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Tables of Contents
EXECUTIVE SUMMARY: ........................................................................................................... 3 INTRODUCTION TO NESTLE COMPANY: .............................................................................. 4 MEANING OF NESTLE: ........................................................................................................... 5 Mother Bird ................................................................................................................................. 5 NESTLE IN PAKISTAN:............................................................................................................... 5 VISION: .......................................................................................................................................... 5 MISSION STATEMENT: .............................................................................................................. 5 OBJECTIVES: ................................................................................................................................ 6 PROBLEM STATEMENT: ............................................................................................................ 6 SUSTAINABILITY IN NESTLE BUSINESS:.............................................................................. 6 ALTERNATIVES GENERATED: ................................................................................................ 6 SHORT TIME ALTERNATIVES:................................................................................................. 7 Value Stream Mapping: .............................................................................................................. 7 Nestle Continues Excellence: ...................................................................................................... 7 Kaizan: ........................................................................................................................................ 7 LONG TERM ALTERNATIVES: .............................................................................................. 8 Just in Time: ................................................................................................................................ 8 Lean Production in Nestle: ...................................................................................................... 8 Benefits of Lean Production: ................................................................................................... 8 Built in Quality: ........................................................................................................................... 9 Internal Process Stability:............................................................................................................ 9 Waste Hunting: ............................................................................................................................ 9 Nestle Waste Hunting: ............................................................................................................. 9 5S (Sort, Set Shine, Standardize, Sustain): ............................................................................... 10 Sort: ....................................................................................................................................... 10 Set in order: ........................................................................................................................... 10 Shine: ..................................................................................................................................... 10 Standardize: ........................................................................................................................... 10
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Sustain: .................................................................................................................................. 10 Time Based Management: ......................................................................................................... 10 EVALUATION OF ALTERNATIVES: ...................................................................................... 11 NESTLE STRATEGY: ................................................................................................................. 11 IMPLICATIONS & RECOMMENDATIONS: ........................................................................... 13 Selected Strategy: ...................................................................................................................... 13 CONCLUSION: .......................................................................................................................... 14
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EXECUTIVE SUMMARY:
The purpose of this report is to study and analyze assigned case study of Nestle in depth. Nestl is the worlds leading nutrition, health and wellness company. It manufactures more than 70 brands in the UK. Nestl is one of the UK and Irelands major exporters. Henri Nestl founded the company in 1867. Main purpose of study is to identify the key issues faced by them in factory while production and after investigation give them best alternative for its solution. We identified that the Nestle Water was facing a problem of inefficiency in the production process and shortage of time and resources. It wants to build a brand new high-tech combined plant and warehouse facility to bottle the two local waters. To solve their problem we study different techniques of lean production that are categories in two parts short term alternatives and long term alternatives. Short term alternatives include Value Stream Mapping, Nestle Continuous Excellence and kaizan. Long Term Alternatives were just in time, Built in Quality, Internal Process Stability, and 5S (Sort, Set Shine, Standardize, and Sustain), Time based management and Waste Hunting. After analyzing each alternative separately we reached at final decision that Nestle Water should adopt just in time lean production techniques that best meet to their problem solution. As JIT focuses on continuous improvement but only works as part of an overall lean strategy. It can improve the efficiency of processes. It can lead to a better return on investment through improving productivity. JIT also allows for fewer materials to be held at anyone point which can reduce working capital needs as less finance is needed for stock, leading to better financial performance. This can lead to better returns to stakeholders such as investors, as any finance invested is yielding a direct return. Selected strategy for Nestle is Just In Time (JIT) which can benefit a lot in terms of reduced storage costs, low loss of products are due to obsolescence and lower inventory holding costs.
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heritage brands include HIGHLANDER, MILO, MAGGI and NESCAF. Whilst Nestl is well known for its confectionery business, this represents only a small part of todays product portfolio.
MEANING OF NESTLE:
Henri Nestle endowed his company with the symbol derived from his name, his family coat of arms, the nest with a,
Mother Bird
Protecting her young, became the companys logo and a symbol of the company care and attitude to life-long nutrition. The Nestls nest represents the nourishment, security, and sense of family that are so essential to life.
NESTLE IN PAKISTAN:
Nestle head office in Pakistan is in Lahore. It also has its registered office in Lahore. Nestle has divided the whole Pakistan in three zones: Northern Zone Central Zone Southern Zone
It has eight (8) regional offices in Pakistan. These offices work under their respective zonal offices.
VISION:
At Nestle, we believe that research can help us to make better food, so that people live a better life.
MISSION STATEMENT:
Nestle is dedicating to providing the best foods to people throughout their day, throughout their lives, throughout the world. With our unique experience of anticipating consumers needs and creating solutions, Nestle contributes to your well-being and enhances your quality of life.
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OBJECTIVES:
Main objective of Nestle is to provide safe, tasty, convenient, and nutritious food to improve health and well-being of consumers of all ages all over the world. To meet the needs and desires of todays and tomorrows consumers, Nestle is strongly committed to Research & Development (R&D) to improve existing products and develop new foods with specific health benefits.
PROBLEM STATEMENT:
Nestl Waters UK (NWUK) decided to look for a new site and invest 35 million to build a brand new high-tech combined plant and warehouse facility to bottle the two local waters Buxton Natural Mineral Water and Nestl Pure Life spring water. The UK bottling factory at that time had no space to expand to meet demand. The site also had inefficiencies in the production process which meant time and resources were unable to be optimized. In response to these problems, our study proposes to investigate different techniques of lean production like just in time, kaizan Value Stream Mapping, Nestle Continuous Excellence Build in Quality and Internal Process Stability
ALTERNATIVES GENERATED:
After a complete analysis of nestle case study we found that Nestle Water UK wants to build brand new high-tech combined plant and warehouse facility to bottle the two local waters but it was facing different problems. The main problem which we identified is inefficiencies in the production process which meant time and resources were unable to be optimized. To solve these
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issues we generated different alternatives that are broken down into two different categories, short and long term alternatives. Short term alternatives describe changes to the changeover process that can be done in a very short time with a minimum investment and can have immediate results. On the other hand, long term alternatives describe more complex changes to the system that imply a major capital investment and because of its complexity take longer to implement.
3. Kaizan:
One of the most popular buzzwords in business today is the word kaizen. It is a Japanese word meaning incremental improvement. Kaizen was formalized by the Toyota Production System, which is now utilized throughout the United States as lean manufacturing. Kaizen focuses on eliminating waste, improvement productivity and achieving sustained continual improvement in targeted activities and processes of an organization. The term kaizen is often coupled with another
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word to create the phrase kaizen event. The kaizen event is the term given to a highly focused continuous improvement event consisting of a team working together for a brief time period to solve a business problem. Small improvement leads to big savings.
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2. Built in Quality:
Built in Quality is a strategy that minimizes the need for inspection "after the fact" and enables prompt problem solving. Be proactive and not reactive; it is much less costly and keeps customers and associates happier. Quality cannot be inspected into a product. In a low-product variability remanufacturing context, the tools of built-in-quality are used with a great deal of specificity and specialization to simplify and error-proof production processes. This lean methods increase process flow and efficiency through an emphasis on standardization, grounded in the economies of scale paradigm. It can be useful for Nestle.
4. Waste Hunting:
The aim of lean Production is to reduce the quantity of resources used. Lean production should mean less use of labor, materials, space and time. Muda is the Japanese term used for waste. Muda is broken down into the seven areas that make up the mnemonic TIMWOOD. Lean production makes it possible to eliminate waste by reducing defects so that products are 'right first time' and are of a quality that meets. Nestl Waters then can carry out a waste hunting exercise of the old factory looking at the seven areas of Muda. This exercise established that where the waste is present. Through exercising waste hunting Nestle can reduce the excess material used in the process, waiting or delays in different ways i.e. raw material, packaging and finish goods. Nestle Waste Hunting: Nestle used the waste hunting exercise to reduce the excess material used in the process, waiting or delays in different ways i.e. raw material, packaging and finish goods. They reduce the process
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of labeling on bottles at different departments and merge that printing process in a single department. This reduced the cost of printing and on defective bottles. Through this, it also reduced the cost loading in trucks. And allocate the unique tasks in specific activity.
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It improves cash flow since money is not tied up in stocks. The system reduces waste, obstacle and damaged stock. The cost of stockholders is reduced significantly. The motivation of workers is improved; they are given more responsibility and encouraged to team work.
EVALUATION OF ALTERNATIVES:
After generating the list of alternatives, seen in the above section, the setback in the changeover process can be synthesized into two main problems inefficiency in the production process and shortage of time and resources. Having this in mind, the alternatives were narrowed down to attack the core of these two problems. The following sections explain the problems in a more detailed way and give a solution using the proposed alternatives. After short term alternatives have been put in place for a more consistent and efficient changeover process and the system has reached a plateau, long term alternatives can be place on top of the already placed short term alternatives and reach new efficiency and productivity heights. Long and short term alternatives can work in conjunction to create a better work environment, a better work flow and a more efficient changeover process. The difference between long term alternatives and short term alternatives is that long term alternatives are more complex, take a considerable investment and in most of the cases installation as well as training are needed.
NESTLE STRATEGY:
Nestls objectives are to recognized as the world leader in Nutrition, Health, and Wellness, trusted by all its stakeholders, and to be the reference for financial performance in its industry. They believe that leadership is not just about size, it is also about their behavior. They recognize trust is earned only over a long periods of time by consistently delivering on their promises. These objectives and behavior are encapsulated in the simple phrase Good Food, Good Life, that sums up their corporate ambition. The Nestle roadmap is intended to create alignment for their people behind a cohesive set of strategic priorities that will accelerate the achievement of their objectives. These objectives demand from their people a blend of long term inspiration needed to build for the future and short-term entrepreneurial actions, delivering the necessary level of performance. They are seeking to achieve leadership and earn that trust by satisfying the expectations of consumers,
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whose daily choices drive the performance of shareholders, of the communities in which they operate and of society as a whole. They believe that it is only possible to create long term sustainable value for their shareholders of their behaviors, strategies, and operations are also creating value for the communities where they operate for their businesses and for their consumers, and they call this Creating Shared Value. They are now investing for the future to ensure the financial and environmental sustainability of their actions and operations in capacity, technology, capabilities, in people, in Brands, in R & D. their aims to meet todays needs without compromising the ability of the future generations to meet their needs, and to do so in a way which will ensure profitable growth year after year and a high level of returns for their shareholders and society at a large over the long-term. Nestle describes itself as a food, nutrition, health, and wellness company. They believe their strengthening their leadership in this market is the key element of their corporate strategy. This market is characterized as one in which the consumers primary motivation for a purchase is the claims made by the product based on nutritional content. In order to reinforce their competitive advantage, Nestle created Nutrition as an autonomous global business unit within the organization, and charge it with the operational and profit and loss responsibility for the claim- based business performance by offering consumers trusted, science based Nutrition products and services. The Corporate Wellness Unit was designed to integrated nutritional value-added in their food and beverage industries. This unit will drive the nutrition, health, and wellness organization across all their food and beverage businesses. It encompasses a major communication effort, both internally and externally, and strives to closely align Nestls scientific and R & D expertise with consumer benefits. This unit is responsible for coordinating horizontal, cross-business project that address current customer concerns as well as anticipating future consumer trends. Nestle business level strategy is integrated cost leadership or differentiation with wide range of products and low cost operators. Nestle strategic leadership is to force the business to become more efficient, to create a regional manufacturing network, integrate the companys business on a global scale and to reduce marketing expenditures by exploiting the synergies between brands. Their strategy to develop R & D network by improving existing products and creating tomorrows nourishments, two third of companys R & D activities are dedicated to renovating existing products, the remaining third is reserved for radical product innovations, improve on operational level and a number of organizational changes.
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CONCLUSION:
For a company that will turn one hundred in a decade, Nestle has almost tried all of the strategies there can be. Nestle company has expanded internationally, helped countries economies grow, be environmentally conscious and create joint ventures with other companies in which enhanced Nestls and these companies performance positively. The theory based framework and models might be very useful but the application in practice might be achieved very hard. It will also depend on the execution skills of the companies and the organizational culture. Nestle company is an international company which came to the stage it is today by gaining superior competitive advantage over its rivals. The focus product differentiation strategy has been very successful although it may not work for other firms. The company is able to create and deliver value not only by offering distinguished products but also gaining effectiveness and efficiency by reengineering its business process. By doing all recommendations and follow all these steps of adapting JIT strategy, Nestle will do better in the future than its competitors and might be trend setter in some criteria and also gain its above average returns to their company.
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