Amen Hamed
Christopher Case
Huguette Mouako
Table of Contents
Company Overview .......................................................... 2
Company Mission and Vision ........................................... 2
Company Structure .......................................................... 2
Supply Chain ..................................................................... 3
Customer .......................................................................... 6
Challenges ........................................................................ 6
Order Processing .............................................................. 7
Customer Service Metrics ................................................ 9
Procurement...................................................................10
Responsible Sourcing Activities at Nestle ..................... 12
Supplier Information ...................................................... 13
Inventory ........................................................................14
Manufacturing or Process .............................................. 14
Competition ....................................................................15
Logistics Facilities Network ............................................16
Transportation Methods ................................................ 16
Uniqueness .....................................................................17
Mission/Vision................................................................ 18
Works Cited ....................................................................19
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COMPANY OVERVIEW
Nestlé is a Swiss multinational food and beverage company headquartered in
Vevey, Switzerland. It is the largest food company in the world measured by revenues.
Nestlé’s products include baby food, bottled water, breakfast cereals, coffee and tea,
confectionery, dairy products, ice cream, frozen food, pet foods, and snacks. Twentynine of Nestlé’s brands have annual sales of over $1.1 billion, including Nespresso,
Nescafé, Kit Kat, Smarties, Nesquik, Stouffer’s, Vittel, and Maggi. Nestlé has 447
factories, operates in 194 countries, and employs around 333,000 people. It is one of
the main shareholders of L’Oreal, the world’s largest cosmetics company.
Nestlé was formed in 1905 by the merger of the Anglo-Swiss Milk Company,
established in 1866 by brothers George Page and Charles Page, and Farine Lactée
Henri Nestlé, founded in 1866 by Henri Nestlé. The company grew significantly during
the First World War and again following the Second World War, expanding its offerings
beyond its early condensed milk and infant formula products.
COMPANY MISSION AND VISION
Nestlé’s “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.” The company doesn’t mention any values,
which guides its actions, in the statement but provides them in addition to their vision:
“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.”
COMPANY STRUCTURE
Nestlé has a Board of Directors, led by Chairman Peter Brabeck-Letmathe, who
was the former Nestlé CEO. There are 14 members of the Board of Directors. The dayto-day management of the Nestlé business is taken care of by the Executive Board. The
14 designated Board Members manage diverse parts of the global business. The Nestlé
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Group is managed by geographies - Zones EMENA (Europe, Middle East and North
Africa), Americas and Asia/Oceania/Africa - for most of the food and beverage
business, with the exceptions of globally managed businesses, which include Nestlé
Waters, Nestlé Nutrition, Nespresso, Nestlé Professional and Nestlé Health Science.
They also have joint ventures such as Cereal Partners Worldwide and Beverage
Partners Worldwide.
Nestle products are sold in every country except North Korea, this indicative of
the company’s global reach. Nestlé has five operating divisions. The food businesses
operate as three geographic divisions in the Americas, Europe and Asia Pacific regions,
while the company's water and pharmaceuticals businesses operate as separate global
units. The group's products fall into six categories. However across these, there are six
main brands which between them generate more than 70% of group revenues. The
biggest of all is the main Nestlé brand, used across dairy products, mineral water,
confectionery and prepared foods.
SUPPLY CHAIN
Nestle was recognized for holding their suppliers accountable to a “nodeforestation” policy on palm oil. Nestle along with PepsiCo also “bundled their
warehousing, co-packaging and outbound distribution of fresh food products leading to
logistics, cost savings, service level improvements and carbon reductions.” Nestle also
employs traceability requirements for its suppliers, who must report on their supply
chain, specifically the origin of products provided to Nestle, so the company has a
comprehensive picture from farm to consumer.
Nestlé operates within complex supply chains. Its cocoa supply chain goes from
cocoa bean to chocolate bar. This path starts with cocoa from farmers, who grow the
crops; to cooperatives, which manage the sale of the crops; to processors and
manufacturers, such as Nestlé which create chocolate products; to retailers such as
supermarkets, and finally to consumers who purchase the products. Nestlé sources
materials from thousands of farms, many of them small farmers in poorer rural regions
of the world. In many rural communities, a lack of investment in infrastructure has a
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serious impact on the quality and quantity of raw materials that Nestlé and other
companies rely on. Nestlé provides training in order to encourage sustainable
production, protect the supply and quality of its raw materials and have a positive, longterm impact on the local economy and farmers’ standards of living.
For Nescafe products, Nestle Bangladesh collects raw material from Nestle
Malaysia. Nestle Bangladesh imports coffee in bulk where, each container contains 25
kg of grinded coffee as raw material. They also import finished Nescafe products like
the Nescafe Classic Jar and Nescafe 200 gm pillow pouch directly from Nestle
Malaysia. The main reason for collecting from Malaysia is that the cost is relatively low.
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Primary Supply Chain Processes of Nescafe
Packaging and Processing
Secondary Supply Chain
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CUSTOMER
Consumer interest in the nutritional quality and health impact of foods has
probably never been greater and for good reason. Governments have been busy
spreading the message that healthy foods and a balanced diet are vital for good
physical and mental health and a general feeling of wellness.
Nestlé is one of the world's leading food companies and intends to remain
so. Its commitment to high quality market research ensures that it remains fully aware of
changes in consumer behavior and consumer tastes. Its excellent product research and
development network ensures that it is well placed to meet the challenge of changes in
consumer expectations. The company's wellness strategy is carefully geared to
delivering to customers what they now clearly want in relation to the foods they eat; a
high nutritional value and a positive contribution to their general wellness.
CHALLENGES
Supply chain knowledge is becoming more and more critical to ensure
competitive supplies of goods and services, especially for large companies dealing with
a complex network of suppliers, customers, distributors and consumers. All parties in
the chain need to have a particularly good grasp of how their individual activities work
together and affect the performance of the whole supply chain. At Nestlé, Key
Performance Indicators (KPIs) provide the standard metrics for measuring supply chain
performance. Nestlé launched a new initiative to communicate the value and use of
KPIs to line managers.
As a major buyer Nestlé seeks to be as closely involved in the supply chain as
possible, to ensure quality and fairness. Currently Nestlé is participating in a process to
examine potential problems of forced child labor on cocoa farms in West Africa. This is
being done on an industry wide basis, in consultation with governments, labor
organizations and Non-Governmental Organizations (NGO), as well as with other
members of the cocoa and chocolate industry.
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The Nestlé Cocoa Plan is a $120-million initiative to improve cocoa sustainability
and the livelihoods of cocoa farmers through a number of programs including:
distributing higher-yielding, disease-resistant plantlets; providing education for farmers
and their families; improving infrastructure in farming communities; and addressing and
eliminating the use of child labor in the cocoa supply chain.
Food companies such a Nestlé face increasing challenges as they source
ingredients more widely, making it difficult to monitor safety.
ORDER PROCESSING
Order processing is the process or work-flow associated with the picking, packing
and delivery of the packed items to a shipping carrier.
At Nestle, it starts as follow:
Order collection

Sales Team collects orders from distributors

Sent to regional office

Order are documented and reviewed on sales order form by customer service
executive

Sales order form approved by regional sales manager

Approved sales order form is mailed to Zonal Sales Office
Order upload to SAP

Customer service executives receive sales order form

Sales order form converted to CSV (Comma-Separated Values )format via EDI

CSV file stored in SAP

Customer service executive prepares
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Credit check

Accounting department maintains payment data

System automatically checks for assigned credit limits and Pre-paid amounts
Post credit check

Order within credit limits

Order uploaded into the system

Balances offset against orders

Stock automatically allocated from inventory at hand
Order exceeds Credit Limits

Order frozen

Sales team notifies distributor

All pending dues cleared

Head of sales authorization required to unfreeze order
Order Processing

Customer order planner reviews all orders

SAP generates order tracking report

Customer order planner prepares outbound delivery report and transport
schedule

The customer order planner then emails the final deliver plan to the distribution
channel including pending and merged orders
Distribution Channel

Distribution channel verifies stock quantity from sales orders

Prepares pick slip for good to be shipped

Stock is picked by fork lift from storage

After picking, 3 invoices are generated (customer, transporter, and accounting )

Prices and allowances are added from master data as per official agreements
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
Invoice is matched with the purchase order to ensure that the amount invoiced is
correctly stated
Transportation

Transporter arranges trucks

Goods are loaded

Transporter confirms loaded and invoiced quantities

Invoice acknowledged by security staff

Goods shipped to customer

Transporter returns a copy of the invoice acknowledged by customer
CUSTOMER SERVICE METRICS
Nestle tries to keep a clean relationship with every customer. So, Nestle has a
“Contact Us” page on its global site where customers can complain or ask questions
from wherever they are. Moreover, each branch (Nestle Purina or Nestle Pure Life) has
a call center and social media accounts (Facebook, Twitter, and LinkedIn) where
customers can follow Nestle activities and make also requests. On the Nestle global
site, customers can tweet to NestleCare and see instant responses on their concerns.
Concerning the problem resolution time, it depends of the extent of the customer
problems. According to nestleprofessional.com, when a customer makes a complaint,
he/she will receive an acknowledgment letter or email within 5 business days. “This
communication will set out the name of the person responsible for handling the
complaint and the expected response time to the complaint. Nestlé endeavors to make
a decision on all written complaints within 20 business days after a complaint is
received”. Moreover Nestle Vietnam works with Nash Tech (IT Outsourcing company)
in order to manage and maintain Nestlé’s Customer Relationship Management (CRM)
system. NashTech sets up a systematic process to make sure all new data has to be
profiled and present in Nestlé’s CRM in a proper time manner.
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PROCUREMENT
The essential raw materials purchased by nestle are: milk, coffee, cocoa, pulp
and paper, palm oil, soya, hazelnuts, sugar, vanilla, fish, dairy , meat, poultry and eggs.
These, as well as fruit, vegetables, cereals, potatoes are partly sourced directly from
farmers. Sugar, oil, meat, spices and other ingredients are purchased only through the
trade. The strategies employed in sourcing depend on the characteristics of the raw
materials and on the requirements of the factories. This direct procurement is more
common for perishable products (e.g. milk). Nestlé does not own any commercial
farming activities
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1
2
RESPONSIBLE SOURCING ACTIVITIES AT NESTLE
1- Auditing
Through auditing, Nestle verifies that the direct suppliers are implementing their
Supplier Code. The audit is carry out by an independent verification firm.
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2- Traceability
Nestle works with its direct suppliers to map the upstream supply chain back to the
origin.
3- Farm assessments
Nestle assess the implementation of Responsible Sourcing Guideline on farms and
plantation, and identify any issues that exist.
SUPPLIER INFORMATION
Nestle has at least 8 700 suppliers around the globe. However, anybody can be a
supplier for Nestle if it complies with Nestle Supplier Code. Nestle procures from
multiple countries as USA, Brazil, Argentina, Malaysia, Indonesia, Mexico and India,
Madagascar, and the SAVA regions (Sambava, Antalaha, Vohemar, Andap).
Sourcing at Nestlé is done through Farmer Connect (Nestle direct sourcing program
through which it buys more than half its dairy ingredients and significant volumes of
coffee and cocoa) and Tier 1 (direct) suppliers: Through Farmer Connect, Nestle source
raw materials for its factories directly from farmers, as well as co-operatives and a
number of selected traders. Many of its 695 000 Farmer Connect suppliers are dairy,
coffee and cocoa farmers, who deliver to the buying stations and collection centers, or
those of our partners.
Tier 1 suppliers are in direct commercial relationships with Nestlé. Many of them
work in the pre-processing industries, or as trade partners.
Sub-tier suppliers supply its suppliers, so they are not in a direct commercial
relationship with Nestle; nonetheless, Nestle focus on mapping where their ingredients
come from to establish transparency and traceability in its supply chain.
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INVENTORY
Nestle uses just-in-time strategy at Waters Nestle for the better use of storage
and time. Inventories are the raw materials, unfinished and finished goods held in stock
by a company for future sale. For instance, in Thailand, a new national distribution
center is also used for raw and packaging material, reducing overall required
warehouse space. Finished goods are stock in transit. So, they do not stay in
warehouse more than a week.
MANUFACTURING OR PROCESS
“Manufacturing strategy as a concept was first recognized by Skinner (1969),
referring to a manufacturing strategy as to exploit certain properties of the
manufacturing function to achieve competitive advantages”. So Nestle opts for a lean
production, an approach developed in Japan, aims to reduce waste. Waste is looked at
in terms of time, money and quantity of resources used in production. Reducing these
elements aims to increase productivity and efficiency. So according to Mr. José Lopez
the lean approach at Nestle is Nestlé Continuous Excellence which consists of:

Delight consumers: minimized consumers complaints.

Deliver competitive advantages: improve customer service ad inter-marketsupply and enable delivery of year on year savings.

Excel in compliance: improvement in quality and safety and implement nestle
management systems
According to Mr. José Lopez Executive VP, Operations & GLOBE, Nestle has 443
factories in 81 countries. The largest are the following:

Araras, Brazil has the world largest soluble coffee exporting factory

Switzerland –World’s Biggest Center of Coffee Excellence (Nespresso) with a
production capacity of 8.8 billion capsules

North America (Hollis Maine) – World’s Biggest Water Plant with a production
capacity of 4.1 billion bottles
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
China: Totole, Shanghai –World’s Biggest Culinary Factory
Nestlé Waters also used a lean production technique called Value Stream Mapping
(VSM). VSM illustrates the flow of materials and information required to bring the
finished product to the consumer. Moreover, according to businesscasestudies.co.uk
“the Just-in-time (JIT) is another Japanese lean production technique uses by Nestle.” It
is about timings during the production process. When items are ready just in time, they
aren't sitting idle and taking up space. JIT involves ensuring materials arrive just as they
are needed. Similarly for outputs, transport must arrive to take finished products away
just-in-time, without any waiting or storage costs.
COMPETITION
Nestlé’s major competitors are:

Unilever: A Dutch company that produces packaged foods and products for the
home and personal care markets.

Kraft Foods: A U.S. company that produces packaged foods products.

GROUPE DANONE: French Company that produces packaged foods and
beverages.

Hershey Foods: A U.S. company that produces chocolate and sugar
confectionery products. Hershey Foods competes with Nestlé’s confectionery
brands mostly in North America.

Nestle competes with other packaged foods companies as well as store brands
from retailers such as Safeway, Wal-Mart Stores, Walgreen Company).
·
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LOGISTICS FACILITIES NETWORK
Nestle is a global corporation with a massive logistics infrastructure. With 442
factories in 86 countries, Nestle relies on constant improvements and more efficient
processes to remain the most profitable corporation in the world.
In the United States, there are 77 factories involved in both local production of
raw materials, and importing products. 5 distribution centers receive products from pet
food, to health care, to confectionary items from 32 manufacturing locations across the
entire continental United States. In addition to these manufacturing and import centers,
there are 34 product technology and R&D centers across the United States. Many new
products such as fortified baby formula, or a dark chocolate with increased nutrients
come from these facilities, and are specific to the Americas.
Nestle relies primarily on road transit, and has been implementing the use of 3 rd
party logistics services when necessary. At the volume of product Nestle produces and
moves, it is more cost effective to outsource the primary movement of both raw
materials, and finished goods. In France, the 6 Nestle factories have teamed up with
Geodis to deliver Nestle products through 125 delivery points across the nation.
Approximately 860,000 pallets of Nestle product moves through France through this one
contract.
Overall, Nestle owns 90,000 SKU’s, 7800 trucks, 15,000,000 sq ft of
warehouses, and works with over 160,000 suppliers. The use of 3PL services is
absolutely essential in keeping costs at a relative minimum.
TRANSPORTATION METHODS
Travelling the equivalent of 264 times around the Earth, while moving over
141,000 tons of material from around 1,630 warehouses to customers. Most is through
3rd party logistics providers. A majority of transport is done over open road, however in
an effort to reduce emissions and CO2 production, in Europe some goods have moved
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from road to rail/short sea and have saved over 5,300 tons of CO2 emissions in 2011
alone. Other forms of transport include rail and sea, but no river or air transports.
UNIQUENESS
339,000 employees operating 197 countries. $93.6 billion in annual sales. $14.3
billion in trade operating profit. 43% of sales in the Americas, 28.2% in Europe/Russia,
and 28.7% in Asia/Oceania/Africa. With a global corporation as large as Nestle, they
have gone to great lengths to make the supply chain as efficient as possible.
In 2006, Nestle began experiencing problems with their supply chain
communications. The sheer size of the company left them with 14 different enterprise
planning systems from SAP AG of Germany in place in many different countries. The
increasingly globalized nature of the company led them to take on a $2.4 billion
standardization of processes across the entire supply chain in an effort to maximize
efficiency. The use of the new Internet-based mySAP.com helped the company grow
even through today.
Many different factors come in to play with such a large company that produces
over 8900 brands and operates on such a large scale. Most coffee in the world is grown
between the tropics of Cancer and Capricorn. Rather than have the coffee beans picked
and shipped for harvesting, Nestle decided to start building production facilities and
warehouses in the host nations, and reduce the cost of shipping and minimize the risk
of loss.
One such instance is the construction of a warehouse in Vietnam that is
solely for the storage of coffee beans grown in that country. As Vietnam is one of
the largest coffee bean growers in the world, building a warehouse in that country
saves time and money by keeping the storage close to the raw product
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.
VISION/MISSION
Part of the Nestle Roadmap is the Operational Pillars.

Innovation & Renovation
o Learning new approaches, and re-visiting operations that are
breaking down allow Nestle to continuously improve.

Wherever, whenever, however
o Getting the job done, at the lowest cost, with the highest quality
is integral to the continued success of Nestle.

Consumer Engagement
o Learning what consumers really want, studying trends to
determine what they might need in the future, and staying
current helps Nestle to stay relevant.

Operational Efficiency
o As referenced earlier with the Vietnam coffee warehouse,
reducing travel time and cost for products ultimately leads to
decreased cost, and increased profit.
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Works Cited
Bakers Journal. Nestle study shows problems facing world cocoa supply. 25 September 2012.
<http://www.bakersjournal.com/news/nestl-study-shows-problems-facing-world-cocoa-supply4024>.
Business Case Studies. Achieving sustainability through lean production. n.d.
<http://businesscasestudies.co.uk/nestle/achieving-sustainability-through-leanproduction/jit.html#ixzz3X4O1VGiY>.
ElAmin, Ahmed. Nestle France outsources transport logistics. 11 October 2006.
<http://www.foodproductiondaily.com/Supply-Chain/Nestle-France-outsources-transportlogistics>.
Lopez, Jose. Accelerating performance through GLOBE/NCE. n.d. Slideshow.
<http://www.nestle.com/assetlibrary/Documents/Library/Presentations/Investors_Events/Investor_seminar_2011/NIS201105-GLOBE-NCE-JLopez.pdf>.
—. Creating Competitive Gaps Through Manufacturing. 7 June 2011. Slideshow.
<http://www.nestle.com/assetlibrary/documents/library/presentations/investors_events/investor_seminar_2011/nis2011-04manufacturing-activities-jlopez.pdf>.
Master, Nancy. Nestle Incorporates Warehouse Logistics to Improve Coffee Supply Chain. 12 July 2013.
<http://www.rfgen.com/blog/bid/304055/Nestle-Incorporates-Warehouse-Logistics-toImprove-Coffee-Supply-Chain>.
Nestle. Management. n.d. <http://www.nestle.com/aboutus/management>.
—. Nestle Locations Americas. n.d. <http://careers.nestleusa.com/about-us/locations>.
—. Our Global Network. n.d. <http://www.nestle.com/randd/globalnetwork>.
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Nestle Professional. Mission Statement. n.d.
<https://www.nestleprofessional.com/uk/en/FAQs/Company_related_FAQ/Pages/FAQ_Our_Co
mpany_2.aspx>.
Nestle. Strategy. n.d. <http://www.nestle.com/aboutus/strategy>.
Nestleprofessional.com. Credit Reporting Policy. n.d.
<https://www.nestleprofessional.com/australia/en/SiteArticles/Pages/Credit-ReportingPolicy.aspx>.
Saynor, Chris. What the Head of Logistics of Nestle is Thinking and Why are 3PL Contracts So Short? 1
January 2014.
<http://www.supplychain247.com/article/what_the_head_of_logistics_of_nestle_is_thinking/E
yefortransport>.
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