OPERATIONS MANAGEMENT - I

Submitted by- GROUP-3

Anshi Tripathi - M007-22

Chitraksh Uppal - M012-22
Manan Goyal - M020-22
Neetu Kumari - D004-22
Ankit Kumar Sinha - D005-22
Sunil Kumar Yadav - D006-22
 Nestle
Sector & Industry: Fast Moving Consumer Goods (Food Processing) Company: NESTLE

COMPANY OVERVIEW
Nestle was founded in 1866 after two Swiss ventures split. The two testing
agencies gradually expanded across Europe and the US in the following decades.
Nestle is a nutrition corporation that improves livelihoods. Its goods promote
healthy living.
Nestle nutrition, a business approach, focused on nutrition rather than corporate
social responsibility. Thus, market leadership must be strengthened to succeed.
Nutritional value drives this market's purchases. Nestle nutrition is an autonomous
worldwide business segment that boosts the company's competitiveness.

Nestle has used its resources, skills, and creativity to help networks solve their
financial problems. Poor tidiness, lack of clean water, neediness, illnesses,
deprivation, nourishment security, and others plague several networks.
The company is a leader in the fast-moving consumer goods (FMCG) food
processing industry.
It makes drinks, chocolates and other sweets, cooked meals, and tools for cooking.
The company has a strong presence all over India because it has nine
manufacturing sites, four branch offices, and a large number of co-packers.
The company has leveraged its resources and technology to solve clients' socio-
economic demands. These include poverty elimination, sanitation, and food
security. This provides it an edge over several competitors.

COMPANY MISSION - Decidedly impact the social condition wherein Nestle

would work as capable corporate residents, with due respect for those natural
measures and cultural yearnings which improve personal satisfaction.

COMPANY VISION - To be a main, focused, Nutrition, Health and Wellness

Company conveying improved investor esteem by being a favored corporate
resident favored manager, favored provider selling favored items.

The firm has the most Factory state boosts

technologically sophisticated sustainability
plant.

The factory's staff is about An estimated 26 billion

70% female. rupees will be invested in
India.

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 WHY ONLY NESTLE
Market leader: In 80% of its product line, the company is the market leader.
More products are offered by the corporation than by any of its competitors in
the market. The business controls a monopoly (97% of the market) for baby
food (Cerelac).

Organic Success: If Nestle sees a market opportunity in a certain category, it

may always introduce some of the parent company's brands to India,
eliminating the need for Nestle India to look for inorganic prospects.

The voyage into the countryside has only just begun; it is constantly extending
its reach into smaller cities and rural areas. By CY24, it aims to reach 120,000
% villages; 80% of that goal has already been achieved. Additionally, it
.05
R 11 expanded its entire distribution reach from 4 million outlets in CY16 to 5
G
CA
million outlets in CY21.

Economic downturns and recessions have little effect on the company because
it is in the recession-proof industry of food processing. Despite the supply
disruption and increased commodity pricing, the company also showed
volume growth of 6-9% YOY in CY2021. The primary objective of the
organisation is to constantly boost volume through innovations.

Rich in Dividends Company The business has a zealous dividend payout

strategy and has declared dividends consistently every year. The business
announced a total dividend for CY 2021 of 200 per share. For CY 21, the
dividend payment percentage was 89.9%.

Company Products and Services

Nestle has focused on nutrition since 1867. Thus, most corporate products and
services focus on nutrition.
The company provides high-quality goods and services to improve clients'
health. Nestle is known for its quality and safety.
Nestle Company makes several nutritious items. Breakfast cereals, milk, and
bottled water provide many benefits. These goods are popular worldwide. The
company makes chocolate and sweets. These products are over 100 years old.
Profitability Margin Italy and Brazil have long known S. Pellegrino and Nestle Moca. Nescafe,
Nestea, Maggi, Buitoni, Purina, and Nestle are world-renowned brands. Milo
and Nespresso sell internationally.
Nestle provides nutrition holistically. Wellness services help people live
healthy. Baby development, sports nutrition, and weight management are
offered. Nestle brands cover most food and beverage areas.

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 Product Strategy
Product Strategy of Nestle

Nestle offers a portfolio of products in more than 186 countries and

adapt taste of their product to match with consumer needs and local
preference, provide appropriate nutrition and delight the senses
(multi-Domestic strategy). They achieve this through continuous
innovation, product evolution, Acquistion and partnership.
Top 10 Food Processing Companies in India
They have 5 different product strategies.

Nestle is using its nutrition expertise to improve the health and well-
being of people and animals. Experts check for defects and ensure
that food is completely safe.

Meeting the need and answering the needs of today’s consumers as

modern consumers expect modern products in less time and with
shorter delivery times.

Bringing food innovations to market by taking in account of

consumer insights, cutting-edge nutrition science and excellence

Offering a diverse range of plant-based foods rather artificial

chemical-based foods and meet the need of modern consumer’s
demand.

Using their scale and expertise to improve accessibility, they rank

their food grade, nutrition on a scale and check it on a regular basis.

Nestle Largely concentrate on the following items-

Dairy Products: Such as Nestle milk, Nestle slim etc.

Chocolates: Most profitable segment e.g., KitKat, Munch, Eclairs etc.

Beverages: such as Nescafe, world's most popular coffee brand

Prepared Meals: Ready to cook items e.g., Maggie Instant noodles,

Maggi pasta, Maggi sauces etc.

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 Process Strategy
Productivity
Nestle's primary goal has been to change its specific packaging
procedures throughout its existence, resulting in a reduction of major
problems faced by customers of various ages.

Nestle is a pioneer in implementing individual strategy in product

packaging, it has developed it with a view on environmental problems in
mind. The general concept in Nestle's process designing is characterized
According to the general concept, Nestle's process designing stage is
characterized with a context of goods, and its complimentary packaging.
Nestle also have a core value to focus the nutritional value they are
offering to their customers.

Control and Planning

The organizational definition has stated that an organization is an entity
that processes various inputs including capital and resources, and turn
them into product and services through its various output processes. It
has been possible with the selection of an effective planning and control
process, which assist in the attainment of various long-term and short-
term goal set up by the organization. It also helps in evaluating and
analyzing the effectiveness of various operation mechanism'
implementation.

Supply Chain
Nestle's supply chain is extremely motivated to provide a superb
platform that supports from collaborative supply chain experts. The
firm can attain a competitive advantage through an effective
contribution from its supply chain.

The blend of the art and science of Nestle's Supply Chain has assisted in
attaining its corporate objectives. This method assist in identifying the
specific raw material component needed in product or service
development. Nestle's supply chain has been efficient with the help of
its key stakeholders like suppliers , manufacturers, distributors, retails,
consumers, and producers.

A related diagram is provided below to adequately depict the procedure

of a typical Nestle Dairy Supply chain.

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Improvement and Innovation
Nestle's primary goal is to improve its goods by preserving innovation
inside its processes, since the techniques have been at the core of the
company's operations for over 150 years.

Facility Layout
The procedure for manufacturing refers to deciding how items or
administrations will be created. Nestle makes use of batch production
or processing. Batch manufacturing requires low amounts of goods or
administrations and may handle a limited range of items or
administrations. Item or administration profiling can be used to avoid
errors by identifying the essential item or administration measures
and then selecting a fitting strategy.

Nestle also utilizes layout, which refers to the design of offices, work
centers, and hardware, with a special emphasis on work developed
through the framework. It has provided a smooth and rapid process of
large volumes or clients. Line adjustment refers to the process of
assigning tasks to workstations. This reduces idle time throughout the
line and results in a high utilization of labor and hardware. Excellently
adjusted lines will have a smooth progression of work since exercises
along the lines are coordinated to achieve the most extreme usage of
work and hardware to accomplish the request.

Production Process Type

Nestle employs a batch manufacturing technique for product
development, stating that the number and variety of the items they
must produce are moderate, necessitating the use of low-skilled
personnel to do the task. The batch manufacturing method offers the
following advantages: It can shift the period of job preparation to when
the processing assets are less busy.

It refrains from recording assets and resources by minute-by-

minute manual intervention and oversight.

It amortizes the PC, particularly a pricey one, by maintaining a high

overall rate of utilization.

It enables the framework to use a variety of requirements for

clever and non-intuitive tasks.

Rather than executing the same programme several times to

complete the same exchange, group procedures will run the
programme just once for some exchanges, reducing framework
overhead.

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 Quality Management
Quality and Safety for the consumers is the company's top priority.
This applies to our entire portfolio, from foods and beverages to all
their systems and services. The quality of the company's products is
dependent on- internal quality and management function, R&D, NFSI
(National Floor Training Institute, Customer feedback process, and
various training programs.

Nestle Quality Management System

The quality management platform that the company uses guarantees
food safety, and compliance with quality standards. The internal
quality Management System is also audited and verified by
independent certification bodies.

Production of Quality Products

From Farmland to home- The quality management system of the

company starts from the farmland. The company works together
with the farmers and helps them to upgrade the quality of the
products and adopt farming practices that are environmentally
sustainable.

Quality by design - The quality of the products is formed during

the product development stage that too according to the needs of
the customers and following all the food safety and regulative
requirements. The company uses thier R&D network to ensure
"Quality by design" for all their products.

Good Manufacturing Practices - Nestle applies Good

Manufacturing Practices (GMP) that are internationally recognized
and ensure food safety and quality. It covers all the aspects of
manufacturing, from standard operating procedures, proper
design, controlling, and monitoring the manufacturing process to
the handling of materials and training of the staff.

Critical Control Points and Hazard Analysis - To ensure food

safety, the company uses the HACCP (Hazard Analysis and Critical
Control Point) system, which is also internationally recognized. This
proactive, scientifically based method finds, assesses, and controls
dangers that are important to food safety. From the processing of
the raw materials to the conversion of them into final good, this t
includes the complete food processing and conversion chain.

Consumer use - The company also provides complete information

regarding products to the consumer and ensuring highest level of
safety and quality are met with the standards.

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 Inventory
Key factors in the inventory process

All Nestle subsidiaries are required to follow the finest procedures

in procurement which are ensured by "Common Procurement
Processes." all procurement follows a strict, rigorous, and
standardized procedure.

"Local/regional and/or global buying" which not only allows the

company to leverage purchases in high volume but also helps
them to save their time and effort.

"Strategic and tactical sourcing" focuses on identifying,

inspecting, and analyzing the internal requirements, examining the
suppliers, and matching their needs with that of the supplier's
market.

"Empowerment of employees" in their purchasing functions/roles

is ensured in the company as the company follows appropriate
rules and guidelines.

For mitigating the supply chain stewardship risk, the company

deployed Generation Regeneration activities which also support the
advancement of reformative food systems.

The cost of goods sold is calculated using the cost of acquisition or

production (which includes the costs of raw materials, packaging
materials, direct labor, energy, manufacturing overheads, and
depreciation of factory assets, which are allocated to products using
activity-based drivers), and then inventories are taken into account for
variation.

How Inventories are valued-

Raw materials of the company are valued at the lower of purchase
cost or the net realizable value. The purchase cost is calculated
using the FIFO (first-in, first-out) method

The Work in progress, total supplies, and the finished goods are
valued at the lower of their (WAC) weighted average cost and net
realizable value of the product. (WAC also includes an allocation of
depreciation and factory overheads).

The company maintains a certain cash flow level which is used as

hedging against inventory purchases. The cost of inventory alsp
includes all the gains and losses from the hedge.
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 COMPETITIVE ADVANTAGE
Enhanced research and development
The research and development capabilities of Nestle are unmatched. They have made significant
investments in the R&D sector throughout time. Their annual report states that they spent an
astounding US $1.697 billion on R&D in 2015. The largest privately held food nutrition research institute
in the world is the Nestle Research Center (NRC), which is situated in Lausanne, Switzerland. The
business has a significant advantage over its near competitors in terms of market data and consumer
insights because of its intensive research initiatives.

Collaboration with Big Companies

Strategic alliances with significant corporations are nothing new for Nestle. They collaborated with
Starbucks Coffee in 2018 and spent $7.15 billion to buy the world's rights to distribute Starbucks
packaged coffee and tea. The plan was to let Nestle handle sales while Starbucks concentrated on their
café operation.

Products are accessible.

Strength derives from diversity, according to Nestle. The United States barely accounts for 28.5% of the
company's overall revenue stream despite being the largest operational market in the globe. This serves
to further demonstrate how the business spreads its financial risks. Nestle has done a remarkable job,
compared to thitsompetitors, of expanding to nearly every region of the globe, ensuring product
availability at a faster rate than any other market player.

Meals Made of Plants

Yes, Nestle has lately entered the market for meatless meals as well, providing plant-based meals for
vegetarians and "flexitarian" diets. Less meat is now being consumed, and more vegetarian dishes are
being incorporated into daily diets. Nestle took advantage of the chance to enter an unexplored market
and acquire a competitive edge by providing food options to a new segment of consumers.
Comparatively speaking to their competitors, this addition is also producing bigger sales volumes.

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 CONCLUSION
The Company has adopted the approach of purchasing local enterprises in order to develop an autonomous
regional manager who is familiar with the dynamics of the local market.

Nestle has made an indelible stamp on the food and nutrition industry, and as a result has become extremely
competitive in the corporate world.
The Nestlé Company enhances its operational efficiency by integrating its companies on a global basis.
Currently, they are transforming into a really global food organisation in order to continue as one.

Nestlé has an extensive global network of creative work centres engaged in scientific research and product
development. They have the world's largest food and nutrition research organisation.

The organisation is aware of and has approved the assembly for all of its raw ingredients and packaging
products. Nestlé group swiftly produced a tailored major upgrade to accelerate the office standard in accordance
with global patterns, presenting increasingly productive equipment. This has accelerated their production. In its
provincial office, Nestlé maintains a record of handpicked deals.

Consequently, the board, executive activities, and quality administration are responsible for enhancing the
organization's inventory network competence.

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 References
https://www.nestle.com/aboutus/history/nestle-company-history
https://www.google.com/search
rl&q=nestle+background&oq=nestle+back&gs_l=psy
http://www.hrelements.com/wp-content/uploads/2015/09/436-Nestl%C3%A9-Kit-Kat-Revitalising-a-Brand-
Leader.pdf
https://www.scribd.com/doc/45268552/The-Company-Project-Kit-Kat
https://www.nestle.com/aboutus/strategy
https://www.nestle.com/sites/default/files/asset-sustainability_review_english.pdf
https://www.nestle.com/stories/healthy-food-meatless-meals-flexitarian-nutrition-needs
https://www.nestle.com/aboutus/quality-and-safety

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