Answer the following eight (8) questions:
1. a) Describe the recall situation in this example. (2 points)
b) Who are the stakeholders involved and what are their objectives? (3 points)
c) How was the information communicated to stakeholders? (2 points)
d) Could Kellogg’s have communicated the information to other stakeholders more effectively? (3 points)
2. a) Where were the contaminated cereal products produced? (2 points)
b) Where were they shipped? (2 points)
c) What are Kellogg’s shipping terms of sale? (2 points)
d) How might the contaminated products have been shipped to customers? (2 points)
e) If an Incoterm was used for any customer locations, what might it have been and why? (2 points)
3. a) Describe how Kellogg’s’ procurement team could have mitigated the risks associated with outsourcing production to a contract manufacturer in this situation. (3 points)
b) Describe the ethical risks associated with contract manufacturing in this situation. (3 points)
c) Based on the strategic importance of contract manufacturing, which Supplier Interaction Model best describes the relationship that exists between Kellogg’s and Kerry Inc. What should it be? Why? (4 points)
4. Identify and explain the Processing Stages that Kellogg’s might have followed in conducting the recall. (10 points)
5. How could Kellogg’s use this recall as an example in conducting a self-assessment of its ability to transition to a circular economy model? (10 points)
6. a) Which mode of transport, conveyance, and equipment would Kellogg’s likely have used to ship products to the countries involved in the recall of “Honey Smacks” cereal? (5 points)
b) What legal considerations would Kellogg’s have to be aware of when selecting carriers for domestic and international shipments of products involved in this recall? Why? (5 points)
7. Consider the following scenario: Kellogg’s distribution of cereal products to customers in Guatemala is coordinated through the company’s ARICAM Headquarters in Guatemala City (https://
Orders for the Latin America region were consolidated and aggregate orders were placed with Kerry Inc. in Gridley, Il. Kerry Inc. shipped consolidated orders, palletized and labelled by distributor, by intermodal to Mexico City, at which point trailers with orders for distributors in countries south of Mexico were moved over the road.
The general manager of Kellogg’s ARICAM office in Guatemala City advised Kellogg’s head office personnel in Battle Creek, Michigan that they had identified approximately 140 pallets of salmonella-contaminated cereal products still in wholesale inventory in Guatemala.
Unfortunately, despite FDA recommendations for disposal, government officials in Guatemala, upon learning of the recall through their government Facebook account, had contacted ARICAM and insisted that no contaminated food products be disposed of in Guatemala. Furthermore, since the contaminated products had been shipped from the United States, Guatemalan authorities insisted that the contaminated products be returned to the U.S. for disposal.
ARICAM’s Supply Chain Manager had already spoken with their freight forwarder and customs broker regarding arrangements to return the contaminated products to the U.S. Mexican authorities would not allow the contaminated products to transit through Mexico, which left marine transport as the only economically viable option to ship the contaminated products from Guatemala to the U.S. ARICAM’s customs broker had placed a call to US Customs and Border Protection (CBP) for advice since the returning goods would be labelled “CONTAMINATED – Not for Resale – Goods returned for disposal only”. Since the returning shipment would not be subjected to the same level of scrutiny as a commercial shipment, CBP expressed concerns that someone might target the shipment for smuggling or terrorism reasons. As a result, CBP stated they would only allow the shipment to enter the US if the origin port was compliant with the International Ship and Port Facility Security Code (ISPS) and the Container Security Initiative (CSI).
a) Describe the possible intermodal transportation of Kellogg’s “Honey Smacks” cereal from Kerry Inc. in Gridley, Il to food distributors in Guatemala.
i) What intermodal carrier(s) might be available to Kerry Inc. in Gridley, Il. offering service to Mexico and Guatemala? (2 points)
ii) Assuming the intermodal shipment travelled by rail from Gridley to Mexico City, describe the route and possible carriers involved. (1 point)
iii) Describe the highway route from Mexico City to Guatemala City. (1 point)
iv) Where would the shipment encounter Guatemalan Customs when it left Mexico and entered Guatemala? (1 point)
b) Describe the cargo security issues surrounding the return shipment from Guatemala to New York.
i) Which Port is the most likely origin Port for ARICAM in this scenario (i.e. meets the cargo security requirements of CBP)? (2 points)
ii) Describe the journey (route and equipment) from Guatemala City to the Port. (3 points)
iii) Describe the journey (route and possible ocean carriers) from Guatemala City to New York, and on-forwarding to Gridley, Il. (5 points).
8. Identify and describe the relevant cargo security programs that are involved in the reverse logistics scenario described in question 7.
i) In which security programs would membership likely benefit ARICAM, Kellogg’s USA, and Kerry Inc.? Why? (5 points)
ii) What would the Harmonized Code, and rate of duty, be when returning these goods to the US? Provide the appropriate reference. (5 points)
(End of Questions)
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