Course Title: Introduction to Product and Operation Management

Course ID: MGT330; Section: 05

Submitted By

Zarin Taslim 1620157

A.S.M Mohim 1630486

Sumaia Hamid 1720858

MD. ShadmaanAhsanMahi 1710150

Monzoor Murshed Babu 1731381

Md.Tohidul Islam Arafat 1731645

Submitted To

MS Seeratus Sabah (Dept. of Management)

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 Lette
r of Transmittal
23stMarch 2019
MS Seeratus Sabah
Lecturer

School of Business

Independent University, Bangladesh

Subject: Supply Chain Management for product of Nestle

Dear Mam,

This is the report that we have done for the ‘MGT330’ on the topic of “
Supply Chain Management for product of Nestle” The report has been completed by the
knowledge that we have gathered from the course “MGT330”.
We are thankful to you because of providing us guidelines and helped us by giving valuable
information. We would be glad if you read the report and we will try our best to answer all the
questions you want to ask about the report.
We have tried our best to complete the report correctly. We do hope that this will help you to get
through the whole process. However, if you have any queries regarding this report we will be
more than happy to clear out those queries without any hesitation.

Sincerely,

ZarinTaslim

A.S.M Mohim
Sumaia Hamid
Md.Tohidul Islam Arafat
Md.Shadmaan Ahsan
Monzoor Murshed Babu

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Executive Summary
One of the leading Nutrition, Health and Wellness Company Nestle strives to serve its customers
with the best quality products. Its story of excellence is not limited to product sales exclusively
rather it also concentrates in providing brilliance consistently for every group of stakeholders. It
focuses not only to nourish its employees, distributors, retailers and other stakeholders but also to
nurture its respective vendors businesses also.

Therefore, its internal structure is designed in a constructed and systematic manner so that
stakeholders can contribute efficiently. An open platform is created by the internal organizational
culture where every member are allowed to exhibit their extraordinary views and opinions that
ultimately help Nestlé Bangladesh to be competitive at all of its operational phases. Thus far, the
description of the internal department, mainly Supply Chain, gives a well-defined picture
through this report that explains the process and also showcases the inner relation and
operational procedure.

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Contents

Letter of Transmittal........................................................................................................................2
Executive Summary.........................................................................................................................3
Introduction......................................................................................................................................4
Case Study.......................................................................................................................................5
Analysis and Finding:......................................................................................................................7
The key flows in
Supply Chain...............................................................................................................................8
The Make Process:......................................................................................................................10
The production
process.......................................................................................................................................10
The Materials
Requirements
Planning.....................................................................................................................................11
The Supply Chain
Forecasting.................................................................................................................................12
References......................................................................................................................................13

Introduction
Nestle is one of the largest food companies in the world. The product of Nestle mainly includes
the cereals, baby food, coffee, tea as well as ice cream and pet foods. The company was formed

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in the year 1905 by the merger of the Anglo-Swiss Milk Company. The company grew
considerably during the World War 1st. One of the biggest competitors of the company is the
Anglo-Swiss Condensed Milk Company that is already a leading manufacturer in Europe.  As a
result, in order to compete with this company, Nestle launched a condensed milk product of its
own .

The report mainly provides an overview about the supply chain management about the company
Nestle. The report explain the key flows in supply chain where in the effectiveness of the
information flow, product flow, return flow and cash flow of Nestle is explained. The
effectiveness of the make process in the company has also been explained in the report .

Case Study
Nestle DSD Controls Costs through Proper Warehouse Management

Using proper supply chain management and order processing,Nestle DSD is able to maintain
accurate orders and delivery.

Nestle is one of the world’s leading nutrition, health, and wellness companies, saw anopportunity
that it just couldn’t resist, but in the Kraft’s North American frozen pizza business.As Kraft
divested itself of one of its only major frozenfood products, Nestle needed to have an adequate
supplychain infrastructure to handle this type of product.This type of product had a limited shelf-
life and requiredspecial delivery and handling to prevent spoilage. Nestle already had a ton of
experience with frozenproducts like ice cream, and they looked to InsightGroup for help in this
new product distribution. Nestle was working with Insight through its association withDreyer’s,
who had been merged with Nestle ice creamproducts years earlier. Over a 4 year period, Insight
had worked with Nestle to develop a program that began with theNational Warehouse Director
rolling out the solution in cities like Seattle and Chicago first, and then company-wide. The
system they had chosen. The DC Expert, integrated fully with the existing ERP system. This was
essential to maintainaccurate orders and maintain proper deliveries.

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Still Frozen, But Completely Different Product

The acquisition of the pizza line presented a whole new set of challenges for Nestle. All of the
systems neededto redesign to accommodate the differences betweenshipping ice cream and
pizza, especially since you are working in a direct to store delivery (DSD)
environment.Coordination between stores, corporate, and thewarehouse must be seamless. There
is just too much risk if you try to deliver too much, which won’t fit in the store’s coolers, or if
you deliver too little and the storerooms out, costing both companies sales. Nestle DSD and
Insight worked together to alter plans on 14 different operations during the acquisition process,
nearly 13 weeks. As the DC expert has beenrolled out into different markets across Nestle DSD's
supply chain, the coordination and data becomes evenbetter. The integration of the system with
the existingERP allows for a seamless order process while allowingfor forecasting and manual
order changes.

Stock Levels Affect Everyone

Keeping every store adequately stocked at all times is thepriority, whether this means a once a
week delivery, or 3 times a week. With this type of collaboration and order accuracy, shipping
and storage costs are driven down.The more accurate the ordering solution becomes the less
waste and overstock that is destroyed. The out-of-stocklevel will also decrease significantly.No
longer are warehouses sitting full of product waiting to go out.If product is coming in, product is
going out. A free-flow of productfrom manufacture, to distribution,to DSD is essential. It keeps
the factories working at the correct levels without creating overstock, or having to work overtime
if enough products was not initially ordered and therefore produced.

DSD Can Be A Challenge, But Worth It

As more retailers are looking to companies to provideDSD services, it can be a challenge to the
suppliers.Having the right DC management system in place canchange everything. In an age
where margins are thin,being able to capitalize on accurate deliveries and supplychain
management can be the difference between success and failure. Nestle DSD has taken all of the
steps to make sure that as the DSD business grows, Nestle DSD is right there with it.

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The key flows in Supply Chain the product flow refers the conditions where the flow starts from
the raw materials to the product to the consumer. The product flow is very effective in the case
of Nestle. The reason is that Nestle ensures the highest level of quality and safety before the
products reaches the customers. The ensuring of the quality and the safety takes place millions
times a day. The company ensures the highest possible standards along the supply chain that
starts from the raw materials via packaging, distribution to the consumer. The products of Nestle
are checked on the product line and as a result, the customers feel safe with the product, which
increases the demand. In order to meet the strict standards, the local, and the international
regulation, the products are checked on the line of production. On the other hand,the money flow
indicates the flow of funds from the customers to the manufacturers and from the manufacturer
to the supplier. The company Nestle mainly faces three important organization related challenges
that includes the maximization of profits, conserving cash flow as well as the creation of the
shareholder value. The cash flows from the consumers to the manufacturer as the products are
mostly sold in the retail shops. The information flow involves the sharing of the information
from the customers as well as the suppliers. The Nestle nutrition council plays an important part
in this case as they provide the company with the appropriate information in order to develop the
nutritional needs. The council is mainly comprised of ten global well-known nutritional
scientists. The information is also provided to educate the customers about the ingredients in the
products. This information will help the customers to avoid becoming overweight or obese. The
return flow is quite similar to the cash flow where the money returns to the company in the form
of payment. In other words, the money that is gained by the company by selling its produce is
known as the return flow. The supply chain encompasses the company and the flow of the goods
and services within the company, which starts from the use of the raw materials until the
customers. In the case of Nestle, the supply chain management plays an important part in Nestle.
It will help to meet the satisfaction of the customers and leads to the success of the company.
The information flow is the most effective theories of the supply chain management as with the
help of the of the information flow the consumers will become more aware about the product.
More improvement needs to be applied to enhance the information flow so that the consumers
are more educated about the product. Thus, the supply chain theories will be able to bring the
improvement in the company, as it will help to touch the major issues in the company. The

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supply chain will help to lead to the international expansion of the company and it will lead to
sourcing.

Analysis and Finding:

The key flows in Supply Chain: The item stream alludes the conditions where the stream begins
from the crude materials to the item to the customer. The item stream is powerful on account of
Nestle. The explanation is that Nestle guarantees the most significant level of value and security
before the items arrives at the clients. The guaranteeing of the quality and the wellbeing happens
millions times each day. The organization guarantees the most noteworthy potential norms along
the production network that begins from the crude materials by means of bundling, circulation to
the customer. The results of Nestle are kept an eye on the product offering and therefore, the
clients have a sense of security with the item, which builds the interest. So as to fulfill the
exacting guidelines, the neighborhood, and the worldwide guideline, the items are kept an eye on
the line of creation. On the other hand, the cash stream demonstrates the progression of assets
from the clients to the makers and from the producer to the provider. The organization Nestle for
the most part faces three significant association related difficulties that incorporates the
amplification of benefits, saving income just as the formation of the investor esteem. The
incomes from the customers to the producer as the items are generally sold in the retail shops.
The data stream includes the sharing of the data from the clients just as the providers. The Nestle
nourishment committee has a significant impact right now they furnish the organization with the
proper data so as to build up the dietary needs. The board is chiefly included ten worldwide
notable wholesome researchers. The data is likewise given to instruct the clients about the
fixings in the items. This data will assist the clients with avoiding getting overweight or
corpulent. The arrival stream is very like the income where the cash comes back to the
organization as installment. As it were, the cash that is picked up by the organization by selling
its produce is known as the arrival stream. The inventory network includes the organization and
the progression of the products and ventures inside the organization, which begins from the
utilization of the crude materials until the clients. On account of Nestle, the production networks
the executives has a significant impact in Nestle. It will assist with meeting the fulfillment of the
clients and prompts the accomplishment of the organization. The data stream is the best

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speculations of the store network the board likewise with the assistance of the of the data stream
the shoppers will turn out to be increasingly mindful about the item. Greater improvement should
be applied to upgrade the data stream with the goal that the purchasers are progressively
instructed about the item. Along these lines, the store network speculations will have the option
to acquire the improvement the organization, as it will assist with contacting the significant
issues in the organization. The inventory network will assist with prompting the global extension
of the organization and it will prompt sourcing.

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The Make Process:

In order to ensure an effective and well-organized supply and logistics management, the
company needs to incorporate the make process. So as to guarantee a powerful and efficient
stock and coordination the executives, the organization needs to consolidate the make procedure.
The creation procedure for the most part alludes to the exercises that are executed by the
organizations for the booking and arranging the creation productively. The strategy by which a
Nestle manages the month to month requests and conjecture the future deals are mostly with the
assistance of the make procedure. Creation arranging is extremely compelling in an association
like Nestle so as to execute a prudent activity in the assembling unit. The creation arranging will
assist with giving a superior client care as Nestle will have the option to experience a legitimate
booking and quickening of work. The creation arranging will assist the organization with
delivering the best quality item in time. This will, thusly, help to win the certainty of the
clients.In Nestle, the first step that is involved in the production planning process is routing. With
the help of this process, Nestle decides the path of work and the succession of operation. The
company with the help of this process fixes the quality and the amount of the goods in advance.
The company also determines the number of workers, materials that is to be used in order to
produce the products. The routing process mainly depends on the nature of production .A sound
production planning process will help to maintain a systemized operation in Nestle. The
production planning had helped to products to remain stable in Nestle. The objectives of the
production planning in the case of Nestle are to minimize the wastage of milk and to achieve the
predetermined level of production output. The production planning also helps the company to
makes the efficient use of imported materials.

The production process : The people basically influence the steering procedure and thus, this
procedure attempts to meet the desire for the shoppers. The steering procedure causes Nestle to
decide the best and the least expensive chain of activity which is extremely compelling for the

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organization. The booking procedure is the second step that is engaged with the creation
arranging process. The viability of this procedure is that with the assistance of this procedure,
Nestle masterminds the different procedure of assembling arranged by primary concern. The
time component is the most significant factor in the booking procedure. The activity plan and the
day by day plan are the two most significant elements that are identified with the planning
procedure. With the assistance of this procedure, the organization will have the option to finish
the activity efficiently and furthermore in time.

The Materials Requirements Planning: The material prerequisite arranging process

fundamentally guarantees that the materials are accessible so as to deliver the products. It
likewise guarantees that the completed merchandise arrive at the customers. The material
prerequisite arranging forms likewise plan the assembling method and the conveyance schedule.
The inventory channel primarily manages the three specific structures. The procedure encourages
the organization to deal with the assembling method. The store network hypotheses will prompt
improvement with the assistance of the creation arranging. This will help Nestle to continue
searching for a focal point of creation that will include lower cost of creation just as the crude
materials that are sensibly estimated. This will, thusly, help the organization to contend with its
rivals in the global market just as in the arranged economy. The organization includes different
exercises that incorporate the key administration, for example, the sourcing of the crude
materials from various places and afterward the finished products are moved to the assorted
system. The assorted system incorporates the retailers, the merchants just as the end-clients. It is
prescribed to utilize the creation arranging and the control procedure as it uses the distribution of
the assets, materials and the creation limit so as to serve the clients. The creation arranging
should be joined with the creation control techniques. The creation arranging is additionally
viable as it incorporates the endeavor asset arranging. The undertaking asset arranging will help
Nestle to oversee and decipher the information from the business exercises. The business

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exercises will incorporate the assembling and the conveyance procedure just as the delivery and
the installment procedure.

The Supply Chain

Forecasting
The production network the executives assumes a significant job with regards to the requesting
supplies all together satisfy the need of the clients. The production network the executives is the
system by which an organization guarantees to fulfill the need given the stock. The anticipating
by and large alludes to the moving of midpoints and the exponential smoothing, the
improvement and the reenactment procedure (Babai et al., 2016).

Fig: The Supply Chain Forecasting

One of the most important simulation techniques in the case of Nestle is creation of the
chocolates such as Kit Kat. The candy production in Nestle mainly takes place with the
simulation technique. The engineer at the Product Technology Centre in Nestle mainly makes
use of the simulation technique to manufacture the Kit Kat bar.

An exceptional sort of ability with consolidates foundation that will have the option to join the
universal involvement in the inventive critical thinking and legitimate aptitudes are required for
the estimating of the store network the board. On the off chance that, if Nestle faces any

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vagueness, all things considered the anticipating procedures will ready to foresee the interest and
supply for what's to come.

It is also recommended that it is important to maintain a good vendor relationship by making the
use of the information technology. The intelligent distribution system and the relationship with
the vendor is one of the most important reasons for the success of the company. The information
technology has helped the company to manage their business function in diverse methods.

Conclusion: The report for the most part gives a diagram about the production network the
executives of Nestle. The report generally gives a chart about the stock system the leading group
of Nestle. It has been assumed that the consequences of Nestle are watched out for the line of
thing and in this way, the customers have a feeling of security with the created items that extends
the intrigue. The purposes of the creation orchestrating because of Nestle are to diminish the
depletion of milk and to achieve the prearranged level of creation yield. The association Nestle
chiefly faces three noteworthy affiliation related challenges that consolidates the development of
advantages, directing pay similarly as the creation of the financial specialist regard. The time
segment is the most noteworthy factor in the arranging method in Nestle. It has also been
surmised that the desserts creation in Nestle basically occurs with the reenactment system. It has
also been concluded that the candy production in Nestle mainly takes place with the simulation
technique.

References
Babai, Z., Boylan, J. E., Kolassa, S., &Nikolopoulos, K. (2016). Supply chain forecasting:
Theory, practice, their gap and the futureAuthor-Name: Syntetos, Aris A. European Journal of
Operational Research, 252(1), 1-26.

Barney, J. B. (2012). Purchasing, supply chain management and sustained competitive

advantage: The relevance of resource‐based theory. Journal of Supply Chain Management, 48(2),
3-6.

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Bozarth, C. B., &Handfield, R. B. (2016). Introduction to operations and supply chain
management.Pearson Higher Ed.

Christopher, M. (2016). Logistics & supply chain management. Pearson Higher Ed.

Hax, A. C. (2013). Hierarchical production planning (pp. 708-712).Springer US.

Heizer, J., Render, B., & Munson, C. (2016). Principles of operations management: sustainability
and supply chain management. Pearson Higher Ed.

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