Course Title: Introduction to Product and Operation Management

Course ID: MGT330; Section: 05

Submitted By

Zarin Taslim 1620157

A.S.M Mohim 1630486

Sumaia Hamid 1720858

MD. Shadmaan Ahsan Mahi 1710150

Monzoor Murshed Babu 1731381

Md.Tohidul Islam Arafat 1731645

Submitted To

MS Seeratus Sabah (Dept. of Management)

Letter of Transmittal
23st March 2019
MS Seeratus Sabah
Lecturer

School of Business

Independent University, Bangladesh

Subject: Supply Chain Management for product of Nestle

Dear Mam,

This is the report that we have done for the ‘MGT330’ on the topic of “
Supply Chain Management for product of Nestle” The report has been completed by the
knowledge that we have gathered from the course “MGT330”.
We are thankful to you because of providing us guidelines and helped us by giving valuable
information. We would be glad if you read the report and we will try our best to answer all the
questions you want to ask about the report.
We have tried our best to complete the report correctly. We do hope that this will help you to get
through the whole process. However, if you have any queries regarding this report we will be
more than happy to clear out those queries without any hesitation.

Sincerely,

Zarin Taslim

A.S.M Mohim
Sumaia Hamid
Md.Tohidul Islam Arafat
Md.Shadmaan Ahsan
Mahi
Monzoor Murshed Babu

Executive Summary
One of the leading Nutrition, Health and Wellness Company Nestle strives to serve its customers
with the best quality products. Its story of excellence is not limited to product sales exclusively
rather it also concentrates in providing brilliance consistently for every group of stakeholders. It
focuses not only to nourish its employees, distributors, retailers and other stakeholders but also to
nurture its respective vendors businesses also.

Therefore, its internal structure is designed in a constructed and systematic manner so that
stakeholders can contribute efficiently. An open platform is created by the internal organizational
culture where every member are allowed to exhibit their extraordinary views and opinions that
ultimately help Nestlé Bangladesh to be competitive at all of its operational phases. Thus far, the
description of the internal department, mainly Supply Chain, gives a well-defined picture
through this report that explains the process and also showcases the inner relation and
operational procedure.

Introduction

Nestle is one of the largest food companies in the world. The product of Nestle mainly includes
the cereals, baby food, coffee, tea as well as ice cream and pet foods. The company was formed
in the year 1905 by the merger of the Anglo-Swiss Milk Company. The company grew
considerably during the World War 1st. One of the biggest competitors of the company is the
Anglo-Swiss Condensed Milk Company that is already a leading manufacturer in Europe.  As a
result, in order to compete with this company, Nestle launched a condensed milk product of its
own (Phillips, 2014).

The report mainly provides an overview about the supply chain management about the company
Nestle. The report explain the key flows in supply chain where in the effectiveness of the
information flow, product flow, return flow and cash flow of Nestle is explained. The
effectiveness of the make process in the company has also been explained in the report
(Christopher, 2016).
Case Study

Nestle DSD Controls Costs through Proper Warehouse Management

Using proper supply chain management and order processing, Nestle DSD is able to maintain
accurate orders and delivery.

Nestle is one of the world’s leading nutrition, health, and wellness companies, saw an
opportunity that it just couldn’t resist, but in the Kraft’s North American frozen pizza business.
As Kraft divested itself of one of its only major frozen food products, Nestle needed to have an
adequate supply chain infrastructure to handle this type of product. This type of product had a
limited shelf-life and required special delivery and handling to prevent spoilage. Nestle already
had a ton of experience with frozen products like ice cream, and they looked to Insight Group for
help in this new product distribution. Nestle was working with Insight through its association
with Dreyer’s, who had been merged with Nestle ice cream products years earlier. Over a 4 year
period, Insight had worked with Nestle to develop a program that began with the National
Warehouse Director rolling out the solution in cities like Seattle and Chicago first, and then
company-wide. The system they had chosen. The DC Expert, integrated fully with the existing
ERP system. This was essential to maintain accurate orders and maintain proper deliveries.

Still Frozen, But Completely Different Product

The acquisition of the pizza line presented a whole new set of challenges for Nestle. All of the
systems needed to redesign to accommodate the differences between shipping ice cream and
pizza, especially since you are working in a direct to store delivery (DSD) environment.
Coordination between stores, corporate, and the warehouse must be seamless. There is just too
much risk if you try to deliver too much, which won’t fit in the store’s coolers, or if you deliver
too little and the storerooms out, costing both companies sales. Nestle DSD and Insight worked
together to alter plans on 14 different operations during the acquisition process, nearly 13 weeks.
As the DC expert has been rolled out into different markets across Nestle DSD's supply chain,
the coordination and data becomes even better. The integration of the system with the existing
ERP allows for a seamless order process while allowing for forecasting and manual order
changes.
Stock Levels Affect Everyone

Keeping every store adequately stocked at all times is the priority, whether this means a once a
week delivery, or 3 times a week. With this type of collaboration and order accuracy, shipping
and storage costs are driven down. The more accurate the ordering solution becomes the less
waste and overstock that is destroyed. The out-of-stock level will also decrease significantly. No
longer are warehouses sitting full of product waiting to go out. If product is coming in, product is
going out. A free-flow of product from manufacture, to distribution, to DSD is essential. It keeps
the factories working at the correct levels without creating overstock, or having to work overtime
if enough products was not initially ordered and therefore produced.

DSD Can Be A Challenge, But Worth It

As more retailers are looking to companies to provide DSD services, it can be a challenge to the
suppliers. Having the right DC management system in place can change everything. In an age
where margins are thin, being able to capitalize on accurate deliveries and supply chain
management can be the difference between success and failure. Nestle DSD has taken all of the
steps to make sure that as the DSD business grows, Nestle DSD is right there with it.
Conclusion:
The report mainly gives an overview about the supply chain management of Nestle. It has been
concluded that the products of Nestle are checked on the line of product and as a result, the
consumers feel secure with the manufactured goods that increases the demand. The aims of the
production planning in the case of Nestle are to diminish the depletion of milk and to achieve the
prearranged level of production output. The company Nestle mainly faces three important
organization related challenges that includes the maximization of profits, conserving cash flow
as well as the creation of the shareholder value. The time element is the most important factor in
the scheduling process in Nestle. It has also been concluded that the candy production in Nestle
mainly takes place with the simulation technique

References
Babai, Z., Boylan, J. E., Kolassa, S., & Nikolopoulos, K. (2016). Supply chain forecasting:
Theory, practice, their gap and the futureAuthor-Name: Syntetos, Aris A. European Journal of
Operational Research, 252(1), 1-26.

Barney, J. B. (2012). Purchasing, supply chain management and sustained competitive

advantage: The relevance of resource‐based theory. Journal of Supply Chain Management, 48(2),
3-6.

Bozarth, C. B., & Handfield, R. B. (2016). Introduction to operations and supply chain

management. Pearson Higher Ed.

Christopher, M. (2016). Logistics & supply chain management. Pearson Higher Ed.

Hax, A. C. (2013). Hierarchical production planning (pp. 708-712). Springer US.

Heizer, J., Render, B., & Munson, C. (2016). Principles of operations management: sustainability
and supply chain management. Pearson Higher Ed.