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

• 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 it’s product line outside food market and acquire Loreal the cosmetic company in1974. Presently it holds 26.4% share in the company.

throughout the world.MISSION • Nestle is dedicated to providing the best foods to people throughout their day. • With our unique experience of anticipating consumers needs and creating solutions. . throughout their lives. 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 .

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

NESTLÉ’S PRINCIPLES OF PURCHASING Purchasing Roles: • Two primary purchasing roles that encompass strategic and operational activities are used in Nestlé:1. Strategic Buyers perform strategic activities such as market research or analysis. negotiation.g. supplier profiling and selection. contract management. marketing for media). engineers for machinery. . in collaboration with other professionals (e. logistics for transport.

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

LEGAL REQUIREMENTS FOR PURCHASING • Written Agreement • Quality Conformity • Dispute Resolution Clauses .

• The Nestlé Supplier Code helps to implement commitment. their employees. To ensure both responsible sourcing and supplier relationships that deliver a competitive advantage.SUPPLIERS • The Nestlé Supplier Code establishes non-negotiable minimum standards • They ask their suppliers. agents and subcontractors to respect and to adhere to at all times when conducting business. .

service level and transparency. • • Minimum corporate social responsibility standards. • Sustainable business practices . Nestlé select suppliers based on the following criteria: – Ability to offer a competitive value proposition. Ability and willingness to work with their preferred tools. Ownership. management structure and competence. Innovation. Reputation. Already approved or subject to formal approval prior to first delivery. financial situation and record with Nestlé.SUPPLIER SELECTION • • • • • • In compliance with Nestlé’s Corporate Business Principles. processes and solution providers.

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

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

maintains the Key account(s) target in stock rates. • · 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.MAJOR RESPONSIBILITIES • Using CPFR process & replenishment strategies. and weeks of supply. . • Develop external customer relationships and focus on the customers agenda.

and at the lowest possible system costs. in the quantities and at the timing needed. • This requires a supply of raw materials at specified quality.SOURCING Sourcing 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. • .

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


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

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

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



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

Nestlé’s 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 MANAGEMENT • Superior quality is a competitive advantage and a joint effort by all parties in the value chain is needed. Nestle expect suppliers to guarantee the quality of the material/goods they supply or the service they provide. . Suppliers are therefore considered an important link in this chain. • To achieve Nestlé’s objective of offering consumers high quality nutritional products. Whenever possible.

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

including nutritional information and serving instructions. . • It protects food products from spoilage and ensures safety from manufacture through storage. quality or consumer acceptance of its products. • Nestlé is committed to reducing the environmental impact of packaging. distribution and consumption. and provides the convenience demanded by today’s consumers. It communicates information. • Packaging may also provide tamper-evidence features. without jeopardizing the safety.PACKAGING • Packaging serves a major role in Nestle daily lives.

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. Study (check the results and make corrections) and Act(make revisions and improvements for the next step in the cycle). Nestle will Plan (set environmental policies and targets for itself and create a plan to achieve them). • Following this cycle. Do (put the plan into practice). .


SUSTAINING COMPETITIVE ADVANTAGE • Modifying Positional Advantage in International Markets • The Growing Integration of Markets • Building Market Presence and Position • Strategic Flexibility • Speed of Resource Deployment .

ERP IMPLEMENTATION • In June 2000. • The Switzerland-based consumer goods giant intends to use the SAP system to help centralize a conglomerate that owns 200 operating companies and subsidiaries in 80 countries including India. . Nestle SA signed a much-publicized contract with SAP – and threw in an additional $80 million for consulting and maintenance – to install an ERP system for its global enterprise.

which are situated at different cities of India. • Nestlé has its own distribution networks equipped with all necessary transportation facilities. • These sales offices (distribution centers) have their own vans with sales people who sell and transport goods to the small retailers.DISTRIBUTION SYSTEM • Distribution system of Nestlé is one of major source of competitive edge over its existing rivals. They transport their products at major regional sales offices. • Distribution of products from the factory to the customer involves transport and storage. .

CONT… • • • • • • Manufacturer Carriage and Forwarder Agent Distributor Wholesaler Retailer End Customer .

large inventories. and larger shipping lots— which represent a lower level of overall customer service. • In contrast. and other services—all of which raise distribution costs. • logistics system can both maximize customer service and minimize distribution costs.LOGISTICS • logistics objective as providing maximum customer service at the least cost. minimum distribution costs imply slower delivery. smaller inventories. Maximum customer service implies rapid delivery. liberal returns policies. . flexible assortments.

Major Logistics Functions • • • • Order Processing Warehousing Inventory Transportation .

INTEGRATED LOGISTICS • Cross-Functional Teamwork Inside the Company • Building Channel Partnership • Third party logistics .

• Nestle also believe in maintaining regular contact with Nestle consumers. The Nestlé Seal of Guarantee is a symbol of this commitment. tasty and affordable. This applies both to how nestle present Nestle products and to how Nestle address Nestle consumers' questions and concerns. Nestle committed to offering consumers high-quality food products that are safe. • Nestle has a relationship panel with a tag line ―TALK TO NESTLE‖ .CRM IN NESTLE • At Nestlé.


PERFORMANCE EVALUATION Two criteria are of equal importance:– • The measurement of the efficiency of suppliers • The evaluation of the effectiveness of Purchasing. .

BENCHMARKING The concept of benchmarking should: – Be seen as a continuous process of evaluation.– • • Ensure that results are quantifiable and actionable Be supported by a direct management commitment .

BEST PRACTICES • Purchasing practices must be modified. • By following or copying best practices available and working with suppliers. so as to produce the internal changes that will result in increased efficiency and effectiveness. improved or adapted. Purchasing can pro-actively seek change and realize the desired breakthrough .

• EFFECTIVENESS • Purchasing effectiveness is measured by the function’s ability to ―do it right first time‖ and achieving maximum value within the parameters of the total cost of ownership concept.e-Requisitioning (Catalogues). For example the use of . e-Supply Chain and are commended in order to bring economic benefits and efficiency. .• EFFICIENCIES • Efficiencies are also the execution of specific programs implemented through benchmarking.

.• COST SAVING INTIATIVES • A cross-functional approach and continuous improvement in areas such as quality. etc. logistics. must generate cost saving initiatives where purchasing contribution will be defined. targeted and monitored. service.

for example through the conservation of natural Nestle and the minimization of waste. . • The NEMS objectives include the following: • To ensure the continuous improvement of Nestlé’s environmental performance.FUTURE OF SCM • THE GREENING OF SUPPLY CHAIN • The Nestlé Environmental Management System (NEMS) Is Management an essential corporate management tool that consolidates all organizational and technical measures taken by the Group to achieve environmentally sound business practices.

create efficiencies. It is regularly updated and continually evolves to meet the needs of Nestlé. drive Product availability and enhance customer. templates and best practices. supplier information. organisations. • E-Procurement Nestlé promotes the use of electronic tools to optimize the value chain to Nestle costs.• Intranet Purchasing The Purchasing Intranet is a Nestle e-based communication tool used internally within the Nestlé purchasing community to share information about market prices. send information. .

•To build mutual trust with consumers.• To achieve compatibility with international voluntary standards on environmental management systems. . The Nestlé Environmental Management System is being implemented throughout Nestlé’s entire operation. such as ISO 14001 and the European Union Eco-Management and Audit Scheme. governmental authorities and business partners.

• • • The business strategy of Nestle starts with the needs of the customers that the Nestle serves.CONCLUSIONS • Nestle’s supply chain is an integral part of its approach to the markets it serves. Nestle whose supply chain allows it to more efficiently meet the needs of its customers. Depending on the needs of its customers. Nestle’s supply chain must deliver the appropriate mix of responsiveness and efficiency. • It will gain market share at the expense of other companies in that market and also will be more profitable. • The supply chain needs to respond to market requirements and do so in a way that supports the Nestle’s business strategy. .

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