CHEESE – KRAFT

– BAHAR ROY -
18020276
Product Identification –
Product Characteristics
and its effect on
Logistics and Transport
Management.

• I present a case study of

packaged cheese.
The product is a dairy item,
consumed extensively, packaged for
short time storage, requiring
refrigeration and ware housing.
Due to this logistics and efficient
transportation is essential.

The cheese are of different varieties:

• refrigerated category,
• cheese spreads in bottles and
• Canned cheese
Each variety has its own
logistics and transportation
criteria, including ware-housing.

Company Identification – Company
Strategy and its effect on Logistics and
Transport Management.
• The case study involves the
operations of Kraft Heinz Company. A
globally-trusted producer of delicious
foods.
The basic strategy of the company is
to manufacture the high end
products, source the low end products
and deliver it to the consumers in the
shortest possible time, however
maintenance of inventory at the local
depots are minimized by an efficient
logistics software coupled with good
warehousing.
• Kraft Heinz Co., embraced a supply
chain segmentation strategy by which
low cost contract manufacturers
produced the non-core Stock keeping
unit’s (SKUs) while higher
volume/margin products requiring
higher service were manufactured by
Kraft.
• The company after merger used
Zero Based Budgeting, this saved the
company up to USD1.7 billion in costs.
Most of the cost saving was in the
supply chain management.
• With 40 factories, 88 distribution
centers and over 100 co-pack and co-
manufacturing partners and produces
about 11 billion pounds of product
annually, across some 7,000 SKUs.
• Kraft Heinz has to be efficient and
nimble.
• The company has installed X ray
and 2D barcode systems on its
manufacturing lines to ensure quality.
• Kraft Heinz outsources it’s mixed
SKU fulfillment processes to third
party mixing centers.
 Company Identification
– Company Strategy
and its effect on
Logistics and Transport
Management.

.Kraft Heinz uses transportation tracking

and visibility technology from Four Kites
to track inbound and outbound
shipments.
.Kraft Heinz utilizes IBM’s Watson
technology for its S&OP process, to
analyse more variables to get a better
predictive modelling for the demand
.Direct Store Delivery (DSD) may be 2 tier
or 3 tier
Kraft Heinz supports both conventional
centralised distribution networks as well
as 2 tier DSD distribution network, where
the product moves through DC and
warehouses close to retailers.
.The products are shipped from the
factories to numerous upstream Kraft
buffer facilities,
these act as overflow buffers and are
located close to the plant.
.The products are then pulled out as per
demand to regional mixing centres,
located close to the demand centres.
These mixing centres service within its
designated area all the retail DC and the
wholesale DC - called Customer
Distribution Centres.
From the CDC, the products are moved
to the retail or wholesale distributors and
then to the retailer
 .Logistics being a fundamental part of supply chain management, today enterprises often
outsource their logistics activities to third party logistics providers and it is estimated that long-
term contractual relationships, contract logistics, constitute 16% of total global logistics, while
Current Process express/courier/parcel service are key to the e-commerce delivery business.

of Logistics and . Logistics consists of the organisation and management of flows of goods related to

Transport purchasing, production, warehousing, distribution and the disposal, reuse and exchange of
products, as well as the provision of added value services.

Management .Logistics costs represent about 10-15% of the final value of products.
across the globe. .It is estimated that about half of these costs could be saved if high administrative burden and
Strength and inefficient transport chains, lack of transport infrastructure and the non-completion of the
internal transport market are removed.
Weaknesses. .Digitalisation can facilitate administrative procedures through the establishment of so–called
single windows and the implementation of the 'reporting-only-once' principle.
Suggestions to improve upon the current Logistics
and Transport Management Strategy and processes. .
Since approximately logistics costs
represent about 10-15% of the final
value of products.
Creation of a network of multimodal
transport corridors allowing large
volumes of freight to be moved
efficiently.
The internalisation of external costs of
all transport modes is a key topic. High
negative externalities are also due to
current transport patterns, where road
is predominant with 70% of activity
and more than 70% of the total
negative externalities.
It is estimated that about half of these
costs could be saved if high
administrative burden and inefficient
transport chains, lack of transport
infrastructure and the non-completion
of the internal transport market are
removed.
Transport services do not perform
equally well in all modes and in all
parts of the world.
Digitalisation can facilitate
administrative procedures through the
establishment of so–called single
windows and the implementation of
the 'reporting-only-once' principle.
 Comparison of previous and
existing cost structure.
The study and practice of physical distribution and logistics emerged in the 1960s and
1970s. Logistics costs were high. It was estimated that logistics cost around the world
accounted for between 14-24 percent of the GNP. On an individual firm level, they could
be as high as 32 percent of sales.

Logistics were envisioned to have broad responsibilities for managing activities associated with
product flow from the points of raw material acquisition to the end consumer. The total cost
concept served as the basis for managing certain activities collectively. Activities such as
transportation and inventory control were collectively managed because they were in cost conflict.
Also, they gave little attention to issues of product flow.

No coordination between the various sub systems of Logistics.

Logistics today is being viewed as a subset of supply chain management. The scope of
logistics is being limited to the boundaries of the function within a firm and is primarily
concerned with activity administration, which was not the early view.

Purchasing and production are now included within the scope of supply chain
management. As a result, SCM is responsible for 70 to 80% of the cost of sales for many
firms.
 REFERENCES

i. www.kraftheinzcompany.com/brands.htm

ii.www.forbes.com/sites/stevebanker/2019/02/25/kraft-heinz-
plunges-to-record-low-despite-a-highly-efficient-supply-
chain/#4e3388de2977

iii.www.forbes.com/sites/stevebanker/2018/02/20/in-the-news-
supply-chain-stengths-weaknesses-opportunities-and-
threats/#1525079961da

iv.www.forbes.com/sites/stevebanker/2019/01/05/supply-
chain-trends-to-watch-in-2019/#66d1a000323d

v. ec.europa.eu/transport/themes/logistics-and-multimodal-
transport/logistics_en

vi.http://www.scielo.br/scielo.php?script=sci_arttext&pid=S010
3-65132006000300002

vii.www.logisticsmgmt.com/article/keeping_it_nimble_at_kraft_
Heinz

viii.www.ukessays.com/essays/marketing/introduction-of-kraft-
food-company-marketing-essay.php

ix.www.mwpvl.com/html/dsd__vs_central_distribution.html