INVENTORY MANAGEMENT

Inventory management is the supervision of non-capitalized assets (inventory) and stock

items. A component of supply chain management, inventory management supervises the
flow of goods from manufacturers to warehouses and from these facilities to point of sale.

Cadbury companies following the inventory systems:

1. Just In Time inventory management
2. SAP APO system

JUST IN TIME INVENTORY MANAGEMENT:

JIT is a common inventory management technique and type of lean
methodology designed to increase efficiency, cut costs and decrease waste by
receiving goods only as they are needed. JIT was originally formed in Japan as a
response to the country’s limited natural resources, leaving little room for
wastage.

Today, Just in Time systems are used by many businesses, and it has influenced
related lean inventory management techniques like IBM’s Continuous Flow
Manufacturing (CFM). The rise of drop shipping has made JIT inventory
management more appealing for retailers, as it allows them to sell a product
before buying it, then purchase the item from a third party and have it shipped
directly to the customer.

JIT creates a more flexible business that has a better communication with
customers and suppliers, and can react more quickly to market demands,
which bring more competitive advantages for Cadbury improve job.

ADVANTAGES:

 Reduced Costs.
 By using IIT product line, the inventory cost reduced from $670000 to
$200000
 Cadbury was able to cut the assembly time by over 95%
 Improve the competitive advantage
 JIT demands active participation in the production process from
employees
  It increases their skill, given term greater responsibility and fosters an
interest I the performance of the whole company

SAP APO system:

Cadbury rely on systems provided by SAP, one of the world leaders in

enterprise resource planning (ERP) systems. SAP also provides financial
planning and human resources (HR) systems, called ERP Financials and ERP
Human Capital Management respectively.

Kraft upgraded all of its SAP systems in 2008. Cadbury, on the other hand,
has had a trying time with SAP. Before demerging from Schweppes, Cadbury
reported that trouble with its SAP implementation had impacted on
performance and contributed to its £12m deficit. It seems to have been
sorted out since.

CADBURY following the inventory control in the company

Inventory Control enables you to avoid stockouts, make prompt reorders and
get automatic stock level updates whenever sales and purchases are made.
You can also manage inventory across multiple warehouses and in multiple
currencies.

Inventory controlling can be performed through the following methods or

activities:

 Inventory list
 Variants
 Inventory details report
 Reorder report
 Stock adjustment
 Inventory stock on hand report
 Location report
 Inventory list:

VARIANTS:
Each product can contain separate variants with product options such as
weight, size and color, as well as composite variants and pack sizes.
Some of the products variants can be observed through following table
PRODUCT WEIGHT
Diary milk silk bubbly chocolate 150 grams

Choclairs gold 5.5grms

Fuse 25grms
Silk oreo 60grms
Boost bar 48.5grms
Fruit and nut 120grms
Pebbles 119grms(bag)
Easter Eggs 21grms
Bournvile 80grms

Inventory details report

Check total stock on hand and filter by location or product type, total
stock available and total units committed. The details can also be split by
each product and variant

Reorder report

Check all products and variants that have fallen below the reorder point
in a list displaying supplier name, number of products and variants to
reorder, as well as a link to the reorder page.
 Some of the suppliers all over the India are:
SUPPLIERS LOCATION
Pakshalika Enterprise Gobind Nagar Extention, Jalandhar

KingShop Gifts N More Mazgaon, Mumbai

Sri Durga Sales Corporation Hegganahalli, Bengaluru
Birds Of Paradise Vasant Kunj, New Delhi
Aggarwal Traders Jaitpur, New Delhi

A2Z Modern Supermarket Royapettah, Chennai

Mukesh Traders Erragadda, Hyderabad
Purohit Trading Bandi Mutt, Bengaluru

Stock adjustment

Cadbury inventory systems enables company to increase and decrease stocks

levels for new products, returns, damages, shrinkage, and promotions – which
also works for multi-item stock adjustments.

Inventory stock on hand report

By observing total units on hand plus total costs, retail value and total profit
value for the stock on hand. For each product or variant, see the number of
units in stock, if they're taxable or not, the retail price, the inventory value, the
retail value, the profit value and the profit margin.

Location report

Select a warehouse or stock location and check stock on hand, committed

stock, last ordered stock, last purchased stock, inventory value, profit value
and profit margin.
Cadbury introduced Service Level Optimizer99+.

Easily integrated into the SAP APO system that Cadbury was already
using.After implementing this inventory buffer variability and demand control
had less human intervention, safety stocks determination was highly
automated. The inventory management of Cadbury was stable. This step
towards an effective inventory management helped them satisfy the customer
needs at reduced costs.
SUPPLY CHAIN MANAGEMENT:

Cocoa products usually move through a long and multifaceted supply chain
consisting of collectors, exporters, traders, processors and manufacturers
before they hit store shelves. The coca bean is grown naturally on small
family farm that apply manual practices. It is approximated by the
International Cocoa Organization (ICCO) that about 90% of the world’s
cocoa is produced by 3,000,000 such smallholders. Production of cocoa
hires about 15,000,000 people all over the world with Western Africa alone
hiring 10.6 million people. The world supply of cocoa is dominated by four
countries from Western Africa including Cameroon, Nigeria, Cote d’Ivoire
and Ghana by producing about 70% of the world’s cocoa beans. The two
largest world producers are Ghana and Cote d’Ivoire accounting for 56% of
all traded coffee .

KEY ISSUES:

 Cadbury dairy milk advertisement focuses mainly on adults

rather than children.
 Chocolate with low melting point.
 Challaneges with competitors
 Dependednce on single category.
 Raw materials and product’stransportation cost and
warehousing cost.
  Maintenance and inventory.

SOLUTIONS:

Launching new campaign and advertisements focussing on

adults might help.

Cadbury apart from focussing on chocolates should also focuses

on other confectionery and food businesses.

Factory set up must be near to raw materials procurement site

to cut cost and increase productivity.

Recent major activity:

 Cadbury Trebor Bassett has made major contract with Culina Logistics to
handle the radial supply chain for its chocolate and confectionery
brands. The UK division of Cadbury Schweppes plc, the world’s largest
confectionery company, Cadbury Trebor Bassett has numerous leading
brands in its product portfolio including Cadbury Dairy Milk and Cadbury
Crème Egg, along with Bassett’s, Trebor and Trident.

The solution provided by Culina’s ambient operation involves shared-user

distribution of orders, received by EDI (electronic data interchange), for
individual pallets for radial distribution. Collections are made from Cadbury
distribution sites at Minworth, near Sutton Coldfield, and Milton Keynes then
delivered via the Culina network across the UK.

 70%Imported from Ghana and 30% from UK.

 Raw materials supplied from Bournvile.
 Reaches customers through wholesalers.
 Supplied mostly from Cadbury self-owned shops.

Cadbury has an excellent logistic and supply chain management.Cadbury has

well connectivity with branches and a well developed and extended IT support
for distribution network.To meet the demand Cadbury maintains 15 days
finished goods inventory at warehouses and 18/20 days at CFA’s place(carrying
and forwarding agencies).But inrder to reduce cost of logistics and distribution,
Company is planning to reduce inventory at warehouses to only for 8/10 days
and at CFA’s for 15/16 days.