Op-Rationale

Round 2 Introduction The KornFlake Company began in India in 1980 with a mission to improve health through improved diet. With a focussed mission, it acquired considerable market share and is one of the major breakfast cereal manufacturers. Its products are manufactured in over 10 countries and sold in more than 100 countries. Its product portfolio comprises of Corn Flakes, Chocolate chips, Vanilla stars and Cereal bars. Besides its focussed business strategy that has been an enabler of growth and expansion, KornFlake is also known for its approach to CSR. In India, it has volunteered to provide over one million mid-day meals to address the nutrition needs of the deprived. The same level of responsibility reflects in all sections of the KornFlake supply chain. With efficient technology and packaging, the KornFlake Company aims to reduce energy usage and emission levels.

The supply chain The industrial supply chain consists of three key sectors:

The supply chain touches a number of stakeholders. These include research, quality, purchasing, sales, transport and distribution. KornFlake organizes its transportation and storage facilities to minimize costs and environmental impact. However, it is the company’s constant endeavour to make the value stream leaner by identification of Non-Value Add activities. Waste reduction is one of the major drivers that aids competitiveness and profitability by lowering overheads and unit costs.

In its initial days, KornFlakes itself took care of various stages of the supply chain including manufacturing, transportation and distribution. It worked quite well when the scale was small and geographical penetration was limited. Over time, it realized that it would me more effective to concentrate and specialize in the area of its expertise. It was then that it decided to outsource transport and distribution facilities and concentrate on manufacturing.

The supply chain – the secondary sector KornFlake is a large scale secondary sector business. The raw materials acquired from the primary suppliers are processed to make 40 different breakfast cereals and snacks and are sold to the customers through the tertiary sector. Apart from focussing on the customer needs and R&D requirements, KornFlake needs to consider many different aspects of their operations: - Where to locate the business: close to suppliers or near to the consumers? - Size & Scale: large inventory storage or relying on JIT? - Where & how the finished goods are to be stored until needed for sale? - Who are the intermediaries? KornFlake’s largest Indian production plant is at Gurgaon. The nearest storage depot was 30 kms away from the plant. In a strategic move to reduce transportation costs, KornFlake moved this storage to a new site only a kilometre away from its production base. This provides specialist energy efficient warehousing of stock 24 hours a day. The Food & Drink Federation, an organization for food and drink manufacturers has called on its members to improve the environmental performance by reducing: 1. Levels of packaging to consumers 2. Use of water during production 3. Impact of transportation 4. Waste to landfill 5. Energy use during production. Through the FDF, KornFlake has signed an agreement with 26 major companies to improve water efficiency, reduce waste and cut CO2 emissions. Together these companies aim to save 140 million litres of water per day. KornFlake has also joined with the international company Timberley Klark, which makes paper products like tissues, to reduce carbon emissions by sharing delivery services. KornFlake now has targets in these areas and where possible builds these aspects into Service Level Agreements with partner companies in the primary, secondary and tertiary sectors.

The supply chain – tertiary sector The final stage in the supply chain is the tertiary sector that provides services. This sector involves: - Retailers like supermarkets that purchase manufactured goods from the secondary sector and sells them to consumers - Service companies dealing in finance, IT, warehousing, transportation etc. The activities are stocking and transportation and KornFlake employs specialists in these domains. One of its logistics partners stores and transports pallets of KornFlake products. It

also looks at strategic alliances with other manufacturers to reduce distribution costs. This enables it to stay competitive in the market. This sharing enables it to reduce the number of part-full or empty vehicles on the road, thereby reducing time, miles and CO2 emissions. It also has strong linkages with retail supermarkets to foster strong consumer ties.

Managing the supply chain effectively KornFlake has always ensured that the right products are formalized based on consumer needs. It has robust distribution channels to ensure proper placement of products in its stores. Attributable to mutually benefitting liaisons, the prices are kept competitive. Promotion is taken care of in association with the retailers. Creating value for the retailers has been a constant endeavour at KornFlake. Through convenient location of its manufacturing units and storage facilities, KornFlake always ensures timely deliveries to the stores. The collaborative approach followed by KornFlake has given it a robust and lean supply chain. -

Distribution has improved through collaboration with Timberly Klark and DK logistics. The lean production system streamlines processes and eliminates waste. Robust IT support ensures efficient warehousing

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Challenges Although KornFlake has been able to capture the urban market, its penetration in the rural space is minimal owing to supply chain limitations. It had added economy packs to its portfolio and orchestrated campaigns to create rural demand but reaching the last mile has been a challenge. Devise a robust supply chain that not only delivers the product but also engages the customers in an innovative way. Creating value for the retailers has been one of the focal points of KornFlake. Come up with cost saving and value-maximizing mechanisms to benefit the retailers. You may take resort of IT infrastructure/ automation at the various stages of supply chain. Which framework of inventory management can assist in your cause to empower the retailers? Evaluate the supply chain in terms of value add and non-value add activities & suggest measures to make it cost-effective and environment friendly. Suggest potential tie-ups in the tertiary sector that can enhance KornFlake’s business in the rural sector.

Deliverables 

A 10 Minute PowerPoint Presentation inclusive of all the points listed above followed by 5 minutes of Q&A with the judges.

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The presentations will be judged on the basis of the below parameters: o Identification of Challenges o Competitive Strategy o Feasibility of solution o Creativity and Innovation o Overall Presentation Quality

Submission Details 1. Participants are expected to submit their solutions as PowerPoint presentations. 2. The PowerPoint presentation should be named in the following format: ‘Oprationale_Round-2_team name_institute name_contact number'. Contact number of any one participant has to be mentioned here. 3. The PPT should be sent to [email protected] with subject of the mail as ‘Oprationale _Round-2_team name_institute name'.

Deadlines 1. Round 2 for Op-Rationale will commence on October 12th, 2013 at 04:00 PM. 2. The PowerPoint presentation should be sent to the above mentioned email address latest by 03:00 PM, October 12th 2013. 3. No changes will be entertained in the PowerPoint presentation once the same has been sent.

For any queries, contact:

Dheeraj Tewani: +91-7840083814 Harshul Vats: +91-9899023382 Email Id: [email protected]