make it look attractive and meet customers’ expectations. Value is added here. The finished product is then checked once again to ensure that it meets the Cadburys quality policy. The Cadbury chocolate produced could be:

Bournville, Dairy milk, Dairy milk caramel, Crème egg, crunchie, flake, dream, time out, Cadbury buttons, Easter eggs. These are then delivered to the shops were customers can purchase them.

Packing:

Value is also added when the chocolate is packaged to help it to stay fresh. For Cadbury this means that the sales would increase because the packaging helps to sell the product, and also keep the product in the condition it’s meant to be in (cool, dry, fresh etc). If the packaging for the chocolate did not keep it in the condition its meant to be in then it would have a negative impact for Cadbury over all because no one would want to purchase the chocolate and go elsewhere, as chocolate is not a necessity but a luxury item and it has a lot of substitutes (Elastic product).

Distribution:

Cadbury’s distribution channels include the manufacturing warehouses where the chocolate production takes place. The first distribution channel is manufacturer, then wholesaler, then retailer such as for example; ASDA, Sainsbury’s, Newsagents shops, and other convenience stores. Then it is the consumer, which is the end result of the channels of distribution for Cadbury’s.

CONCLUSION:

The value added at each stage of production means that the product is made to be more appealing/attractive for the customer to buy also the quality of the product is improved as the value product is added to the product. Adding value has a positive impact for Cadbury, because it aims to attract more customers to buy the chocolate that is produced. Cadbury also aim to make the chocolate be appealing to people who like to eat low fat things, an example of this is that, Cadbury make a low fat chocolate (Frys Turkish) which is 92% fat free, this is made for customers who are trying to loose weight/watch what they eat to keep

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