Nestle Operations Management Project

INTRODUCTION:
Nestle Operations Management Project contains report about Nestle Pakistan.
Nestl is the worlds leading nutrition, health and wellness company.
Nestl S.A. is a Swiss multinational nutritional and health-related consumer goods company
headquartered in Vevey, Switzerland. It is the largest food company in the world measured by
revenues.
Nestls products include baby food, bottled water, breakfast cereals, coffee, chocolates, drinks,
healthcare nutrition, sports nutrition, confectionery, culinary and frozen food, dairy products, ice
cream, pet foods and snacks. 29 of Nestls brands have annual sales of over 1 billion Swiss francs
(about $ 1.1 billion), including Nespresso, Nescaf, KitKat, Smarties, Nesquik, Stouffers, Vittel and
Maggi. Nestl has around 450 factories, operates in 86 countries, and employs around 328,000
people. It is one of the main shareholders of LOreal, the worlds largest cosmetics company.

HISTORY
In Vevey, Switzerland, founder Henri Nestl, a German pharmacist, launched his Farine lacte, a
combination of cows milk, wheat flour and sugar, saving the life of a neighbors child. Nutrition has
been the cornerstone of the company ever since.
Nestle is a multinational packaged food company founded and headquartered in Vevey, Switzerland,
and listed on the SWX Swiss exchange with a turnover of 87 billion Swiss francs. It originated in a
1905 merger of the Anglo-Swiss Milk Company for milk products established in 1866 by the Page
Brothers in Cham, Switzerland, and the Farine Lactee Henri Nestle Company set up in 1866 by Henri
Nestle to provide an infant food product. The two World Wars both affected growth: during the first,
dried milk was widely used but the second war caused profits to drop by around 70%. Today, it s the
Worlds largest food Company.

OBJECTIVE
Nestls objective is to consolidate and strengthen its leading position at the cutting edge of innovation
in the food area to meet the needs and desires of customers around the world, for pleasure,
convenience, health and well being.

CORE VALUES

The Nestl global vision is to be the leading health, wellness, and

Nutrition Company in the world. Nestl PAKISTAN subscribes fully to this
vision.
MISSION STATEMENT
 positively influence the social environment in which we operate as
responsible corporate citizens, with due regard for those environmental
standards and societal aspirations which improve quality of life. Henri
Nestl, 1857.
VISION STATEMENT

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.
NESTLES COMMITMENT
Quality and Safety for our consumers is Nestls top priority. This applies to our entire portfolio, from
foods and beverages to all our systems and services.

Quality assurance and product safety is one of Nestls 10 Corporate Business Principles which form
the foundation of all we do.

NESTLE IN PAKISTAN
Nestle has been serving Pakistani consumers since 1988. Nestle acquires 40% share in Milkpak. In
1990, Shiekhupura factory started the production of Nido Milk Powder Cereals. In 1992, Nestle took
over Kabirwala plant and began to develop its Milk collection network. In 1996, Milkpak was renamed
to Nestle Milkpak Ltd. Nestle milkpak was then renamed to Nestle Pakistan in 2005.
DESIGN OF GOODS AND SERVICES
Putting its customers, retailers and wholesalers first is its top priority. Thats why they have developed
one of the most modern and effective customer service practices in the UK.

For us, all this expertise will mean one thing: the chance to build a customer services career that is
second to none. Orders and collections are processed within required time-scales across
all Nestl businesses to getting products delivered to the right people at the right time. They have
responsibility for liaising across the business with Sales, Logistics and Planning and for developing
and maintaining excellent partnerships both within and outside the business, so as to maximize
customer service and customer fulfillment.
As such, good administrative and organizational skills are a must, as is the ability to communicate
effectively and clearly at all levels. The capacity to use initiative and support others as part of a team
will also play a vital role in making customers the happiest customers around.

PLANT LAYOUT
Nestle is using a plant layout which is functional in nature. Layout that can handle varied processing
requirements.

SUPPLY CHAIN MANAGEMENT

A basic purpose of supply Chain management is to control inventory by managing the flows of
materials.

QUALITY MANAGEMENT
Our Quality Management System starts on farms. The Quality Management System not only ensures
the ongoing access to high quality raw materials but also enable farmers to protect or even increase
their income. Often the standard of living of entire rural communities is raised as a result. The system
helps address key global environmental and social issues.
 Quality is built in during product development according to the requirements of the consumers and
following all food safety and regulatory requirements. Nestls R&D network applies in this Quality by
design to all of product. Nestle apply internationally recognized Good Manufacturing Practices (GMP)
to ensure quality and food safety. GMP covers all aspects of manufacturing, including standard
operating procedures, people management and training, equipment maintenance, and handling of
materials.

Nestl Quality Policy

o Build trust by offering products and services that match consumer expectation and
preference
o Comply with all internal and external food safety, regulatory and quality requirements
o Gain a zero-defect, no-waste attitude by everyone in our company
o Make quality a group-wide objective

Nestl Quality Management System

Quality Management System is the platform used globally to guarantee food safety, compliance
with quality standards and to create value for consumers. The internal Quality Management System
is audited and verified by independent certification bodies to prove conformity to internal standards,
ISO norms, laws and regulatory requirements.
QUALITY
Quality is the core competitive priority of nestle. They take quality in two ways.

High performance design

Consistent quality
Availability of its products
Customer satisfaction
Continuous improvement
Quality control
Employee involvement

IMPROVING QUALITY THROUGH TQM

Programs for employee involvement and continuous improvement are aimed at improving quality in
general sense. However, TQM often focuses on benchmarking, and product and process design.

QUALITY CERTIFICATION
Nestle has its own quality standard certification which has much higher standards as compared to
ISO, called NestleQuality Standards. Nestle Kabirwala is approved by Nestle Quality Standards. In
which quality is maintained right from the purchase of raw
material to the distribution of the products to the ultimate consumers.

Quality of Materials
Quality of Process
Distribution
Continuous improvement
Customer satisfaction
Employee involvement
 BENCH MARKING
Benchmarking is a continuous systematic procedure that measures a firms product and process
against industry leaders .As NESTLE is industry leader in food products, each factory has its
benchmark to improve quality. Nestle Milk Pak Kabirwala takes Nestle Tambula factory Australia as
bench mark, which is the best Nestle factory in all over the world. Nestle Milk Pak Kabirwala is at
2nd number.

INVENTORY MANAGEMENT
Following types of inventories are kept by Nestle Pakistan Kabirwala.

RAW MATERIALS
Raw Material inventory of Nestle consists of milk. Their Raw Material is kept in Silos. Silos are the big
tanks, which are used to store the milk. Inventories of their raw materials cannot be maintained in bulk
quality and for a longer period of time. The factory can store the milk up to 596000 liters. They have
five silos for storing the milk all have different capacities. The milk can remain
for the period of 36 hours without losing quality.

WORK IN PROCESS INVENTORIES

Work in process inventories are not to huge. Whatever they put into production they stop production
after its completion if there is no unusual
breakdown. The unpacked goods inventory can be considered as the WIP inventory. The condensed
milk is stored in Bins. Bins are the big boxes in which the milk powder is stored before packing it.
Then through an automatic plant the milk is packed. The butter is stored in huge tubs.

FINISHED GOODS INVENTORY

Inventories of packaging material can also be included in WIP
inventories. The packing material is purchase externally. The supplier of packing material is packages
private limited, Pakistan. There is a huge warehouse within the factory. In the warehouse they store
the finished goods.

MATERIALS MANAGEMENT
There is a separate department in the factory which isresponsible for purchasing the materials and m
anagers itssupply. There is a centralized system of material management. Thewhole operations of whi
ch are looked after by the operationsmanagers. There is also a stores officer which also looks after
the materials management.

INVENTORY CONTROL SYSTEMS

For controlling inventory, Nestle use Continuous Review which is the whole computerized system. In
this way they keep a continuous control over their inventory. The stores officer not only maintains
records but also makes visits at the warehouses to see the actual situation of materials. The
officer can review the inventory at any time. Operations manager and the auditing people also check
the inventory and its records so that the risks of loss or manipulation may be minimized.

GLOBAL FOCUS OF NESTLE

A positive attitude toward work
A pragmatic, realistic approach to doing business
An open-minded approach to the world
A minimal number of systems and written guidelines
A personal style of management
An atmosphere of mutual trust
An avoidance of showing off, windy rhetoric and hypocritical remarks
 An emphasis on practical experience and on the setting of good examples.
CAPACITY PLANNING OF NESTLE
The best mechanism for running a business is to match level of demand (goods, services that
customers need) with supply of capacity (recourses, labor force that the business inputs in the
production process). They also define capacity as the maximum level of value added activity over a
period of time. Thus three main factors come into force here the capacity of resources and labor
force, the process operation which itself leads to satisfying customers through matching demand. It is
very important to plan and coordinate all 3 factors very effectively because a difference in capacity
and performance easily affects: costs, revenues, working capital, flexibility, quality of goods, speed of
response and others.

PRODUCTION CAPACITY OF NESTLE

The worlds leading nutrition, health and wellness company Nestl, with a 100 year presence in
Turkey, is completing the construction of its breakfast cereals production facility which is going to meet
the domestic demand and make Turkey an export and production base for the nearby countries.
Nestl is going to start the production of the breakfast cereals, which it has imported up to this date, in
Turkey. Built with the support of the Investment Support and Promotion Agency of Turkey (ISPAT) in
Karacabey, Bursa, the breakfast cereals production facility will begin production with a production
capacity of over 10,000 tons in the second half of 2011. All of the raw materials to be used in the
production processes will be procured domestically and Nestl will buy 4,350 tons of sugar, 5,350
tons of wheat, 4,000 tons of corn and 1,000 tons of rice per year as of 2013. By the completion of
production facility, almost all Nestle products which are sold in Turkey shall be produced in Turkey.
The production facility, which will transform Turkey into a regional hub in the breakfast cereals
category, is launched to the press through a meeting attended by Minister of Trade and Industry.

MAIN FOCUS OF NESTLE

People first
Employees, people and products are more important at Nestle than systems. Systems and methods,
while necessary and valuable in running a complex organization, should remain managerial and
operational aids but should not become ends in themselves. It is a question of priorities. A strong
orientation toward human beings, employees and executives is a decisive, if not the decisive,
component of long-term success. Nestle in very much keen about TALENT MANAGEMENT and there
HR department works to hire and retain the best industry personnel.
Quality products
Our focus is on products. The ultimate justification for a company is its ability to offer products that are
appealing because of their quality, convenience, variety and price products that can stand their
ground even in the face of fierce competition.

Long-term view
Nestle makes clear a distinction between strategy and tactics. It gives priority to the long-range view.
Long-term thinking defuses many of the conflicts and contentions among groups this applies to
employment conditions and relations with employees as well as to the conflicts and opposing interests
of the trade and the industry. Of course, our ability to focus on long-term considerations is only
possible if the company is successful in the struggle for short-term survival. This is why Nestle strives
to maintain a satisfactory level of profits every year.

Flexibility and simplicity

From a strictly organizational point of view, flexible, simple structures work best and excessively large
units should be avoided whenever possible. In both respects Nestle has a natural advantage:
Although it is a big company, it is spread out over many countries and each of Nestle s factories has
its own management and responsibility and simplicity

Uniformity
 A very important concern at Nestle has to do with uniformity: how consistent Nestle s principles,
policies, rules of conduct and strategies should be, and to what extent they should differ depending on
the country, subsidiary, region, branch or group of products. In general, Nestle tries to limit the
uniformity of its policy to a requisite minimum. This minimum is then systematically enforced, unless
there are compelling reasons in a given market that justify deviation from policy.

Diversification
Nestle does not want to become either a conglomerate or a portfolio manager. Nestle wants to
operate only those businesses about which it has some special knowledge and expertise. Nestle is a
global company, not a conglomerate hodgepodge. We regard acquisitions and efforts at diversification
as logical ways to supplement our business, but only in the context of a carefully considered corporate
marketing policy.

Research and development

Foresight Nestle is probably unique in the food industry in having an integrated research and
development program that engages in applied and basic research in the fields of human physiology,
health, nutrition and raw materials. Our research and development program gives us the capacity to
create new types of products that we cannot even imagine today, especially in the critical area where
preventive medicine and food products overlap.

For Nestle, this is particularly important in packaging. Concern for the effects of packaging on the
environment is forcing us to look for new solutions and to consider their interaction with our biological
product food.

Nestle SWOT ANALYSIS

Strengths:
BRAND STRENGTH:

Nestle has some very strong brands like Nescafe, Meggi and Cerelec. These brands are almost
generic to their product categories.

PRODUCT INNOVATION:

The company has been continuously introducing new products for its Pakistani patterns on frequent
basis, thus expanding its product offerings.

RESEARCH & DEVELOPMENT:

Nestle has a worldwide network of centers in 17 locations on four continents. An international staff of
3500 engaged in the search for innovative new products and the renovation of existing ones.

MARKET SHARE:

Another thing is high level of market share and that people all over the world trust and recognizes
Nestle as a big brand name.

LOW COST:

They are low cost operators which allow them to not only beat competition but also edging ahead
operating excellence, innovation, renovation, product availability and communication are major
strengths.
Weaknesses:
Supply chain:

Company has a complex supply chain management.

Opportunities:
Expansion:

Company has potential to expand its business in small towns and others geographies. They can
introduce breakfast cereals, chocolates and others thing like that.

Product offering:

Company has opportunity to introduce more new brands.

Threats:
Competition:

Because the world is global village and a lot of companies exist in it and trying to produce qualitative
product so the competition is increasing and to maintain the level of the products is getting tough day
by day.

International marketing standards:

Nestle is facing the threat by the world wide community due to its violation of international marketing
standards. Many conferences and campaigns have been held against nestle in this regard which can
damage the name of the company and also can break the trust of their customers.

Human Resource Management and Job design

The Recruitment Services team in the UK is recognized within Nestl globally as the benchmark in
leading recruitment practices. Thats because we dont just fill jobs. Instead, we work with the
business to proactively identify and fill their talent gaps. We constantly stand back and work out new
ways to attract the very best and keep ahead of the competition, but it isnt always easy.
Predominantly based in Croydon and York, we provide a service to Nestl, Purina PetCare and Nestl
Waters, managing the full recruitment cycle for management, staff and some factory roles. Acting as
internal consultants, our remit is comprehensive initially taking the vacancy briefing, defining the
attraction strategy, designing the selection process and managing the offer.

You wont be surprised to know that the key to success in this team is great influencing and
stakeholder management skills coupled with the ability to juggle lots of balls. Ideally youll combine
recruitment agency and in-house experience. The pace can be hectic, but we do make the time to
inject innovative ideas into what we do and how we work, and have some fun along the way!

So, if you want to join a hard-working, high-achieving team with a relentless drive to keep getting
better at what we do, this is the place to be.

As a member of the Talent Management and International HR Team, on the other hand, youll focus
on developing the potential and careers of all our employees, particularly those with high levels of
performance and potential who are likely to be Nestl leaders of the future. Working with the global
Nestl business, you and your team will develop the framework and processes which enable us to
identify and develop the potential of our employees. As part of this, the team will support individuals
with a clear career development plan to go on international assignments out of the UK to locations
such as Nestls international headquarters in Vevey, Switzerland, or to other Nestl markets around
the globe.
As a member of our Learning and Development Team, youll divide your time between supporting
HR Business Partners in the development of cutting-edge interventions and supporting change
through far-reaching development programmes. Youll also help us create and implement functional
development programmes across the business, covering everything from manufacturing to supply
chain.
As a member of our Reward and Employee Relations Team, youll join one of two expert sub-
teams, each with specific responsibility for business-wide strategic and operational remits. As part of
the Employee Relations sub-team, youll provide business-wide advice and guidance to line managers
and the HR community on individual employee relations matters and to HR Business Partners on
broader employee relations and change management issues, as well as developing and implementing
our policies and procedures in this area and undertaking relevant project work. As part of the Reward
sub-team, on the other hand, youll focus on maximizing our return on investment to deliver Reward
that will motivate our employees to perform at the highest level as well as managing our overall
Reward principles and processes including base salary, incentives and Flexible Reward.

Competitive advantages

Unmatched
product and brand
portfolio
Unmatched R&D There are inherent links between great products and strong R&D,
capability between the broadest geographic presence and an entrepreneurial spirit,
Unmatched between great people and strong values.
geographic presence
People, culture,
values and attitude

Growth drivers

Nutrition, Health
and Wellness
These four areas provide particularly exciting prospects for growth. They
Emerging markets are applicable across all our categories and around the world.
and PPP Everything we do is driven by our Nutrition, Health and Wellness agenda,
Out-of-home Good Food, Good Life, which seeks to offer consumers products with the
leadership best nutritional profile in their categories
Premiumisation

Operational pillars

Innovation &
Renovation Nestl must excel at each of these four inter-related core competences.
Wherever, They drive product development, renewal and quality, operational
whenever, however performance, interactive relationships with consumers and other
stakeholders and differentiation from our competitors.
Consumer If we excel in these areas we will be consumer-centric, we will
communication accelerate our performance in all key areas and we will achieve
Operational excellence in execution.
efficiency