GROUP ASSIGNMENT

Operations and Supply Chain management

Simarpreet Singh Hundal- 8626914

Mandeep Singh- 8686509
Jasteshwar Singh- 8684959
Harmandeep Singh Sidhu- 8632444
Harpreet Singh Grewal- 8360950
Nisha – 8684665

MGMT-8340
Business Operations

Marc DeRochie

25 March 2020
Supply chain of Nestle

Product Life Cycle Management- Nestle manages all the aspects of product life cycle
in house by setting up different locations with defined goals and aim.
Nestle boasts about its 23 R&D centers with 3900 researchers and scientists throughout
the globe where all the innovation about product creation, brand management and
maximizing product value are done. Nestle has divided its research centers into 3 main
categories:
Nestle Product Technology Centers: They provide technological innovation in the
product, manufacturing and packaging processes.
Nestle Application Groups: They are attached to the Nestle factories to ensure the
product reflect the local flavors.
Fundamental Research Centers: They are the base for renovation and innovation. They
cross function between the 4 research departments: Food Safety and Analytical
Sciences, Health Sciences, Material Sciences and Packaging Sciences

Plan- Nestle should have its products available at the right time and in the best
condition. In order to achieve this, they collaborate with globally distributed commercial
teams to forecast the demand and suppliers to provide raw materials in order to fulfill
the demand. Along with these teams, the operations teams balance the inventory levels
in processing to provide right supply of the product. Postproduction the supply chain is
also responsible for safely storing products according to the government and scientific
requirements. On their official website Nestle.com; they say - “We are an aligned, agile,
and adaptable organization that is committed to delivering results, not only within supply
chain, but also in support of overall business priorities.”

Source- Nestle has formed Procurement teams consisting of experienced procurement

professionals whose job is to achieve sustainable growth of the company. They are
responsible for ethically sourced supply which creates value for the company. They
manage procurement of raw materials, packaging, indirect materials and other services.
While these teams operate globally, they are located in hubs in Switzerland, Panama,
and Malaysia according to their official website.
The main source to procure raw materials are the dealers or brokers who buy and sell
right quantity of quality product at prices acceptable to both buyer and sellers. They buy
the product from exporters who further buy it from local co-operatives, auctions or
governments in their area of operation which ensures the quality of the shipment.

Make- Nestle produces all its products in house in 418 factories spread around the
globe in 86 countries. These factories aim at Engineering and Operations excellence in
order to pass the product’s regulatory and Quality standards all over the world.
Production is planned after analyzing Per Bag Contribution Margin and going through
the weekly, monthly, quarterly, and annual revenue forecast which include labor and
bag production and packaging costs. Another consideration made is the Roast Weight
Reduction i.e. the loss of weight in beans after moisture evaporates due to roasting.
Nestle is also always trying to enhance the safety of employees and improving Health
and environmental standards in its workplaces.

Deliver- With the production spread globally, the product does not need to be
transported long distances to reach the customers. This is also done to increase the
shelf life of the product. Since production is done at a large-scale and most
transportation done is by land, Nestle relies on external logistic providers to ship its
product from the factories to store shelves. These outsourced companies are given term
contracts ranging from 2 months to 1 year which are renewed if the requirements are
being met by the provider. Secure warehouses are searched and rented to store
product if the factory storage runs out.

Service- Nestle provides service for corporate and non-corporate queries through 2
different channels.
There is dedicated page on the website where a person can tell them corporate
concerns like non-compliance of products or services, jobs, interest in distributing
Nestlé products etc.
Non corporate services are given through helpline numbers, email and through social
media.

Operation Cycle
 1. What is the strategy?

Nestle aim to offer a portfolio of products that evolve with consumers need
contributing to a healthier lives, balanced diet and healthier planet. They are more
focused on good food, good life.

2. Quality over cost.

They are more concerned about the modern consumer need and bring premium
food innovations to the market and are more focused on the quality of their products
especially coffee that comes in various qualities as per the consumers need.

3. Implementation

Nestle uses their own standardisation, scale, and expertise to increase access to the
nutrition to everyone, everywhere. They are committed to reach a sustainable mid-
single-digit level of organic growth and allocating resources with discipline and clear
priorities.

4. Operational efficiency
Their profit margin has increased to 17.5% in 2020 from 16% in 2016. The company
promises an unmatched product and brand portfolio as they have unmatched
research and development capabilities. They have also maximised their shareholder
value.

Process Management

Process management simply defines as to manage process effectively with an

organization’s strategic goals to achieve and design the process, organizing the
managers, and establishing systems that measures process alignment with the
organisational goals. The coffee we get from the tree has to go through number of steps
and converted it into consumable products. So, I am going to discuss that processes in
detail with management scope-
 1. Picking: - Generally coffee is picked by hands. To give the customer better
quality, when the cherries are bright Red, they are ripe and give the better taste.
So, the individuals working there have to visit tree multiple times in the harvest
season and they pick ripe and unripe cherries at one time to reduce their efforts.
And here the process management helps them to give them better quality by
taking care of these things by assigning mangers.
2. Drying and Hulling: - The cherries after picking have to be dried and there are
two ways to do it that are in the direct sunlight and by using artificial dryers. The
cherries have beans with different layers that need to be separated namely- pulp
and parchment by hulling process.
3. Sorting, Grading and Packing: - After the proper separation and dried process,
next quality measure is to remove the unnecessary material separated from the
beans, the damaged pieces separation, and grading them by means of meeting
standards provided by nestle.
4. Bulking: - Management helps Nestle to get required grade in enough quantity by
collecting bulk of small batches of coffee of particular grade. This job is assigned
to exporters in the country to buy roasters in large quantities of coffee of a
particular grade.
5. Blending: - It is very important to blend the coffee to make the taste what
consumers want by making coffee products from different sources. The fine
palates are used by the experts and experience is needed to use specific origins
to blend the coffee.
6. Roasting: - Basically, the beans are of green colour and it named as “Green
coffee” as imported coffee but after it gets roasted to set the aroma and to make
that specific coffee these roasted beans are used.

Value chain analysis of nestle

The addition of value to the products and services which are produced by an entity by a
sequence of business activities (Value chain analysis,2013). Value is added by different
organizations by set of following activities.
Primary activities- it is a process of production, transformation and delivery of product to
the marketplace. It consists of following steps-

a. Inbound logistics- The procedure of bringing components or finished products

into organization for producing finished products for delivery to marketplace.
Companies like Nestle have their own logistics for transportation of finished
products. They have their relations with agriculture and retailing business as well
as good relations with consumer (Value Chain Analysis of Nestle, n.d.).
b. Operations- These are to make sure that final product is ready for market by
setting up manufacturing and product change processes. Activities like- arrival of
raw material at nestle company, processing of raw material, machining,
packaging, assembling, testing of product, equipment repair and maintenance
(Value Chain Analysis of Nestle, n.d.).
c. Outbound logistics- Delivery of product to the customer by accessible distribution
channels which are convenient. It is always under care that product should not
get stock out. Some of the examples of outbound logistics are material handling,
warehousing, scheduling, order processing, transporting and delivery of finished
products. Nestle take care of all these processes for competitive purposes and its
growth objectives (Value Chain Analysis of Nestle, n.d.).
d. Marketing and sales- Nestle highlights the benefits of the finished products to
gain the trust of customer that their products are better than other companies.
Nestle focus on sales activities as only high quality of product and affordable cost
is not enough (Value Chain Analysis of Nestle, n.d.).
e. Customer Services- This process is taking care of pre-sale and post-sale
services offered by nestle for the customer. Post- sale activities play an important
role in marketing and promotional activities (Value Chain Analysis of Nestle,
n.d.).
References

 Business Operations (Custom Edition) [Texidium version]. (2018). Retrieved from

http://texidium.com
 Strategy. (n.d.). Retrieved March 23, 2020 from https://www.nestle.com/aboutus/strategy
 Jaffery. (2013, April 8). Retrieved March 24, 2020 from
https://blogs.baruch.cuny.edu/mgt4880nestle/2013/04/08/nestle-international-strategy/
 -, B. C. S., By, -, & Business Case Studies. (2019, October 29). Coffee-the-supply-chain.
Retrieved from https://businesscasestudies.co.uk/edition-5-coffee-the-supply-chain/
 Home. (n.d.). Retrieved from https://www.nestle.com/
 Value Chain Analysis,2013. Retrieved from
https://www.cgma.org/resources/tools/essential-tools/value-chain-analysis.html
 Value Chain Analysis of Nestle. (n.d.). Retrieved from https://www.essay48.com/value-
chain-analysis/13633-Nestle-Value-Chain-Analysis