CORE COMPETENCIES Nestle Milk Pak has the following core competencies.

WORK FORCE Nestle Milk Pak has a small work force as their most of the operations are automated.They have a very skillful and trained workforce. FACILITIES

THE NESTLE STORY Nestle S.A. the present Switzerland based international food group, originally consistedof two companies and two products: Henri Nestle and his baby food in Vevey, and theAngloSwiss Condensed Milk company and its condensed Milk Company and itscondensed milk in Cham, both in Switzerland. In 1866 the Page Brothers form theUnited States set up a new industry in Cham, making condensed milk from a rawmaterial that was available in abundance in the region. In 1867 Henri Nestle a chemist inVevey, created a milk and cereal based food for babies. The companies competedvigorously until 1905, when they merged and became the starting point of the presentfood group.MEANING OF NESTLE:Henri Nestl endowed his company with the symbol derived from his name. His familycoat of arms, the nest with amother birdprotecting her young, became the Company'slogo and a symbol of theCompany's careand attitude to life-long nutrition. The Nestlnest represents the nourishment, security and sense of family that are so essential tolife.BRIEF HISTORY OF NESTLE:1866 -1905 In the 1860s Henri Nestl, a pharmacist, developed a food for babies who were unableto breastfeed.1905-1918In 1905 Nestl merged with the Anglo-Swiss Condensed Milk Company. By the early1900s, the company was operating factories in the United States, Britain, Germany andSpain..1918 -1938. The 1920s saw Nestl's first expansion into new products, with chocolate theCompany's second most important activity.1938 -1944Nestl felt the effects of World War II immediately. Profits dropped from $20 million in1938 to $6 million in 1939. Factories were established in developing countries,particularly Latin America. Ironically, the war helped with the introduction of theCompany's newest product, Nescafe, which was a staple drink of the US military..1944 -1975In 1947 came the merger with Magi seasonings and soups. Crosse & Blackwell followedin 1950, as did Findus (1963), Libby's (1971) and Stouffer's (1973). Diversification camewith a shareholding in L'Oral in 1974.1975 1981Nestl made its second venture outside the food industry by acquiring AlconLaboratories Inc..1981 -1996 Nestl divested a number of businesses1980 / 1984. In 1984, Nestl's improved bottomline allowed the Company to launch a new round of acquisitions, the most importantbeing American food giant Carnation.1996+The first half of the 1990s proved to be favorable for Nestl: trade barriers crumbledand world markets developed into more or less integrated trading areas. Since 1996there have been acquisitions including San Pellegrino (1997), Spillers Pet foods (1998)and Ralston Purina (2002).

There were two major acquisitions in North America, both in2002: in July, Nestl merged its U.S. ice cream business into Dreyer's, and in August, aUSD 2.6bn acquisition was announced of Chef America, IncNESTLE TODAY Nestle is now the worlds largest food company. It is present on five continents, has anannual turnover 70 billion Swiss francs ,runs 522 factories in 81 countries, 200operatingcompanies, 1basic research center and 20 technological development group and morethan 231,000 employees the world over. The Nestle factories are operating in the regionof Africa America Asia Europe OceaniaBeing a company dedicated to food from the beginning, Nestle remains sensitive toculinary and eating habits, and responds to specific nutritional problems, whilst alsosetting and matching new trends such as growing out-of-home consumption and caringabout the well being of its consumers. Lahore29-B, Main Gulberg,Lahore, Punjab, PakistanPhone: (042) 5754335-6,5761484Fax: (042) 515061Quetta63 B - D, Chaman Housing Scheme, Opposite Askari Park Quetta, Baluchistan,Pakistan Phone: (081) 834887Fax: (081) 822297Islamabad74-W, Yaseen Plaza, 1st Floor, Blue Area, Islamabad, Pakistan Phone: (051)271874-75,824328, 824384, 274376These offices work under their respective zonal officesRegistered & Corporate Office Is in Lahore308 - Upper Mall, Lahore PABX: 5757082-95Fax: 5711820FaisalabadHouse No. 24-Y-103 Madina Town,Faisalabad, Punjab, Pakistan Phone:(041)726993Fax: (041) 47438GujranwalaPlot No: 144-A, First Floor Satellite-Town Market, Gujranwala, Punjab,Pakistan.Phone: (055) 3733415 Fax: (055) 3733415Peshawar201, 2nd Floor, City Tower, Jamrud Road, B Block,Peshawar, N.W.F.P.,Pakistan Phone: (091) 840859, 842415Fax: (091)45516MultanSurij Miani Road, Chungi No.1,Multan, Punjab, Pakistan Phone: (061)515061Fax: (061) 515061Quetta63 B - D, Chaman Housing Scheme, Opposite Askari Park Quetta, Baluchistan,Pakistan Phone: (081) 834887Fax: (081) 822297Islamabad74-W, Yaseen Plaza, 1st Floor, Blue Area, Islamabad, Pakistan Phone: (051)271874-75,824328, 824384, 274376These offices work under their respective zonal offices Registered & Corporate Office Is in Lahore308 - Upper Mall, Lahore PABX: 5757082-95Fax: 5711SALES ORGANIZATION HIERARCHY Managing DirectorIAN DonaldSales DirectorZafar Hussain ShahZonal Sales ManagerAmmad MalikRegional Sales ManagerAbdul Mateen Khan FACTORIESNestle has two factories in Pakistan for the production of different food items. OneinSheikhupuranear Lahore and other inKabirwalanear MultanProduct DesignProduct design can be defined as the idea generation, concept development, testing andmanufacturing or implementation of a physical object or serviceArea Sales Manager6 ASMTerritory InchargeTI 14 Order Booker250 The Nestle Pure Life water bottles themselves have a shaped design, sort of a hour-glassshape with larger top and bottom with indented waist. The bottom 1/3 of the bottle hasridged lines to help with hold and grip on the bottle There is a bright blue label strip thatruns around Unique bottle design, developed by designers team, catchy self -adhesiveand glossy label, and trendy name, give to the product the edge that is needed to bespotted on the shelvesINFLUENCES UPON DESIGN Service Expected. Appearance Shipping Costs Cost to Manufacture consumer preferencesNestle Milkpak Ltd.As a consequence of joint venture arrangement between NestleS.A. of Switzerland andMilkpak Ltd. In 1988, the existing production facility of Milkpak in Sheikhupura becamea part of Nestle Milkpak.The Milkpak Sheikhupura factory had commenced operations in1981 as a producer of

UHT milk. By 1988, it had expanded its operation and was also producing butter, cream,Desi ghee all under the brand name of MILKPAK and juice drinks under the brandname FROST.Conscious of the large food market that Pakistan offered, Nestle Milkpak drew upambitious expansion plans. While reorganizing and re-enforcing the production of existing brands, it lost no time in giving shape to new production lines. The first to comewas a milk powder plant, which not only began producing NIDO in 1990but was alsocritical to the production of several milk-based products in the future. With theinstallation of the roller dryer in1990, the first such product to come was CERELAC aninternationally recognized brand on infant cereal, followed by LACTOGEN 1 & 2 in 1991.The year 1992 saw the introduction of tea whitener EVERYDAY and milk powder in bulkpacking named GLORIA.MILO and NESLAC came under production in 1994 and MILORTD, In 1995.Local packing of coffee mixes under the name of NESCAFE 3 in1commenced the same year. In 1996, Nestle Milkpak Ltd. first confectionery plant of POLO Mint was installed and the line of NESTLE PURE ORANGE JUICE was also added.Packaging of coffee under the brand name NESCAFE CLASSIC was under taken the sameyear. In 1997 NESTLE WHEAT and two variants of POLO viz. strawberry and Orangewere introduced.1998 has been, by far, the most outstanding year for Nestle Milkpak. As a result of thetimely implementation of major expansion plans, involving a substantial capital outlay,no less than 17 products were launched during the year. Significantly, the factory nowhouses three new flavors of POLO in addition to two flavors of POLO, namely Blackcurrent and Strong Mint brought the number of POLO variants to five. A new variantLemony was added to the range of popular FROST fruit drink flavors and a new 1-literpacking of FROST was introduced. Three flavored milk Vanilla, Strawberry and Mango,under the brand FRESH & FRUITY, came under production on the new Tetra FillingMachine equipped with the modern slim f ormat. MILO RTD and UHT Cream were alsoshifted over to this new format. A flexible confectionery line for the manufacture of awide range of high and low boiled sweets and toffees was commissioned, with TOFFOand two variants of SOOTHERS Menthol Eucalyptus and Honey Lemon, being themaiden products. Nestle Milkpak alsocontracted to supply dairy mixes to McDonalds,for its popular soft serves and milk shakes. And to top it all, the most prestigious project, to handle the increased volumes of finished products was proportionately increased.1999 also saw the installation of a pouch-filling machine, making Kabirwala Factoryindependent from Sheikhupura.YEAR PRODUCT NAME1981 UHT Milk1983 Butter1986Milk Pak CreamDesi GheeFrost JuiceMilk Pak UHT Milk1990NidoCerelac1991NestumLectogen1992Everyday Tea WhitenerGloriaMaggis Noodles1994MiloNeslac1996NesteaPoloNescafe Classic

Maggi Yakhni1997Nestle Wheat1998ToffoSoothersNestle Pure Life1999Maggi SaucesFruit DropsButter Skotch2001Nescafe Creamy FlavorsCream milk powder Nestle Milkpak Ltd. Market LeaderNestle Milkpak Ltd. is the market leader in food and beverage industry. They areproducing high quality well known brands. There is no such competitor that cancompete Nestle Milkpak Ltd .in its total product mix. There are a few local competitorsof the company in different product item. These competitors are:Rafhan Rafhan is competing Nestle in infant and follow up cereals.Shezan and BambinoShezan and Bambino is competing Nestle Milkpaks local brand Frost.

CDL and Adar-e-kisan:These two competitors are competing in milk and milkpowder products.In spite of this competition, Nestle Milkpak Ltd. is enjoying about70-75% market share in Pakistan.DIVISIONS OF NESTLE MILK PAK ltd.OBJECTIVES OF NESTLE MILKPAK LTD. The major objective of the company is to sell high quality, innovative andsuperior products which satisfy needs and wants of consumers. Nestle not maximize profit through high market share but use satisfaction of consumer. The health of consumer and employees is at primary prioritiesProduction DivisionQuality asst DepartmentBrand wise productiondepartmentsMarketing DivisionCustomer Relation DepartmentDistribution DepartmentResearch & DevelopmentHR DivisionPersonnel departmentFinance DivisionTreasury departmentMilk Collection DivisionAgriculture service DepartmentLogistic Department Nestle provide the pollution free enviroNestle Milkpak ltd.ent and provide themedical facilities Nestle establish policies, programs and practices to conduct operation in anenviroNestle Milkpak ltd.entally sound manner. Nestle operate to achieve highest standard of ethical conduct, which acquirecompanys activities and relationship world-wide in each business sector. Nestle aim to deal only with reputable suppliers who willing to apply NestleQuality Standard. Nestle has been committed to enviroNestle Milkpak ltd.entally sound businesspractices throughout the world. EXTERNAL ENVIRONMENT NESTLE MILKPAK LTD.The top management of Nestle MilkPak continuously carries on environmental scanningand within the environmental trends. Opportunities & opportunities they carry onrequired adjustments in their organization to remain variable and to survive in the faceof competition. CORE COMPETENCIES Nestle Milk Pak has the following core competencies.WORK FORCENestle Milk Pak has a small work force as their most of the operations are automated.They have a very skillful and trained workforce. FACILITIES The NESTLE MILKPAK LTD.s facilities i.e. offices stores and plants are very well located and have the requisite capabilities, which is a big competitive advantage for them. SYSTEM AND TECHNOLOGY Nestle Milkpak ltd. is an organization which heavily depends upon new systems andtechnologies to excel in the market. The organization is well equipped with newdeveloped systems and technologies especially in their operations COMPETITIVE PRIORITIES Following are the competitive priorities of NESTLE MILKPAK LTD..Consistent qualityDevelopment speedVolume flexibility QUALITY

Quality is the cone competitive priority of NESTLE MILKPAK LTD.. They take qualityin two ways. High performance design and consistent quality.

CONSISTENT QUALITY NESTLE MILKPAK LTD. pays special attention for maintaining consistent quality. Theyhave special sort of equipments and process which facilitates in maintaining a consistentquality. So the each and every unit of its product equally satisfies its customers. DEVELOPMENT SPEED As for as develop speed is concerned NESTLE MILKPAK LTD. is the industry leader notonly in Pakistan but all over the world. They have a team of very innovative people which consistently focus on the development of new products and to improve the already existing products. VOLUME FLEXIBILITY

Volume flexibility is one of the competitive priority of NESTLE MILKPAK LTD.. When the availability of Milk is high in winter season they increase their production as the milk cannot be stored for longer period of time. In season when there is shortage of milktheir production rate dropped. So they can adjust their volume of production according to their requirements. FLOW STRATEGY Flow strategy is one of the primary element of operations strategy. Based oncompetitive priorities a flow strategy is selected. It specifies has the operations systemto be organized and handled. For different set of products different flow strategies can be implemented. LINE FLOW STRATEGY NESTLE MILKPAK LTD. has adopted the line flow strategy here the system is organized around the product. In this strategy all products follow linear pattern in facility. NESTLEMILKPAK LTD. has high volume production with highly automated facility and huge capital investment is there and the standardized products they produce. So they follow the line strategy. STRATEGIES BASED ON FLOW Following are the flow based strategies adopted by NESTLE MILKPAK LTD..MAKE TO STOCK STRATEGY NESTLE MILKPAK LTD. follows the make to stock strategy. They have high volumeproduction and the demand for their products can be forecasted quite well, there existrepetition of work and a consistent quality is maintained all these priorities lead to maketo stock strategy. STANDARDIZED SERVICE STRATEGY

The products which are provided by NESTLE MILKPAK LTD. are standardized. Thereforethe standardized service strategy also exist in NESTLE MILKPAK LTD. Ltd. They havestandardized and consistent quality products. PRODUCTION PROCESS Milk Collection &ReceptionStandardizationStoringEvaporationSpray dryingPackingPasteurizationDeCreamingCooling MILK COLLECTION Milk Collection system of Industry is excellent. According to this systemthe companiestrucks reach 140000 milkmen and collect milk daily. The milkmen provide milk oncontract basis. Prices of milk vary in case of self-collection and contract basis. On milkcenter price of milks is paid at Rs. 5.80 per liter at 6% Fats. If the quality of fat is lessthan required 6% then price will be paid less proportionately. Percentage of FAT in Various Kinds of Milk. Buffalo 6% FatCow 3.5%Goat 3%Sheep 6%Human 3.5% At milk collection centers, Gerber Test in done for the determination of Fat. Companies are bounded to maintain 3.5%Fats under pure Food Laws. It is legal requirement throughout the world Milk collection system of Nestle Milk Pak is excellent. According to this system milk is collected from area of about 72,000 km .Village Milk centers 2273Sub centers 583Main Centers 23On milk centers price of milk is paid according to percentage offers. If the quality of fatis less than required (6%) than price will be paid accordingly. At milk collection centers , gerber test is performed for determination of fat. In milk collection centers temperature of milk is kept at 4oC. Nestle purchase milk directly few frames, there is no middle man. Collection Areas are in all over Punjab Nestle Milk Pak divide theareas in following Categories: Sahiwal, Burewala, Okara etc. Pindi Bhattian, Chaniot, Sarghoda Kabir Wala, Mian Channu, Shorkot, Kahane wal, Kacha KHU Bahawalpur , Bahawalnagar, Chistian, AhmadpurThere are Area collection managers, Milk collection Cocoordinators and Milk Collection Supervisors in each Area for collection of specific amount of Milk in specific time RECEPTION From milk collection centers milk is collected and delivered to factory daily seal of tankers are properly decided. Receiving capacity of milk is 60,000 liters. At receptionfollowing tests are performed before storing milk to assure the quality of milk.1. Alcohol precipitation test2- Clot an boiling3- Fat (5.8% 6%)4- SNF (Solid non -fat) (8.5-8.9)5- PH test (6.8 6.9Up to reception temp of milk is about 8-10oC, there is no rejection on temperature basis. Trollers are not preferred to stay more than 1.75 Hrs. in factory so that they can in time collect milk for next day. STORING OF MILK Milk is stored in storage tanks called Silos. The capacity to store milk is 596 tons. There are 5 Silos of100 tons each,2 Silos of 10 tons each,1 Silo of 70 tons. Milk can be stored for 36 Hours in Silos. STANDARDIZATION

All the animals have different composition of fats in their milk indifferent seasons.Standardize milk according to the recipe milk is given temperature of 72oC for 15seconds to reducebacterias in milk, this process iscalled thermization life of milk isincreased by this process and in standardization composition of fats and SNF arestandardized. DE-CREAMING In this process dirt particles, SNF and cream is separated, milk is given temp of 60oC and60,000 rpm in de-creamer. So that dirt particles cream can be separated. Cream is sendto butter section. Dirt is drained after 30 seconds milk is send for further processes. PASTEURIZATION In This Process milk is heated at 92 oC for 5 seconds to remove remaining bacterias. Milk powder process activities After pasteurization milk to treated for conversion into powder,following activities are performed to milk: Evaporation (a) Low heat treatment (b) Milk is heated at high pressure of 889 milli bar so that it start boiling at about 70 oC .(b)4-effect falling film Milk is evaporated in 4 effect system. Milk is evaporated about 56%, 62%, 67% and 75%after 1st 2nd3rdand 4th effect respectively. After 3rd effect Homogenization is donewhich uneven composition of fats and SNF is homogenizedSpray dryingIn this process there are 5 lateral high pressure nozzles which exert high pressure onmilk after that there which exert high pressure on milk after that there are about 50%water and 50%solids are remained in milk. After this step about 320oC hot air is thrownon milk, it is very quick process in which powder settle in base and moisture evaporatein forms of vapors.Central lecithinationLecithinate is sprayed on powder so that it is converted into highly dissolvable powder.That way Nestle Milk Pak say Nidois instantMilk (easily dissolvable in hot ad coldwater).DryingAfter all these procuress still powder has 5.5 % moisture in it, Powder is dried through x-Egran System to reduce moisture level up to 3.1%CoolingAfter drying there is a cooling process, in which powder is cooled before storing.Storing of powderPowder is stored in bins there are 40 bins.Packing Milk is packed in different packing according to the weight required, form tote tiltingstation from bins.CapacityCapacity is the maximum rate of output for a facility. The operations manager mustprovide the capacity to meet current and future demands; otherwise the organizationwill miss the opportunities for growth & profits.Capacity planning is duty of top management and it is long term .In flush season whenmilk is abundantly available they utilize capacity 100% as cleaning time is just 4 hoursdaily and 20 hours for working. Installed capacity in NIDO plant is 560 tons, it produces 4tons / Hours & in 20 working hrs it can produce 80tons per day. In summer whenavailability of milk is lower they have their annual

shut down (June). They have trainingsession for employees and vacations in that time. There are certain standards for laborutilization. Efficiency of employees is calculated daily