SOLUTIONS

Nestle produces hundreds of products, has a global network of suppliers, and

multiple selling channel and distribution. Therefore, it is very difficult to predict the
changes of needs among the customers in market. When predicting a market, Nestle
will need information to know what steps they should take next to prevent any loss.

However, every company has its own weakness. Firstly, the most usual problem is the
sources of supply of raw materials. This is due to an unexpected and sudden increase
in demand, which will cause extreme supply shortages for merchandises that will also
cause price increases. For example, bad weather will affect incoming raw materials.
Secondly, error in recording orders. For example, the purchasing department of Nestle
ordered 15,000 of mixed yoghurt from its dealer, but the retailer only received 12,000
of them, or on another case they might receive lacking records.

Hence, in order to solve these problems, it is critical for Nestle to engage with
multiple dealers or suppliers in that specific region. They should purchase inventories
from multiple dealers, which will definitely reduction the risk of shortage due to
incontrollable situation. Other than that, mutual trust and strong relationship with all
the dealers are needed in order to raise the flexibility of material supply management,
as well as to improve the bargaining power of Nestle.

Thirdly, although Nestle has a logistics department but it does not deal with
transportation logistics. Nestle subcontracted its supply chain transport to the third-
party logistics as Nestle tries to cut their supply chain costs and to concentrate more
on their in-plant operations. Although Nestle does not have, a transportation logistics
department but they do have a delivery team to cooperate with the third-party logistics
in routing protocol. Nestle is using a Dynamic Source Routing (DSR), which is a
simple and efficient routing protocol designed specifically for use in multi-hop
wireless ad hoc networks of mobile nodes. The protocol is composed of the two main
mechanisms of “Route Discovery” and “Route Maintenance”, which work together to
allow nodes to discover and maintain routes on-demand to arbitrary destinations in the
ad hoc network. Therefore, the delivery team is there to help Nestle and the third
party Logistic that DSR is working as per company direction as well as DSR
performance.

Then, it is the poor partnership relationship between consumer and dealership.

However, Nestle solved this problem by using the Dealer Management Systems
(DMS) as well as their dealers. DMS is a software solution that provides tools for
managing service, sales, parts and inventory management, integration, business
management, and core architecture. DMS help manufacturers and dealers create
integrated marketing movements to offer inventory to goal markets. This will
integrate innovations into traditional in-store sales and service processes and offer
technologies for non-traditional merchandising, service and sales strategies through
alternative channels for consumer engagement in-vehicle, via Web, or by phone.

About 70 percent of people using their products. They need to conduct a survey on
why the 30 percent of people does not using their products. They also need to put low
prices to increase their customers because their prices are a little bit higher than
others. Besides that, they need to improve their marketing and advertising so that
people will know about their products. Other than that, Nestlé also need to improve its
taste. This is because, about 17 percent people are not satisfied with its taste.

Nestle could acquire the inventories from the other outlets from the other region
instead of just finding or having multiple suppliers. Because some regions have
different demographics. For example, race. If there is a surplus, and unable to clear
the inventories at a short time, Nestle could consider donation for short-run purpose,
this could help to clear the old stocks, as well as to help. Nestle could use both manual
and automation system in managing service, sales, and others. This is because one
cannot trust wholly to a machine, as it may not be documenting the steps in its own
processor. Because some steps cannot be automated and may require operator
intervention to stop the escapement processing steps, even though adapting advanced
technologies could help saving cost as labor cost is decrease, but if there are still
problems occur, it will affect the business such as loss of customers because of the
mistake. Consequently, Nestle must update the system software regularly and full
utilization of available technology as well as the manual operators, which will
effectively increase the efficiency and dependability of the supply chain systems.