BBA- 6B

Supply Chain Management

Company: Nestle
Product: Water Bottle
Team Members
NAME ROLL NO
Nimra Naseer (Leader) BBHM-F20-214
Sahar Hadi BBHM-F20-203
Mahnoor Altaf BBHM-F18-203
Sobia BBHM-F20-146

Submitted to: Sir Kashif Mahmood

 Content List
Content 1: Company Profile ……………………………………………………….... 4
Introduction ……………………………………………………………………………… 4
Vision ……………………………………………………………………………………. 4
Mission …………………………………………………………………………………... 4
Values ……………………………………………………………………………………. 5
Nestle Water bottle Introduction…………………………………………………………. 5
Content 2: Customer Profile …………………………………………………………. 6
Content 3: Demand Forecasting Method ……………………………………………. 6
Content 4: Production Planning……………………………………………………… 7
Aggregate plan …………………………………………………………………………… 7
Master Production schedule ……………………………………………………………… 8
Material Requirement Planning (MRP)…………………………………………………... 9
Bill of material……………………………………………………………………………. 10
Content 5: Procurement Process……………………………………………………... 11
Supplier Relationship Management ……………………………………………………… 11
Order size ………………………………………………………………………………… 12
Types of material ………………………………………………………………………… 12
Lead time ………………………………………………………………………………… 12
Material dispatch responsibility …………………………………………………………. 13
Content 6: Distribution Network ……………………………………………………. 13

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Distribution strategy ………………………………………………………………………15
No of intermediary ………………………………………………………………………. 16
Coverage plan….………………………………………………………………………….17
1. Inventory Policy
Raw material………………………………………………………………………………17
Work in Process (WIP)……………………………………………………………………18
Finish good stock………………………………………………………………………….18
2. Warehousing Requirements
Procurement stage…………………………………………………………………………19
Production stage.…………………………………………………………………………. 19
Distribution stage………………………………………………………………………… 19
3. Logistics Requirements
Procurement stage…………………………………………………………………………20
Production stage…………………………………………………………………………. 20
Distribution stage………………………………………………………………………… 20
Content 7: System of information sharing …………………………………………. 20

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 Content 1: Company Profile
Introduction:
Nestlé is a Swiss multinational food and beverage company that was founded in 1866 by Henri
Nestlé. It is headquartered in Vevey, Switzerland, and has operations in 191 countries around the
world.
The company is known for its wide range of products, including coffee, bottled water, pet food,
baby food, and confectionery. Some of its most well-known brands include Nescafé, KitKat,
Gerber, Perrier, and Purina.
Nestlé is a multinational food and beverage company that owns many famous brands, including:

 Nescafé - A brand of instant coffee

 KitKat - A chocolate-covered wafer bar
 Gerber - A brand of baby food and formula
 Perrier - A brand of carbonated mineral water
 Purina - A brand of pet food
 Nestea - A brand of iced tea
 Toll House - A brand of baking products, including chocolate chips
 Nesquik - A brand of flavored milk powders and syrups
 Smarties - A brand of candy-coated chocolate candies
These are just some of the many brands owned by Nestlé. The company also owns a wide variety
of other food and beverage brands, as well as brands in other industries, such as cosmetics and
pharmaceuticals.
Nestlé has a long history of innovation and has been a pioneer in many areas of the food and
beverage industry. Over the years, Nestlé has grown through a combination of acquisitions and
organic growth. Today, it is one of the largest food and beverage companies in the world, with
more than 2,000 brands and operations in 191 countries.

Vision:
Nestlé's vision is to be a leading, sustainable, and trusted food and beverage company that makes
a positive difference in society and in the lives of people and pets.

Mission:
Nestlé's mission is to provide high-quality, nutritious food and beverage products that meet the
needs of consumers of all ages, from infancy to old age, while also ensuring the long-term
sustainability of the company.

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 Values:
Nestlé's values are based on respect for people, respect for the environment, and respect for
responsible business practices. Some of its core values include:

 Quality - Nestlé is committed to providing high-quality products that meet the nutritional
needs of consumers.
 Responsibility - Nestlé takes responsibility for its impact on the environment, society, and
the economy, and strives to minimize any negative effects.
 Innovation - Nestlé is committed to ongoing innovation and development of new products
and solutions to meet changing consumer needs.
 Teamwork - Nestlé values collaboration and teamwork across all levels of the
organization.
 Trust - Nestlé is committed to building trust with consumers, customers, and stakeholders
by operating with integrity and transparency.
These values guide Nestlé's decision-making and actions, and are reflected in the company's
policies and practices.

Nestle Water Bottle Introduction:

One of the major brands is Nestlé Pure Life that provides safe and pure drinking water. It launched
in 1998 being successful globally. It has 4 factories in Pakistan that are located in Sheikhupura,
Islamabad, Kabir Wala and Karachi. Today, it plays their role as a leading player in the bottled
water market globally as well as in Pakistan. Nestlé Pure Life is available in two basic categories,
PET and HOD (Home and Office Delivery), with the following formats:
 0.33 Liter Fit Bottle
 0.33 Liter Hero Bottle
 0.5 Liter
 1.5 Liter
 5 Liter
 12 Liter (Karachi only)
 18.9 Liter (Home and Office Delivery)

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 Content 2: Customer Profile

Target Customer segments (Customer Profile)

Variables Description

Age All ages

Gender All gender

Occupation All Types

Income Doesn’t matter

Education Doesn’t matter

Family Size Doesn’t matter

City Worldwide

Behavior Health conscious, nutrition, and wellness.

Content 3: Demand Forecasting Method

Nestlé, like most companies, likely uses a variety of demand forecasting methods to predict
demand for its bottled water products. Some common methods include:

 Time-series forecasting:
This method involves analyzing historical sales data and using statistical
techniques to project future demand based on trends, seasonality, and
other factors.

 Market research:
Nestlé may conduct market research to understand consumer preferences, trends, and buying
patterns, which can be used to forecast future demand.

 Sales force estimates:

Nestlé may gather input from its sales force, who are in direct contact with customers, to
estimate future demand based on customer feedback and insights.

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  Economic forecasting:
Nestlé may use economic indicators, such as GDP and consumer confidence, to project future
demand for its bottled water products.

 Machine learning and AI-based forecasting:

Nestlé may use advanced data analytics techniques, such as machine learning and artificial
intelligence, to forecast demand based on a wide range of variables, such as weather patterns,
social media sentiment, and other external factors.

Content 4: Production Planning

Aggregate plan

Aggregate planning is an important aspect of production planning for Nestlé's bottled water
products. The goal of aggregate planning is to match production capacity with expected demand
while minimizing costs and maintaining an appropriate level of inventory. Here are some key
considerations for Nestlé's aggregate plan for bottled water production:

 Forecasted demand:
Nestlé would need to forecast demand for its bottled water products over a specific time horizon,
such as a month or a quarter, based on historical sales data, market trends, and other factors.

 Production capacity:
Nestlé would need to assess its production capacity for bottling water, taking into account factors
such as the availability of raw materials, labor, and equipment, as well as any constraints on
production such as maintenance downtime.

 Inventory levels:

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Nestlé would need to determine an appropriate level of inventory for its bottled water
products based on forecasted demand and production capacity. This could involve establishing
safety stock levels to ensure that inventory is available to meet unexpected demand.

 Workforce planning:
Nestlé would need to plan for the necessary workforce to meet production targets, taking into
account factors such as the availability of labor, labor costs, and any overtime or seasonal labor
requirements.

 Cost considerations:
Nestlé would need to balance the costs of production, inventory holding, and labor with expected
demand and revenue, in order to maintain profitability while meeting customer needs.
Overall, Nestlé's aggregate plan for bottled water production would need to be flexible and
adaptable to changing market conditions, such as shifts in demand, production capacity, or raw
material availability. By carefully managing production, inventory, and labor, Nestlé can ensure
that it can meet customer demand while maintaining profitability and minimizing waste.

Master Production schedule

The Master Production Schedule (MPS) is a detailed plan that specifies the production quantity
and timing for each product within the Nestlé bottled water product line. Here are some
considerations for creating a Master Production Schedule for Nestlé's bottled water products:

 Demand forecast:
The MPS should be based on accurate demand forecasts, which can be generated using a range of
methods including market research, historical sales data, and trends.

 Capacity planning:
Nestlé will need to ensure that it has sufficient production capacity to meet the MPS. This may
require balancing production across different production lines and scheduling overtime or
additional shifts as necessary.

 Inventory management:
The MPS should be designed to maintain appropriate inventory levels of finished goods while
minimizing the amount of inventory held in the production process.

 Lead times:
Nestlé will need to consider the lead times for procurement of raw materials, production, and
distribution, as these factors can impact the ability to meet the MPS.

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  Scheduling:
The MPS should specify a detailed production schedule for each product, including start and end
dates for each production run, batch sizes, and the number of productions runs per day or week.

 Contingency planning:
The MPS should include contingency plans for unexpected events, such as equipment breakdowns,
raw material shortages, or changes in demand.
The MPS serves as a critical tool for Nestlé to ensure that it can meet customer demand while
optimizing production, inventory, and distribution. By carefully managing the MPS, Nestlé can
ensure that it can respond quickly to changes in demand and maintain a high level of customer
service.

Material Requirement Planning (MRP)

Material Requirement Planning (MRP) is a production planning and inventory control system used
to manage manufacturing processes. In the case of Nestle water bottles, MRP can help to ensure
that the right materials are available at the right time to meet production needs and minimize
inventory costs.
Here are the steps that could be involved in the MRP process for Nestle water bottles:

 Demand Forecasting: The first step is to estimate the expected demand for Nestle
water bottles over a specific period. This can be done by analyzing historical sales data,
market trends, and customer demand.
 Bill of Materials (BOM): The next step is to create a bill of materials (BOM) for Nestle
water bottles, which is a list of all the components needed to manufacture the final product.
The BOM would include items like plastic resin for the bottle, caps, labels, and packaging
materials.
 Inventory Analysis: Once the BOM is created, the next step is to analyze the inventory
levels of each component to determine if there is enough stock to meet production needs.
This analysis can also identify any potential shortages or excess inventory that could lead
to waste or inefficiencies.
 MRP Calculation: Based on the demand forecast and inventory analysis, the MRP
system would calculate the required quantities of each component needed for production.
The system would take into account lead times for ordering materials and manufacturing
processes to ensure that the right materials are available at the right time.
 Purchase and Production Orders: The MRP system would generate purchase
orders for materials that need to be ordered and production orders for the manufacturing of
the water bottles.

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  Monitoring and Control: The final step is to monitor and control the
production process to ensure that it is on track and to adjust the MRP system as needed
based on changes in demand or inventory levels.
By using MRP, nestle can ensure that it has the right materials available when needed to meet
production needs and minimize inventory costs. This can help to improve efficiency and reduce
waste while ensuring that customers receive high-quality products on time.

Bill of material

A bill of materials (BOM) is a list of all the materials and components required to manufacture a
product. In the case of Nestle water bottles, the BOM would include all the materials needed to
make the plastic bottles, caps, labels, and packaging materials. Here is an example BOM for a
Nestle water bottle:

 Plastic resin for the bottle:

This is the main component of the water bottle, and it can be made of various types of plastic, such
as PET (polyethylene terephthalate) or HDPE (high-density polyethylene).

 Cap:
The cap is typically made of plastic and includes a threaded portion that screws onto the bottle. It
may also include a seal to prevent leaks.

 Label:
The label provides information about the product and may include the Nestle logo, product name,
and nutritional information. It is usually made of paper or plastic and may be attached to the bottle
using adhesive.

 Packaging materials:
The water bottles are typically packaged in cardboard boxes for transport and storage.
In addition to the materials listed above, the BOM may also include information about the quantity
of each material needed for production, the unit of measure, the cost per unit, and the lead time
required for ordering and receiving the materials. By creating a BOM, nestle can ensure that it has
all the necessary materials available for production, manage inventory levels effectively, and
minimize waste and inefficiencies in the manufacturing process.

Content 5: Procurement Process

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 Procurement
It includes procurement of minerals, Resin, Labels, shrink wrap, caps, shrink film etc. which
usually procure by corporate procurement team. Procurement lead time varies from 15 days to 03
months depend upon local and imported items. Some items are single sourced and some are multi
source, decision made after analysis of supplier’s quality, ability and performance, lead times,
business size and company’s share etc.

Storage:
Minerals are usually store in controlled temperature while rest items on room temperature. Strict
guidelines are available for storage of these materials and checked during regular audits.
Retail bottles (1.5L and 0.5L) are produced in batches. Their storage unit is pallets 1.5L pallet
contains 112 cases (each case is equal to 06 bottles) and 0.5L pallet contains 175 cases (each case
is equal to 09 bottles). Batch code with manufacturing and expiry date is printed on bottle for
traceability purpose. They produced on the same lines; changeovers are made on line as per
demand of particular SKU.

Supplier Relationship Management

 Nestlé and its Suppliers

Nestlé has excellent relationships with its suppliers because it always strives to establish a win-
win situation, meaning that whatever is agreed upon benefits both Nestlé and the suppliers. This
is because Nestlé claims that its suppliers are its partners and that in order for both parties to
flourish, they must work together. Because Nestlé has a strong ethical foundation, it also makes
sure to assist in its suppliers' growth, particularly when those suppliers are small-scale local
businesses. This promotes the expansion of such suppliers, which benefits Nestlé as well. Nestlé
also done similar for SPEL and Mehran, two of their bottle suppliers.
Due to Nestlé's size, many suppliers, particularly local ones, are constantly ready to deal with the
company, therefore they also take care to keep strong connections with them. Some suppliers also
take steps to ensure they have excellent connections with Nestle and receive additional business
from them, including their willingness to store inventory with them for up to 20 days so that Nestlé
is not concerned.
Nestlé chooses suppliers who are close by, have shorter lead times, and offer the best items at the
greatest prices to ensure that it can manage its inventory without any difficulties. In general, Nestlé
works with the top suppliers since it cannot afford a supplier that can fill an order once but not the
next. Nestlé does not skimp on product availability, quality, or freshness.
Additionally, Nestlé and its suppliers collaborate as partners to ensure that demand is satisfied and
that changes in demand are anticipated in advance to prevent errors. Because Nestlé maintains

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inventory in warehouses, it can cover 40 days of inventory during the low-demand
months of January and February. During those days, the warehouse is full. Because of the increased
demand during the peak months of May and June, suppliers plan ahead and ensure that raw
materials are available for Nestlé to use so that the demand is satisfied.
The inventory is occasionally handled by the suppliers, and on occasion Nestlé carries all of its
own inventory, thus it does vary from situation to circumstance. For each of its materials, Nestlé's
procurement department develops a sourcing strategy.

Order size

Nestle Waters is a large company with a global presence, and it likely receives a significant number
of orders for its bottled water products on a regular basis. The number of orders can vary depending
on various factors such as the season, consumer demand, distribution channels, and the markets
they serve.

Types of material

The plastic used to make all of our bottles is either PET or recycled PET (PET). All of our bottles
from 325ml to 4 liters that are made from non-recycled PET are completely BPA-free.
Our PET bottles are made from recycled PET plastic that is carefully collected, screened and sorted
as per strict regulations and internal guidelines. These practices keep other types of plastics from
entering the PET manufacturing process and minimize introduction of contaminants. Given the
nature and variability of the recycling streams we have a strict qualification and testing program
for PET materials to ensure the absence of contaminants. Product testing clearly shows that only
a very small fraction of our PET materials may have trace levels of other types of plastics and that
any unlikely detection of BPA from those other plastics would be at trace levels in the low parts
per trillion range. In fact, our regular testing programs have shown the absence of BPA in PET
packaged finished product analysis. For these reasons, we consider our PET bottles virtually BPA
free.

Lead time

the lead time for Nestle's water bottles would depend on various factors such as the location of the
production facilities, the demand for the product, the availability of raw materials, and the
distribution network.
Shorter lead time without increase in cost is 3 months

Material dispatch responsibility

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The dispatch of Nestle water bottle materials is typically managed by the company's
supply chain and logistics teams. This includes:

 Managing the transportation and delivery of raw materials used in the production of the
bottles, as well as the finished products to distributors, retailers, and customers.
 The supply chain and logistics teams are responsible for ensuring that the materials are
dispatched efficiently, safely, and in accordance with Nestle's sustainability and
environmental policies.
 They work closely with suppliers, manufacturers, and transportation partners to ensure that
the materials are dispatched in a manner that minimizes environmental impact and supports
Nestle's sustainability goals.

Content 6: Distribution Network

Supply Chain Distribution Network

A company's distribution network is a flowchart that shows all feasible paths for the movement of
inventory, information, and other resources to and from various supply chain levels, both
physically and virtually. Even so, the physical flow via the distribution network is the sole thing
that our study focuses on. Planning and execution for the supply chain are divided into two steps.
The main component of the planning stage is the design of the distribution network. The entire
supply chain is covered, from planning inventory warehousing through inventory flow throughout
the entire supply chain. In order to guarantee the highest quality of the finished product, Nestlé
employs more than 100 different control tools from the water source through the bottle packaging.

Issues affecting the Distribution Network

 The foundation of a distribution network's design is to satisfy client needs while
minimizing service costs.
 Response time, product variety, market accessibility, customer experience, order visibility,
and the ability to return an entire product or a portion of it are the primary considerations
that businesses must make while building their distribution networks on these two
dimensions.
 So, the corporation will increase costs for facilities, information management, and
transportation as well as warehousing.
 They provide value to the customers as a result by keeping their products fresh, allowing
them to pay with cash, and keeping their costs low. Nestlé maintains that it never sacrifices
quality or its customers.
 Customers at Nestlé Waters play a significant role in the distribution network as well
because the company's design has three distinct customer-based configurations: retail
storage with consumer pick-up for regular PET consumers, distributor storage with

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 delivery for corporate PET customers like Metro and AL Fatah, and finally
manufacturer storage with direct customer delivery for HOD products.

Designing Distribution Network at Nestlé Waters

Nestlé Waters for its distribution strategy prioritizes lead time, constant availability in markets,
product quality and deliverance of premium experience to its clients. As drinking water is a low
innovative product there is not much variety in the product range nor constant innovation hence,
for them, lead time is more about efficient product replenishment than successful launch of new
products.
In designing their distribution route, the key factor is length of distance from one point to another
and ultimately from start point to end point as the firm aims at optimizing cost and time-to-market
in its distribution phase. In order to maximize value for its customers while geographically
covering the maximum points of sale across the country.
Due to the dynamics of the categories of products of Nestlé Waters their distribution design is not
based on the product type but on the category of the product (drinking water). The distinguishing
point amongst the two categories in network design is returnability factor of the product.
Since their PET Bottles (polyethylene terephthalate) are disposable bottles, they never come back
to Nestlé. Though customers can recycle it. The PET category network design has one-way product
flow to the end consumer, hence is usually done through Nestlé distributors instead of the company
itself, apart from major PET category clients like Metro & Hyper star.
Reverse logistics is utilized for the second category of HOD (Home and Office Delivery), which
is a two-way movement of product to and from the final customer. As the container needs to return
to the production floor, the business distributes the product in this category by itself. Hence, it
provides doorstep delivery for HOD customers. Two SKUs (stock keeping units) of Nestlé Pure
Life 12- and 18.9-liter bottles are available under the HOD category.

Strategy for Distribution Network Design

The majority of distribution channels, including traditional commerce, workplaces, dining
establishments, modern trade, and residences, carry Nestlé Waters. The HOD and PET are used to
design the distribution network rather than the stock keeping units (SKUS). The cost-benefit
analysis for each category serves as the foundation for the distribution network.
Nestlé water is easily accessible to consumers because to a distribution network that is set up in
every region of the nation. Strong relationships are kept up between the business and its clients.
The distribution strategy is channel based, cost based, and demand-based. Where the product is
needed, whether at offices, stores, homes, etc., is determined by the channel

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Due to the way each category is designed, costs may vary. Demand-based means that
demand differs for each SKU; for instance, there is no demand for Nestlé water bottles in 5 liter
sizes at restaurants. Due to the distance, the distribution network in Lahore for HOD and PET is
the same.

Distribution Strategy for PET

Since the final product first travels to the distributor and subsequently the retailer, it passes via an
intermediate under PET. Restaurants are a target market under PET. The 1.5-liter and 0.5-liter
water bottles are required by the restaurants. There is only one category in Quetta, and that is PET.

Distribution Strategy for HOD

As the product moves from the maker to the distributor and the final retailer, which consists only
of offices and shops, the distribution design changes under HOD. The cost factor is the main factor
that causes the distribution design to vary. HOD is reverse logistics, which means that the water
bottle is returned to the business at additional expense. The factories are situated close to the final
consumers because long distance routes do not fit into this category.
At the interview, it was learned that Islamabad only needs HODs, which is why the plant line was
also constructed. The cost of delivery will be greater and it will be highly expensive for the
business to operate in this category if the water is delivered and carried through the factory that is
located in Sheikhupura. Because of the accompanying returnability factor, HOD is essentially cost-
driven. There is only direct selling to consumers in Karachi.

Direct Selling to the Customers

Only their most important customers receive direct sales, and they keep close relationships with
them. Metro, Macro, and Hyper star are the main customers for Nestlé water. Because they are
their most important consumers, they purchase in bigger amounts globally, and they provide a
significant portion of the company's revenue. There is no third-party distribution elsewhere but in
Karachi.

Network of Facilities and Distribution

The supply chain facilities are taken into account when designing and modifying the distribution
network. Due to the economic consideration, HOD's facilities are close to the customers. To
prevent taking long roads, manufacturers are strategically placed close to their customers. A close
proximity to customers guarantees freshness, availability, and lower costs. The cost of
transportation and delivery is influenced by facility decisions.

Network for Transportation and Distribution

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As per order received from customer, orders are dispatch to distributors. Nestlé
distribution is widely spread in Karachi, Lahore, Quetta, Hyderabad, Sakar and other major cities
and remote locations.
Nestlé has contract with leading transport providers (dedicated fleet), however it also hired trucks
to fulfill demand.
The distance from the factories to the factories directly relates to the cost of transportation. The
price of delivery and transportation would be higher if the water were to be shipped from Karachi
to Islamabad. Long distance shipping routes might cause product damage and lower quality. It
would be costly for the corporation to meet demand by transportation from other cities if there was
no HOD production line in Islamabad.

Number of intermediaries
Nestlé Waters, the division of Nestlé that produces bottled water, has a complex supply chain that
involves multiple intermediaries. The exact number of intermediaries can vary depending on the
specific location and distribution network involved.
Typically, the supply chain for Nestlé water bottles includes various intermediaries such as:

1. Raw material suppliers - these are companies that supply Nestlé with the raw
materials needed to make the water bottles, such as plastic resin.
2. Bottle manufacturers - these are companies that produce the plastic bottles that are
used to package Nestlé water.
3. Packaging suppliers - these are companies that supply Nestlé with the labels, caps,
and other materials needed to package and label the water bottles.
4. Distributors - these are companies that help move the bottled water from the
manufacturing plants to retailers and other outlets where consumers can purchase the water.
5. Retailers - these are the companies that sell the Nestlé water bottles to consumers.
So, in summary, the number of intermediaries involved in the production and distribution of Nestlé
water bottles can vary depending on the specific location and distribution network, but typically
includes several different companies that provide raw materials, manufacturing, packaging,
distribution, and retail services.

Coverage plan
The Nestlé water bottle distribution network includes a crucial component called the coverage plan
that works to make sure that customers can access the company's goods quickly and effectively.
The coverage plan, in the context of Nestlé's distribution network, involves figuring out the ideal
number and placement of warehouses and distribution centers required to successfully service the

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target market. This involves researching the best places for these facilities based on
aspects including customer demand, transportation expenses, and inventory carrying costs.
The coverage plan specifies the ideal frequency and routing of deliveries to each area after deciding
the best places for warehouses and distribution centers.
In order to calculate the most effective delivery scheduling, transportation expenses, delivery lead
times, and inventory carrying costs must be considered.
Nestlé may save expenses related to carrying inventory and shipping by creating an efficient
coverage plan that will ensure that its products are available to customers quickly and efficiently.
This might assist the business in maintaining customer satisfaction levels and market
competitiveness.

1) Inventory Policy

Raw material

The raw material inventory policy in the distribution network of Nestlé water bottles involves
managing the inventory of raw materials needed to manufacture the bottles. The policy aims to
ensure that there are enough raw materials on hand to meet production requirements, while
minimizing inventory carrying costs.
To achieve this balance, Nestlé uses a variety of inventory management techniques and policies,
such as:

 Forecasting: The company uses historical data and market trends to forecast demand for
its products and raw materials. This helps to ensure that the right number of raw materials
is ordered and available to meet production requirements.
 Safety stock: Nestlé maintains a certain level of safety stock of raw materials to guard
against unexpected increases in demand or supply chain disruptions.
 Lead time: The company takes into account the lead time for raw materials to arrive and
ensures that raw materials are ordered in advance to avoid stockouts.
 Economic order quantity: Nestlé uses economic order quantity (EOQ) models to
determine the optimal order quantity of raw materials that minimizes inventory carrying
costs while ensuring that there is enough raw material available to meet production
requirements.
Overall, the raw material inventory policy in the distribution network of Nestlé water bottles is
designed to ensure that the company has enough raw materials on hand to meet production
requirements, while minimizing the costs associated with holding excess inventory. This helps to
ensure that the company can operate efficiently and remain competitive in the market.

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 Work in Process (WIP)
To achieve this, Nestlé employs several inventory management techniques and policies, such as:

 Just-in-time (JIT) production: Nestlé uses JIT production techniques to minimize

the amount of WIP inventory that is required. This involves producing goods only when
they are needed, and in the exact quantities that are required.
 Production scheduling: The company uses a detailed production schedule that
specifies the amount of WIP inventory that should be present at each stage of the
production process. This helps to ensure that there is enough WIP inventory to support
efficient production while avoiding excess inventory that can drive up costs.
 Continuous improvement: Nestlé continuously reviews and improves its production
processes to minimize the amount of WIP inventory required.
 Lean manufacturing: The company uses lean manufacturing techniques to reduce
waste and improve efficiency in the production process, which can help to reduce WIP
inventory levels.

Finish Good Stock

The finished goods inventory in the distribution network of Nestlé water bottle refers to the
completed water bottles that are ready for sale and consumption. This includes the Nestlé brand of
bottled water, such as Nestlé Pure Life and Nestlé Splash, as well as other brands that Nestlé may
distribute in its network.
The finished goods inventory is stored in Nestlé's warehouses and distribution centers until it is
shipped to retailers or directly to consumers. The inventory is managed using a variety of inventory
management techniques and policies, such as demand forecasting, safety stock, lead time, and
economic order quantity.
The finished goods inventory is an important aspect of Nestlé's distribution network as it ensures
that there is enough product available to meet customer demand. Proper inventory management
helps to ensure that the right amount of product is available at the right time and place, while
minimizing the costs associated with holding excess inventory.
Overall, the finished goods inventory in the distribution network of Nestlé water bottle is a critical
component of the company's supply chain and helps to ensure that the company can meet the needs
of its customers and remain competitive in the market.

2) Warehousing Requirements
Nestlé has specific warehousing requirements for the procurement, production, and distribution
stages of its water bottle supply chain. These requirements are designed to ensure that the products

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are handled and stored in a manner that maintains their quality and safety, and meets
regulatory and customer requirements. Here are some of the key warehousing requirements in each
stage:

Procurement:
The raw materials used to produce Nestlé water bottles, such as PET resin and cap materials, are
stored in warehouses near the manufacturing facilities. These warehouses must meet certain
quality and safety standards to ensure that the raw materials are not damaged or contaminated.
Additionally, these warehouses should be located near transportation hubs to minimize
transportation costs.

Production:
Nestlé's production facilities have their own warehouses where the finished products, such as
bottled water, are stored. These warehouses must meet strict quality and safety requirements to
ensure that the products are not damaged or contaminated during storage. The warehouses must
also be clean and secure to prevent theft or tampering.

Distribution:
Nestlé's distribution centers are responsible for storing and distributing the finished products to
retailers and customers. These warehouses must meet certain quality and safety standards to ensure
that the products are not damaged or contaminated during transportation and storage. The
warehouses should also be located near major transportation hubs to ensure efficient distribution.

3) Logistics Requirements
Nestlé has specific logistics requirements for the procurement, production, and distribution stages
of its water bottle supply chain. Here are some of the key logistics requirements in each stage:

Procurement:
The raw materials used to produce Nestlé water bottles are sourced from suppliers located around
the world. Logistics requirements for procurement include ensuring timely and reliable
transportation of the raw materials from suppliers to Nestlé's manufacturing facilities. The logistics
team must also ensure that the transportation is compliant with applicable regulations, such as
environmental regulations and customs requirements.

Production:
Nestlé's manufacturing facilities have their own logistics requirements, which include ensuring
timely and reliable transportation of raw materials to the production lines and finished products to
the warehouses. The logistics team must also ensure that the transportation is compliant with
applicable regulations, such as safety regulations and quality standards.

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 Distribution:
Nestlé's distribution centers are responsible for transporting finished products to retailers and
customers. Logistics requirements for distribution include ensuring timely and reliable
transportation of the products, maintaining product quality and safety during transportation, and
complying with applicable regulations such as safety and environmental regulations.

Content 7: System of information sharing

In the supply chain management of Nestle water bottles, there are several information sharing
systems that are used to ensure that the products are manufactured, transported, and distributed in
an efficient and effective manner. Here are some of the information sharing systems that Nestle
use in their supply chain management for water bottle products:

1. Enterprise Resource Planning (ERP) System:

Nestle may use an ERP system to manage and integrate various aspects of their supply chain,
such as procurement, inventory management, production planning, and logistics. This system
allows different departments to share information about the status of the water bottle products
in real-time, enabling better decision-making and improved supply chain visibility.

2. Radio Frequency Identification (RFID):

Nestle may also use RFID technology to track the movement of water bottle products through
the supply chain. RFID tags are attached to the products, and these tags can be read by RFID
readers as the products move through the different stages of the supply chain. This provides
Nestle with real-time information about the location and status of their products, enabling
better inventory management and supply chain optimization.

3. Electronic Data Interchange (EDI):

Nestle may also use EDI to exchange information electronically with their suppliers,
distributors, and logistics partners. This system allows Nestle to share information about order
placement, order status, shipment tracking, and invoice processing in a standardized format,
reducing errors and improving communication efficiency.

4. Collaborative Planning, Forecasting, and Replenishment (CPFR):

Nestle may also use CPFR to collaborate with their supply chain partners on demand
forecasting and inventory replenishment. This system allows Nestle and their partners to share
information about customer demand, production schedules, inventory levels, and promotional
activities, enabling better planning and coordination across the supply chain.

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Overall, nestle use a combination of these and other information sharing systems to manage their
water bottle supply chain effectively and efficiently, ensuring that their products are delivered to
customers on time and in optimal condition.

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