WAREHOUSING AND

TRANSPORTATION
WAREHOUSE AND TRANSPORTATION ANALYSIS OF
NESTLE MILK PAK
GROUP MEMBERS
Muhammad Ikram Gohar
Urooj Hameed
Shahrukh Ghulam Nabi
 ABOUT NESTLE
MILK PAK
In 1981and originated the packaged milk category by which they pioneered
TETRA Pack milk in Pakistan
Nestle Pakistan is the leading brand in Pakistan in Dairy products. One of
the leading dairy product is Nestle MilkPak available in every part of
Pakistan.
Nestle Pak works as a subsidiary of Nestle S.A. Nestle Pak started working
in Karachi since 1988 under a joint venture with Milk Pak Ltd. With its
headquarter in Lahore, Nestle Pak. has four production facilities.
 It has a separate department for supply chain management which was
founded in 2001. The objective behind the creation of separate department
of supply chain management is to ensure the smooth running operations
from the supply of raw materials from farms or other sources to the supply
of finished products into the markets.
ORGANIZATIONAL
STRUCTURE
(NESTLE PK)
 Farmers Buffalo Milk

SUPPLY CHAIN Nestle Village Milk

Centers

PROCESS OF
NESTLE MILK
Milk Reception and
Cooling Centre r#1

PAK PAKISTAN Milk Reception and

Cooling Centre #2

Transportation in
temperature controlled
trucks to process ing
plant

Nestle Kabirwala Nestle Sheikh Pura

Factory Factory

Nestle Warehouse Nestle Warehouse

Distributors

North Zone Central Zone

South Zone

Whole Seller Retailer

 WAREHOUSE
LAYOUT OF
NESTLE MILK PAK
Factory ware house is located near the plant to reduce the
transportation cost

Nestle Milk Pak warehouses contains very suitable

temperature that should not increase from 38’C in order to
keep preserved milk in its fresh condition.

This warehouse has no shelving or racking system instead the

goods are kept on pallets. Information tags are placed on every
carton as well as on the top of the pallets.

. There are two gates; one for receiving the goods and the
other for distribution. In this way, receiving and dispatching of
goods can be done at the same time which is a time saver

the lanes were designed in such a way that it creates a “U

shaped” flow of goods which makes easier for the pickers to
carry the goods to the trolleys using safe lifting and reduces
the time and motion wastage.
 Nestle Warehouses
Properties

Economic Benefits
Service Benefit
Type Location INSIGHT OF
NESTLE MILK
PAK
Cross Docking
Warehouse
Spot Stock
Warehouse Private Warehouse
Decentralized
Warehouse
WAREHOUSES
INSIGHT OF NESTLE MILK PAK
WAREHOUSES
Cross Docking:
Nestle is a FMCG company and most of its goods are perishable and have limited time span. Due to which cross docking
phenomenon is adopted in which the FG comes from the nestle factory .The logistics usually take 3 days to arrive at Nestlé’s
warehouses in Karachi from their manufacturing factories at Lahore, kabirwala and shaikhupura. Here ths product has been
delivered to the respective whole sellers and distributors through their assigned distribution network from third party
(3PL) . This phenomenon occurs within a week or days.
Spot Stocking Warehouse:
In case of occasions (Eid Fitar etc) or Incident (Pregnancy season of cows)they adopt the phenomenon of spot stock in
which they produce amount of product and store in the distribution warehouse such that in case of critical situation, the
product may not be out of stock from market. Due to this reason the available on shelf no matter which season it is.
Private Warehouses:
All the warehouses has owned by the Nestle Pak. The reason behind this is the to manage the product pershaibility as it
required specific temperature and conditions for storage. To ensure this they have well trained staff which regulate these
things.
INSIGHT OF NESTLE
MILK PAK WAREHOUSES
Decentralized Warehouse:
Nestle Pak have decentralized warehouses, located in various
districts as mentioned above. Product visibility is the measure
of the distance at the product can be clearly recognized.
Nestle have the highest product visibility. It is because of the
distribution Nestle’s distribution network and decentralizing of
the warehouse. Although it effects in the increase of the cost
of warehouse but the product is available in about all the
cities of Pakistan.
INSIGHT OF NESTLE MILK PAK
WAREHOUSES
Storage System in Nestle Milk Pak:
Dedicated Storage System:
Nestle adopt dedicated storage system as accordance to their strategies, the area is designated
for the milk and milk based products in accordance of their SKU’s.
Every SKU i gets a number of storage locations, Ni, exclusively allocated to it. The number of
storage locations allocated to it, Ni, reflects its maximum storage needs and it must be
determined through inventory activity profiling
INSIGHT OF NESTLE MILK PAK
WAREHOUSES
Method of Inspection in Warehouses:
Random Sampling:
In Nestle Pak, the random sampling phenomenon has been adopted in which the product has
been randomly checked based on the batch. It is checked for quality thrice before being
released.
The random sample picked from 100 cartons of 3 batch in a day, here the Physiochemical,
Sensorial and Microbiological properties have been checked. After it, it has been dispatched to
the warehouses in various others districts.
.
INSIGHT OF NESTLE MILK PAK
WAREHOUSES
Racking Systemin Nestle Warehouses:
The factory warehouse has no shelving or racking system instead the goods are
kept on pallets. But in the central, North and South warehouses in the districts,
the adopt the selective pallet racking system in which the cartons on pallets
arranged and delivered on FIFO method because the product is sensitive and to
be handle in this way to maintain its quality.
INSIGHT OF NESTLE MILK PAK
WAREHOUSES
WMS System in Nestle Milk Pak:
ERP System in Nestle Milk Pak:
In 2000 Nestle signed a $200 million contract with SAP to roll out an ERP system. Nestle also
committed to an additional $80 million to be spent on consulting, maintenance, and upgrades.
Role of ERP:
Keeps track of customer orders
Reduce overstocking
Enables group buying of materials
Data sharing among subsidiaries
 INSIGHT OF NESTLE MILK PAK
WAREHOUSES
WMS System in Nestle Milk Pak:
ERP System in Nestle Milk Pak:
The inventory is 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, who is specially hired for this purpose.

Process:
The order received from the managing director which has been requested by marketing department and sales distribution
department through ERP.
After receiving request from managing director, the head of supply chain dispatched milk storage vehicle in different farm and
milks collected and stored in tanks and transferred to factory. This bulk amount then added in the ERP and MRP in the form of
inventory and data forwarded to the production and respective departments regarding the availability.
Production department then processed this milk and pack in to tetra pack packaging and convert into SFG or FG. And then
transferred to their warehouses.
Logistics department has been forwarded about the request regarding the market demand, hence logistics collect the amount and
check through ERP and transferred to retailers or wholesaler
 INSIGHT OF
TRANSPORTATION IN
NESTLE MILK PAK
In Nestle Pak, the distrubtion work has been
assigned to the third party distributors (3PL).

Nestle Milkpak goes for indirect channel of

distribution, that means there is a chain of
intermediaries through which a product moves
through additional steps as it moves from
manufacturing business via distributors to
wholesalers and then to retail stores or super marts

Nestle employs different distributors for different

areas. Distributors employ their own sales force and
vans, which deliver Milk Pak to the doorstep of the
retailers.

Every distributer has three territories per area. In the

“A” territory, the distributor’s vans visit the outlets
every alternate day. In the “B” territory, the vans visit
the retailers at least twice a week, while in the “C”
territory; the vans visit once a week.
INSIGHT OF
TRANSPORTATI
ON IN NESTLE
MILK PAK
Minimum one or two nestle milkpak
trucks daily being arrived at each ware
house from the sheikhupura and
kabirwala factories, and is distributed
in the same amount to the retailers all
over the city. The logistics usually take
3 days to arrive at Nestlé’s
warehouses in Karachi from their
manufacturing factories at Lahore,
kabirwala and shaikhupura.Nestle
milkpak has their owned and
outsourced trucks.

List of Suppliers OF Nestle:

INSIGHT OF TRANSPORTATION
IN NESTLE MILK PAK
Load Control Center(LCC):
Was introduced to streamline and standardize processes, reduce costs and gain control over
transportation operations
By centralizing control, they could manage transportation and logistics costs, live up to carrier
expectations about freight volumes and improve customer service.
Improvement in on-time delivery, maintain stable costs while business increased, better manage
carrier activity, and reduce the number of carriers used to a small fraction of the original number.
Load planning, carrier selection, scheduling and real-time communication of that information is
virtually automatic in the LCC.
Red Prairie's DLx[R] Transportation TMS software-Modules of the software in use include Load
Builder, Matcher, Asset Manager, Assign, Offer, Rate and Pay, Routing Manager and Status
 AUDITING
METHODS IN
NESTLE MILK PAK
Internal Auditing of warehouse has been done by
both the members of the warehouse as well as
they have designated internal audit department
for warehouse.

The warehouse members conduct each the end

of the month and report the findings to
supervisor.

The internal audit department conduct audit

after three months in which it checked the
inflows and outflows of goods as well as record
maintained by the warehouse in charge.

In case of any finding, he will report to the

management regarding the necessary
improvement needed.
CONCLUSION
It has been concluded that Nestle Milk Pak has well organized Warehouse and Transportation system. Each and every
thing is regulated properly and have been recorded both manually and systematically in order to ensure the proper
traceability in case of any defect and complain observed from the customers. Following recommendation has been
suggested:
1. Nestle Pakistan can establish their own dairy farms near their factory.
Benefits
a. Transportation cost that incurs from the collection centres to the factories will be minimized.
b. Less dependency upon local farmers.
c. These dairy farms will act as Crisis Management point in dynamic conditions as we have recently faced in the form of
worst floods in all over Pakistan.
d. More employment opportunities for local people around that region.
e. As milk is collected twice a day so there will be less repetition of work; if Nestle establishes its own dairy farm near
its factory.
CONCLUSION
2. Nestle can also establish a few of their own retail outlets or franchises in major cities of Pakistan to fill the
demand and supply gap more efficiently just like Millac (Pvt) Ltd. Benefits
a. These outlets will save the repute of the company from stock outs in peak seasons like Ramazan, Eids, &
Moharram.
b. These retail outlets will align with Nestle’s production planning with the demand of customers.
c. There will be less occurrence of bullwhip effect.
3. Nestle should introduce vertical shelf system in the warehouse Benefits
a. As Nestle’s warehouse has a ceiling of 17 feet, it should use the ample space above the lower shelves.
b. This system will allow the storage of goods in segregation.
4. Nestle should install Voice Picking technology in warehouses. Benefits
a. Although it’s a bit expensive, but use of this technology will benefit Nestle in future as it reduces the time and
human error and increases efficiency.