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First of all many thanks to Allah Almighty who blessed us with a lot of skill and abilities. Through which we are
able to complete our research with in time. We would also like to thanks Mam Zahra Tahir whose way of
teaching, method, guidance support us to do this task effectively and efficiently, and we would like to dedicate
this final report to the companies through which we are able to complete it.

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Executive Summary:

This is an informative report on Supply Chain Management of Nestle milkpak of Pakistan. In this report we
have described how nestle came into being internationally and in Pakistan. Through our research we found how
much Nestle care about it consumer Good Food Good Life is the principal. They always, follow we have
described the marketing strategies Nestle uses and we have explained the performance of Nestle. Nestle
Pakistan limited, formally known as Nestle milkpak limited is a subsidiary of Nestle a company of Swiss origin
headquartered in very, Switzerland. It is listed on Karachi and Lahore stock exchanges for the 5 years in a row,
the company has placed among top 25 companies of the KSE. It principal activities are to manufacture process
and sell food products.

The report include brief introduction of the Nestle Pakistan and milkpak. and later the detailed processing from
supply chain to distribution of milkpak, in the process including

Transfer of raw material
Customer feed back
Distribution claim

At the problem has been identified related to milkpak and latter suggestion has also been given for the removal
of these problem and then draw the conclusion about the milkpak.

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Introduction of supply chain

The movement of materials as they go with the flow from their source to the cease customer. Deliver chain
consists of shopping, production, warehousing, transportation, customer service; call for planning, deliver
making plans and supply chain management. It's far made up of the people, activities, records and assets
worried in shifting a product from its dealer to consumer. Although this deliver chain definition sounds very
simple, effective control of a supply chain can be a actual project.

Example of a supply chain:

Raw materials manufacturer distribution middle customer . In some fashions, the product is shipped from the
producer to the distribution center as soon as it's far synthetic. In other fashions, together with a hub & spoke
version, the product is held at the manufacturer as soon as produced. It's far then sent out to the distribution
middle only while it's far needed.

Objectives of supply chain management:

The fundamental goal is to "add price". That brings us to the example of the fish arms. In the course of the
supply chain control '98 conference within the united kingdom this autumn, a participant in a supply chain
control seminar stated that general time from fishing dock via manufacturing, distribution, and very last sale of
frozen fish arms for his eu grocery- merchandise company became 150 days. Manufacturing took a mere forty
three mins. That suggests an vast goal for deliver chain managers. At some stage in all that point, organization
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capital is-- almost actually in this case--frozen. What's real for fish arms is genuine of most products. Study any

Deliver chain, and its miles probable to be a protracted one. James morehouse, a vice chairman of consulting
company at. Kearney, reviews that the overall cycle time for corn flakes, as an instance, is close to a 12 months
and that the cycle instances in the pharmaceutical enterprise average 465 days. In reality, morehouse argues that
if the supply chain, of what he calls an "extended company," is encompassing the entirety from initial provider
to very last client fulfillment, might be reduce to 30 days, that might provide not most effective greater
inventory turns, however brisker product, an capacity to personalize better, and improved patron
responsiveness. "all that upload value," he says. And it gives a clean competitive gain.

Deliver chain control turns into a tool to help accomplish corporate strategic goals:

Reducing operating capital, taking assets off the stability sheet, accelerating coins-to-cash cycles, growing
inventory turns, and so on.

Supply chain benefits:

Experience shows that the benefits of a well designed and implemented Supply Chain Management strategy is
substantial. Successfully implemented projects have provided benefits such as:

Reduction of Transportation, Warehousing, and Distribution Costs

Lean Processing from Supplier to customers
Reduced Direct and Indirect Labor Costs
Optimized Stock Levels
Increased Material Flow Velocity
Accurate Job Costing and Scheduling
Streamlined Purchasing Control
Increased Decision Making Speed and Responsiveness to Demand Change
Increased Customer Service
Increased Inventory Availability, Customer Order Fill Rates, Accuracies and services
Reduced Operations Support Costs
Reduced Inventory Carrying Costs
Improved Productivity of Procurement Operations
Improved Quality of Products and Services

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Introduction of supply chain of milk in Pakistan

Milk is the most perishable and fast moving customer good. The very first and initial requirement or feed for
any human being is milk. Milk is complete diet as it contains every nutrient except iron. Fortunately Pakistan is
the fourth largest producer of milk in the entire world and its annual production is surprisingly 45 billion liters
which is very high. But unfortunately only 27 billion liter of milk is available for human consumption.
Therefore most of the milk is lost and Pakistan cannot fulfill its demand. Despites of these facts and figures
Diary Industry is playing a very crucial role in the Pakistan economy and contributing 14% to the countrys
overall GDP. More than 20% of the entire population of Pakistan is involved in this sector directly or indirectly.
If we talk about the Dairy Supply chain management of Pakistan, we can divide it in to two categories: One is
Formal and second is Informal sector. The share of formal sector is 4% whereas the rest of 96% of share is
taken by the informal sector. In the formal sector Nestle is the market leader in Pakistan and contributing 60%
of market share as per fact and figure of 2008. In formal sector, milk is collected by different milk collection
centre. Then it is taken in to the processing plant where milk is stored in cooling towers. In the processing plant,
milk is processed and packed and then it is distributed to the retailer and finally milk is reached to the ultimate
consumer. In formal sector we can divide it in to two sectors. In first category farm milk is collected by gawalas
(milkmen) who sell the milk directly to the consumers or the milk collectors. In second case, farm milk is
collected by different milk collectors who sell their milk to the retailers and these retailers provide it to end


As a consequence of joint venture arrangement between Nestle S.A. of Switzerland and Milkpak Ltd. in 1988,
the existing production facility of Milkpak in Sheikhupura became a part of Nestle Milkpak.

The Milkpak Sheikhupura factory commenced operations in 1981 as a producer of UHT milk. By 1988, it had
expanded its operation and was also producing butter, cream, desi ghee - all under the brand name of
MILKPAK and juice drinks under the brand name FROST.

To meet the demands of the large food market that Pakistan offered, Nestle Milkpak reorganized and reinforced
the production of existing brands and gave shape to new production lines. The first to come was a milk powder
plant, which not only began producing NIDO in 1990 but was also critical to the production of several milk-
based products in the future.

With the installation of the roller dryer in 1990, the first such product to come was CERELAC - an
internationally recognized brand of infant cereal. This was followed by LACTOGEN 1 & 2 in 1991.

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The year 1992 saw the introduction of tea whitener EVERYDAY and milk powder in bulk packing named
GLORIA. MILO and NESLAC came under production in 1994 and MILO RTD in 1995. Local packing of
imported coffee under the name of NESCAFE 3 in1 commenced the same year.

In 1996, Nestle Pak Ltd first confectionery plant of POLO Mint was installed and the production of NESTLE
PURE ORANGE JUICE commenced. Packaging of coffee under the brand name of NESCAFE CLASSIC
was undertaken the same year.

In 1997 NESTLE WHEAT and two variants of POLO viz. Strawberry and Orange was introduced.

In 1998 a substantial capital investment was made to launch several products and install two new state-of-the-
art technologies.

SWEET TREETS were launched in early 1998. The addition of two flavors of POLO: Blackcurrant and
Strong Mint increased the number of POLO variants to five.

A new variant Lemony was added to the range of popular FROST fruit drink flavors and a new 1-liter packing
of FROST was introduced.

Flavored milks under the brand FRESH & FRUITY came under production on the new Tetra Filling Machine
equipped with the modern "slim" format. MILO RTD and UHT 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

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

The year 2000 saw the production of some exciting products. First came NESCAFE for the Original, followed
by its two other flavors: Mocha and French Vanilla. NESCAFEF rape RTD was to come next.

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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

The success of NESTLE PURE LIFE in PET bottles encouraged the commissioning of 5-gallon 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 to8300 pallets (approximately 8000 tons).

NESTLE Pakistan Products

We believe that food plays a key role in achieving a well-balanced person. And so our philosophy is Good Food
for a Good Life! At Nestl, our products are developed keeping our consumers, their preferences and health in
mind. Millions of consumers the world over trust Nestl products for good reason: when they choose a Nestl
product they have the satisfaction of choosing quality, taste, variety, convenience and the good nutrition.

With over 140 years of experience and expertise, we take great pride in bringing you a portfolio of health and
wellness because happy, healthy consumers are important to us.

Doodh ki qudrati ghizayat

Pure, Nutritious Goodness of Milk

Pure, rich and delicious nestle milkpak standardized UHT milk benefits from Nestls expertise in bringing
consumer the very best life has to offer and benefits from

140 years of consumer trust.

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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 fullestand
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 160-169Kcal of energy, as Recommended Dietary
Allowance by the National Academy of Sciences, USA

Nestle supply chain vision

Nestls ambition is to achieve high level of customer satisfaction through low cost, highly
efficient operations driven by value creation and continuous improvement

Nestle supply chain mission

Optimize and consolidate resources and processes for a low-cost but efficient.
Develop and manage simplified and effective supply network to achieve a high level of service.
Create a continuous improvement culture driven by performance measures and reward.

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Nestl principle:

Nestl is based on the principle of decentralization, which means each country is

responsible for the efficient running of its business - including the recruitment of its staff

Milk Industry in Pakistan

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 liters. In cities, milk is largely consumed for tea
whitening (2.3 billion liters), drinking (2.3 billion liters), 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.

Milk industry in Pakistan of Nestle MilkPak

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Organizational Structure

Organizational Structure

Supply Chain Process:

Nestl pakistan's supply chain makes certain that nestl merchandise are available, irrespective
of wherein you're in pakistan. We combine processes from the farm to markets, and ensure
merchandise are introduced to you on the proper time, the right cost and in the right quantities.
Within the first quarter of 2006 on my own, we introduced an fantastic 136 million kg of nestl
merchandise in pakistan. Deliver chain was established as a separate department in 2001. Due
to the fact then, we have finished a number of milestones, inclusive of a cold-chain in 2002,
centralized demand and deliver planning in 2003, and implementation of globe in 2005. We were
selected for a pleasant in class repository look at, and three of our quality practices have been
eventually integrated into the exceptional practices library.

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Supply Chain Process Steps:

Inventory management

Planning is the strategic part of supply chain management process, to find out a best possible blueprint of how
to fulfill the end requirement. SCM managers should identify a list of key components like plant location &
size, warehouse designing, delivery models, IT solutions selection etc.

The Procurement is process relating to commercial discussions or supplier selection. Procurement owns the
sourcing process, leads supplier selection decisions and recommends supplier decisions to the Business
stakeholders. Procurement will be involved at the beginning of any new product development process to ensure
the greatest value can be achieved during the ideation, concept, product development and product
industrialization phases. Procurement involvement from the beginning of any sourcing process will ensure an
appropriate analysis of supply risk is undertaken and strategies will be put in place to mitigate these risks and
ensure the supply of our goods and services.

The procurement cycle follows specific steps for identifying a requirement or need of the company through the
final step of the award of the product or contract.

Step 1: Need Recognition

The business must know it needs a new product, whether from internal or external sources. The product may be
one that needs to be reordered, or it may be a new item for the company.

Step 2: Specific Need

The right product is critical for the company. Some industries have standards to help determine specifications.
Part numbers help identify these for some businesses. Other industries have no point of reference. The company
may have ordered the product in the past. If not, then the business must specify the necessary product by using
identifiers such as color or weight.

Step 3: Source Options

The business needs to determine where to obtain the product. The company might have an approved vendor list.
If not, the business will need to search for a supplier using purchase orders or research a variety of other sources

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such as magazines, the Internet or sales representatives. The company will qualify the suppliers to determine the
best product for the business.

Nestl Sourcing activities are undertaken according to the Nestl 7 Step Strategic Sourcing Process with the aim
of turning superior knowledge of the supply market into a competitive advantage for our Business.

Here is Nestls 7 Step Strategic Sourcing Process:

1. Develop category profile

2. Develop sourcing strategy
3. Generate supplier portfolio
4. Select implemented plan
5. Negotiate and select suppliers
6. Implement the agreement
7. Continuous improvement

Step 4: Supplier Selection

The supplier selection process for suppliers who provide raw and packaging materials, promotional items or
other indirect materials

Supplier Selection After having provided their proposals, the short listed suppliers will be analyzed against a pre
determined set of evaluation criteria to determine if they meet all requirements in relation to the goods or
services that Nestl requires.

Potential suppliers will be chosen based on an objective analysis against the evaluation criteria. All relevant
information regarding a suppliers proposal and any risks associated with the supplier or the delivery of
materials will be shared between Procurement and the Business to ensure that informed decisions are made that
take account of all important details

Vendor Pre-Qualification:

Pre-qualification of vendors will be undertaken to create a supplier short list. This ensures that there is an early
understanding of a potential suppliers capability, readiness and commitment to comply with Nestls

Step 5: Price and Terms:

The business will investigate all relevant information to determine the best price and terms for the product. This
will depend on if the company needs commodities (readily available products) or specialized materials. Usually
the business will look into three suppliers before it makes a final decision.
Nestl Competitive Bidding:
All significant purchases will undergo a competitive bidding process to ensure that Nestl is consistently
obtaining competitive cost, service and quality from its suppliers. Competitive bidding means that we either buy
from a preferred supplier or, where this is not possible; we select a supplier for significant purchases by obtaining
at least three bids or quotations.

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Step 6: Purchase Order:

The purchase order is used to buy materials between a buyer and seller. It specifically defines the price,
specifications and terms and conditions of the product or service and any additional obligations.

Vendor Assessment:

Potential suppliers will be further assessed to ensure the compliance of each of their supplying sites to the
Nestl Supplier Code and to guarantee the quality of the goods and services they provide.

This assessment will result in an approval decision as to whether the supplier can or cannot ultimately be used
to supply goods or services to Nestl.

Step 7: Delivery and Expediting:

The purchase order must be delivered, usually by fax, mail, personally, email or other electronic means.
Sometimes the specific delivery method is specified in the purchasing documents. The recipient then
acknowledges receipt of the purchase order. Both parties keep a copy on file.

Nestl Supplier Code defines the non negotiable minimum standards with which our suppliers must comply
when delivering with Nestl. It applies to all suppliers and contract manufacturers..

Expedition of the purchase order addresses the timeliness of the service or materials delivered. It becomes
especially important if there are any delays. The issues most often noted include payment dates, delivery times
and work completion.

Step 8: Receipt and Inspection of Purchases

Once the sending company delivers the product, the recipient accepts or rejects the items. Acceptance of the
items obligates the company to pay for them.

Step 9: Invoice Approval and Payment

Three documents must match when an invoice requests payment - the invoice itself, the receiving document and
the original purchase order. The agreement of these documents provides confirmation from both the receiver
and supplier.

Approval of Procurement Agreements and Transactions Procurement agreements and transactions will be
approved by duly authorized people within the Nestl organization and the suppliers organization. A formal
approval process will be documented that includes approval levels, roles and responsibilities of all participants
and will include provision for above Market approvals where relevant.

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Step 10: Record Maintenance

The availability of accurate and consistent procurement data supports effective and faster decision making. It
also leads to increased efficiency in day to day procurement activities and the elimination of waste within
procurement processes. Procurement master data will be carefully managed to ensure the integrity of the data.

Nestle Procurement:

Nestle Pakistan has a wide range of merchandise from nutrition to liquids, as so we selected milk pak to explain
the deliver chain of nestle Pakistan. Supply chain information is turning into increasingly critical to make sure
aggressive elements of goods and offerings, especially for massive agencies coping with a complex network of
suppliers, customers, vendors and purchasers. All events in the chain need to have a in particular proper draw
close of the way their man or woman sports paintings collectively and have an effect on the performance of the
complete deliver chain.
At Nestl, key performance indicators (kpis) provide the usual metrics for measuring deliver chain performance.
Nestl released a brand new initiative to speak the value and use of kpis to line managers. How do nestle create
aggressive gaps inside the upstream deliver chain? With farmer join, wherein they have got direct contacts
with producers to:
Ensure traceability as much as farmers degree
Guarantee pleasant, safety and quantity increase of raw substances
Mitigate price volatility exposure
Reduce transaction expenses and serving our manufacturers ensuring get entry to to precise
uncooked materials
Make certain protection& best of raw substances
At ease availability of good enough agricultural raw substances milk is accumulated from extra than 2000
village milk centers and 500-600 sub facilities after which milk is transported to twenty-five essential facilities
of milk up to conventional. After whole manner of milk collection, it's far transported to the Sheikhupura and
Kabirwala factories.

Production Process:

MILK COLLECTION Milk collection system of Nestle Milk Pak is excellent. According to this system milk is
collected from area of about 72,000 km .Village Milk centers 2273 Sub centers 583 Main Centers 23On milk
centers price of milk is paid according to percentage of fats. If the quality of fat is less than required (6%) than
price will be paid accordingly. At milk collection centers, Gerber test is performed for determination of fat. In
milk collection centers temperature of milk is kept at 4oC. Nestle purchase milk directly few frames, there is no
middle man.

Collection Areas are in all over Punjab Nestle Milk Pak divide there as in following Categories: A.Sahiwal,
Burewala, Okara etc.B.Pindi Bhattian, Chaniot, SarghodaC.Kabir Wala, Mian Channu, Shorkot, Kahane wal,

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KachahKhuD.Bahawalpur , Bahawalnagar, Chistian, Ahmadpur There are Area collection managers, Milk
collection Co-coordinators and Milk Collection Supervisors in each Area for collection of specific amount of
Milk in specific time.


From milk collection centers milk is collected and delivered to factory daily seal of tankers are properly
decided. Receiving capacity of milk is 60,000 liters. At reception following tests are performed before storing
milk to assure the quality of milk.

1-Alcohol precipitation test.

2-Clot and boiling

3-Fat (5.8% - 6%)

4-SNF (Solid non fat) (8.5-8.9)

5-PH test (6.8 6.9)

6-Adulteration test (only on doubt)Up to reception temp of milk is about 8-10oC, there is no rejection on
temperature basis. Trolleys are not preferred to stay more than 1.75 Hrs. in factory so that they can in time
collect milk for next day.

Storing of milk:

Milk is stored in storage tanks called Silos. The capacity to store milk is 596 tons. There are 5 Silos of
100 tons each, 2 Silos of 10 tons each,1 Silo of 70 tons. Milk can be stored for 36 Hours in Silos.


All the animals have different composition of fats in their milk indifferent seasons. Standardize milk according
to the recipe milk is given temperature of 72oC for 15 seconds to reduce bacteria in milk, this process in called
theorization life of milk is increased by this process and in standardization composition of fats and SNF are


In this process dirt particles, SNF and cream is separated, milk is given temp of 60oC and 60,000 rpm in de-
creamer. So that dirt particles cream can be separated. Cream is send to butter section. Dirt is drained after 30
seconds milk is send for further processes.


In This Process milk is heated at 92oC for 5 seconds to remove remaining bacteria. Milk powder process
activities. After pasteurization milk to treated for conversion into powder, following activities are performed to
milk: Evaporation(a)Low heat treatment Milk is heated at high pressure of 889 mill bar so that it start boiling at
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about 70oC .(b)4-effect falling film Milk is evaporated in 4 effect system. Milk is evaporated about56%, 62%,
67% and 75% after 1st 2nd 3rd and 4th effect respectively. After 3rdeffect Homo-genansization is done which
uneven composition of fats and SNF is homogenized.

Spray Drying

In this process there are 5 lateral high pressure nozels which exert high pressure on milk after that there which
exerts high pressure on milk after that there are about 50% water and 50%solids are remained in milk. After this
step about 320oC hot air is thrown on milk, it is very quick process in which powder settle in base and moisture
evaporate in forms of vapors.

Central lecithination:

Lecithinate is sprayed on powder so that it is converted into highly dissolvable powder. That way Nestle Milk
Pak say Nido is instant Milk (easily dissolvable in hot ad cold water).


After all these procuress still powder has 5.5 % moisture in it, Powder is dried through x- Egan System to
reduce moisture level up to 3.1%


After drying there is a cooling process, in which powder is cooled before storing.

Powder is stored in bins there are 40 bins , with capacity of each.


Milk is packed in different packing according to the weight required, form tote tilting station from bins.

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. We are constantly working to reduce emissions at our factories, reducing and treating
wastewater, and making our packaging environmentally friendly. Regular audits have confirmed that our
factories' environmental management meets the Nestl international standard

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
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Milk filling machine TBA-22 (most modern and efficient and high speed equipment
available in dairy industry)
National distribution
distribution centrecentre was constructed
was also also constructed in 2000
in 2000 with capacity
with capacity to store 8300 pallets.
to store

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 store and a bigger distribution

Islamabad factory:

AVA water factory Islamabad was acquired by Nestle Pakistan in 2001 and was subsequently merged with it.

Islamabad factory:
There by becoming a fully owned unit of Nestle Pakistan in 2003.

The production capacity of the factory is approximately 8000 bottles per day
per day is approximately
Packaging Materials:
8000 bottles
Nestl is committed to reducing the environmental impact of packaging, without Jeopardizing the safety, quality
or consumer acceptance of its product. 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
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
Decrease packaging waste at all stages in the supply chain, including packaging and manufacturing,
utilization and disposal

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According to the distribution, Pakistan is divided into three geographical zones and then in further
Regional Sales Offices.
North Zone: Islamabad and north outstations Peshawar Jhelum
Central Zone: Lahore Faisalabad Gujranwala Multan Sahiwal
South Zone: Karachi Hyderabad Quetta Sukker

Selection of Distributors

The Criteria followed are:

Capital Investment Depends on both present and future capital investments by distributors
Amount vary from Area-wise to marketwise
Relevant experience Prior experience in FMCG sector is preferred to save on training expenses
Distributor should not be dealing in Competitors product Should handle entire range of Nestle
products (Both fast and slow moving SKUs)
Infrastructure Godowns / Storage space with appropriate refrigeration as per product needs
Delivery vehicles Salesmen
Companys discretion based on markets served

Distribution process

The distributors have sales force to collect orders. There are two methods for distribution of goods:

OSw P Rh O eD Tr E e s a l e s f o r c e fii s r s g t i v b e o n o ka t v h a e n o r d e r f r o m t h e
RsfS u h E l o lL pLo I f No n r e r se t t l a e i l g e o r s o d a s n d t o t h s e ln l d e l i v e r t h e g o o d s
Nestle milkpak is going for oblique channel of distribution, meaning there's a sequence of intermediaries
via which a product actions through extra steps because it actions from manufacturing enterprise through
vendors to wholesalers and then to retail stores or super marts. The distribution strategy of nestle milkpak
is extensive as its miles protecting extensive market. There are regional headquarters of the company in
all massive towns of pakistan. In this file we have included distribution channel of nestle milkpak in
karachi. In order to reach far off regions the corporation is connected with the principle distributor and
sub-vendors. The business enterprise is directly connected with the primary vendors; they offer the
products inventory to the primary distributor this is similarly dispatched to shops and sub- vendors. The

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targets vary from area to vicinity and set on the premise of history of the area sale and additionally from
the monthly forecasting.

Distribution channels
Nestle employs one-of-a-kind vendors for specific regions. Distributors appoint their own income
pressure and trucks, which deliver milk pak to the doorstep of the shops. Every distributer has three
territories in step with location. Inside the a territory, the distributors vehicles visit the retailers every
exchange day. Inside the b territory, the trucks go to the stores at the least two times per week, while in
the c territory; the vans go to as soon as every week.

Distributors sales target:

Its miles exciting to word that the vendors are given sales goals, which might be then communicated by
way of using the companies to their earnings institution. The targets are commonly like 15% annual
increase in sales. The distributors reap this by way of way of promoting extra gadgets to the present
buyers (shops in their place). In a few times the clients themselves ask for added inventory. In other
times they have to be persuaded to buy greater. The norm generally is that if a retail purchaser asks for
12 percent the distributors income group sells him 15. The reason is to leave no space available for the

Daily Incoming And Outgoing Logistics

Minimum one or nestle milkpak trucks each day being arrived at every ware residence from the
sheikhupura and kabirwala factories, and is distributed in the equal quantity to the retailers all around
the metropolis. The logistics normally take 3 days to arrive at nestls warehouses in karachi from their
manufacturing factories at lahore, kabirwala and shaikhupura.Nestle milkpak has their owned and
outsourced vans. Shelf existence of nestle milkpak nestle milkpak has 3 months of shelf lifestyles.

Distribution centers of nestle milkpak in Karachi:

Nestle milkpak has four major distribution centers in Karachi zone these are:

1. S.A Enterprise.
2. Burque Corporation
3. Krafts Distributors
4. Mehran Distributors

Karachi is divided into two zones i.e. East Zone and West Zone
There are 16 total warehouses of Nestle Milkpak

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The objectives of Nestls distribution centers or warehouses:

There are three main objectives of Nestls distribution centers.

Meeting the target
At Right the
Distribution targets
at Right
Distribution at right time
At a right place

Milk is very perishable item; therefore it is required very effective storage conditions at
At targets
placat Right
warehouses to preserve milk in its real condition. time
For this Nestle milkpak warehouses contains very suitable temperature atmosphere,
temperature should not increase from 38 degree Celsius in order to keep preserve milk in
its fresh condition

Capacity of trucks:
Nestle milkpak has trucks which have the following capacity. The data is on the basis of
cartons per truck

Size of item No of cartons

1 liter 1092
250ml 1815
1.5liter 1040
500ml 1750

Loading, uploading,handling and transportation conditions:

Acceptance Letter:
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Acceptance letter is the conformance letter that ensures that the warehouse accepts or
receives the inventory, it includes:

Product whom
Invoice number
Whom to sold
Whom to ship
Dispatch date
From whom
Product description
Unit price

Major item sale:

1 liter of Nestle milkpak has the major 55% o9f total sales
250ml of Nestle milkpak has 25% of sales
1.5 liter of Nestle milkpak has 10% of sales
500 ml pf Nestle milkpak has 10% of sales

Number of item per carton:

Size of item No of cartons

1 liter 12
250ml 8
1.5liter 27
500ml 12

Shelf life of Nestle milkpak:

Nestle milkpak has 3 month of shelf life

Demand fluctuation of Nestle milkpak:

The demand of Nestle milkpak usually increases in the festivity season or any event such as


Inventory management

Following forms of inventories are saved by nestle Pakistan kabirwala.

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Raw materials
Uncooked cloth inventory of nestle includes milk. Their raw fabric is kept in silos. Silos are the huge tanks,
which might be used to store the milk. Inventories of their uncooked substances can not be maintained in bulk
nice and for an extended time frame. The manufacturing facility can shop the milk up to 596000 liters. They
have 5 silos for storing the milk all have exceptional capacities. The milk can remain during 36 hours with out
dropping best.

Paintings in system inventories

Paintings in process inventories aren't to large. Some thing they put into production they prevent production
after its final touch if there is no uncommon breakdown. The unpacked items inventory may be taken into
consideration because the wip inventory. The condensed milk is stored in packing containers. Bins are the
massive boxes wherein the milk powder is saved before packing it. Then through an automated plant the milk is
packed. The butter is stored in large tubs.

Finished goods stock

Inventories of packaging cloth also can be included in wip inventories. The packing fabric is purchase
externally. The provider of packing fabric is applications non-public confined, pakistan. There's a large
warehouse inside the manufacturing unit. Inside the warehouse they shop the completed goods.

Materials control
There's a separate department inside the manufacturing facility which isresponsible for purchasing the materials
and bosses itssupply. There's a centralized gadget of material management. Thewhole operations of which can
be taken care of by means of the operations managers. There may be also a stores officer which additionally
looks after the materials control.

Stock manipulate systems

For controlling inventory, nestle use non-stop assessment that's the whole computerized machine. In this way
they preserve a continuous control over their stock. The stores officer not simplest maintains information
however additionally makes visits at the warehouses to see the actual situation of materials. The officer can
overview the stock at any time. Operations manager and the auditing humans also check the inventory and its
information so that the dangers of loss or manipulation may be minimized.

Global attention of nestle

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A high-quality mindset toward work
A realistic, realistic approach to doing enterprise
An open-minded technique to the world
A minimum wide variety of systems and written tips
A private style of control
An environment of mutual agree with
An avoidance of displaying off, windy rhetoric and hypocritical feedback
An emphasis on practical enjoy and on the placing of correct examples.

Potential planning of nestle

The nice mechanism for going for walks a commercial enterprise is to in shape degree of demand (goods,
services that customers need) with supply of capacity (recourses, exertions pressure that the commercial
enterprise inputs inside the manufacturing system). Additionally they define potential as the most degree of
cost brought activity over a period of time. As a result 3 primary elements come into pressure right here the
potential of sources and exertions pressure, the manner operation which itself leads to pleasurable clients thru
matching demand. It is very essential to plan and coordinate all 3 factors very successfully due to the fact a
difference in ability and overall performance effortlessly impacts: fees, revenues, working capital, flexibility,
high-quality of products, pace of response and others.

Production potential of nestle

The worlds leading vitamins, fitness and wellbeing business enterprise nestl, with a 100 year presence in
turkey, is completing the development of its breakfast cereals manufacturing facility which goes to satisfy the
home call for and make turkey an export and manufacturing base for the close by countries. Nestl goes to
begin the manufacturing of the breakfast cereals, which it has imported as much as this date, in turkey. Built
with the support of the investment guide and advertising corporation of turkey (ispat) in karacabey, bursa, the
breakfast cereals manufacturing facility will begin production with a production ability of over 10,000 tons
inside the second half of 2011. All of the raw substances for use within the production tactics may be procured
locally and nestl will purchase 4,350 tons of sugar, 5,350 heaps of wheat, 4,000 lots of corn and 1,000 heaps of
rice consistent with 12 months as of 2013. With the aid of the of completion of manufacturing facility, nearly all
nestle merchandise that are sold in turkey shall be produced in turkey. The manufacturing facility, for you to
remodel turkey into a regional hub in the breakfast cereals class, is released to the press via a meeting attended
with the aid of minister of trade and industry.

Return policy of Nestle Milkpak:

Nestle milkpak has an efficient return policy for inventory in case of any defect.

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Every carton and item has assigned a certain batch number.
If any defect has found in item or carton then the batch number of that item or carton is noted and
disposes the defected item right on there

Information system and purchasing:

Purchasing task will be greatly facilitated by standard it infrastructure, common business applications and best
practices, visibility of standardized ,real-time purchasing data / information will permit aggregated spend
category analysis. This will help identify opportunities and define more effective purchasing strategies with the
objective of achieving lower total cost.


In the end, we would like to conclude that Nestle Pakistan is the leader in FMCG industry. NESTLE keeps track
of its goods by maintaining its supply chain all over the country. From Nestle manufacturing system to its
distribution channels, every thing is properly managed. They have a strong relationship not only with their
customers but also with their suppliers, distributors and retailers. They maintain a proper corporate social
responsibility by training their local farmers about milking and feeding of their animals Nestle proposed a
system of small loans for farmers who wanted to make improvement to their farmers, such as building
cowsheds. They drew up the sample specifications for model farm to be presented to the banks disbursing the
loans. The service even helps farmers fill out applications for loans. In short Nestle takes care of its inside and
outside customers .the manufacturing plant of Nestle is the strength and serves as a competitive advantage for
Nestle because of its perfect system. The hygiene, safety and security control is done under Nestle
manufacturing plant. We learnt a lot about Nestle supply chain from the manufacturing department to
distribution , everything is done perfectly.

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