Nestle Company: An In-Depth Operations Management Case Study

This case study provides an in-depth analysis of Nestle's operations management strategies, focusing on key performance indicators such as quality, cost, flexibility, speed, and durability. It explores how Nestle prioritizes quality and safety, reduces costs through strategic investments and supply chain management, and fosters flexibility within its organizational culture. The study also examines the importance of speed in customer satisfaction and durability in product development. Furthermore, it discusses order-winning and qualifying factors that contribute to Nestle's competitive advantage, as well as the implementation of a balanced scorecard to measure and improve overall performance. The case study concludes with recommendations for maintaining efficient operations management to ensure productivity and effectiveness. Desklib provides access to this and other solved assignments for students.

Operations Management Case Study Nestle Company
Table of Contents
INTRODUCTION...........................................................................................................................1
1.0 Company Profile........................................................................................................................2
1.2 Cost............................................................................................................................................3
1.3 Flexibility...................................................................................................................................3
Qualifying factors............................................................................................................................5
2.0 The Balanced Scorecard Nestlé Company................................................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................6

Operations Management Case Study Nestle Company
1.1 INTRODUCTION
This is a branch of management that deals with the combination and transformation of the
several resources which are used in the organization into value added goods and services in a
manner that is controlled in accordance to the policies of the organization (Kang, 2012). It can
also be defined as a branch of management that deals with design, control of the production
processes in production of goods and services. Operations management is important to every
organization because no organization can be able to sustain in the market if it cannot operate its
services effectively. Through designing, production and quality delivery of products and services
then the organization can be able to satisfy the market needs (Stan Davisa, 2004). The following
are some of the major importance of operations management.
 It is used as a basis for future innovation because of competition and growth in
technology
 It generates more revenue and thus increases growth in the economy
 It is important in enhancing quality production within the shortest possible time.
 It is useful in cost reduction thus profit increase.
 It benefits the consumer through reduced cost of products and services thus growth in the
economy
 Due to increased profits employees can earn a higher rate of salary
 It generates more employment opportunities due to increased production
For this study therefore Nestle is the selected company to base our study on.
1.2 Company Profile
Nestle is an international food and beverages company that has its headquarters in
Switzerland. It has been one of the largest food and Beverages Company globally since 2014.
The company was founded by Henri Nestle, Charles Page and George page in 1866 when
their two firms were merged to form Nestle. This Merger was meant to increase the quality
of life as well as improving a healthier future. It has some of its subsidiaries which may
include Neprasso, Nestle Purina Petcare Company among others.
So far the company deals with 8500 brands and 10000 products produces in the 456 factories
which are located in around 80 countries worldwide. Some of the products that they produce
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Operations Management Case Study Nestle Company
include: ice-cream, breakfast cereals, coffee, baby food, variety of snacks, medical
supplements, tea, coffee, milo, and bottled water animal feeds among others.
Operations management is a major process that is used in this company so as to increase
quality, increase speed, and improve dependability and to enable its products to be durable
and long lasting (Jeanne & Marc , 2016)
2.0 Performance indicators
2.1 Quality
For Nestle Quality and Safety for the users of its product it a top priority which is used to ensure
that the supplied products are healthy for consumption. It is a major principle by the company.
The company need to ensure that trust is maintained by the providing products and services that
are able to meet consumers taste, expectation and preference. Complying with the various
internal and external safety and regulatory requirements by the company is a must, to ensure that
quality is a mandatory objective.
The company should have a management system for quality that is used globally to ensure that
good food is always provided and that they comply with the various standards of quality to
enhance consumer value. And should verified internally through auditing by the various selected
and certified bodies to ensure conformance to standards and various requirements by law.
Working together with the farmers- this is a strategy that is used to ensure that farmers from the
rural areas adopt the use of sustainable environmental practices this helps farmers to improve
their living standards as well increasing their income thus addressing the various issues in the
environment.
Quality is generated in the product development process, to ensure that consumer requirements
are met through adhering to the various product safety and regulation needs (Errol R., et al.,
2008)
Practice of best practices of manufacturing- The Company applies international practices to
enhance quality in all fields of training, material handling among others (Niven, 2010)
Risk analysis- Nestle uses the globally recognized risk control systems to evaluate and control
various risks in the various production stages from raw materials to consumption
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Operations Management Case Study Nestle Company
The benefits of these include: improved safety standards, improvement of trust between the
company and the consumers. It benefits the external environment by ensuring that all safety
standards are always ensured, ( Kammerer, 2009).
2.2 Cost
To reduce the cost of its services the company should only invest in the best-selling brands at the
same time diversify those businesses that may not be performing well this will improve
efficiency and enhance growth.
Reducing supply expenses- this will save money and create larger discounts for various products.
For instance only contact vendors when necessary and try to find those that can give quality
products at a discount (Sikahala, 2015).
This will benefit the organization internally by reducing the cost of production since there is a
reduced cost of raw materials. It also reduces internal wastage and thus a higher productivity.
Externally the organization will benefit its customers since they are able to buy more and
improve their cost of living. Through large sales, the company will generate more revenue to the
government.
2.3 Flexibility
The Nestle culture should always enhance flexibility by ensuring that more flexible strategies are
always put in place as part of the work culture for example supporting life stages and priorities
for their workers and making this as part of their culture as well as empowering their employees
through use of more work practices that are flexible. When there is a balance between work and
social life then profitability is enhanced. Personal commitments should be allowed so as to
motivate the workers. Employees should be allowed to have freedom so that they can do what
they like at any given time without being supervised or given instructions. They should be
trusted so that they can feel empowered to work more. Flexible simple structures should be
encouraged as well as large units avoided. They should as well be allowed to have freedom to
take charge to their careers. Their work schedules should also be adjusted if and when necessary.
Nestle is big company but it has been spread throughout several countries whereby its factory
has its own management and roles. This will benefit the organization internally because the
employees will feel empowered and free thus they can work on their duties without fear and even
come up with better ways of doing work. On the other hand, it benefits the external environment
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Operations Management Case Study Nestle Company
because it allows innovation because it encourages the employees to work more on their
strengths as well as coming up with new ideas in the work environment.
2.4 Speed
Organizations are realizing the importance of speed and how its benefit can be achieved. It can
be speed of various levels either delivery, market or even faster services. This increases the
success of every organization. Companies should be enhancing speed in customer satisfaction so
as to increase its efficiency. It is useful because it ensures that customers are always satisfied,
and that suppliers and other parties always met their needs at the shortest possible time.
2.5 Durability
Durability is another important decision in operations management (Jones & Robinson, 2012).
Organizations strive to achieve a customer satisfaction level which other competitors in the
market are targeting. Therefore, products durability is a core factor to enhance the quality of the
products. Nestle company target a large market with its products. There are well packaged in
durable cans and packets to withstand any breakages and product perishability.
3.0 Order winning
In every organization operations and marketing are essential because it enhances growth and the
overall success of the organization firm are important to enable growth, success, profitability and
superior performance in the market place. Order winning is useful to analyze various products
and services of the firm to the market.
Analyses the selling and buying actors’ perceptions of order winners and competitive
strengths as the degree of fit between these perceptions. A good fit means that the two
actors agree on order‐winning criteria and the firm’s competitive strength on these criteria.
It is expected that a good fit relates to a positive sales growth of the selling firm’s product
(Herrmann & Winkler, 2009). Analyses different situations of fit and misfit for the ten
product families of four small manufacturing Swedish firms and shows how these situations
relate to the sales patterns of the product families. The results reveal that a good fit is
related to a stable economic development of sales, while two different situations of misfit
may lead to a decline in or an expansion of sales.
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Operations Management Case Study Nestle Company
Order winning factors are the factors that that adds value directly to the business from one
customer to another. Performance improvement increases the profitability of the
organization ( Biazzo & Garengo, 2012)
3.1 Qualifying factors
This refers to all activities in the operation that needs to be of a higher level so as to be
considered by the customer. An example of these factors include quality and technology. Quality
is a mandatory qualifier for every organization because without it customers may not make an
order for the products. Speed, quality and durability are some of the major factors in order
winning (Garrison, 2012)
3.2 Less competitive factors
These are factors that they are neither qualifying nor order winning. Therefore, their performance
does not affect the competitiveness of the organizations operations (Quagini & Tonchia, 2010).
4.0 The Balanced Scorecard and performance
4.1 Nestlé Company
For an organization to have an effective performance appraisal system, it must be able to
bring together both financial measures and non-financial measures. To do this therefore a
balanced scorecard technique is importantly used. It was developed in 1993 by Norton and
Kaplan (kaplan & Kaplan, 1996).
It is a device for planning that enables managers to set a range of targets linked with appropriate
objectives and performance. (Lee & Epstein, 2012).
For Nestle Company, performance measurement is done by use of a balanced scorecard whereby
the organization identifies a given number of financial and nonfinancial measures and sets
targets so as to enable them to identify if the current results meets the expectation (Magdy G.,
2011). It enables the management on the critical areas that needs to be improved. For example, if
the sale of animal feeds has declined for the past 1 month then the management should come up
with strategies to increase their sales. The following steps should be designed for a scorecard.
Transitioning vision to operational goals
Clearly communicate the vision and link it to performance
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Operations Management Case Study Nestle Company
Draft a business plan and learn from the feedback received.
Feedback and learning and adjusting the strategy accordingly.
Even though a scorecard helps managers to on realizing the various strategic issues, it does not
affect strategy formation.
5.0 Conclusion and Recommendation
Operations management is concerned with making so many critical decisions that affects
how the organization operates as well as it is crucial because it determines the organizations
level of efficiency. Managers needs to be strategic so as to ensure that the various strategies
to be developed by the organizations are productive and effective. It is recommended tha t
organizations should always focus on efficient operations management so be able to be
productive.
References
Biazzo, S. & Garengo, P., 2012. Performance Measurement with the Balanced Scorecard: A
Practical Approach to Implementation within SMEs. s.l.:Springer Science & Business Media.
Kammerer, M., 2009. The Balanced Scorecard - advantages and disadvantages. s.l.:GRIN
Verlag .
Errol R., . I., Sands, J. & Mia, L., 2008. The effects of the balanced scorecard on performance:
The impact of the alignment of the strategic goals and performance reporting. Journal of
General Management, 33(4).
Garrison, 2012. Managerial Accounting. 11 ed. s.l.:Tata McGraw-Hill Education.
Herrmann, S. & Winkler, A., 2009. Financial markets and the current account: emerging Europe
versus emerging Asia. Review of World Economics, 145(3), pp. 531-550.
Jeanne , D. W. & Marc , S., 2016. The Balanced Scorecard Effect: What a comprehensive
approach to strategic planning can do. Georgia Nonprofit .
Jones, P. & Robinson, P., 2012. Operations Management. s.l.:OUP Oxford.
Kang, G. (., 2012. The balanced scorecard: the effects of feedback on performance evaluation.
Management research review, 35(7).
kaplan, R. S. & Kaplan, D., 1996. The Balanced Scorecard: Translating Strategy Into Action.
United states: Harvard Business Publishing.
Lee , J. Y. & Epstein, M. J., 2012. Advances in Management Accounting. s.l.:Emerald Group
Publishing.
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Operations Management Case Study Nestle Company
Magdy G., A., 2011. Review of Management Accounting Research. s.l.:Palgrave Macmillan.
Niven, P. R., 2010. Balanced Scorecard Step-by-Step: Maximizing Performance and
Maintaining Results. 4 ed. Chicago: John Wiley and Sons. Copyright. .
Quagini, L. & Tonchia, S., 2010. Performance Measurement: Linking Balanced Scorecard to
Business Intelligence. s.l.:Springer Science & Business Media,.
Sikahala, C., 2015. Managerial Accounting: Strategy Implementation Using a Balanced
Scorecard: A Case Study Practical Application. s.l.:CreateSpace Independent Publishing
Platform.
Stan Davisa, T. A., 2004. An investigation of the effect of Balanced Scorecard implementation
on financial performance. Management Accounting Research, 15(2), pp. 135-153.
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