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MIGRATION TO AN ERP...............................................................................................................................32
INFORMATION SYSTEM AND PURCHASING..............................................................................................33
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NESTLE LTD.
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HISTORY
In the 1860s Henri Nestl, a pharmacist, developed a food for babies who were unable to
breastfeed. His first success was a premature infant who could not tolerate his mother's
milk or any of the usual substitutes. People quickly recognized the value of the new
product, after Nestl's new formula saved the child's life, and soon, Farine Lacte Henri
Nestl was being sold in much of Europe.
In 1905 Nestl merged with the Anglo-Swiss Condensed Milk Company. By the early
1900s; the company was operating factories in the United States, Britain, Germany and
Spain. World War I created new demand for dairy products in the form of government
contracts. By the end of the war, Nestl's production had more than doubled.
After the war Government contracts dried up and consumers switched back to fresh milk.
However, Nestl's management responded quickly, streamlining operations and reducing
debt. The 1920s saw Nestl's first expansion into new products, with chocolate the
Company's second most important activity.
The end of World War II was the beginning of a dynamic phase for Nestl. Growth
accelerated and companies were acquired. In 1947 came the merger with Maggi
seasonings and soups. Crosse & Blackwell followed in 1960, as did Findus (1963),
Libby's (1971) and Stouffer's (1973). Diversification came with a shareholding in
LOreal in 1974.
The first half of the 1990s proved to be favorable for Nestl: trade barriers crumbled and
world markets developed into more or less integrated trading areas. Since 1996 there
have been acquisitions including San Pellegrino (1997), Spillers Pet foods (1998) and
Ralston Purina (2002). There were two major acquisitions in North America, both in
2002: in July, Nestl merged its U.S. ice cream business into Dreyer's, and in August, a
USD 2.6bn acquisition was announced of Chef America, Inc.
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Cream were also shifted over to this new format. A new flexible
confectionery line enabled the manufacture of a wide range of high and low
boiled sweets and toffees, including TOFFO and two variants of
SOOTHERS' Menthol Eucalyptus and Honey Lemon.
Nestle Milkpak also contracted to supply dairy mixes to McDonald's, for its popular soft
serves and milk shakes.
And to top it all, the most prestigious project, NESTLE PURE LIFE was also
commissioned in December. Based on the latest water treatment and bottling technology,
this marked the entry of Nestle Milkpak in the Pakistan water market and that of Nestle
in the world water market.
The expansion of high boiled sweet line continued in 1999 with the introduction of Fruit
Drops and BUTTERSCOTCH.
The year 2000 saw the production of some exciting products. First came NESCAFE
Frothe Original, followed by its two other flavors: Mocha and French Vanilla. NESCAFE
Frappe RTD was to come next.
The fruit juice range was expanded by the production of Mango and Orange-Mango Mix.
On the confectionery side, Tutti Fruiti was added under the umbrella of POLO and Wild
Cherry was added to the SOOTHERS range.
The success of NESTLE PURE LIFE in PET bottles encouraged the commissioning of 5gallon bottles production line for home and office in June.
And the last product line of the year to be commissioned in November was that of
NESTLE Plain Yogurt, a high quality product with special Stay-Fresh Seal.
To meet the needs of safe and quality storage for the ever expanding product range and
their volumes, a National Distribution Center (NDC) was completed and became
functional in June, 2000.Spread over 6614 square meters; it has the capacity to store up to
8300 pallets (approximately 8000 tons).
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VISION STATEMENT
The strategic priorities of Nestle Pak Ltd are focused on delivering shareholder value
through the achievement of sustainable, capital efficient and profitable long term growth.
Improvements in profitability will be achieved while respecting quality and safety
standards at all times.
In line with this objective, Nestle Pak Ltd envisions to grow in the shortest possible time
into the number one food company in Pakistan with the unique ability to meet the needs
of consumers of every age group - from infancy to old age, for nutrition and pleasure,
through development of a large variety of food categories of the highest quality.
Nestle Pak Ltd envisions the company to develop an extremely motivated and
professionally trained work force, which would drive growth through innovation and
renovation.
It aspires, as a respected corporate citizen, to continue playing a significant role in the
social and environmental sectors of the country.
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MISSION STATEMENT
Nestls mission is to provide the best food to people throughout the
world.
OBJECTIVE
At the threshold of this new millennium, Nestls objective Is to consolidate and
strengthen its leading position at the cutting edge of innovation in the food area in
order to meet the needs and desires of customers around the world, for pleasure,
convenience, health and well being.
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Lead a dynamic motivated and professional workforce proud of its heritage and
bullish about the future.
Meet the nutritional needs of consumers of all age groups from infancy to old
age, from nutrition to pleasure, through an innovative portfolio of branded food
and beverage products of the highest quality.
We have profitable and diversified high quality food and beverage product
portfolio, delivering 60:40+ advantage to consumers, available across all sales
channels.
Our brands are the preferred choice in their categories. Consumer insight drives
all aspects of our marketing and communication efforts.
Our communications to the consumer are relevant, cutting-edge, and adhere to the
highest standards of responsible communication.
Our company is seen as the No. 1 career destination for talented, motivated and
ambitious professionals.
Our milk collection and agri services will continue to play the primary role in
development of the dairy sector in rural Pakistan.
Our proactive innovation and renovation culture is the key to our success in the
marketplace.
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Bharpoor nashvonuma!
Sehatmand mustakbil ka behtrin aghaaz!
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Nestls extensive milk collection system ensures that the milk you get is of
the finest quality.
Encourage your family to exercise regularly, eat a healthy, well-balanced diet and drink
pure, nutritious milk for good health. Milk is a must-drink for your children as it is a rich
source of Calcium that helps in the growth and development of strong bones and teeth. It
is equally beneficial in keeping grown-ups bones strong. So live to the fullest
and enjoy the pure, wholesome goodness of milk with
NESTL MILKPAK!
A 250 ml glass of NESTL MILKPAK fulfills your daily requirement of 27-30% of
Calcium, 15-18% of Protein, 31-34% of Phosphorous, 6-9% of Vitamin A and 160-169
Kcal of energy, as Recommended Dietary Allowance by the National Academy of
Sciences, USA.
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Pakistan is the 5th largest milk producing country in the world with an annual milk
production of 27 billion liters. The total urban milk consumption is 6.86 billion litres. In
cities, milk is largely consumed for tea whitening (2.3 billion litres), drinking (2.3 billion
litres), and desserts etc (2.2 billion liters). In Pakistan, loose milk still occupies 96% of
the total milk market share. While buying loose milk, a consumer may pay less than that
of UHT milk, but there is serious health risk, and the consumer is also paying for milk
containing up to fifty per cent of water.
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ORGANIZATIONAL STRUCTURE
B.O.D.s
Managing
Director
Head Of
Marketing
Head of
Sales
Head of
Technical
Head of
supply
chain
Head of
H.R.
.Manager
Plant
Manager
Procurement
Manager Q.C
Manager
Purchase
Q. Assurance
Officer
Logistics
Officer
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Head of
Legal
affairs
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SUPPLIERS SUPPLIER
Improving Feed
Even before calling Nestl in, Milkpak Ltd. had tried to ensure that milk cows were given
fresh fodder during the summer.
Our teams are always prepared to offer practical advice. We have planted a variety of
fodder crops, which we demonstrate to farmers on field days.
We also provide training on best practices in animal husbandry. For instance, we stress
the importance of giving cattle enough water, and train farmers in hygiene and milking.
Livestock Breeding & Health
Pakistan's vast milk production comes largely from buffaloes, despite their small yield.
Our agronomists have shown that with artificial insemination we can actually triple milk
production. Yet artificial insemination is still not widely used.
In 1996, our vets and agronomists independently formed an NGO to promote artificial
insemination using high quality semen.
Today, with help from Nestl and others, they have established a training programme for
inseminators, and provide high quality imported semen at low cost to farmers.
We concentrate on preventative measures against the most common diseases that afflict
cattle in Pakistan.
Farmers know that they can call on our trained vets whenever necessary.
Better Equipment
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Our agricultural services staff have drawn up technical plans for cowsheds,
which are provided free of charge.
Our mechanics have also developed prototypes of machines to cut fodder quickly and
inexpensively.
Starting 2004, we went a step further and proposed a system of small loans for farmers
who wanted to make improvements to their farms, such as building cowsheds.
We drew up the sample specifications for a model farm to be presented to the banks
disbursing the loans. The Service even helps farmers fill out applications for loans.
An agent runs the diary. It occupies a small room of about 20 to 30 m either in the
agents house or in a building that nestle rents.
The milk collected on average is two times 150 liters per day.
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The agent does a quick tasting test on the milk before recording the
delivery in the farmers personal milk logbook.
The dairy is open two or three hours morning or evening.
The agent transports the milk to one of the 972 secondary receptions
and cooling station before closing.
Looking after more than 1000 generators with the same number of water pumps
and ancillary equipments demands a systematic approach.
Each of the 23 main stations employs full time mechanics/electricians.
For more complex problem mechanic/electrician can immediately calls one of the
five Nestle maintenance service station located in five of the main reception
stations.
The Nestle repair service was originally based in shaikhupura factory. But over
the period of time it was transferred to the fresh milk-purchasing department.
Number of
farmers
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1994
1996
1998
2000
2002
2004
2006
39,205
53,693
65,568
68,277
89,394
121,259
137,784
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INBOUND LOGISTIC
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Inbound logistics used for milk collection from different milk collection
centre is centrally owned by nestle Pakistan limited. In Pakistan, logistics
has always been a problem specially for sensitive product like milk in the
hot weather. Initially the supplier who supplied there milk
Nestle Factories
Our products are manufactured in five facilities scattered around the country, from
Islamabad in the north, to Karachi in the south.
Two state-of-the-art multipurpose factories are located in the agricultural heartland of the
Punjab, and the remaining three are dedicated to producing our trusted brands of bottled
water.
As citizens of Pakistan, we consider it our duty to make sure that our manufacturing
processes are clean, hygienic and safe.
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Sheikhupura Factory
The factory commenced operations as part of Milkpak Ltd in 1981. At the time it
produced only UHT milk, but by 1988 had expanded to produce butter, cream and ghee,
as well as fruit drinks.
Milk filling machine TBA-22 (most modern and effiecient and high speed
equipmentr available in dairy industry)
National distribution centre was also constructed in 2000 with capacity to store
8300 pallets.
Kabirwala Factory
In 1990, Nestl Milkpak acquired the Kabirwala factory, located in Khanewal district of
the Punjab, as a subsidiary. By 1997 it was a fully owned unit of Nestl Pakistan Ltd.
.2006 has seen the commencement of Kabirwala Extension Project that would be
completed in April 2007 at a cost of about Rs. 4.0 billion. The project has seen expansion
of milk processing capacity to triple its current size, both
for powder and liquid.
In 2005 Fresh milk capacity was increased from 676 to 800 tons per day.
in 2007 an additional raw and packing and semi finished product stored and a
bigger distribution
centre, a stick pack filling machine and 1000 gr. Powder filling machine will be
added.
Islamabad factory:
AVA water factory Islamabad was acquired by Nestle Pakistan in 2001 and was
subsequently merged with it. Thereby becoming a fully owned unit of Nestle Pakistan in
2003.
The production capacity of the factory is approximately 8000 bottles per day.
AVA Karachi
FONTALIA Karachi
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SCOR MODEL
Plan
S
up
pli
er
s
Source
Make
Deliver
Return
Return
Source
Deliver
Enable
C
us
to
m
er
s
Planning
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MANUFACTURING
Manufacturing is very important part of supply chain. In our factories,
the objective is to maximize eco-efficiency that is to maximize the
production of goods, while at the same time, minimizing of
consumption of resources and reduce wastage and emissions. The
factories are equipped with complete testing and monitoring facilities
for wastage and emission enables them to stringently monitor the
gaseous environments and ensure that these are in accordance with
environmental standards (NEQS).
Milk Processing:The Milk Reception Unit receives milk and liquid milk products for a milk processing
plant. The unit measures and pumps the product for buffering or further treatment.
Tetra performs in-line mixing for a wide range of powders and liquids for dairy
applications such as reconstituted and recombined milk, yoghurt milk, flavored milk,
evaporated milk, recombined concentrated milk, ice cream mix, chocolate slurries, dairy
desse
Heating and cooling are basic processes within dairy processing and take place in plate or
tubular heat exchangers. Tetra Pak heat exchangers have high thermal efficiency for low
energy consumption.
Automatic direct in-line standardization of milk and cream. Accurate control of fat,
fat/solids and non-fat ratio gives better utilization and control of the production
parameters
Along with correct cooling, pasteurization is one of the most important processes in the
treatment of milk. If carried out correctly, these processes will supply milk with longer
shelf life.
Temperature and pasteurization time are very important factors which must be specified
precisely in relation to the quality of the milk and its shelf life requirements etc. The
pasteurization temperature for homogenized, HTST pasteurized, regular-grade milk is
usually 72-75 C for 15-20 seconds.
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UHT treatment is a thermal process for preserving liquid milk. UHT stands
for Ultra High Temperature and by heating to 137 140 C for a very short
time (2-10 s) the micro-organisms are inactivated. If the milk is packaged under aseptic
conditions it can be stored at room temperature for months.
Packaging Materials
Nestl is committed to reducing the environmental impact of packaging, without
jeopardizing the safety, quality or consumer acceptance of its products.
As far as milk is concern packaging is very important, it is perishable item which
requires special packaging to preserve it for few months. To meet this objective Nestle
Milkpak use tetra Pak to deliver fresh milk to its customer without sacrificing in health
measures. Nestle have following objectives in mind regarding packaging:
Result in the lowest possible weight and volume of packages whilst still
maintaining pack integrity;
Take into account new packaging materials and processes that reduce the impact
on the environment of unnecessary transportation;
Avoid the use of substances that can adversely impact the environment during
packaging production and disposal;
Decrease packaging waste at all stages in the supply chain, including package
manufacturing, utilization and disposal;
Increase the use of recycled materials wherever possible, and increase the
recyclables and compatibility of packages with existing waste management
schemes.
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Outbound logistics:
Outbound logistics concerns finished milk movement from factory to different
warehouses located in different cities.
The logistics usually take 3 days to arrive at Nestls warehouses in Karachi from their
manufacturing factories at Lahore, kabirwala and shaikhupura
Size of item
1 liter
250 ml
1.5 liter
500 ml
No. Of cartons
1092
1815
1040
1750
DISTRIBUTION:
According to the distribution, Pakistan is divided into three geographical zones and then
in further Regional Sales Offices.
North Zone
o Islamabad and north outstations
o Peshawar
o Jhelum
Central Zone
o Lahore
o Faisalabad
o Gujranwala
o Multan
o Sahiwal
South Zone
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o
o
o
o
Karachi
Hyderabad
Quetta
Sukker
S.A Interprise
Burque Corporation
Krafts Distributors
Mehran Distributors
Karachi is divided into two zones i.e. East Zone and West Zone
There are 16 total warehouses of Nestle Milkpak.
DAILY INCOMING AND OUTGOING LOGISTICS:
Minimum one or two nestle milkpak trucks daily being arrived at each ware house
from the sheikhupura and kabirwala factories, and is distributed in the same
amount to the retailers all over the city.
The logistics usually take 3 days to arrive at Nestls warehouses in Karachi from
their manufacturing factories at Lahore, kabirwala and shaikhupura.
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No. Of cartons
1092
1815
1040
1750
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Invoice number
Whom to sold
Whom to ship
Dispatch date
From whom
Product description
Unit price
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GLOBE
(Global business excellence)
In the year 2005 the successful launch of GLOBE remained probably the most significant
achievement for Nestle Pakistan. It was recognized locally as well as in the Nestle world
as the most successful implementation of GLOBE.
GLOBE is a worldwide program/project designed to align Nestle Pakistan with other
Nestle companies around the world and to learn and benefit from each others
experience.
The project has three main objectives;
Creation and adoption of common business practices across all countries where
Nestle operates.
Standardization of data and,
Standardization of information technology system.
Migration to an ERP
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Or
de
r
Si
ze
33
Production
ProductionPlan
Plan
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Customer
Demand
Time
FINANCIAL OVERVIEW
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2006
22031
2640
12%
1363
6.20%
30.06
2005 change
17142
28.50%
2121
24.50%
12.40%
1153
18.20%
6.70%
25.42
18.20%
Export sales to Afghanistan increase by 35% to PKR 1.3 billion as both the progressive
climate for business and development of the retailing sector continuous strongly.
Growth in sales translates into a solid increase in operating profit of 24.5% to PKR 2640
million. The slight decline in operating profit margin was mainly due to:
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Investment project
Total capital expenditure for the year reached PKR 3.6 billion, the highest spending
recorded in the company history. The most significant projects are listed below:
Project Description
Kabirwala - new factory extension
Sheikupura - upgrading water retail line
Sheikupura - Yogurt line
Karachi - new bulk water line
Milk collection - field development
Sales and Distribution - infrastructure
Information Technology - upgrading of equipment
PKR Million
2097
280
180
209
191
107
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These investments are part of long term infrastructure plans need to support our
continued accelerated growth. Investments in 2007 at approximately PKR 3.1 billion are
planned for capacity increases, milk collection, field development, and upgrading of
existence production facilities.
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Bibliography
To collection information we have considered following source in order to gather
authentic data:
www.nestle.pk
www.nestle.com
www.tetrapak.com
www.cia.gov.com
www.smeda.com
www.wekipdia.com
Books concerned
Nestle management report 2005
Nestle management report 2006
SEMIDA report 2005 for milk production and distribution
Economic survey of Pakistan 2006
Personnel concerned
Mr. Taimur Lodhi.
Area Sales Manager
Nestle Karachi
Mr. Eric Francis
H.R. Department
Nestle Lahore
Mr. Hafiz Iqbal
Territory Incharge
Karachi Nestle Pakistan
Miss Rani Siddique
Head of H.R.
FONTALIA (Nestle Pakistan)
Mr. Farruq Siddique
Warehouse Manager
S.A. Enterprise (Distributor Nestle Pakistan)
Mr. Malik Salman Saeed
Supply Chain Manager BURQUE Corporation(Distributor Nestle Karachi)
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