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Supply Chain Management of Nestle
Supply Chain Management of Nestle
Supply Chain Management of Nestle
Concept
The term “Supply Chain Management” was revealed in the late 1980s, and
then it was exposed to all in 1990s. Before that time “Supply Chain
Management” was used as different terms like- “logistics” and “operations
management” in the business fields. Earlier, supply chain management was
considered just like a concept. Implementation of this concept was very
difficult as there were some necessary components in the total chain to
connect with each other. The focal part of the barrier to full supply chain
management was the cost of communication and coordination among the
many independent suppliers in each supply chain. An entire supply chain
covers the area from the creation of raw materials to the delivery of the
finished consumer goods. So, many supply chains are involved in the entire
supply chain of a product up to the ultimate delivery stage. This is why; it
was difficult to link up actively all the supply chain points. But day by day
companies are being interested to implement the supply chain concept in
their business for three environmental changes.
First, development of the communication technology has made easier the
process to communicate between members of the supply chain.
Second, new management models have been developed that are being used
by the supply chain members to simplify the coordination of tasks.
Third, for the development of highly trained work-force, it has become easier
to assume the responsibility, make decisions quickly and take required
actions to coordinate the supply chain.
These three changes are encouraging the companies to take the challenges
in the competitive market through the utilization of supply chain
management concept.
Introduction:
A supply chain is defined as a system of suppliers, manufacturers,
distributors, retailers and customers where material, financial and
Slogan:
Good food, Good life
Corporate mission:
At Nestle, we believe that research can help us make better food so that
people live a better life. As consumers continue to make choices regarding
foods and beverages they consume, Nestle helps provide selections for all
individual taste and lifestyle preferences.
Corporate Vision:
Nestle has an aim to meet the various needs of the consumer every day by
marketing and selling food of a consistently high quality.
Nestle in Bangladesh:
Nestle Bangladesh was established in 1992 and started its first commercial
production in Bangladesh in 1994. First, it was a subsidiary of Trancom Ltd
which is a renowned industry in our country. In 1998, Nestle was separated
from Transcom Ltd and emerged as an individual entity. On that time Nestle
S.A. took over the remaining 40% share from local partner when Nestle
Bangladesh became a fully owned subsidiary of Nestle S.A. Nestle
Bangladesh's vision is to be recognized as the most successful food and
drink Company in Bangladesh, generating sustainable, profitable growth and
continuously improving results to the benefit of shareholders and employees.
Factory Location:
Their factory is situated at Sreepur, 55 km north of Dhaka; the factory
produces instant noodles, cereals and repacks milks, soups, beverages and
infant nutrition products. Today Nestle Bangladesh Ltd. is a strongly
positioned organization. The Company is continuously growing through its
policy of constant innovation and concentrating on corecompetencies and
commitment to high quality, with the aim of providing the best quality food
tothe people of Bangladesh.
✓ Cerelac
✓ Nido
✓ Maggi Noodles etc.
✓ Nescafe
✓ Maggi Soup.
✓ Fox’s Fruit
✓ Coffee Mate
✓ Lactogen,
✓ Corn Flakes etc
About Nescafe:
Nescafe is one of the world's top-selling brands of instant coffee, made by
Nestle. The name is a combination of the words "Nestle" and "coffee". The
beginning of NESCAFE can be traced all the way back to 1930. Nestlé’s
powdered coffee product was introduced in Switzerland on April 1, 1938 after
being developed for seven years by Max Morgenthaler and team.
• Arabica and
• Robusta.
Nestle MalaysiNestle
fee beans suppliers (Farmers) fromBrazil, Thailand Banglades h (Import Coffee Beans)
a (Coffee
Jar Supplier s
Nestle do not compromise with quality for this reason, only the best quality coffee
beans are used to produce the Nescafe products. For Nescafe products Coffee
beans are collected by Nestle Malaysia. They take coffee beans from different
country but majority comes from Brazil, Thailand. They take coffee beans from
different suppliers sequentially so that the supplier cannot create monopoly market
of coffee beans but they do not compromise with quality. Nestle always help their
suppliers and farmers by providing Education and training facilities. These things
help them to produce the good quality coffee beans because educational program
and training give the idea about cultivation techniques, coffee beans sorting etc.
Nestle do have agronomist to conduct these educational and training programs.
Use of fertilizer and chemical is always harmful for the environment for the
environment. For this reason Nestle always encourage their farmers to use
compost of coffee husks. When the farmers or the suppliers of the coffee beans
give the guarantee about the quality of the beans then Nestle is ready to pay more
to their suppliers. Nestle always try to buy the coffee beans directly from the
farmers that means they try to avoid middlemen.
Plantation:
Normally coffee is grown in small evergreen trees. Cultivation of coffee trees
is very much labor intensive. Young coffee trees demand constant care from
farmers like regular watering, fertilizing weed control and right amount of
shaded sunlight. It takes up to 5 years for a coffee tree to begin producing
good fruit. A good coffee tree can give fruits up to 15 years but if properly
maintained it can be extended to 40 years.
2. Wet method
Blending:
This stage is very much important for the production of Nescafe. Nestle have
experts to closely monitor the blending process. It helps them to maintain
quality and consistent taste over the years.
Roasting:
Grinding:
Grinding helps to extract flavor out of coffee beans. Like other processing
part grinding is also very important because taste of coffee depends on
grinding.
Local
Suppliers
(sugar,
“Supply Ch ain t of Nestle” by Market Tracker-02 Page 10
label,
Packaging,
sachetetc)
Figure: Packaging and Reprocessing of Nescafe
Packaging protects food products from spoilage and keeps them safe all the
way from manufacturing stage right through to storage, distribution and
consumption. Nescafe is packaged in such a way so that, it is attractive and
convenient both for transportation and use. Nescafe jars which are available
in Bangladesh are packaged by Nestle Malaysia. These jars are not made by
Nestle itself. They have the suppliers for jars who design the jars, levels
according to the requirement of Nestle. They use temperature resistant glass
which helps to protect the coffee from moisture and oxygen. As Nescafe do
not use any preservative for their coffee, so air tight foil of the jar plays a
vital role for keeping the coffee fresh for long time. Nescafe jars are
imported by Nestle Bangladesh from Nestle Malaysia. For jars only one was
packaging activity is conducted here in Bangladesh that is labeling. Nestle
Bangladesh only change the label of the jars in the factory of Sreepur. But the
Sachet and Nescafe 3 in 1 is packaged in Bangladesh. For sachet and Nescafe 3
in 1 raw material such as coffee, Coffee mate are imported from Malaysia and
they use local sugar [United Sugar Mills Ltd, Abdul Monem Sugar Refinery
(Igloo sugar)].In the factory of Sreepur they mix coffee, coffee mate, sugar to
produce Nescafe 3 in 1. Nestle have started this production from November,
2009. They have the local supplier of packaging material for these products.
For example – Anmon Packages Ltd. In total they have 15 local supplier of
packaging material. These suppliers’ always design the packaging material
like- label, sachet etc according to the demand of Nestle Bangladesh. Nestle
use food grade plastic for packaging Nescafe 3 in 1 and Sachet. Nestle
always help these suppliers by giving them proper training. They also share
resources with packaging suppliers.
Consum ers
1. Sonarbangla
2. DACHSER
3. Shuvo.
✓ Dhaka North
✓ Dhaka South
✓ Chittagong
✓ Khulna
✓ Bogra
Nestle have 78 distributors for distributing Nescafe along with other products
of Nestle. These distributors also distribute other products of Nestle. Through
this strong distribution network they are making the products available.
Nescafe is collecting raw materials from the suppliers who can guarantee
about quality. Nescafe is always conscious about the quality that’s why they
are encouraging the suppliers not to use more fertilizer and insecticides.
These things are helping Nescafe to deliver quality products.
Processing of raw material:
Their packaging is not only attractive but also helps to keep the coffee fresh
for long time. Nescafe is also helping their packaging suppliers to improve
the packaging quality.
Distribution:
With their strong distribution network they are making Nescafe available all
over the country. They can reach any corner of the country with their
distribution network but others like
Mac coffee may not be able to do so.
2. Push/Pull view
Based on those two views, Nescafe explains the process of supply chain.
Those are below.
1. Cycle view
b) Replenishment cycle
c) Manufacturer cycle
d) Procurement cycle
Custome
Retailer
Replenishment
Distributo
Manufacturing
Manufact
Procurement
Supplier
Each supply occurs at the interface between two successive stages of the
chain.
When the customer of Nescafe buys products from, it is customer order
cycle. When the retailers replenish its products (that are already sold) from
distributors it is replenishment cycle. When distributors brings product from
manufacturer, it is manufacturing cycle. When manufacturer like Nestle
collects raw materials from supplier it is procurement cycle.
2. Push/Pull process and Boundary
Pull process
Custome
Customer order
……………………………………………………………………….Push/Pull
Bo undar
Retailer
Replenishment
Manufacturing
Push Process
Distribut
Manufact
Procurement
Supplier
Recommendations
After reviewing all the things I would like to make the following
recommendations to Nestle Bangladesh Ltd:
For the product Nescafe Nestle Bangladesh limited can target the huge rural
population of Bangladesh. Because they have a very strong distribution
network and they also have different product categories of Nescafe. They
can introduce the Sachet of 0.9gm to the rural population.
▪ http://www.thefinancialexpress-bd.com/more.php?news_id=95816
▪ http://bangladesheconomy.wordpress.com
▪ http://www.thedailystar.net/newDesign/news-details.php?nid=79168
▪ http://www.defence.pk/forums/bangladesh-defence/10487-bangladesh-economy-news
▪ http://www.nescafe.com/worldwide/en/Pages/Home.aspx
▪ http://nestle.bdjobs-server.com/
▪ http://www.maccoffee.com/
▪ http://www.nestle.com/
▪ www.google.com
Books:
▪ Chopra , Sunil , 2013, Supply Chain Management,3rd edition, Prentice Hall, India.