Nestle Milk Pak Supply Chain Report

Submitted by:
Khizra Azhar 007
Faisal Rafique 010
Submitted to:
Abeera Islam 044
Ma’am Samreen Malik
Mahnoor Khan 051
Table of Contents
Executive Summary:..............................................................................................................................3
Nestle Introduction:..............................................................................................................................4
Nestle Milkpak Introduction..................................................................................................................5
Milk Supply chain introduction:.............................................................................................................6
Vision of Company.................................................................................................................................6
Mission of Company..............................................................................................................................6
Vision of Company’s Supply chain.........................................................................................................6
Mission of Company’s Supply chain......................................................................................................7
Milk Gathering:......................................................................................................................................7
Managing milk collection.......................................................................................................................7
Production of milk.................................................................................................................................7
Normalization:...................................................................................................................................8
De-creaming:.....................................................................................................................................8
Purification:.......................................................................................................................................8
Bundling:...........................................................................................................................................8
Warehouse:...........................................................................................................................................8
Inventory Management:........................................................................................................................9
Goods carried from warehouse.........................................................................................................9
Ordering of goods..............................................................................................................................9
Delivery from warehouse of goods..................................................................................................10
Distribution:.........................................................................................................................................10
Distribution Process:........................................................................................................................10
Value chain:.........................................................................................................................................11
Bottlenecks (Problems)........................................................................................................................12
Recommendation................................................................................................................................12
Conclusion:..........................................................................................................................................12
Executive Summary:

Introduction:
Nestle Introduction:
Nestle is commitment to offer best in product safety and quality and to make price and aims
to be the well-known for Nutrition, Health and wellbeing. Since 1988, Nestle is working and
joined venture with Milk Pak ltd in 1992. Nestle existing merchandise grow by technology,
through innovation and modernization by maintaining a well establish product lines. the
corporate aim is to bring the great quality and best product to individuals. Nestle goods is for
all age groups, individuals and old where they're and no matter their need.
Nestle workers around 250,000 individuals from quite seventy countries. They have factories
or operations in several countries within the world. The history of Nestle began in European
country in 1867 once Henri Nestlé, the health care provider, launched his product meal
Lacteal Nestle a nutritive for youngster’s growth.
Nestle Pakistan is the best Food & Beverages Company in Pakistan of those days with
extremely consider Nutrition, Health and wellbeing They reached the faraway of locations
within the Pakistan to serve the customers. Nestle Pakistan conjointly being the leaders in
Nutrition, Health & wellbeing in dairy farm goods brands. The Henri Nestlé fabricated the
primary infant food, nutrition has been in our deoxyribonucleic acid in 1867. In
contemporary world the a lot of and a lot of customers offer importance on nutrition as a
result of they notice that food decisions will injury their health and quality of life. Nestle
operates on massive scale products measure the most supplier of the Company’s image. the
product category include dairy farm, coffee, nestle water, breakfast cereal, baby nutrition,
juice nectars and fruits drinks.
Nestle story began one hundred fifty years past with the spirit for nutrition of conveyance
sensible Food, sensible Life to customers round the whole world. they're constant to deliver
best goods and services that offers prime quality of life to the patron everyplace. Nestle could
be a part of Pakistani Nation for years currently. With a promise of fine food, sensible life
Nestlé that created an area within the hearts of nation individuals. individuals square measure
living up to its potential of providing on a healthy life all the approach through prime quality
of food. At Nestlé, we tend to square measure proud to be a district of all the stories that
brighten up your life and sweeten up your moments.

Nestle Milk Pak Introduction

A very famous popular product for food service operators of nestle. It is for
simple tea and coffee making to an important ingredient food range. Milkpak
was launched in January 1979. It began commercial production in November
1981. Milkpak began marketing the Frost line of fruit juices which had been
established a year before by Packages Ltd in 1984. Milkpak purchased the Frost
brand name from Packages in 1986. It is for 9% of Milkpak sales. The company
launched its own butter and it launched Balai a pasteurized cream product and Desi Ghee.
These products stayed under the brand name of Milkpak and sold by it.
Nestle Milkpak aims to grow in the short periods of time into the top food company in
Pakistan with the good ability to meet the needs and wants of consumers of every age group
from infant to old age for nutrition, through development of a large variety of food categories
of the highest quality. Nestle Milkpak company want to develop an impressive and
professionally trained work force which would growth through modernization and
transformation. The production of milk was high during the winter months December to May
and lowest from May to August.
To improve the problems carried about the gap between supply and demand for milk during
summer the Pakistan government approved broadminded policies for the import of milk
products. It is proposed that Milkpak now had to participate in foreign markets with local
milkmen who deliver raw milk. Milk powder became a popular import of Milkpak and
making 30% of supply in Karachi.
The problem during season Milkpak met is a storage in demand and at some point in the even
season the company had to waste milk supplies. The company need knowledge to gain and
vision involving how to function in a situation in which somewhere demand and supply were
so limited. Additionally, Milkpak marketing managers were disinclined to promote Milkpak
broadly during the even season of generating demand in the off season which they would not
be able to fulfill. They were committed to enhancing long-life milk sales, the UHT company
was a high-level volume and low surplus business. The technology for producing UHT milk
was believed very costly. But the milk powder would be imported and this plus point for
milkpak it can be expensive option which also caused in giving grounds to competitors for
business.
We have chosen Supply chain Department of Nestle milk Pak for analyzing

Milk Supply chain introduction:

Milk is the most common consumable and rapidly changing
customer. The very earliest need and requirement or to food
for any human being is milk. Milk is perfect nutrition as it
includes every single nutrient. Luckily Pakistan is the
fourth largest manufacturer of milk in the entire world and
its yearly assembly is shockingly 45 billion liters which is
very good and high value. But sadly only 27 billion liter of milk
is offered for human intake. The most of the milk is missing
and Pakistan cannot compete its demand. These facts and
statistics Diary Industry is performing a very critical role in
the Pakistan economy and contributing 14% to the
country's in country GDP. It is more than 20% of the
whole population of Pakistan is participating in this directly
or indirectly. The portion of formal sector is four-
dimensional and ninety-six of portion is below the informal
sector in farm provide management. within the formal sector
Nestle is that the market leader in Islamic Republic of Pakistan. It
providing hour of market share as statis of 2008. Milk collected by different milk collection
center informal sector. It is taken in to the managing plant and milk is stored in refrigeration.
In plant milk is treated and packed and pasteurized then it is supplied to the retailer. Finally,
milk is reached to the consumer. In formal sector it can be divide it in two sectors. In first
classification the milk is collected by milkmen who sell the milk directly to the people and
also sell to collector. In other sector farm milk is collected many milk collectors who sell
their milk to the different retailers and these retailers deliver milk to end consumers.

Vision of Company
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.

Mission of Company
“Nestlé is…...the world's leading nutrition, health and wellness company. Our 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.”

Vision of Company’s Supply chain

Nestle's ambition is to achieve high level of customer satisfaction through low cost, highly
efficient operations driven by value creation and continuous improvement

Mission of Company’s Supply chain

• 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.

Problem Statement:
Since supply chains operate as a system or network, supply chain issues affect the entire
supply chain In the supply chain as a whole this can lead to greater inefficiency. The
organization faces a challenge of quality of raw material and managing it to one single
standard of quality, as they are taking raw material from different suppliers. Temperature
issues in production, distribution. And transportation of raw material and they face issues
regarding energy crisis., making the Production management difficult. In order to make the
right decisions for the supply chain as a whole, the consequences of acts and choices to one
section of the supply chain should be weighed. This report tries to address this question:
Is there evidence of inefficiencies in the supply chain or of problems which penetrate
Nestle Milk Pak entire supply chain?

Objective of the report:

 The purpose of this report is to build understanding of production and operation management
and how it plays its role in and organization. Finding the inefficiencies and loop holes in
supply chain which is effecting the overall performance of the organization. And after
studying all the factors and aspects affecting supply chain finding their solution and giving
recommendations to improve the supply chain system and filling the gap.

Scope of report:
This repost discuss the supply chain of Nestle Milk Pak. The  supply chain extends through the
organization from the demand and end to the supply end. We have applied various operational
management tools which reflects to the different phases of the tools with regard to process and
importance of manufacturing of Milk. Report determines the issues and inefficiencies in supply chain
of Nestle Milk Pak and tools to minimize the bottlenecks and problems in supply chain system. By
reducing these inefficiencies in supply chain Nestle milk Pak can operate more effectively and
efficiently.

Methodology:
This report is based on supply chain of Nestle Milk Pak based on FMCG industry Pakistan.
The material and literature is taken from various resources like magazines, books, journals,
websites, electronic reports and company itself. Then most important factors were analyzed
and we took some of the experimental results. Moreover, this data is discussed as a report and
made few recommendations and then concluded the results.

Supply chain linking Organization Goals

Supply chain involves the sequence or processes from manufacturing/ production of good to
distribution of goods to end consumer. Supply chain plays a very vital role in organizational success.
All the core operations are included in supply chain. The organization goal of Nestle Milk Pak is to
ensure quality, health and wellbeing. Supply chain helps in achieving competiveness and customer
satisfaction. Efficient supply chain helps the organization to produce/ manufacture a product and
deliver its customers. so through effective and efficient supply chain system Nestle milk Pak is able
to produce goods and deliver to its customer and meet the demand of market in this way they are
able to create their strong brand image and effectively position themselves in the market. The core
organization goal of every business is to earn profit so when you can make your product and sell it
you earn profit and its only possible when you have proper system of manufacturing and
distribution. Nestle Milk Pak with the help of its tremendous supply chain is able to ensure quality,
health and wellbeing that they promise to the nation.

Flow chart :
Milk Reception Testing

(Cows and buffaloes)

Quality Approval
Rejection
 Chillers

Regional milk collection

manager

Trucks

Main collection centre

Manufacturing of Nestle MilkPak

Factory

Normalization

De-creaming
 Purification

Bundling

Distributors Warehouse of company

Wholesalers

Milk Gathering:
Nestle has the biggest milk assortment framework in the
nation which is assembled from the two dairy animals End Consumers
and bison.Retailers
Nestle has an exceptionally wide and broad
system of town milk focus (VMCS), sub focuses which
is extensively stretch out in the nation roughly more than
2000 VMCs and 500-600 sub communities. Milk
contains low sodium, high fat and solid not fat (SNF)
and extremely low in bacterial tally. On the off chance
that the milk isn't up to these standard that milk is
dismissed. As we realize that milk is a biodegradable
thing in this system to guarantee milk according to quality measures assortment of chillers are
arranged at the assortment communities which will safeguard the milk from bacterial
development.
Managing milk collection
Nestle has 24 areas and every district gathers milk from 60-70 milk assortment sub focuses
and VMCS. Every locale is leaded by regional milk collection manager (RMCM) who is
capable to sort out all the exercises inside its district. Territory in-charge (TIs) keeps the
steady gracefully line with the providers and ranchers and gathers milk from 10 assortment
sub focuses and he has some objective of milk assortment which he needs to satisfy. Volume
of milk assortment is determined by national milk collection managers (NMCM). These
domain volumes of milk assortment are additionally part in to sub focus that must be
recognized on day by day bases. TIs are additionally capable to ensure the best quality and
sterile practices, quality testing and record keeping at the sub habitats. Each sub place has
given time with the goal that truck gathers the milk and transports to the chillers of
fundamental assortment communities. Each milk truck has limit of most extreme 8 to 10 tons.
Milk is siphoned from the chillers to the truck holding territory which is a very efficient
strategy. From the primary appropriation place close to mid night through enormous
protected big haulers of least limit 20 to 25 tons delivered to processing plant. The protected
big haulers and mid evening time helps in keeping up the milk temperature underneath 4C
during the excursion. At the production line all the milk testing are by and by rehashed; in the
event that any of the test isn't certain, at that point milk is come back to the assortment habitats.

Production of milk
As Milk is reached to the production line it is put away in huge tanks called Silo for 366 hours. The
Capacity of Silos is as per the following:

5 Silos of l00 tons each.

2 Silos of 10 tons each.
1 Silo of 70 tons.
The Processing of milk comprises of four stages which are as per the following:

Normalization:
As milk is assembled from wild oxen and cows so the fat substance in milk changes in each
season. In this manner milk must be normalized to adjust the fat and SNF (Solid Not Fat) of
milk according to legitimate gauges. Milk is given a temperature of 72°C for 15 seconds to
kill the microscopic organisms. So by normalization, timeframe of realistic usability of this
biodegradable thing is expanded and milk is normalized according to necessity.

De-creaming:
In this procedure assortment of earth molecule, SNF and cream is disconnected from the
normalized milk, milk is prepared at a temperature of 60°C for 60,000rpm (cycles every
moment) in de half and half. Cream is accumulated and it is sent to the margarine segment for
additional preparing and soil particles are isolates and milk is prepared for additional
procedure.

Purification:
It is the most basic advance of milk preparing and in this procedure milk is warmed at a
temperature of 92°C for 5 seconds to wreck the hurtful microscopic organisms and increment
the time span of usability of the milk with the goal that milk can be put in the racks in
unrefrigerated condition. Sanitized milk is as yet biodegradeable item and will lose its value
in this way it must be put away in chilly condition by the providers and clients.

Bundling:
It is the last step of milk preparing now the sanitized milk is pressed naturally in various sizes.

Warehouse:
The completed tetra pack is dispatched to the production line product place which is 4 km
away from the handling plant. Production line product house is situated close to the plant to
lessen the transportation cost. At Factory stockroom temperature is controlled to ensure the
state of the milk is new when it arrives at the buyers. Milk is an entirely transient thing,
thusly it needs extremely adequate capacity conditions at stockrooms to save milk in its
genuine condition. For this Nestle milkpak distribution centers have entirely reasonable
temperature that ought not increment from 38°C so as to keep safeguarded milk in its new
condition.

Inventory Management:
The stock is managed by the software called SAP.
Another strategy for managing stock is "manual
counts"(tallies) that is finished by the inventory clerk.
On regular basis who is explicitly recruited for this
reason. The counted stocks are recorded on a
whiteboard that’s put inside the distribution
center(warehouse). it contains not simply the data
about the name and number of items yet additionally
in which path they are and in what volume they are in.
The whiteboard data is upgraded every time a picker
picks the order and furthermore when the products are
stacked on truck for conveyance.
For additional validation, the barcodes are put down to scan the cartons whenever they get in
and out of the warehouse (distribution center).
The batch code gives us the following information
1. Year of product manufactured
2. Day of year when the product was packed
3. Manufacturing plant code
4. The number of time that product went through the machine
5. A machine code

Goods carried from warehouse

there are five pickers in the distribution center. The manager appoints 4 of them to pick items
by a list. the list contains data about the product batch number, amount, path (lane) number,
and the pallet number. two of them picks the merchandise, the third one gives the guidance
and the fourth individual reevaluates it. The FIFO strategy is embraced in the distribution
center since settle is a FMCG company and the vast majority of merchandise are short-lived
and have constrained time range. what initially goes into warehouse ought to be dispatched
first.
Ordering of goods
Goods are ordered that are based on LIFO technique. orders are gotten
from wholesalers across the country. LIFO is utilized in light of the fact
that it takes transportation cost, time to record and put in a request
alongside the conveyance procedure. as for nestle milk pack its expiry is
at a half year (six months).
Delivery from warehouse of goods
There is a door in the stockroom from where the products are conveyed, when the picker gets
the merchandise, the procedure of conveyance starts. the supervisor of the warehouse re
verifies the merchandise are picked at right amount, packaged in right way and loaded in the
correct truck

Distribution:

distribution is the way toward moving an item from manufacturing source (assembling source) to its
customers. Nestlé’s is isolated into 3 geographical zones.
1. North zone
2. Central zone
3. South zone
Distribution Process:

distributors have dealers (sales forces) to take orders. 2 methods are used for distribution
1. Booking orders
2. Selling on spot
in booking order dealers (sales force) first take orders from retailers and then deliver them the
goods while in selling on spot the sellers are given the van full of milk Pak to sell them.
Nestle milk Pak has indirect ditribution. that implies that there is a chain of mediators through
which an item travels through extra strides as it moves from distributors to wholesalers and
afterward to retailers or super stores. There are 3 territories for each distributor per area in
“A” territory every alternate day van visits. In “B” territory twice a week van visits and in
“C” territory once a week van visits.

Value chain:

Value chain is process or activity by which firm adds value to the product, including
manufacturing, sales and marketing and after sales services.
Inbound logistic involves all the goods that is coming to business. It’s about receiving and
warehousing all the raw material brought from suppliers for production., the distribution and
manufacturing of product. Inbound logistics for the milk collection from various suppliers of
milk and then bringing it to the production plant. Operation involves the conversion process.
Turning raw material into finished good. Outbound logistic involve all the process after
conversion. Moving good from plant to warehouse and then distribution of good to the end
users. Nestle milk Pak outbound logistic is concerned with finished milk Pak from factory to
Distributors and then to the retailers. Marketing involve the selling for milk pak. All the
promotional campaigns and marketing strategy to sell the finished good. Services is in which
after sales services are provided to the end users.

IPO Diagram Adidas: PROCESS

Temperature Quality of product
Raw material
maintenance during
transpo
transportation of milk
Supply chain system
Supply chain inefficiencies
Procedure issues regarding
inventory and
distribution
Energy Split milk
Energy or machine
shut down can split
milk or effect its
quality

IPO diagram represents the relationship between input, process and output. This diagram
provides the clear picture of the used input and outputs produced from the functions. This
tool is mostly used as a way to document a program. In broader perspective the input used
tells us that it will be utilized for process the process step itself is used to solve the issues that
Nestle Milk Pak is facing and represent the working of the functions or output it the data
obtained of the modification involved in steps.

Sipoc Diagram
 Suppliers Input Process output customers
farmers equipment normalization Packaged milk distributors
Pak
Transportation Raw material De creaming wholesalers
workers
Energy supply purification retailers
bundling End consumer

Sipoc is a tool that represent the scope of the process its supplies, inputs, processes, outputs
and customers. It represents the flow of the process in the form of table. This operation
management tool is used to design a process and to make improvement in it. It gives relevant
information before the project begins. It will help nestle Milk Pak to find the source of the
issue that from where it is taking place or occurring. For further understanding of process that
where the issues lie and where is the break down in the process in this way they can talk to
those people who are directly involved in it. Get their view point and know that where things
are wrong and what they think about certain issue and how improve.

Bottlenecks (Problems)
The biggest challenge that Nestle milk Pak face is maintaining one standard of quality. As they
purchase milk from various milk suppliers(farmers) so the quality of every milk is different from one
another. So it is a big problem for them to ensure one quality standard for their milk and ensure
health, nutrition and wellbeing. The second major issue they face is at the time of picking supplies of
milk from farmers and taking it to production plant. The temperature required it 5 degrees so the
temperature management is a challenge for them to if there is fluctuation in temperature the milk
splits. Energy crisis is also an issue during production if machinery stops or gets disrupted the batch
being manufacture might get wasted it has to be ensured that very frequently things are handled
and managed to avoid the disruption else the batch is spoiled or may not ensure desired quality.
Milk is a perishable item so it requires certain temperature and ways to be stored to increase its
shelf life so after production when milk is transferred to warehouse temperature management in
warehouse is also a problem. The last but not the least there is seasonal fluctuation they have flush
and lean seasonal periods in flush period they have a lot of milk supply while in lean they have milk
shortages they have difficulty in managing a lot of milk and in lean period they issue in meeting the
demand of market.

Recommendation:
Nestle milk Pak should get their own farm and cows for milk. They should introduce vertical shelves
in warehouses and high roof ceilings. Use sensor based alarms which gives an alert when
temperature fluctuates so that frequently things can be handled and overcome the damage. Use
different other ways of electricity like solar system or make sure that generator may abruptly
operate when there is load shedding to avoid delay and disruption in production process. They
should introduce them on farms and milk so they can minimize the challenge of milk to split while
bringing it from farms to production plants there would be not much management required to
maintain temperature for longer time if they have their own milk supply near the production plant
which will not only help them to save the milk from splitting but this will reduce their transportation
cost and time. When they face seasonal fluctuation like flush and lean periods. In flush period they
should manufacture products that have a longer shelf life they should introduce their new line of
nestle powder milk Pak. Lean and flush season can be handled that nestle milk Pak store milk in flush
season when there is excessive supply of milk and store that for lean season to meet the demand.

Key findings:
After the research and data collection we find out that the major issue that Nestle Milk Pak
is facing is transportation of Raw material, temperature maintenance, quality management,
distribution and energy crisis

Conclusion:
They are facing certain problems in supply which affect them as whole. This report finds that
we can improve the productivity by various factors. Our focus was on few of the major
factors that resulted effectively. We emphasized on the quality of raw material maintenance
by introducing their own Farm and cows which would help them to easily maintain the
quality standard of the product and will reduce the risk factor or spoiling milk in
transportation of raw material and reduce the cost and price of the product. Energy shutdown
or equipment disruption is also a factor that effects the quality of output of Milk.
Through improving every single process involved by using automatic or sensor based system
to regulate the processes which would help to improve efficiency. the point to ponder is that
no effectiveness an improvement can be achieved without the performance of each individual
involved in the process of supply chain. Workers should be qualified and proper training
should be given to them to operate the automatic systems and have ability to solve the
problems when they exist. Nestle Milk Pak should implement the strategies for the system so
it can improve its function which leads to high productivity.
At last we might want to conclude that Nestle Pakistan is the pioneer of FMCG industry.
Nestle monitors its products by maintaining its supply chain everywhere throughout the
nation. from manufacturing to distribution channel. everything is done appropriately and
overseen well. they have solid relationship with customers as well as with their providers,
merchants and retailers. the manufacturing of Nestle is the quality and serves as competitive
advantage for them. Nestle as a result of its ideal framework. The cleanliness, wellbeing and
security control is done under settle Milk Pak's manufacturing plant.
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