Global Logistics and Supply Chain Management of Nestle

This report critically analyses the performance of Nestle in global logistics and supply chain management. It discusses the importance of managing the flow of goods and services from one place to another, and the challenges faced by organizations in doing so. The report also evaluates Nestle's SCM strategy, compares it with that of its competitors, and provides recommendations for effective supply chain management.

BSS051-6 Global
Logistics and Supply
Chain Management

EXECUTIVE SUMMARY
Global logistics is defined as the process in which an organisation is managing the flow
of goods from one place to another place. When organisations want to run their business on
international level then they need to understand the concept of global logistics and supply chain
management. It becomes very important for companies in order to manage the flow of goods
from one place to another place. During that time, organisation needs to manage the storage and
movement of goods. That means they require a particular management system which ensures that
flexibility of supply chain. This will helps in achievement of goals and objectives as it satisfy the
customer’s needs and wants. This report has an aims to critically analyse the performance of
Nestle in global logistics and supply chain management.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
About the company.................................................................................................................4
Supply Chain Management....................................................................................................4
Logistics management............................................................................................................5
Global Logistics and Supply Chain Management of Nestle..................................................7
Analysis and evaluation...................................................................................................................9
Nestle's Performance..............................................................................................................9
Key challenges faced in managing their supply chain and logistics......................................9
Compare/contrast with Nestlé’s main competitors’ SCM strategy......................................10
Conclusion.....................................................................................................................................11
Recommendation...........................................................................................................................12
REFERNCES:................................................................................................................................13
Books and Journals:..............................................................................................................13
Online...................................................................................................................................13

INTRODUCTION
Supply chain management includes the flow of goods and services. It is a wider term and
the process starts from procurement of raw materials and includes each and every thing till the
product is given to the end users. The main purpose is to provide the goods and services on time
to the customers with best quality (Craighead and et.al., 2020). It is necessary for an organization
to manage the logistics in order to achieve the final goals of supply chain management. This
report is based on Nestle. It is a Swiss multinational organization that has its operations around
the world. The organization came into existence in 1866. There is discussion related to the the
supply chain management strategy used by Nestle. For that purpose the organization is working
hard and its performance is evaluated in this report. The challenges that Nestle faces while
managing their supply chain and logistics are also analysed in the report. At the same time, the
report also aims to compare the SCM strategy of competitors with that of Nestle. In the end on
the report there are some suggestion that help to manage the supply chain in an effective manner.
MAIN BODY
About the company
Nestle is largest food company in the world. The organization came into existence
155years ago in 1866 by Henri Nestle. The products offered by organization are coffee, Baby
food, dairy products, confectionery, breakfast cereals, bottled water, pet foods and ice cream. It
is seen that organization manages its supply chain in an effective manner and that is the reason
they are able to earn around 10.46 billion in 2018. The organization has around 352,000
employees as per the details of 2019 (About Nestle, 2021). It is necessary to note that managing
the employees is necessary for effective functioning of the organization. It is seen that there are
so many products that are serves by the organization. So, the company manages the supply chain
and provides the final goods to end users in an effective manner. Nestle ranked 64 in Fortune
Global 500 in 2017. There are around 447 factories and it operates in 189 countries as to serve
more and more customers.
Supply Chain Management
According to Koberg and Longoni, 2019, supply chain management can be defined as
flow of goods and services hat includes each and every stage from procurement till final
consumption. It is necessary to provide the good to the customers and it helps them organization

to gain advantage over its competitors. It is overall process that starts from the efforts of
suppliers and develop supply chain that helps to achieves economies of scale. It is a process
under which the organization plans to control the production, shipment, and distribution of a
product. It is vital to note that the organization that is able to manage supply chain gains
advantage over the competitors and the goods of the company are consumed at a fast pace. It is
necessary to maintain good and effective relations with the all the parties involved in supply
chain management. It is seen that each and every product that is provided to customers is result
of effective SCM strategy. The focus is to minimise the shortage and to reduce the cost involved
in the process. It is important for them to take care of the quality of goods that are served to
customers and balancing the price at the same time.
As per Fernandes and et.al., 2017, supply chain is a network of individuals, resources,
companies, activities, and technologies in such a manner that they are able to make the product
sell-able and reach the end user. It oversees all the touchpoints of the product of company from
starting of product life cycle to its end. There are various expenditures that the organization has
to undertake while managing the supply chain. All this benefits the organization and provide
them best quality good to customers that results in enhancing revenues of the organization. It is
vital to note that the organization are able to manage the supply chain at national level. After
globalisation the operations of the business organization is around the world and they have to
manage the supplies. It is important to take care of global supply chain as well. The organization
must have competency is making the goods available at each and every place where they operate.
It is seen that the are so many competitors that are already serving the product, The SCM
strategy must be as strong so as to gain advantage over the competitors. It is important for the
company to use the resources wisely and gain advantage over the competitors. The customers
must be targeted in an effective manner and the organization must try to reach all the customers
and provide them goods at effective rate.
Logistics management

According to Kain, R. and Verma, A., 2018, Logistics management is a part of supply
chain management that includes plans, implement and control the flow and storage of goods and
services in order to meet the need and wants of customers. It is necessary to understand that it is
a process that includes procurement, movement and storage of materials and finished goods by
the organization. In simpler words it is the movement of goods from Point A to Point B. There
are some important points that must be considered by an organization while managing logistics.
It is seen that there some Rs of logistics that help to manage the process effectively.
Each and every organization must take care about the product. They must check the
desired product as well as the quality of product that the want. The next is the need to check
quantity of product. To manage the logistics it is necessary for the organization to purchase the
product in right quality which means as per the requirements of company. The work of logistic is
based on transportation and it is vital to deliver the goods to the right place. As it will help them
to make further changes and development so that tit is ready for consumption (Harrison and
et.al., 2019). The focus is also on the condition of good, it is necessary to take care of condition
at the time of transportation. The product must be delivered at right time so that the customers
needs and satisfied at the same time. It is important to note that a organization that do not deliver
the right product at right place will loose the customers and will not be able to cover market. The
competitors will take away the customers and it is a affair of loss for the organization. The
company also takes care that they are able to reach the right customers. It is said that there are
huge number of customers that are available in the market, but it is up to the company that how
they decide their potential customers. As it will help them to gain success and attract them. For
this there is need to check the market on regular basis and then serve the customers. The last R of

this logistics management is related to right price. The products and service must reach the
potential customers at the price they can afford. The price of the product must be based on the
value the product provides to the society. It is necessary to follow all the Rs in order to
successfully manage the logistics of the organization.
As per the point of view of Chhetri and et.al., 2018, Global logistics can be defined as the
process of managing the flow of good and services from one part of globe to another where the
organization wants to operate. It is necessary to note that the product must be provided at the
place where the customers want it work consumption. There is need of proper planning in global
logistics so that there is proper coordination among all the people that are involved in the
process. It will help to decide the main activities that will help the organization to provide the
goods so that they are able to provide goods to end users. It is necessary to control the inventory
so that they are able to provide adequate amount of goods to the customers. At the time of
logistics it is important to take care about the packaging as it helps the team to provide and
deliver the goods properly (Ohmori and Yoshimoto, 2019). The safety of goods is necessary and
that is necessary for the logistic team to take care of transportation as timely delivery of good is
required. Each and every important data and information must be communicated effectively. The
use of accurate data helps the business organization to work in an effective manner and
accomplish goals and objectives. Delivering each and every product at time is necessary for
success of logistics. It is seen that a company has to assure that they provide the goods at
different nation of time. Logistics play a vital role in success of supply chain management
process.
Global Logistics and Supply Chain Management of Nestle
As per Rahman, N., 2017, Supply chain management of Nestle plays a critical role in
success of the organization. It is seen that supply chain management helps the organization also
helps the organization to reach the entire customer and provide them quality goods. The
organization works with collaboration of all the teams that work to forecast the demand of the
organization. The suppliers work together with the teams and take responsibility to work in a
effective manner. Nestle focuses on balancing the inventory and having right amount of supply
of the products. After the process of production is completed the organization the supply chain
works to safely store the stock. It is seen that next step is transportation. They believe the
transportation of goods and services by keeping in mind the safety of goods is necessary. The

target is to reach the customers and satisfy their needs and wants. Nestle is agile and adaptable
organization that works to provide best to the customers. They keep in checking the requirements
of the customers and provide them with best quality so that they are fully satisfied.
According to Sultana, 2019, Procurement is one of the important aspect of supply chain
management. The procurement team of Nestle works takes the overall responsibility to create
value. They focus on sustainable approach and wants to grow by following the principle of
sustainability. The hubs of Nestle are located in Switzerland, Panama and Malaysia. It facilitates
the work done by them and the supply chain is easily managed. It is important for the
procurement team to take care about the sustainable concept.
Transportation and distribution of Nestle is focuses on reducing the carbon emission over
a period of time. It is seen that transportation facility used by Nestle is so effective and it helps
them to provide the goods and services on time. To satisfy the customers it is important to
provide them goods and services on time. The organization is able to improve net VFR by 10%.
At the same time they focus on reducing CO2 footprint by 13,006 MT. It is also analysed that
Nestle uses 3D simulation approach, that helps them to make use of resources in an effective
manner. The optimum utilisation of resources will help the organization to achieve the targets in
an effective manner. It is helpful for Nestle to have proper transportation facility.
Nestle has worldwide organization and that will help the organisation to work in an
effective manner. The conduct proper planning and use the quality resources in order to
accomplish goals and objectives successfully. To provide the goods to customers on regular basis
and within time is necessary for an organisation. It is necessary for them to manage supplies so
that they are able to satisfy the needs and wants of customers (Jia, F., Gong, Y. and Brown, S.,
2019). It is seen that each and every member that is involved in supply chain management is
important for success of organisation. Nestle builds strong relations with the supply chain team
and that benefits them.
As per Nestlé's Tasty Tactics for a Greener Supply Chain, 2019 Nestle aims to be eco
friendly. The organisation is working to reach zero net greenhouse gas emissions by 2050. For
which they are planning to make some changes in their supply chain management. As they will
shift to sustainable products. They will change the outlet and are planning to replant the trees in
spare areas. They will use all the renewable resources. Also they are planning to partner with
suppliers that sustainable farming practices.

Analysis and evaluation
Nestle's Performance
It is important to note that Nestle is a multinational organisation that has strong
performance. The organisation checks all the external factors while the perform. At the same
time the organisation has strong network of supply chain and that is the reason they are able to
provide their goods and services to customers effectively. The organisation has is called world's
largest food group. It is seen that there is increase in global organic sales by 4.9% over the
quarter. There is positive trend of the sales in Nestle. The financial expenses have decreased by
14% and that leads to reduction in net debt of the organisation (Nestlé reports full-year results
for 2020).
The organisation is working in an effective manner and that helps them to enhance the
sales. It is important for a company to work in an effective manner. It is observed the company
focuses on each and every part that is important for their business and this is the reason they are
earning profits.
Key challenges faced in managing their supply chain and logistics
The concept of supply chain is so wide and Nestle has to manage a lot due to its global
operations. It is seen that the the business environment is also dynamic and due to this the
organisation has to face various challenges to manage the work done by them. The challenges
faced by Nestle while managing supply chain and logistics are as follows:
 The major challenge that Nestle faced in managing the supply chain is related to Covid-
19. It is seen that at the time of pandemic the world faced lock down situation (Govindan
and et.al., 2018). At that time there were issues faced by Nestle while transportation and
delivering the goods to the end users. As it is difficult to manage the health of employees

and their work efficiency as well. The employees were stressed and unable to manage
work ina n effective manner.
 Another challenge that Nestle faces is related to providing the quality of goods as per the
needs and wants of customers. It is difficult for them to provide the right product at right
with the quality that customer wants.
 It is a costly affair to manage the global supply chain and logistics. Due to economic
constraints the prices of raw material are rising and at the same time customers are in
need of best quality product that is costly for the organisation (Litke, Anagnostopoulos
and Varvarigou, 2019). It makes the operations of organisation costly.
 There is constant changes taking place in the market. It is the reason the organisation
faces it difficult to manage the supply chain. There is risk in working in dynamic
environment. It is seen that the political and social changes have impact on performance
of the supply chain and logistics of the organisation.
 Another issue that Nestle face is related to suppliers. It is seen that sometime they are
unable to provide the products at time and that causes issue for the organisation. Another
is related to standard quality of products (Suryanto, Haseeb and Hartani, 2018). It reduces
the image of company in the market and the organisation has to face loss.
 There are so many technological changes that take place. It is seen that it becomes
difficult for them to adopt the innovation vary often and at the same time there are
various unforeseen delays in supply of product to end users and that causes issue for
them.
These are some of the challenges that are faced by Nestle. It is seen that the company is
able to perform effectively and delay with these challenges. But, there are times when they have
to face challenges and try to deal with them.
Compare/contrast with Nestlé’s main competitors’ SCM strategy
There is a comparison between Nestle and their main competitor’s i.e. Hershey. Both are
competitors and they are running their business very well. The comparison of SCM strategy is
mentioned below:
SCM strategy of Nestle
Nestle is the world largest food processing company and their sales approximate 84.34
billion. This shows the market growth of an organisation. That’s why they need to manage their

supply for meeting the demands of customers (Samdani, 2019). They are operating their business
at many countries and that’s why they need to make an effective supply chain management
which ensures the continuous flow of goods and services. Below mentioned figure shows that
how nestle make sues an effective supply chain management. Their supply chain management
involves raw material which they take from directly to farmers, the suppliers who transport their
raw material to manufacturer plants. After that they produce goods at their manufacturing plants.
In order to sell the manufactured products, they move their finished products to warehouse. After
that they contact with the retailers and then distribute to the retailers. Customers purchase goods
from retail shops. It is found that they are purchase world’s 10% coffee, 10% cocoa powder and
2% of milk and sugar. They are providing technical training to their farmers so that they can
improve the quality of products. They also have quality management system which ensures the
quality of their products. It is also found that most of the logistics and transportation is
outsourced to third parties.
SCM strategy of Hershey
The Hershey Company is one of the largest chocolate manufacturers. That’s why they
always ensure the mobility of their goods. They are giving importance to their customers as they
believe that customers are the king of the market. That’s why their supply chain process always
focuses on customers’ requirements which they can fulfil with the help of proper supply chain
management. So the process of supply chain starts from the customers in whom they order from
online and offline stores and then sales department received order from the customers then they
start processing. They are always considering some important elements such as plan, purchase,
inventory, production, transportation, and supply chain risks, etc.
Conclusion
From the above analysis, it is concluded that supply chain management is one of the
essential function of an organisation. It is seen that there is important role of procuring raw
materials, converting them into finished goods and providing it to customers. Logistics is part of
supply chain management. This report has discussion related to the concept of logistics and
supply chain management and its application in organisation. At the same time there are several
challenges that an organisation faces while managing supply chain that is related suppliers,
uncertainty, as well as problems related to Covid-19. There is evaluation related to the SCM

strategy and its comparison with competitors. In the end of this report there are recommendation
given to improvise the supply chain management.
Recommendation
Supply chain management is important function of Nestle. They are working in an
effective manner and managing the same effectively. The recommendations related to
management of supply chain and logistics in regard to Nestle are as follows:
 The organisation must make use of latest technology as it will facilitate the work of
organisation. There are options of automatic purchasing that have came into existence
because of technological improvement. The software directly places order as and when
the level goes down.
 The use of standardised system will help the organisation. It will help to save time and
money of Nestle and they will be able to establish strong image. The use of standardise
product is beneficial for the employees as it enhance their accuracy, encourage teamwork
and reduce the chances of miscommunication.
 The organisation must enhance the relations with supply chain members. It will help the
organisation to get the deliveries on time. It is helpful for the organisation to maintain
relations so that at the time of urgency they are able to get the product. The supply chain
management is important for success of Nestle and to gain advantage over its
competitors.

REFERNCES:
Books and Journals:
Chhetri and et.al., 2018. Global logistics city concept: a cluster-led strategy under the belt and
road initiative. Maritime Policy & Management, 45(3), pp.319-335.
Craighead and et.al., 2020. Pandemics and supply chain management research: toward a
theoretical toolbox. Decision Sciences, 51(4), pp.838-866.
Fernandes and et.al., 2017. Supply chain management and quality management integration: A
conceptual model proposal. International Journal of quality & reliability management.
Govindan and et.al., 2018. Big data analytics and application for logistics and supply chain
management.
Harrison and et.al., 2019. Logistics management and strategy: competing through the supply
chain. Pearson UK.
Jia, F., Gong, Y. and Brown, S., 2019. Multi-tier sustainable supply chain management: The role
of supply chain leadership. International Journal of Production Economics, 217, pp.44-
63.
Kain, R. and Verma, A., 2018. Logistics management in supply chain–an overview. Materials
today: proceedings, 5(2), pp.3811-3816.
Koberg, E. and Longoni, A., 2019. A systematic review of sustainable supply chain management
in global supply chains. Journal of cleaner production, 207, pp.1084-1098.
Litke, A., Anagnostopoulos, D. and Varvarigou, T., 2019. Blockchains for supply chain
management: Architectural elements and challenges towards a global scale
deployment. Logistics, 3(1), p.5.
Ohmori, S. and Yoshimoto, K., 2019. Global logistics network design problem with rules of
origin. Journal of Industrial Engineering and Management, 12(3), pp.447-457.
Rahman, N., 2017. Supply chain of Nestlé Bangladesh.
Sultana, S., 2019. Procurement Practices of Nestlé Bangladesh Limited.
Suryanto, T., Haseeb, M. and Hartani, N.H., 2018. The correlates of developing green supply
chain management practices: Firms level analysis in Malaysia. International Journal of
Supply Chain Management, 7(5), p.316.
Samdani, S.Z., 2019. Integration of supply chain management and marketing management: A
case study on FMCG products under Nestle Bangladesh.
Online
Nestlé's Tasty Tactics for a Greener Supply Chain, 2019. [Online] Available through:
<https://www.inboundlogistics.com/cms/article/nestles-tasty-tactics-for-a-greener-
supply-chain/>
About Nestle, 2021. [Online] Available through: <https://www.nestle.in/aboutus>
Nestlé reports full-year results for 2020. [Online] Available through:
<https://www.nestle.com/media/pressreleases/allpressreleases/full-year-results-2020>