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Supply Chain Management of Nestle

Oct 22, 2014




RANKING Fortune 500: Nestle is ranked 48th company Best Global Brands Nescafe Is placed at 26th rank Nestle Foods is placed at 58th rank

ABOUT NESTLE Nescafe was developed in 1930 and it became a main beverage for the American serving in Europe and Asia Total sales increased by $125 million from1938 to 1945. It expand its product line outside food market and acquire Loreal the cosmetic company in1974. Presently it holds 26.4% share in the company.

MISSION Nestle is dedicated to providing the best foods to people throughout their day, throughout their lives, throughout the world. With our unique experience of anticipating consumers needs and creating solutions. Nestle contributes to your well being and enhances your quality of life.

VISION To be the leading food and beverage company in the world providing customers with healthy food at affordable prices.

PRODUCT LINE Coffee Water And Other products Ice-cream Chocolates Dairy Products Infant nutrition

PURCHASING ISSUES The purchasing objectives of Nestl are to produce and market food products that satisfy customers and consumer expectations, and to provide good quality food and value for money. The key raw materials purchased by Nestl are: milk, coffee, and cocoa. These, as well as fruit, vegetables, cereals, potatoes are partly sourced directly from farmers


Two primary purchasing roles that encompass strategic and operational activities are used in Nestl:1. Strategic Buyers perform strategic activities such as market research or analysis, supplier profiling and selection, negotiation, contract management, in collaboration with other professionals (e.g.engineers for machinery; logistics for transport; marketing for media).

Strategic Buyers can remain within their functional area, as long as there is a line of responsibility to the relevant Head of Purchasing. This will ensure that they are informed of and contribute to purchasing strategies, training, budgets, etc. Operational Buyers perform operational activities such as sending purchase orders, call-off against catalogue, etc. These activities may be performed by members of any organizational unit requiring goods or services.


Quality Conformity Dispute Resolution Clauses

SUPPLIERS The Nestl Supplier Code establishes non-negotiable minimum standards They ask their suppliers, their employees, agents and subcontractors to respect and to adhere to at all times when conducting business.

The Nestl Supplier Code helps to implement commitment. To ensure both responsible sourcing and supplier relationships that deliver a competitive advantage.

SUPPLIER SELECTION In compliance with Nestls Corporate Business Principles, Nestl select suppliers based on the following criteria: Ability to offer a competitive value proposition; Reputation, financial situation and record with Nestl; Ownership, management structure and competence; Innovation, service level and transparency; Already approved or subject to formal approval prior to first delivery;

Minimum corporate social responsibility standards;Ability and willingness to work with their preferred tools, processes and solution providers;

Sustainable business practices

PROCUREMENT As one of the world's largest food raw material buyers, Nestle spends around 60bn (US$71.5bn) a year on central procurement, of which 22bn is spent on ingredients and 8bn is spent on packaging. With such an immense commoditiesrelated spend, it is all too clear that the swings of the commodities markets could have a grave impact on Nestle's bottom line. The group is working to minimise the impact that high prices and volatility have on Nestle's profitability by streamlining procurement and manufacturing.

CPFR OF NESTLE CPFR Analyst - Wal-Mart The successful applicant will be responsible for managing ongoing Collaborative Planning Forecasting and Replenishment (CPFR) processes between Nestl and key account(s) (eg Wal-Mart) in order to ensure accurate forecasting, optimized replenishment and superior retail in-stock and inventory levels.

MAJOR RESPONSIBILITIES Using CPFR process & replenishment strategies, maintains the Key account(s) target in stock rates, and weeks of supply. Communicates recommendations regarding the resolution of issues to the relevant internal or external party and reaches agreement on the appropriate corrective action Order Processing create and process co-managed orders. Develop external customer relationships and focus on the customers agenda.

SOURCINGSourcing has to contribute to the sustainable and profitable development of our company by providing the base for quality differentiation of finished products (customer / consumer satisfaction) and by assisting operating companies to be a competitive producer. This requires a supply of raw materials at specified quality, in the quantities and at the timing needed, and at the lowest possible system costs.

STRATEGIC SOURCINGThe strategies employed in sourcing depend on the proprietary characteristics of the raw materials and on the requirements of the factories. Most of the raw materials are bought through the trade, but part are bought directly from farmers. This direct procurement is more common for perishable products (e.g. milk), and where the company has specific needs. Nestl does not own any commercial farming activities


SUPPLY CHAIN STRATEGIES Market Saturation Driven-Focuses on generating high profit margins through strong brands and forceful marketing and distribution. This is the strategy of successful A-brand suppliers likeNestle. Operationally Agile: Configures assets and operations to react fast to emerging consumer trends along lines of product category or geographic region. Both assortment and shelve presentation are systematically adapted to actual local sales, and replenishment is executed using computer assisted ordering.

Freshness Oriented: Concentrates on earning a premium by providing the consumer with product that is fresher than competitor's offering. For instance, a leading fresh food supplier considers cold chain critical to success since temperature is the dominant factor in shelf life. Consumer Customizer: Uses mass customization to build and maintain close relationships with end consumers through direct sales

Value for Money Focused: This strategy puts a priority on "low price, best-value" for the customer, but it focuses less on brand than on dedicated service. Logistics Optimizer: Emphasizes a balance of supply chain efficiency and effectiveness. However, only collaboration between multiple trading partners will yield a synchronized supply chain. This often maximizes end consumer value proposition and ultimately value to each trading partner.




TQM IN NESTLE TQM capitalizes on the involvement of management, workforce, suppliers, and even customers, in order to meet or exceed customer expectations. Quality in business, engineering and manufacturing has a pragmatic interpretation as the non-inferiority or superiority of something. Quality is a perceptual, conditional and some what subjective attribute and may be understood differently by different people. Consumers may focus on the specification quality of a product/service, or how it compares to competitors in the marketplace

QUALITY MANAGEMENT Superior quality is a competitive advantage and a joint effort by all parties in the value chain is needed. Suppliers are therefore considered an important link in this chain. To achieve Nestls objective of offering consumers high quality nutritional products, Nestle expect suppliers to guarantee the quality of the material/goods they supply or the service they provide. Whenever possible, Nestls goal is to be able to rely on their suppliers competence and ability to implement jointly defined Quality Management and Supplier Quality Assurance (SQA) programmes.

QUALITY ASSURANCE DEPARTMENT The duties of the quality department are to: 1)Develop, with input from all personal, the core values, vision statement, mission statement, and quality policy statement .2)Develop the strategic long term plan with goals and the annual quality improvement program with objectives. 3)Determine and continually monitor the cost of the poor quality. 4)Continually determine those projects that improve the process, particularly those that affect external and internal customer satisfaction

PACKAGING Packaging serves a major role in Nestle daily lives. It protects food products from spoilage and ensures safety from manufacture through storage, distribution and consumption.

Packaging may also provide tamper-evidence features. It communicates information, including nutritional information and serving instructions, and provides the convenience demanded by todays consumers.

Nestl is committed to reducing the environmental impact of packaging, without jeopardizing the safety, quality or consumer acceptance of its products.

PDSA Cycle: Nestle strongly rely on PDSA cycle for solving several of its problems. A PDSA cycle is a system for continuously improving environmental management systems. Following this cycle, Nestle will Plan (set environmental policies and targets for itself and create a plan to achieve them), Do (put the plan into practice), Study (check the results and make corrections) and Act(make revisions and improvements for the next step in the cycle).