Nestle's Business Strategies and Supply Chain Management Report

This report provides an in-depth analysis of Nestle's current business strategies, focusing on its response to the COVID-19 pandemic and its efforts to optimize resilience. It examines Nestle's supply chain management processes, highlighting the importance of efficient handling of product transformation, warehousing, and logistics. The report also explores Nestle's emphasis on e-commerce to capture a higher volume of sales, driven by the impact of the movement control order. Furthermore, it discusses Nestle's commitment to sustainability, including recycling initiatives, packaging guidelines, and partnerships to reduce waste. The report also covers Nestle's efforts in driving sustainability across its value chain, such as the Nestle Paddy Club and various programs supporting sustainable farming practices. The report concludes by summarizing Nestle's financial performance, capital expenditure, and future production capacity plans, emphasizing the company's ambition to transition towards a more environmentally sustainable future.

ACKNOWLEDGMENT
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Firstly , in the name of Allah the most forgiveness, we would like to thankful to Allah
because with HIS blessing and help, finally we had finish our assignment report in
time without any problems. Even we face a lot of difficulties along to complete this
assignment, we still manage to complete it and we so glad about it.
We also would like to give a big appreciation to all the helps, advises and information
which given by our FIN242: Fundamental of Finance lecture, Mohd Sufian Bin Ab
Kadir. also thankful for his effort in making sure everyone understands this subject
thoroughly even though this semester has been tough for everyone since we are
conducting Online Distance Learning (ODL) because of the pandemic. Without his
support, we may not be able to face and solve the difficulties that we encounter during
the process until we finish this report successfully.
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helped us and giving some idea in order to complete this FIN 242 assignment report.
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CURRENT ISSUE OF NESTLE’S COMPANY
Nowadays Nestlé remains a big name in the food industry, and the company
obviously owes its success to the specific management approach that it adopts in
order to market its services to the target audience, as well as the approach towards
motivating the staff towards a better performance and a set of strategies aimed at
innovativeness.
However, it seems that Nestlé should put a stronger emphasis on its network strategy
used as the framework for its R&D approach, as it allows for making the company
even more conspicuous in the realm of the global market and attract new customers.
Nestle had to respond rapidly in the face of the COVID-19 crisis to optimize their
company's resilience—rebalancing for risk and liquidity while analyzing chances for
growth emerging from the downturn. Current and future viability are dependent on
quick C-suite action, encompassing both short-term acts for stability and long-term
movements that will generate new futures for firms and sectors. The primary section
focuses on the various supply chain management process which is required for Nestle
to identify their business processes and effectively plan, execute and measure
performance.
According to an article ‘Nestle Seen Focusing On Boosting E- Commerce’ published
by P. Aruna , The Author of TheStar mentioned that Nestle Malaysia Bhd is expected
to focus heavily on capturing a higher volume of e-commerce sales during the period
of the Covid-19 pandemic. Thus , the secondary section of Nestle entails the
implementation of an E-Commerce application which would not only bring every
resource at the same page but also facilitates communication among them. Supply
chain management The SCM for Nestle would manage their primary business
segment and its manufacturing plants. The various integration of the businesses
ensure efficient handling of the product transformation at every phase and handling all
the business functions like shipment, delivery, warehousing, logistics and many others
.

As stated in article, the reason Nestle seen focusing on boosting e-commerce is
because of Nestle’s performance for the first quarter had come in below the research
house’s expectations mainly due to softer domestic sales owing to the impact of the
movement control order . But for the quarter ended March 31,2020 , Nestle’s revenue
had dipped by 1.3% to RM1.43bil from RM1.45bil a year ago. Its net profit fell by
20.8% to RM186.31mil from RM235.22mil a year ago. Besides, Nestlé Malaysia’s
performance was also dragged down by unfavourable commodity costs and exchange
rates. Despite this, the company has pledged to donate RM15 million as part of its
COVID-19 relief efforts.
Therefore, e-commerce is one of the fastest areas of growth for the Nestle’s company.
Beside that, e-commerce has affected businesses positively and negatively. On the
one side, Nestle’s company have been show that using e-commerce based enterprises
have been shown to sustain fast growth while increasing returns as well. The reason is
that these startups have minimal infrastructure and inventory and rely heavily on
information and communication. In fact, in information based product industries,
distribution and sale via e-commerce may bring the cost per unit to almost zero.
Indeed , the impact of e-commerce on Nestle's business is immense.

To address the issue of packaging waste in the environment, Nestle Berhad has been
proactively working with local partners to establish in the community better and more
widespread recycling habits, as well as more effective ways for waste collection and
separation of the different types of materials.
Empowering communities to adopt better recycling habits
As part of the company’s recycling initiatives, Nestle recently signed a Memorandum of
Understanding with the Petaling Jaya City Council to kick-off an initiative on kerbside
collection of recyclables in two townships in Selangor, with the aim of instilling a better
understanding of recycling, reducing household waste and increase waste separation and
collection for recycling. Nestle rolls out recycling labelling initiative across its portfolio. The
company has also developed a new product packaging guideline to educate consumers on
how to properly separate the different packaging components of its products to facilitate

recycling. These represent 90% of our packaging materials at Nestlé.
These guidelines would encourage and facilitate separation at source and encourage the
behaviour/habit of recycling. UHT production line in the Nestlé Sri Muda Ready-to-Drink
factory, using 100% paper straws since October 2020. Designing product packaging that is
meant for recycling also means looking into using materials that can be recycled more easily.
Leveraging partnerships to shape a waste-free future
Nestle’s operations partner, KPT Recycle Sdn Bhd, executes the on-ground collection to
ensure the waste is managed responsibly and channelled to the specific recyclers, so that none
of its packaging, including plastics, end up in landfills or as litter. As an example, we have
eliminated over 200 million plastic straws per year by swiftly adopting sustainably- sourced
paper straws across all our UHT range”, said Juan Aranols, CEO of Nestle Malaysia. That’s
why we are rolling out a common and simple recycling codification across all our products. In
addition, a new collaboration with The R.Age, the impact journalism platform of The
Star, will see the release of a video explaining the important role of consumers in the
recycling process, and how it can help mitigate the effects of climate change.
Raja Nurmaria Murni, Consumer Marketing Manager for MILO with Juan Aranols, Nestlé
Malaysia CEO explaining to the Mayor of Petaling Jaya about Nestlé’s recyclable packaging
at the launch of the kerbside collection programme in collaboration with the Petaling Jaya
City Council. Nestle has also launched a recycling collection programme in the People’s
Housing Project Lembah Subang 1 in Taman Putra Damai, in collaboration with waste
separation and recycling solution provider, iCycle. “Our aim is to inspire the public to adopt
new behaviours and educate on recycling to avoid plastic waste, leveraging collaborations
such as with business partners like 99Speedmart, ” added Aranols. Nestlé CEO, Juan Aranols
and team, together with 99Speedmart Managing Director and Founder, Mr. Lee Thiam Wah
at the launch of the Nestlé Malaysia & 99Speedmart collaboration on the CAREton Project.
Driving sustainability across the Nestle value chain
Nestle Paddy Club, was established in 2012 to ensure that the rice used for its cereal products
is sourced sustainably and responsibly, while improving the farmers’ livelihood with a
sustainable income. About 225 local paddy farmers across 654ha of paddy fields in Kedah are
equipped with Good Agricultural Practices which provide them with eco-friendly microbial
supplements that help increase yields in a sustainable manner, and promotes more efficient

usage of water and reduction of carbon emissions. In Kelantan, the Nestle Chilli Club in
Kelantan has 76 farmers involved in sustainable chilli farming on some 62ha of land since
1995. Through this initiative, agricultural expertise is shared with local farmers via training
sessions to increase productivity, reduce farm costs, minimise environmental impact as well
as enhance work safety measures.
The programme has also been successful in improving their living standards and promoting a
second generation of chilli farmers. Under the pilot programme, Nestlé has produced over
70,000 Robusta coffee seedlings distributed to 100 local farmers for planting in Kedah. The
programme supports the farmers at every stage of the coffee farming process, which in
turn, results in better quality yield, improves the farmers’ livelihoods and Nestlé’s sustainable
coffee supply chain. The NESCAFÉ Grown Respectfully programme has engaged with more
than 100 farmers in Kedah to date.
Reforestation is another area Nestlé is actively engaging. This is part of the company’s global
pledge to achieve Zero Net Greenhouse Gas Emissions by 2050 and gives continuity to, the
pioneering Kinabatangan Rileaf Project, established by Nestlé in 2011. Nestlé’s ambition is to
be a driving force on the transition of the industry towards a more environmentally
sustainable future.
o PETALING JAYA: Nestle Malaysia Bhd is expected to focus
heavily on capturing a higher volume of e-commerce sales
during the period of the Covid-19 pandemic.
o It noted that raw material costs such as for cocoa had also
continued to trend upwards.
o Its net profit fell by 20.8% to RM186.31mil from RM235.22mil
a year ago.
o It said revenue for the quarter had fallen on the back of
weaker domestic sales from a shorter ramp up to Chinese New
Year and the two-week impact of the MCO, especially for its
dine-in F&B businesses.
o On Tuesday, Nestle said it had allocated the highest capital
expenditure in six years of RM280mil in 2020 to support the
future production capacity of Maggi noodles, product
innovation as well as adding a new high technology
production line in Shah Alam.

o A new high technology production line in Shah Alam would
also allow the group to enter into new high growth categories
with great future potential.