Production and operation management : Nestle Case Study

1
Table of Contents
1. INTRODUCTION..................................................................................................................2
Production of Goods and Services.........................................................................................2
Production and operation management..................................................................................3
a) Input.........................................................................................................................3
b) Output......................................................................................................................3
Process strategies...................................................................................................................5
Principles of process strategies..............................................................................................5
Types of process strategies.....................................................................................................5
2. LITERATURE REVIEW.......................................................................................................6
Nestle: Company overview and description..........................................................................6
Comprehensive description of Nestle pure water and its processing.....................................7
Reason for choosing Nestle pure life.....................................................................................7
Nestle – Timeline and History...............................................................................................8
3. NESTLE CASE STUDY FINDINGS....................................................................................9
Nestle - Selected process strategy..........................................................................................9
Product focus..........................................................................................................................9
3. Findings of Case Studies on Nestle..................................................................................10
4. CONCLUSION....................................................................................................................11
5. REFERENCES.....................................................................................................................12

2
1. INTRODUCTION
In today’s globalized world, the production and manufacturing of goods and services
require large scale strategies to satisfy consumer demands and product specifications. The
modernization of the masses, demand for high quality and variety of products, global
competition and other factors contribute towards the need for newer process and operational
strategies. These will further ensure success in the corporate sector (Araujo and Costa, 2005).
To produce goods and services under cost and managerial constraints, require the
organization to apply several competitive strategies. Evaluation of the nature of constraints
along with prioritizing them is equally necessary along with cost information. At present,
there have been ongoing research work that helps to understand different cost management
models. Using these model organizations may convert their resources into products with a
much more profitable and competitive setup. According to Akman et al., (2016) one of the
major problems which today’s companies are facing is level of profitability while ensuring
optimum product mix. Theory of constraint can be efficiently and effectively used to solve
this problem along with improvement in productivity.
Production of Goods and Services
In the modern world with highly technological progress, the customers demand in
terms of customized and individual goods and services are increasing. With the competitive
market, the current economic environment calls for more innovation in the business models
which are also flexible and adaptive (Hofmann and Knebel, 2013). The manufacturing
process of any good or service is accompanied with financial constraints and many other
constraints like time, scope, design of product etc. While the production process relies on
many factors, some among them are key limiting factors. These key limiting factors depends

3
upon the type of good or service, cost or budget and target market. These limiting factors are
the constraints on the production. Some among them are external and internal constraints.
The major external constraint is the extent of the market. The larger the market, the more
opportunity for the organization to reduce per unit cost with large scale production. Then
there is the capability of the organization to obtain material or resource and run their
production facility (Business case study, 2019). In these challenging situations require
strategies with minimal cost of production and maximum product output with a satisfied
customer.
Production and operation management
The creation of good or service is an essential function of an organization. This
production process goes through multiple steps keeping in mind all the constraints which can
be handled by operations manager. The operations management is responsible for managing
through all these steps. The production process includes key factors including:
a) Input. This includes the raw materials, natural resources, human resources, and
capital which are used for the production of goods and services. Utilizing the inputs,
the organization delivers the outputs. The input usually depends upon the type of
product to be produced and the capital involved. For example, to produce mixed
berry juice, the company needs to have raw material in the form of assorted berries
like blue berry, strawberry, black berry etc. Along with these raw materials the
company also require other resources needed to formulate a delicious juice like
water, sugar, flavouring, stabilizers, and preservatives. Next the company requires is
capital i.e., financial resource to convert all these raw materials into finished product.
For this human resource in the form of labours and workers are also required to
facilitate and handle the industrial processes.

4
b) Output. The inputs go through a couple of processes and are transformed into output
in the form of a finished product or service. This could be any product like mixed
berry juice available at our local supermarket or a service like a software, education
for a student, your airplane ticket etc.
After the production of goods, they need to be made available for consumers, so the next
step involves the marketing strategy. The marketing is yet another important variable that
determine the profitability for the organization and sale of the good. The stronger the link
between marketing and manufacturing, the stronger and more focused the decisions to be
made by operations manager to consider the aspect of Customer Satisfaction.
Customer satisfaction. Each step of the manufacturing process needs to add a certain
value to the processing of the product. To improve these processes, process redesign and re-
invention is needed and proposition of newer and better products to the mass market. For
increasing the level of acceptance of better and available products, specific needs and
demands of individual customer has to be tackled. Organizations need to have a better
understanding of their customer expectations while putting forth innovative business
strategies to target specific market. Additionally, Etgar (2008) says that a customer is
considered as a co-creator in the product production. Understanding the individual
preferences of the customer is very important which leads to the concept of “customization”
for individual group of clients. To reach maximum customer satisfaction, the co-creator of
the product is involved more closely in the creation of product. Thus, a customer becomes a
part of the process (Hofmann et al., 2013).
Hence, manufacturing which is customer-oriented relies on the ability of the
organizations to produce goods encompassing all those attributes which the customer really