PRESENTED BY:

ARPANA(20013)
PRIYANKA(20019)
NISHA(20038)
PRIYANK(20021)
FARJENDRA(20017)
 RANKING
Fortune 500:
Nestle is ranked 48th company

Best Global Brands

Nescafe Is placed at 26th rank
Nestle Foods is placed at 58th rank
 ABOUT NESTLE
Nescafe was developed in 1930 and it
became a main beverage for the
American serving in Europe and Asia

Total sales increased by $125 million

from1938 to 1945.

It expand its product line outside food

market and acquire Loreal the
cosmetic company in1974. Presently it
holds 26.4% share in the company.
 MISSION
Nestle is dedicated 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.
 VISION

To be the leading food and

beverage company in the world
providing customers with healthy
food at affordable prices.
 PRODUCT LINE

Coffee
Water And Other products
Ice-cream
Chocolates
Dairy Products
Infant nutrition
 PURCHASING ISSUES

The purchasing objectives of Nestl are to produce and

market food products that satisfy customers and consumer
expectations, and to provide good quality food and value for
money.

The key raw materials purchased by Nestl are: milk, coffee,

and cocoa. These, as well as fruit, vegetables, cereals,
potatoes are partly sourced directly from farmers
 NESTLS PRINCIPLES
OF PURCHASING
Purchasing Roles:

Two primary purchasing roles that encompass strategic and

operational activities are used in Nestl:1. Strategic Buyers
perform strategic activities such as market research or
analysis, supplier profiling and selection, negotiation, contract
management, in collaboration with other professionals (e.g.
engineers for machinery; logistics for transport; marketing for
media).
 Strategic Buyers can remain within their functional area, as
long as there is a line of responsibility to the relevant Head of
Purchasing. This will ensure that they are informed of and
contribute to purchasing strategies, training, budgets, etc.

Operational Buyers perform operational activities such as

sending purchase orders, call-off against catalogue, etc.
These activities may be performed by members of any
organizational unit requiring goods or services.
LEGAL REQUIREMENTS
FOR PURCHASING
Written Agreement

Quality Conformity

Dispute Resolution Clauses

 SUPPLIERS
The Nestl Supplier Code establishes non-negotiable minimum
standards

They ask their suppliers, their employees, agents and

subcontractors to respect and to adhere to at all times when
conducting business.

The Nestl Supplier Code helps to implement commitment.

To ensure both responsible sourcing and supplier relationships
that deliver a competitive advantage.
 SUPPLIER SELECTION
In compliance with Nestls Corporate Business Principles,
Nestl select suppliers based on the following criteria: Ability to offer
a competitive value proposition;

Reputation, financial situation and record with Nestl;

Ownership, management structure and competence;

Innovation, service level and transparency;

Already approved or subject to formal approval prior to first delivery;

Minimum corporate social responsibility standards;

Ability and willingness to work with their preferred tools, processes

and solution providers;

Sustainable business practices

 PROCUREMENT
As one of the world's largest food raw material buyers, Nestle
spends around 60bn (US$71.5bn) a year on central
procurement, of which 22bn is spent on ingredients and 8bn is
spent on packaging. With such an immense commodities-
related spend, it is all too clear that the swings of the
commodities markets could have a grave impact on Nestle's
bottom line.

The group is working to minimise the impact that high prices

and volatility have on Nestle's profitability by streamlining
procurement and manufacturing.
 CPFR OF NESTLE

CPFR Analyst - Wal-Mart

The successful applicant will be responsible for
managing ongoing Collaborative Planning
Forecasting and Replenishment (CPFR) processes
between Nestl and key account(s) (eg Wal-Mart)
in order to ensure accurate forecasting, optimized
replenishment and superior retail in-stock and
inventory levels.
 MAJOR
RESPONSIBILITIES
Using CPFR process & replenishment strategies, maintains the
Key account(s) target in stock rates, and weeks of supply.

Communicates recommendations regarding the resolution

of issues to the relevant internal or external party and reaches
agreement on the appropriate corrective action

Order Processing create and process co-managed orders.

Develop external customer relationships and focus on the

customers agenda.
 SOURCING
Sourcing has to contribute to the sustainable and
profitable development of our company by
providing the base for quality differentiation of
finished products (customer / consumer
satisfaction) and by assisting operating companies
to be a competitive producer.
This requires a supply of raw materials at specified
quality, in the quantities and at the timing needed,
and at the lowest possible system costs.
 STRATEGIC
SOURCING
The strategies employed in sourcing depend on the
proprietary characteristics of the raw materials and
on the requirements of the factories.
Most of the raw materials are bought through the
trade, but part are bought directly from farmers.
This direct procurement is more common for
perishable products (e.g. milk), and where the
company has specific needs. Nestl does not own
any commercial farming activities
SUPPLY CHAIN
 SUPPLY CHAIN
STRATEGIES
Market Saturation Driven-Focuses on generating high profit
margins through strong brands and forceful marketing and
distribution. This is the strategy of successful A-brand suppliers
likeNestle.

Operationally Agile:
Configures assets and operations to react fast to emerging
consumer trends along lines of product category or
geographic region. Both assortment and shelve presentation
are systematically adapted to actual local sales, and
replenishment is executed using computer assisted ordering.
 Freshness Oriented:
Concentrates on earning a premium by providing the
consumer with product that is fresher than competitor's
offering. For instance, a leading fresh food supplier considers
cold chain critical to success since temperature is the
dominant factor in shelf life.

Consumer Customizer:
Uses mass customization to build and maintain close
relationships with end consumers through direct sales
 Value for Money Focused:
This strategy puts a priority on "low price, best-value" for the
customer, but it focuses less on brand than on dedicated
service.

Logistics Optimizer:
Emphasizes a balance of supply chain efficiency and
effectiveness.
However, only collaboration between multiple trading partners
will yield a synchronized supply chain. This often maximizes end
consumer value proposition and ultimately value to each trading
partner.
EFFECTS OF SUPPLY CHAIN INTEGRATION
ON MANUFACTURER
 EFFECTS OF SUPPLY CHAIN
INTEGRATION ON RETAILERS
 TQM IN NESTLE
TQM capitalizes on the involvement of management,
workforce, suppliers, and even customers, in order to meet or
exceed customer expectations.

Quality in business, engineering and manufacturing has a

pragmatic interpretation as the non-inferiority or superiority of
something.

Quality is a perceptual, conditional and some what

subjective attribute and may be understood differently by
different people. Consumers may focus on the specification
quality of a product/service, or how it compares to
competitors in the marketplace
 QUALITY
MANAGEMENT
Superior quality is a competitive advantage and a joint effort
by all parties in the value chain is needed. Suppliers are
therefore considered an important link in this chain.

To achieve Nestls objective of offering consumers high

quality nutritional products, Nestle expect suppliers to
guarantee the quality of the material/goods they supply or
the service they provide. Whenever possible, Nestls goal is to
be able to rely on their suppliers competence and ability to
implement jointly defined Quality Management and
Supplier Quality Assurance (SQA) programmes.
QUALITY ASSURANCE
DEPARTMENT
The duties of the quality department are to:

1)Develop, with input from all personal, the core values, vision
statement, mission statement, and quality policy statement

.2)Develop the strategic long term plan with goals and the
annual quality improvement program with objectives.

3)Determine and continually monitor the cost of the poor

quality.

4)Continually determine those projects that improve the

process, particularly those that affect external and internal
customer satisfaction
 PACKAGING
Packaging serves a major role in Nestle daily lives.

It protects food products from spoilage and ensures safety

from manufacture through storage, distribution and
consumption.

Packaging may also provide tamper-evidence features. It

communicates information, including nutritional information
and serving instructions, and provides the convenience
demanded by todays consumers.

Nestl is committed to reducing the environmental impact

of packaging, without jeopardizing the safety, quality or
consumer acceptance of its products.
 PDSA Cycle:

Nestle strongly rely on PDSA cycle for solving several of its

problems. A PDSA cycle is a system for continuously
improving environmental management systems.

Following this cycle, Nestle will Plan (set environmental

policies and targets for itself and create a plan to achieve
them), Do (put the plan into practice), Study (check the
results and make corrections) and Act(make revisions and
improvements for the next step in the cycle).
SUSTAINING COMPETITIVE
ADVANTAGE

Modifying Positional Advantage in International

Markets
The Growing Integration of Markets
Building Market Presence and Position
Strategic Flexibility
Speed of Resource Deployment
 ERP
IMPLEMENTATION
In June 2000, Nestle SA signed a much-publicized
contract with SAP and threw in an additional $80
million for consulting and maintenance to install
an ERP system for its global enterprise.

The Switzerland-based consumer goods giant

intends to use the SAP system to help centralize a
conglomerate that owns 200 operating companies
and subsidiaries in 80 countries including India.
 DISTRIBUTION
SYSTEM
Distribution system of Nestl is one of major source of competitive
edge over its existing rivals.

Distribution of products from the factory to the customer involves

transport and storage.

Nestl has its own distribution networks equipped with all necessary
transportation facilities. They transport their products at major regional
sales offices, which are situated at different cities of India.

These sales offices (distribution centers) have their own vans with
sales people who sell and transport goods to the small retailers.
 CONT

Manufacturer
Carriage and Forwarder Agent
Distributor
Wholesaler
Retailer
End Customer
 LOGISTICS
logistics objective as providing maximum customer service
at the least cost.
logistics system can both maximize customer service and
minimize distribution costs. Maximum customer service
implies rapid delivery, large inventories, flexible
assortments, liberal returns policies, and other servicesall
of which raise distribution costs.
In contrast, minimum distribution costs imply slower
delivery, smaller inventories, and larger shipping lots
which represent a lower level of overall customer service.
 Major Logistics Functions

Order Processing
Warehousing
Inventory
Transportation
 INTEGRATED
LOGISTICS

Cross-Functional Teamwork Inside the Company

Building Channel Partnership
Third party logistics
 CRM IN NESTLE
At Nestl, Nestle committed to offering consumers high-quality
food products that are safe, tasty and affordable. The Nestl
Seal of Guarantee is a symbol of this commitment.

Nestle also believe in maintaining regular contact with Nestle

consumers. This applies both to how nestle present Nestle
products and to how Nestle address Nestle consumers'
questions and concerns.

Nestle has a relationship panel with a tag line TALK TO

NESTLE
PERFORMANCE
MEASUREMENT
 PERFORMANCE
EVALUATION

Two criteria are of equal importance:

The measurement of the efficiency of suppliers

The evaluation of the effectiveness of Purchasing.

 BENCHMARKING

The concept of benchmarking should: Be seen as a

continuous process of evaluation;

Ensure that results are quantifiable and actionable

Be supported by a direct management commitment
 BEST PRACTICES

Purchasing practices must be modified, improved or

adapted, so as to produce the internal changes that will result
in increased efficiency and effectiveness.

By following or copying best practices available and working

with suppliers, Purchasing can pro-actively seek change and
realize the desired breakthrough
 EFFICIENCIES

Efficiencies are also the execution of specific programs

implemented through benchmarking. For example the use of
,e-Requisitioning (Catalogues), e-Supply Chain and are
commended in order to bring economic benefits and
efficiency.
EFFECTIVENESS
Purchasing effectiveness is measured by the functions ability
to do it right first time and achieving maximum value within
the parameters of the total cost of ownership concept.
 COST SAVING INTIATIVES

A cross-functional approach and continuous improvement in

areas such as quality, service, logistics, etc, must generate
cost saving initiatives where purchasing contribution will be
defined, targeted and monitored.
 FUTURE OF SCM
THE GREENING OF SUPPLY CHAIN
The Nestl Environmental Management System (NEMS) Is
Management an essential corporate management tool that
consolidates all organizational and technical measures taken
by the Group to achieve environmentally sound business
practices.

The NEMS objectives include the following:

To ensure the continuous improvement of Nestls
environmental performance, for example through the
conservation of natural Nestle and the minimization of waste.
 Intranet Purchasing
The Purchasing Intranet is a Nestle e-based communication tool
used internally within the Nestl purchasing community to share
information about market prices, supplier information,
organisations, send information, templates and best practices.

It is regularly updated and continually evolves to meet the needs

of Nestl.

E-Procurement
Nestl promotes the use of electronic tools to optimize the value
chain to Nestle costs, create efficiencies, drive Product
availability and enhance customer.
 To achieve compatibility with international voluntary standards
on environmental management systems, such as ISO 14001 and
the European Union Eco-Management and Audit Scheme.

To build mutual trust with consumers, governmental authorities

and business partners. The Nestl Environmental Management
System is being implemented throughout Nestls entire
operation.
 CONCLUSIONS
Nestles supply chain is an integral part of its approach to the markets
it serves.

The supply chain needs to respond to market requirements and do so

in a way that supports the Nestles business strategy.

The business strategy of Nestle starts with the needs of the customers
that the Nestle serves.

Depending on the needs of its customers, Nestles supply chain must

deliver the appropriate mix of responsiveness and efficiency.

Nestle whose supply chain allows it to more efficiently meet the

needs of its customers.

It will gain market share at the expense of other companies in that

market and also will be more profitable.