Logistics and Supply Chain Management

Explore the concepts of logistics and supply chain management in this comprehensive study material. Learn about the planning, sourcing, operations, and delivery processes involved in Nestle Waters' supply chain. Understand the sustainability and green logistics risks faced by the company. Get insights into the mission statement and overview of the organization. Find solutions for addressing the risks and ensuring a sustainable business model.

Running Head: LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Logistics and Supply chain management
Student’s Name
University Name
Author’s Note

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Table of Contents
1. Overview of the Organization..................................................................................................3
1.1 Mission Statement..............................................................................................................3
2. Discussion....................................................................................................................................4
2.1 SCOR Model of Supply Chain Management for Nestle Waters...........................................4
2.1.1 Planning phase of supply chain management.....................................................................4
2.1.2 Sourcing...........................................................................................................................5
2.1.2.1 Downstream and Upstream Activities..........................................................................5
2.1.2.2 Operations............................................................................................................................6
2.1.3 Making................................................................................................................................7
2.1.4 Delivery...............................................................................................................................8
3. Sustainability and Green Logistics Risks....................................................................................8
3.1 Water Risks............................................................................................................................9
3.2 Nexus of energy, water, food as well as climate....................................................................9
3.3 The New Economics of Water.............................................................................................10
3.4 Risk Assessment..................................................................................................................12
4. Outlining the key actions for addressing the risks.....................................................................16
4.1 Starting at Home..................................................................................................................16
4.2 Understanding the Water Risks............................................................................................16

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4.3 Development and evolution of the Strategic Management plan of Nestle Waters..............17
4.4 Engagement of the associates..............................................................................................17
Reference List................................................................................................................................18

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1. Overview of the Organization
1.1 Mission Statement
Nestle Waters one of the leading bottle water companies of the world, is the Division of
packaged drinking water of Nestle. Nestle Waters is responsible for about 10% of the entire sales
volume of Nestle. The facilities of Nestle Waters are established in 132 countries with a
complete range of product formats viable for all the distribution channels. The company offers
bottled water as well as water based beverages that suffices the refreshing needs of the
consumers, anytime and anywhere.
In the market of bottle water around the globe, the disparities between the countries are
quite significant. In the middle of these market ambiguities, Nestle Waters aims to ensure
organizational growth based on the management of the unique portfolio of the brands as well as
their globally implemented policy of targeted acquisitions around the globe.
Since the establishment of the organization in the year 1992, the organization started to
strengthen their strategic position, and exhibited higher revenue growth compared to the other
global leaders of packaged drinking water like Bisleri, Aquafina, Dasani or Qua.
Parallel to their growth, the organization is committed towards scrupulously protecting
their springs, drawing only on the required bare minimum for their operators. Nestle Waters also
follows a policy of constant optimization of the processes involved with production in order to
avoid production of waste (Wright 2015). As an outcome, irrespective of the market leadership
of Nestle Waters, the company utilizes only a bare volume (0.0009%) of water that is consumed
in the whole world.

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This process helps the organization to maintain a sustainable business model and thereby
ensure that their customers get the best quality of finished products which can be counted as a
parameter for quality as well as purity (Smith 2017).
2. Discussion
2.1 SCOR Model of Supply Chain Management for Nestle Waters
2.1.1 Planning phase of supply chain management
The operations of Nestle Waters and their product lines are spread throughout the world.
However, in this report, emphasis will be given on the supply chain analysis of the packaged
drinking water business of the company. The supply chain management system of the brand is
unique. They export their packaged water mixing ingredients to the various bottling agents who
had agency of Nestle Waters in various parts of the world. In some of the European and
American locations, the company has directly owned bottling plants, like in Italy, Switzerland
and some areas of North America. Other exclusive territorial contractors of the company produce
the finished products in pouches as well as bottles (Nestle-waters.com, 2019). The filtered water
is mixed with the formulated mineral water mix of the company. On some instances sweetening
agents are mixed also. The bottling agencies around the globe then sells, distributes as well as
merchandises the resulting products of Nestle Waters to the retail outlets, food service agencies,
departmental and convenient stores and the vending machines within around 1300 kilometers
area from the bottling plants.
The Nestle Waters Supply Chain is segregated in to various levels. For the case of the
mineral water division of the company, the downstream activities of the organization are mostly

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required. These activities involve entailment of partnership with the various bottlers, distributers
as well as channels that are utilized for reaching the different retailers.
2.1.2 Sourcing
2.1.2.1 Downstream and Upstream Activities
The upstream activities of the company are limited to manufacturing of mineral water
mix formula. This contains the flavoring agents that help to keep the freshness of the taste and
color of the water intact. This formula is one of the most tightly held trade secrets of the
organization. Hence, there is very less information regarding the particular ingredients used. The
information regarding the cost of the supplies that goes in to manufacture of the ingredients are
also unknown, because of that. The organization holds the original copy of that formula in the
headquarters at Switzerland. The income statement of the company in the year 2018 holds that
the cost of goods for Nestle Waters had been excess of $10 million. The operating margin of the
organization had been around 25% (Nestle-waters.com, 2019). The largest known ingredient of
the organization had been added minerals as well as selected salts. There are various systems
employed by the company for the tracking of the daily variations of the global price of the
ingredients. Along with the specific mineral and salt that are there in the secret formula of the
company, other main ingredients which re used in the manufacturing of the finished processed
products are hydrogen carbonate, sodium, potassium, chloride, magnesium as well as sulfate.
The organization has various established supplier partnerships in order to procure these materials
and these partnerships are not under consideration in this project.
The maximum amount of water of Nestle Waters is sourced from the spring sources as
well as underground aquifers and not from the lakes, streams as well as reservoirs which supply

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maximum of the tap water. The regional spring waters of NWNA are 100% natural that is
captured directly from the source and then it is tested continuously for ensuring the highest
quality. The bottled water of “Nestle Pure Life” begins from the municipal water sourced from
underground. However, in the latter phase it goes through granular activated carbon as well as
reverse osmosis. These are specialized treatment procedures which are not used typically in the
municipal supplies. As an outcome, what comes to the consumers sealed in the bottles under the
brand name of Nestle Pure Life is not the tap water. Rather, it is purified drinking water. Each
bottle of purified drinking water of Nestle Waters has its source of water specified in its label
graphics (Nestle.com, 2019).
The downstream activities of the Coca Cola Company emphasizes on franchised distribution
system, where Nestle Waters produces the mineral mix formula that is sold to the bottlers all
around the world holding exclusive territories.
Because of the commoditized nature of the products, the Nestle Waters Company follows an
intense strategy of distribution where they collaborate with the local bottling companies who
have been operational in several areas in the world. In order to simplify the process of supply
Chain management, Coca Cola allows review of a small part of their process of channel flow that
helps them in development of a better understanding of the procedure by which the Supply Chain
of Coca Cola works (Nestle-waters.com, 2019).
2.1.2.2 Operations
There are primary guidelines for the operations of all the bottling partners as well as suppliers so
that most of the directly related operations are actually standardized and there is a certain level of
standardization as well as centralization in maximum of the strategic decisions.

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Each of the partners of packaging provides service in the assigned territory through the
head office that maneuvers maximum operations. These offices act as a hub for the various
concerned entities of supply chain. The head office of the bottling plant is working is close
quarters with the regional offices which are directly linked with the Nestle Waters Export
Corporation.
Nestle Waters has partnered with Danone as well as Origin Materials which are US based start
up corporations for developing PET bottles of plastic made from 100% sustainable as well as
renewable sources. These start-up forms make use of biomass feedstock of that category that is
used for production of cardboard and/or sawdust so that the resources are not diverted from food
production from the human or animal sources (Nestle.com, 2019). IN the last 10 years, the
amount of PET needed for packaging of every liter of water is 22%. The 700ml bottles of Nestle
Waters that have been launched lately are developed from 100% recycled plastic. Alongside
making our plastic bottles recyclable, we are making them as lightweight as possible, while
maintaining their functionality, and reducing the energy required to produce them.
This project of Nestle is known as the NaturALL Bottle Alliance, which is a
representation of the scientific breakthrough in this sector. This project supports the ambition of
the company to strive for zero environmental impact in their operations by the end of the year
2030.
2.1.3 Making
Nestle have been in to the market for more than 100 years. However the nature of customers has
now changed for Nestle. They research as much for a bottle of water as they do for an expensive
wine bottle.

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That is why it is the responsibility of the CMO of Nestle Waters to ensure that every
single customer have a relevant experience. This posed a challenge to the organization as a CPG
brand. The company does not own the end to end relationship with the customers and that is why
this partial view of the customers became a big problem for them in addressing the needs of the
individual groups of customers. This prompted Nestle Waters to develop their own e-commerce
subscription channel for their customers, known as ReadyRefresh, particularly for their bottled
drinking water products (Nestle.com, 2019). The company had to develop a strategy for linking
their strategy of accommodation of their products in the frontline shelf space. As the customers
are searching more frequently, about the various information of the Nestle waters products, the
company is inclining their delivery line more on ensuring maximum supply of their packaged
drinking water bottles in the front line store shelves (Nestle-watersna.com, 2019).
2.1.4 Delivery
In spite of the 600 ml and 1litre packages of drinking water of Nestle, which were been
sourced to the distributors through their personal delivery vehicles, their major proportion of
sales constitute of the 18.9 litre jars of drinking water. The delivery of those jars has been
outsourced to M Water Co. Ltd. which is distributed under the name of the Sprinkle Brand.
3. Sustainability and Green Logistics Risks
The recently published Water Replenishment Report of the UN highlights that more than two
third of the entire population of the entire world faced issues like acute water crises.
However, Funes (2018), advices that water supply is critical to the success of the
organization since it is the most enabling resource needed for their 3000 and more factories of
drinkable bottle water production all around the world. That is why the company focuses on the

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three primary aspects of water management strategy in the course of their supply chain
management.
3.1 Water Risks
Water system in the US, which is the main market for Nestle Waters, is under an enhanced threat
of growing population as well as climatic changes. About one third of US have been facing high
risks of drought. On top of that, the water infrastructure used by the company in US is very old.
Wooden water mains are used for supply of water to the main processing plants. On the contrary,
the water revenue costs of the company are not exceptionally high so as to arouse the cost of
capital for the repair of their infrastructure. The revenues of water utility are being reduced
because of the reduction of sales. Again, Sciuto (2017), discusses that a bigger problem is that
the consumers of water in most developed nations including America is seasoned to low water
consumption bills. For evidence, the homeowners in Washington are supposed to pay an average
price of $350 for about 130000 gallons of water. On the contrary, a customer of Guatemala City
would have to pay about $1700 for the same amount or water. As an outcome of all these
sustainable threats, the major risks that are violating the company are potential shortage of water
supply at the needed volume, price volatility that enhances the push of water supply at by
increasing the rate (Nestle-watersna.com, 2019).
3.2 Nexus of energy, water, food as well as climate
The management of Nestle Waters has accepted the fact that the climatic changes are really
impacting the customers, suppliers as well as themselves. The company also acknowledges the
fact that more than 70% of the fresh water in this world is necessary for food production around
the globe. The universal trade policy of Nestle Waters also acknowledges the fact that the

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emission of green house gases by the humans is accountable for impacting the water as well as
food supplies. The company realizes that there is acute need of long term investment for
recognizing the solutions to these complex issues.
3.3 The New Economics of Water
The higher price as well as lesser access of water to its investment capital is the principal
economic issue that has been confronting the companies like Nestle Waters. Hence, it is
necessary that in order to solve the issue of water shortage, the currently employed pricing
system of dumb meter have to be replaced with a pricing environment which represents the
demand generated value of water. This new pricing system should take in to consideration the
specific timings of demand for water when the customers who are demanding significant volume
of water supply are liable to pay price pertaining to the premium range. This excess pricing
should be able to generate higher cash flows for supporting sustainable investment for a better
and more capable management of water supply as well as technologies which result in proper
management of current available supply of water. The 4 following sustainable water usage
actions have been faceted by Nestle Waters towards mitigation of the strategic challenges that
have been plaguing the supply chain:
i) Improvement of the water usage ratio by at least 20%, thereby develop the efficiency of water
usage within the year 2022. The water ratio has been improved by 14% by the Nestle waters as
of 2016.
ii) Recycling 100% of the water of their manufacturing plants to that level that they return to the
environment so that they return to the nature at a quality that is able to support the sustenance of
aquatic life.

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iii) By the end of the year 2020, the company is planning to replenish the watershed supplies in
order to produce some volumetric benefits that is equal to the volume of packaged drinking
water that is produced by Nestle Waters (Nestle-watersna.com, 2019).
iv) The company is assessing the quantity as well as quality vulnerable of natural water sources
which are acting as active sources of water for their bottling plants in order to provide protection
against adversely impacting the water accessibility of the other major users of natural water from
being impacted adversely.

Running Head: LOGISTICS AND SUPPLY CHAIN MANAGEMENT
3.4 Risk Assessment

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Severity
NEGLIGIBLE
small/unimportant;
not likely to have a
major effect on the
operation of the
event / no bodily
injury to requiring
minor first aid
injury
MARGINAL
minimal importance;
has an effect on the
operation of event
but will not affect
the event outcome /
requires medical
treatment
CRITICAL
serious/important;
will affect the
operation of the
event in a negative
way / suffers serious
injuries or medical
treatment of minors
CATASTROPHIC
maximum importance;
could result in
disaster/death; WILL
affect the operation of
the event in a negative
way / death,
dismemberment or
serious injury to minors
Probability
LOW
This risk has
rarely been a
problem and
never occurred
at a college
event of this
nature
LOW (1) MEDIUM (4) MEDIUM (6) HIGH (10)
MEDIUM
This risk will
MOST LIKELY
occur at this
event
LOW (2) MEDIUM (5) HIGH (8) EXTREME (11)
HIGH
This risk WILL
occur at this
event, possibly
multiple times,
and hasoccurred
MEDIUM (3) HIGH (7) HIGH(9) EXTREME (12)

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Associated Risk(s)
Risk(s) associated with the activity
Severity
Level of impact on the trip and
students
Probability
The chances of that risk
happening
Risk Score
Risk score, found by
combining impact and
probability on the risk matrix
About one third of US have been facing high risks
of drought. On top of that, the water infrastructure
used by the company in US is very old. Wooden
water mains are used for supply of water to the
main processing plants.
1. Negligible
2. Negligible
1. Medium
2. Medium
3.
1. Low (1)
2. Low (1)
High price paid by people in major markets of
USA which are the developed countries like USA,
Italy, Switzerland. On the contrary, the other
market players have been targeting the developing
countries where the price of packaged drinking
water is significantly less.
1. Critical 1. Low 1. Medium (6)
Threats from local communities which have
showing growing resentment against the Nestle
Waters for extracting excess waters from the local
springs
1. Catastrophic 1. High 1. High (10)
The threat of keeping the carbon output of on road
transit under 22% is a big issue for Nestle Waters.
This is because the company does not have any
separate logistics network in Europe. They
collaborate with Nestle UK for their transit and
major logistics efforts. That is why; the company
have to make the logistics network of Nestle more
fragmented so that CO2 by large vehicles can be
reduced.
2. Medium 2. High 2. Medium (7)

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Running Head: LOGISTICS AND SUPPLY CHAIN MANAGEMENT
4. Outlining the key actions for addressing the risks
Nestle Waters should follow the following four practices in order to address the above
discussed sustainability risks:
4.1 Starting at Home
In spite of the fact that the prices of water have risen to the level when they cannot be
ignored, many businesses have not often grown by focusing on an expense item. That is why
faucet aerators are recommended. At first one of them has to be put on a test faucet. After that it
is not possible to tell the differences, and then all of them have to be put in to faucets. These cost
almost nothing and generate great savings. Finally, as identified by Sciuto (2017), the water
barrels have to be standardized at an equivalent equilibrium. This ensures that the amount of
water that is imported to the bottling plants is exactly equal to the barrel equivalents of water that
goes out. The apprehension should be that the valuation of the output should be more and not
less in any way.
4.2 Understanding the Water Risks
There should be a risk assessment gap for water acquisition of Nestle Waters. It is assumed that
water should be always available at the full limits. Experience of droughts in Texas as well as the
Southwest is increasingly challenging this assumption. Even there is water supply crisis in the
two main markets of Europe like Switzerland and Italy. The recent water battles between the
states of Georgia, Alabama as well as Florida have enhanced the problem. That is why there is
the need of a water risk assessment tool that will apprehend the access to water of the company.
In recognizing the situation, Nestle Waters should be donating their water risk geospatial data to
the Global aqueduct Database. This database will allow the organizations like Nestle Waters to

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elucidate the management of the company, investors as well as the major independent suppliers
and bottlers of the company to develop the water risk maps with detailed specification as well as
high resolution.
4.3 Development and evolution of the Strategic Management plan of Nestle Waters
As a plan to contribute to the global water crisis, the company should distribute water
bottles (complimentary packages not for sale) to the neighborhood from where they are sourcing
their water. In this way, the company will be enlarging their scope of CSR also. For evidence if
they implement this strategy, they would be able to mitigate the growing resentment among the
people in Flint against outsourcing maximum water from the springs in Flint that are major
sources of edible water. Again, distribution of water bottles once every week in the form of
allocating 1 jar of 5 gallons of water to the people of Flint on a metered basis or for free would
help the company to develop the springs of Flint as a sustainable source natural water.
4.4 Engagement of the associates
The company has to employ green teams for providing insights to the partners and the
bottling franchises of the company regarding how to source water and from which potential
sources. The other companies like Bisleri, Aquafia by Coke of Knley have already implemented
this model on an experimental basis. The Nestle Waters have to competitively map the sues
attained by these companies against new implementation. After that they have to incorporate the
green teams in the supply and value chain also.

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Reference List
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Globalization and Waste in the Delaware River. PS: Political Science & Politics, 50(1), pp.193-
198.
Funes, Y. 2018. After Public Backlash, Nestlé Will Give Flint More Water. Gizmodo.com.
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1825953989 [Accessed on 22nd April 2019]
Gutiérrez-Reguera, F., Montoya-Mayor, R., Seijo-Delgado, I. and Ternero-Rodríguez, M., 2016.
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April 2019]

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Nestle-waters.com, 2019. The healthy Hydration Company. Available at: https://www.nestle-
waters.com/ [Accessed on: 21st April 2019]
Nestle-watersna.com, 2019. Does bottled water come from spring sources or municipal sources?
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bottled-water-come-from-spring-sources-or-municipal-sources [Accessed on 22nd April 2019]
Schwarz, V., 2018. Nestlé. A Corporate Financial Analysis of a Multi Million Dollar Company.
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Sciuto, A. 2017. How Nestlé Waters reclaimed the customer relationship. Available at:
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customer-relationship/ [Accessed on 22nd April 2019]
Smith, Y., 2017. Nestlé and the Global Water Governance Arena.
Wright, K.F., 2015. Is your drinking water acidic? A comparison of the varied pH of popular
bottled waters. American Dental Hygienists' Association, 89(suppl 2), pp.6-12.

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