Supply Chain Management of Hershey's Chocolate World

Introduction

Some of the important aspect of business are operational management and supply chain. Every activity related to delivery of product in the marekting and the funcationality of organisation and supply chain is carried out through operation management. The report carries the detailed analysis related to suppy chain and operations with in Hershey’s Chocolate Company. The company was establised in 1894. Over the ears the compay has evoved in every possible way and aunched many segments and products. Hershey is an American manufacturer of food products mainly chocolate and sugar based items. For 20^th century Hershey’s milk chocolate wrapped in brown and silper wrapping was one of the best known product. The company headquaters are in Hershey, Pennsyvania. (Abbady, Hessian, & Alaam, 2017)

In 1960 Hershey collaborated with Reese’s Peanut Butter cups and two pasta businesses. In order to recognise Hershey as food brand it was named as Hershey Foods cooperation in the 1968. The chocolate products are prepared by cocoa beans. As they are rich in carbohydrates they are the instant source of energy also containing small amount of stimulating alkaloids theobromine and caffeine. The chocolate are made from cocoa beans that are roasted and fermented. These kernels is used to create pasty fluid chocolate liquor, which are then transferred to molds to bake chocolate, later pressure is applied to reduce cocoa butter content and pulverized for making cocoa powder, or used as additional cocoa butter for preparing sweet chocolate. (Dubai, 2018)

This report is an elaborated analysis of operation management and supply chain management of the company with regards to its products and services. Part one of the report will cover explanation of the key products of the company. Part two of the report will discuss the competitive abilities of the organisation. Part three shows comparative analysis of the company with the help of dominance frontier and polar chart. Part four is process calculation analyses. Pat five and six will discuss the product supply chain. Last part focusses on various ways of growth of company.

2. Key products/ Services and Input-Output process

Various categories of the products are by Hershey. The company detas with both chocolate and food products. The products of the company are grouped under various catagories such as “Hershey’s chocolate bars, Hershey’s Symphony, Almond Joy, Mounds, 100 Calorie Bar, Hershey’s Bliss, Hershey’s Drops, Miniatures, Hershey’s Pot of Gold, Kit Kat, Hershey’s, Nuggets, Reese’s Peanut Butter Cups, Whoppers and York Peppermint Pattie”. This section of the report has focused on main products and their input process. The products are of different size and colours (Abbas, 2018). The process of input and output are as follows

Inputs: The process ofchocolate and its related product making are cocoa beans, chocolate, electricity, packaging, labour and machinery.

Process: Some of the processes are listed below.

Output: The resultant of these products are chocolate and waste products.

3. Competitive Capabilities of Hershey’s Chocolate Company

The products of Hershey’s are in different colour and size. The brand faces a lot of competition in the market. The main factor that strengthens the company are brand recognition, popularity all over the world, its affordability, wide range of variety that catches the customers’ attention. M&M is one of the popular competitors of the company that itself offer wide verity of products in chocolates. The company keeps a keen eye on its competitors and on their business strategies. The catchy taglines attract more consumers “A Little Something For Everyone” it could be said to be a good example of marketing strategy as it tries to connect to its customers thus attracts large number of customers. (Abbady, Hessian, & Alaam, 2017)

4. Comparison of the company with other companies using Polar chart and Dominance Frontier

This section of the report will compare Hershey’s with its strongest competitor M&M. By comparing both companies it has been observed that Hershey according to Knoji rating is 3.9 and M&M is 3.8. This comparative analysis is also shown by polar chart. The recognition Hershey is more in comparison to its other competitors. It is globally popular brand and offers lots of offers and discounts to the customer.

Hershey’s marketing strategies in order to target their prospects have always been very proficient due to which it always has a upper hand in the market. The strategies used by it are

Holiday marketing– This type of marketing strategy is used to design and formulate holiday themes which includes Christmas, new year holiday themes, summer holiday themes and advertisements are made accordingly to target the potential customers which helps in bringing fresh and new concepts and creates larger impact in the customers mind. The company makes sure the advertising theme is made related to the particular holiday which helps in adding more value and makes the strategy more impactful.
Micro marketing– This type of marketing strategy targets customers in small number and modifies the products according to the demand and need of the customers. This type of strategy helps in focusing on specific requirements of the customers. It also provides provisions for special events like weddings, parties and various occasions. Such specific marketing strategies helps in creating personal impact on the prospects which makes their strategies much efficient compared to the competitors.

The dominance frontier above explains the easy process that can be fooled by supply chain and operation management for smooth functioning. With this process company can be aware of specialization skill and this will result in productivity. It is observed that there are in delivery of product the model ill help in overcoming it.

5. Process Analyses Calculation

The performance measure for every organization is flow rate and time which is associated to workers and productivity within the organization. To understand and study the process analysis tabulation organization uses flow unit. This term represent every activity that occurs within the organization.(Landry, 1998). Flow unit represents the chocolate products. Flow rate is the term calculated by number of products manufactured per unit. It also represent the speed of delivery from various stages (operation department to supply chain department and to delivery).

Average flow rate is the term given to the time utilised from supply chain department to customers.

The normal rate is the term given to the streaming pace of administrations which is passed to the clients. The complete time of preparing comprises of the average some of time that is spent by the streaming units in a particular business procedure. In case of a recurrence the stream time is ascertained by the longest way (Wu & Pagell, 2011). The excess stream units are taken care by a process ibn business termed as Stock. In an organisation the stock is ascertained by parting the rate of streaming which is isolated by the streaming time. In order to determine the utilization of conveyance of speed o administrations for the clients and the number of client handle which is undertaken by an office at a particular period of time. In order to increase the profits for their client organization, the streaming units are expanded throughout, which in turns reduces the costs and enhances the conveyance speed of the products of the client. (Zuckerman, 2002).

The client which are identified by the administrations of the organisations are consulted and asked to provide their inputs and feedback in order to uplift and improve the administrations eventually in future. Getting a boost from this the organisation is motivated to increase the conveyance speed of the administrations provided to the client. This is done with the help of the inputs and feedbacks provided by the clients who clearly state and provide their feedback from time to time about their conveyance speed requirements, in turn leading to better conveyance speed performance.

6. The supply chain of a product and risks related to supply chain

This section of the report discusses the process of supply chain adopted by Hershey’s. Hershey’s supply chain process has different components in order to provide mobility to the different products which the company produces. Hershey’s abides by the phrase, “Customer is the King” as their supply chain process begins with its customers’ requirements and ends with fulfilling all the demands made by these customers.

Customer: A customer may be termed as an individual/ organisation which may purchase a particular product for consumption or further selling. The process starts once the customer likes a product at a retail store or on online portal and places an order for one or more items. The sales department of the organization receives the order and further the supply chain process comes into play in order to deliver the product to the customer in the consumable condition. (Stephenson, 2014)

Planning: After the order is received by the customer the next step in the supply chain management process is to start the planning. Planning process includes making decisions like purchase of raw material, time consumption in manufacturing and delivering of the product as committed. Planning regarding these steps are of utmost priority for the organisation.

Purchase: Once the planning for purchase of raw material is done a decision is made in order to procure it on time. The list is forwarded to the purchase department in order to make purchases according to the requirement. Purchase department then contacts the various suppliers and makes a purchase from the supplier who is offering the best deal in the market. (Zuckerman, 2002)

Inventory: A quality and accuracy check is a must, once the raw material is procured from the suppliers and is further sent to the company’s warehouse after the checking process. A proper list is prepared before and after the issuance of the raw material, so that a proper record is maintained and there occurs no clash while clearing the payments. (Sarkis, 2006)

Production: Once all the material required is received and inventory department gives a clearance, the most important process starts which is the production of the product ordered by the client. The production depends on the customer’s specifications. Some clients want a customized product whereas some of them just want the product in bulk. Thus the product may be produced in a batch or individually. Once the product is prepared the production departments sends the product to the transportation department to ship it further to the client.

Transportation: After the department receives the final product it decides upon the method of shipping it. It could be shipped through sea route, roads or by air; depends upon the nature of the product. Along with the product an invoice is also sent which bears the list of items, the amount and the address.

Supply Chain Risks: As easy as it may sound the supply chain management process is not that easy. It involves various risks which may start at the first step such as the supplier may provide low quality raw material, or they may fail to deliver on time which leads to delay in product production. Other risks may be logistics delays, poor communication, external risks related to political conditions in the region, natural disasters or economic condition in the particular region. These risks may lead to huge losses to the organisation, moreover impacting its goodwill. (Joshi & Rathore, 2013)

7. New Location for the warehouse or service center of the firm through the Center of Gravity method

Center of gravity helps in locating new place thus resulting in productivity increase. By this method the company can locate the regions close to the distributer. Less distance will add a benefit to the company. This method helps in reducing transportation thus reduces cost. This method used by companies for finding new facility resulting in minimizing the cost. Input in this approach is volume of service provided by organization (Wu & Pagell, 2011). Location is one time investment for the company (Stephenson, 2014). Once invested the decision can’t be reversed. Cost pattern is also decided on this factor. This has a direct impact on the sales of the company. Distance from raw material affects the decision making for the plant. This method is studied as it helps the companies so that best methods and low cost for delivery could be decided. Fast delivery results in customer satisfaction and affects their preference.

8. Application of Mass customization to the product

The term mass customization is the manufacturing of unique products on a large scale. This technique helps to serve various requirements of the customer. The challenges are easily overcome by the company, these challenges are mainly related to delivery. This technique helps to identify the needs of the customer and helps in production of goods as per customers’ requirement and demand. Due to its quick solution to product delivery this process is also known as postponement tactic thus results in attracting large customer (Joshi & Rathore, 2013).

9. Conclusion and Recommendations

The study conducted concluded that Hershey is a famous chocolate and food brand which is known world wide. It has a great market share as it has introduced a many features of food and chocolates in the market. In comparison to it competitor M&M Hershey has a large market cover and share and they offer wide range of products to its customers. The report is detailed analysis of the company with regards to it competitor companies, their products and strategies. A deep comparative analysis is conducted through this report. The polar chart gives the detailed description of the products and the comparison with various companies. It also explain the supply chain system and the risks associated with them. A detailed description is also give to make the company customer centric or customer oriented. The various strategies studied gives the insight to improve the products and services of the company. The cost cutting or cos saving methods are also discussed. Not only are this companies productivity improvement methods also suggested. Report also suggests various techniques to improve customer services and various techniques to improve dispatch facility. The market survey reflects that the company hold as good reputation in the market and this reflects ion the revenue generation. Finding the location near to warehouse also add a bonus. As location is one time investment the company has to analysis process and then conclude. All these points affect the organisational growth.

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