Supply Chain Management of Nestle Company

Supply Chain Management of Nestle Milkpak in Pakistan

1. Operations & supply chain management

2. 2 Presented By: Group Members Group #6 Asad Rehman Arafaat Ahmed Mahnum Gillani Shamsa Kanwal Ali Tariq Presented To: Sir Kaleem Ullah

3. Introduction Nestlé 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 Nestle Milk, Nestle Slim Milk. Milk is the most perishable and fast moving customer good. The very first and initial requirement or feed for any human being is milk. Milk is complete diet as it contains every nutrient except iron.

4. Board Of Directors Syed Yawar Ali (Chairman) Freda Yahan Duplan (CEO) Syed Saiful Islam ( Director)

5. Mission Optimize and consolidate resources and processes for a low-cost but efficient. Develop and manage simplified and effective supply network to achieve a high level of service. Create a continuous improvement culture driven by performance measures and reward.

6. Vision “Nestle’s ambition is to achieve high level of customer satisfaction through low cost, highly efficient operations driven by value creation and continuous improvement”

7. Principle Nestlé is based on the principle of decentralization, which means each country is responsible for the efficient running of its business - including the recruitment of its staff.

8. Nestle Products

9. SWOT Analysis Strengths Weakness Opportunities Threats Continuous Improvements Contaminated Products Transparency in material sourcing Poor quality of milk and its scarcity, instead of using chemicals Export Forcing Child Labor For work Growing ready-to-drink Increased competition in the beverage and food industries Research and Development teams are innovative Contaminated Food Recalls Accurate labelling indicating of any harmful products Government policies Best Quality Uses Unethical practices

10. Supply Chain

11. Over View of Supply Chain of Milk Pack

12. Functions of Supply Chain of Nestle Milk Collection System Inbound Logistic Nestle Factories Planning Manufacturing Milk Processing Factory Warehouse Outbound Logistics Distribution Distribution Process Distribution Channels

13. 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 Centres At the Village Milk Collection Centre the farmer's milk is poured into aluminum churns. 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 Nestlé cartons you can find in your grocery store. It is checked for quality thrice before being released for sale.

14. Inbound Logistic Inbound logistics used for milk collection from different milk collection centre 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 there milk

15. Nestle Factories Sheikhupura Factory Kabirwala Factory Islamabad factory

16. 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.

17. 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).

18. Milk Processing Steps: Milk Reception Mixing Heating and Cooling Standardization Pasteurization UHT treatment Packaging Materials

19. Factory Warehouse Of Nestle Inventory Management in the warehouse 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, 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 Nestle MilkPak, it has an expiry of 6months, so it needs to be delivered first.

20. 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 warehouses in Karachi from their manufacturing factories at Lahore, kabirwala and shaikhupura.

21. Objectives Of Nestle’s Distribution Centers Or Warehouses There are three main objectives of Nestlé’s distribution centers. Meeting the targets Distribution at Right time At Right place

22. Distribution According to the distribution, Pakistan is divided into three geographical zones and then in further Regional Sales Offices. North Zone: Islamabad Peshawar Jhelum Central Zone: Lahore Faisalabad Gujranwala Multan Sahiwal South Zone: Karachi Hyderabad Quetta Sukker

23. Distribution Process The distributors have sales force to collect orders. There 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 Nestle goods to sell)

24. Distribution Channels 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.

25. Return Policy Of Nestle Milkpak Nestle milkpak has an efficient return policy for inventory in case of any defect. Every carton and item has 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.

26. Recommendations Nestle Pakistan can establish their own dairy farms near their factory a. Transportation cost that incurs from the collection centre's 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.

27. 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.

28. Conclusion In the end, we would like to conclude that Nestle Pakistan is the leader in FMCG industry. Nestle keeps track of its goods by maintaining its supply chain all over the country. From Nestlé’s manufacturing system to its Distribution channels, everything is properly managed. They have a strong relationship not only with their customers but also with their suppliers, distributors and retailers. They maintain a proper Corporate Social Responsibility by training their local farmers about milking and feeding of their animals.