University of Sargodha

Noon Business School

Assignment (Spring 2021)

Subject:
Operation Management
Submitted to:
Muhammad Zubair Tariq
Submitted by:
Hamza Shahzad
Roll no.
MBBF19M038
Program:
BBA After 14 years
Semester:
Spring 2021
Submission Date:
11th June, 2021
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Nestle supply chain

Mission Statement
Nestlé is the world's leading nutrition, health and wellness company. Our mission of "Good Food, Good
Life" is to provide consumers with the best tasting, most nutritious choices in a wide range of food and
beverage categories and eating occasions, from morning to night.

Our vision and values

To be a leading, competitive, Nutrition, Health and Wellness Company delivering improved
shareholder value by being a preferred corporate citizen, preferred employer, preferred supplier
selling preferred products.

Introduction
Nestle in Pakistan is operating since 1988 under a joint venture with Milk Pak ltd and took over
management in 1992. Nestle, the company has also introduced products of daily utilization and
use, such as Nestlé Slim Milk. Milk is the most perishable and fastmoving customer good. The
very fast and initial requirement or feed for any human being is Milk. Milk is complete diet as it
contains every nutrient except iron.

Functions of Supply Chain of Nestlé’s

• Milk collection system

• Inbound logistics
• Nestle factories
• Planning
• Manufacturing
• Milk processing
• Factory warehouse
• Outbound logistics
• Distribution
• Distribution process
• Distribution Channels

Milk collection system

Steps:
➢ A small farmer in rural Sheikhupura district milks his Buffalo twice a day and takes
about 4 liters to one of Nestlé’s 500 Village Milk Collection Centers.
➢ At the Village Milk Collection Centre the farmer’s milk is poured into aluminum
Churns.
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➢ The Secondary Reception Station has a large electrically powered cooling tank. A
milk inspector measures the fat content, the non-fat solids content, and the milk’s
acidity.
➢ At the Main Reception and Cooling Stations the milk is poured into huge tanks and
is thoroughly checked for quality.
➢ At the Sheikhupura and kabirwala factories, the milk is processed and packed into
the familiar Nestle cartons.
➢ You can find in your grocery store. It is checked for quality thrice before being
released for sale.

Inbound logistics
Inbound logistics used for milk collection from different milk collection center is centrally owned
by Nestle Pakistan limited. In Pakistan, logistics has always been a problem especially for sensitive
product like milk in the hot weather. Initially the supplier who supplied their milk.

Planning
The successful execution of a planning strategy demands that the analysis has been performed
with:
➢ Confidence in the accuracy of the information provided;
➢ Clarity in the way the information is presented;
➢ Completeness of the information to be considered.

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.
• Minimizing of consumption of resources.
• Reduce wastage and emissions.
• The factories are equipped with complete testing and monitoring facilities for wastage and
emission and ensure that these are in accordance with environmental standards (NEQS).

Milk processing

Steps:
➢ Milk processing
➢ Mixing
➢ Heating and Cooling
➢ Standardization
➢ Pasteurization
➢ UHT treatment
➢ Packing Materials
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Factory warehouse of Nestlé’s

Inventory Management in the warehouse

• The inventory is the managed by software called SAP (System Applications and
Products). Another method for managing the inventory is “Manual Counts “that is done
by the “Inventory Clerk” on daily basis.
How the goods are ordered?
• The goods are ordered on the basis of LIFO method. Orders are received from
distributors across the country.
• As for Nestlé Milk Pak, it has an expiry of 6 months, so it needs to be delivered first.

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 Nestlé’s warehouse in Karachi from their
manufacturing factories at Lahore, kabirwala and Sheikhupura.

Objectives of Nestlé’s Distributions Centers Or Warehouses

There are three main objectives of Nestlé’s distribution centers.
• Meeting the target
• Distribution at Right time
• At Right place

Distribution

According to the distribution, Pakistan divided into three geographical zones and then in further
Regional Sales Offices.

• North Zone
Islamabad
Peshawar
Jhelum
• Central Zone
Lahore
Faisalabad
Gujranwala
Multan
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Sahiwal
• South Zone
Karachi
Hyderabad
Quetta
Sukker

Distribution Process

The distributions have sales force to collect orders.

These are two methods for distribution of goods.
✓ Order Booking
(Where sales force first books orders from the shops or retailers and then delivers the
goods)
✓ Spot Selling
(Where sales force is given a van full of Nestlé goods to sell)

Distribution Channels
Nestle employs different distributor for different areas. Distributors employ their own sales force
and vans, which deliver Milk Pak to the doorstep of the retailers.

Return Policy of Nestlé Milkpak

• Nestlé Milk Pak has an efficient return policy for inventory in case of any defect.
• Every carton and item have 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.