D. INFORMATION ISSUES

Bullwhip effect at Cadbury:

Distortion of demand information across supply chain can misled manufacturer as well as intermediate supply chain partners which can impact production scheduling, inventory management and delivery plan of a particular member of the supply chain creating Bullwhip effect. There are four causes of Bullwhip effect which can occur in the Cadbury Supply chain due to mismanagement of information through supply chain elements (Padmanabhan et al., 2009)

1. Demand Signaling: Actual demand of products may not be clearly visible to the manufacturing factory since the forecast updates are results of perception of decision makers in the supply chain. Decision makers have an idea of the functioning of their supply chain with the demand patterns they observe in the downstream which influences their decision-making process causing multiple forecast in between the supply chain. Thus order placement is adjusted by each member and different order is placed to the upstream member in the supply chain resulting in exaggerated demand which affects product scheduling, capacity planning, inventory management, and part procurement for manufacturer and multiplies within the supply chain resulting in Bullwhip Effect. However, this can be reduced to great extent. Firstly, Point of Sale data which can be captured at retail store and information is passed through complete supply chain, which is possible through sell-thru data sharing clause in the contract with retailers or centralizing the demand information which can reduce uncertainty to a great extent.. Secondly, quick response manufacturing strategy to be used to reduce the lead time. Systems such as cross docking and EDI (Electronic Date Interchange) can reduce both the ordering lead-time and the information lead time.
2. Order Batching: Each member in the supply chain of Cadbury places order as per their own pattern such as weekly or monthly ordering but not according to the demand of the product which diminishes at the retail shop. This is due to the suppliers capability of handling orders and/or cost & time required for order processing or generating purchase order. this results in overlapping of different customers which result in erratic demand patter than actual demand faced by the customers. Discount on assorted truck load by the Third Party logistic can be better solution for the customers since it will improve ordering pattern when demand increase for the diminishing product in store.
3. Price Fluctuation: Since distributors of cadbury always provide schemes and offers like rebates and promotions to increase demand of the product which affects buying pattern of the customer during such period and does not provide buying need of the customer which can be called as a seasonal condition. Thus there is variation in the consumption rate as compared to buying pattern of the customer. Promotions act as incentive for buying much more than the demand requirements resulting in price fluctuations which either forces the customer to wait for the required price before buying or will buy more quantity than required. This provides short term benefits for a member in the supply chain creating Bullwhip Effect and increased costs upstream. This can be corrected by special purchase contract which will force member in the supply chain to order only quantity as per required demand which will benefit all the member of the supply chain. Also, offering a product at consistent price as in EDLP (everyday low pricing) can reduce bullwhip effect.
4. Rationing: When there is more demand of the product than supply then manufacturing factory will ration its product and provides order less than amount ordered. This makes customers order more than required knowing that manufacturer will provide less quantity. As demand reduces orders will reduce and there are more cancellations of order. This is called as shortage gaming and is very common in the Industry. It may also happen that customer order from different suppliers and buy from them who delivers them first. This can be reduced based on allocation of products based on past sales.

Information technology tools at Cadbury:

To reduce bullwhip effect and smoothing its supply chain operations, Mondelez International Inc has implemented E2open's demand sensing and transportation forecasting solution. E2open invented demand sensing solution in 2002 which uses automation and machine learning algorithm to analyse real time information across extended supply chain including data from internal operations, retailers and social media which gives more accurate picture of demand from any time horizon enabling better supply response decisions that are aligned with actual market demand. It is also an important part of an enterprise planning system and is provide a consolidated view of demand for the company. It uses current information from across the supply chain to create accurate forecasts which are more aligned with market realities. This has helped Mondelez by reducing its forecast error by almost 40 percent, eliminating unnecessary inventory helped to gain return on capital, increased on-shelf availability of product increased revenue and reduced unplanned changeovers and inefficient shipping which improved its earnings. Transportation Forecasting has provided Mondelez with accurate daily forecast of shipping needs by lane, mode and temperature class which is in sync with sales and operations planning. This provides Mondelez to identify the issues in advance and enables it to secure cost effective solution. to allow the entire company to execute against the same demand plan. Forward-looking visibility to transportation and logistics needs lets Mondelez proactively identify capacity issues weeks in advance and secure cost effective transportation.

Also, in the past, the Cadbury France team decided to opt for SKEP® solutions by DynaSys which is a leading European demand and supply chain planning solution provide. It provides expert business decision-making software which includes forecasting, planning, optimizing and performance analysis. It has proven benefits of reduction inventory levels, saving of a refrigerating warehouse, reduction of the finished products inventories by 5 days and quick return on investment.

Collaborative practices:

Many collaborative practices has been used by Cadbury. Firstly, it includes collaboration with the Cocoa suppliers through Cocoa Life program where Mondelez attempt to boost the prosperity of its suppliers by training them on environmental practices, creating better yields and economic returns. Secondly, Mondelez collaborated with other EU shippers and carriers to join the logistic research project with the goal to significantly reduce its carbon footprint in transportation. Thirdly, collaborating withe the local community though different programs such as cadbury kitchen and events gives the company a sense of belonging in the community. Finally, collaborating with its channel intermediary such as wholesalers, retailers for the information sharing such as sharing point-of-sale (POS) data (Aviv, 2002), vendor managed Inventory (Cheung and Lee, 2002); and Collaborative planning, forecasting and replenishment (CPFR) (Aviv, 2001).

Collaboration with the channel intermediaries of wholesalers and retailers is of utmost importance because due to these intermediaries, finished product is moved from manufacturer to end customer, They helps in providing right product at right time to a customer. This can be implemented through developing distribution channel by keeping in mind different pricing objectives and strategies. Marketers which distribute product through mass merchandiser such as Woolsworth will have different strategies than specialty stores. The challenges involved are the communication access to the intermediaries which shall be limited to the forecasting, while other confidential data should not be passed to collaboration partners. People are a major barrier to the effective use of information technology and their training and further support is major challenge for organisation. Inventory and related information management is essential for an Fast Moving Consumer Good (FMCG) company. A well managed inventory ensures that product is received by customer at the time when they need it, at the quantity they want and at the quality the expect.