University Assignment: Nestlé Operation and Project Management Report

This report examines Nestlé's operations and project management, assessing its supply chain networks, quality management processes, and overall competitiveness. The introduction provides an overview of Nestlé, highlighting its global presence, diverse product range, and operational strategies. It discusses supply chain and quality challenges, including ingredient sourcing, resource management, and environmental impacts. The report then delves into Nestlé's operations strategy, covering product design, process design, and planning. It explores both short-term and long-term solutions to address identified challenges, considering internal and external factors through a PESTEL analysis. A detailed analysis of Nestlé's supply chain management (SCM) follows, defining SCM and assessing its challenges. The report then examines lean and quality management approaches, including the benefits of lean management, quality management methods, and the application of Failure Mode and Effects Analysis (FMEA). Finally, the report explores the impact of Artificial Intelligence (AI) on Nestlé's organizational objectives, discussing its challenges and potential benefits. The report concludes with a summary of findings and recommendations.

Running head: OPERATION AND PROJECT MANAGEMENT
Operation and Project Management
Name of the Student
Name of the University
Author Note

1OPERATION AND PROJECT MANAGEMENT
Table of Contents
1. Introduction............................................................................................................................4
1.1 Overview of the commercial establishment.....................................................................4
1.2 Insights of the operation...................................................................................................5
1.3 Supply chain and quality challenges................................................................................7
1.4 Quality issues associated with the suppliers....................................................................8
2. Operation strategy and exploring solution to address challenges..........................................9
2.1 Present operations strategy...............................................................................................9
2.1.1 Product and design....................................................................................................9
2.1.2 Process Design........................................................................................................10
2.1.3 Planning and control...............................................................................................10
2.1.4 Innovation...............................................................................................................11
2.2 Short and long term solutions........................................................................................11
2.3 Internal considerations...................................................................................................12
2.4 External considerations..................................................................................................12
2.4.1 PESTEL Analysis....................................................................................................12
3. Supply Chain Management of Nestlé..................................................................................13
3.1 Definition of SCM..........................................................................................................13
3.2 Role of the assessor........................................................................................................13
3.2.1 Overall strategy of the firm.....................................................................................14
3.3 Challenges of SCM........................................................................................................14
3.4 Operations strategy for SCM.........................................................................................15
4. Lean and Quality Management............................................................................................15
4.1 Definition of Lean Management....................................................................................16
4.1.1 Benefits of Lean Management................................................................................16
4.1.2 Different categories of waste of Nestlé...................................................................16
4.2 Quality Management......................................................................................................16
4.2.1 Offline line approaches...........................................................................................17
4.2.2 Online approaches...................................................................................................17
4.2.3 Total Quality Management.....................................................................................17
4.3 Methods to address quality (FMEA)..............................................................................17
4.3.1 Linking with operations strategy.............................................................................18
4.3.2 Linking with lean operations...................................................................................18
5. Impact of Artificial Intelligence (AI)...................................................................................18
5.1 Definition of AI..............................................................................................................18
5.1.1 History of the technology........................................................................................18

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5.1.2 Use of this technology on other organizations........................................................19
5.2 Impact of using Artificial Intelligence...........................................................................19
5.2.1 Impact of using Artificial Intelligence on organizational objective of Nestlé........19
5.3 Challenges of using Artificial Intelligence....................................................................20
6. Conclusion............................................................................................................................21
Reference..................................................................................................................................23

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1. Introduction
The notable determination of this report is to evaluate the existing supply chain
networks, quality management processes, operations management, systems and procedures
and identify the competitiveness of Nestlé (nestle-me.com. 2019). The impact of using
Artificial Intelligence will be discussed in the later sections of the paper. The ensuing section
of the report will be briefing the overview of Nestlé.
1.1 Overview of the commercial establishment
Being one of the most reputed commercial establishment all around the world Nestlé
provides a wide range of service in terms of the snacks, pet foods, frozen foods, ice cream,
tea, confectionary, dairy products, coffee, breakfast cereals, bottled water, medical food and
baby food. This global commercial establishment operates in more than 190 countries all
around the world. There are 447 factories or production departments of Nestlé all around the
world.
There are numerous subsidiary organizations which are associated with this commercial
establishment such as L’Oreal which is the biggest cosmetics organization in the world.
Established in the year 1866, Nestlé grew significantly over the years and over the years most
of the strategies and operations changed (Bharucha 2016). This global commercial
establishment has numerous sponsor such as Walt Disney who is helping this organization to
have more exposure and maintain a competitive advantage over the other similar
organizations. Activities of Nestlé can be seen on reputed music festivals all around the world
such as the Beijing Music Festival and Salzburg festival (Akhtar,Xicang and Iqbal 2017).
This commercial establishment also sponsors internal sports events such as Tour de France
and IAAF’s kids athletic programmes. The famous Australian Institute of Sports also gets the
support of this commercial organization (Panigrahi and Chaudhury 2015). There are

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numerous social responsibility programs of this commercial establishment such as sustainable
agriculture development, creation of the shared values, Nestlé Cocoa plan, Ecolaboration,
World Cocoa Foundation, numerous rural development programs in developing countries.
There are lots of recognition for this global commercial establishment as well as they
received the Malcolm Baldrige National Quality Award for exceptional customers service
and market focus. The organizational leadership qualities of Nestlé si also very much superior
as compared with the other similar organizations (Galalae and George 2017). International
standards are maintained in the production room of Nestlé such as ISO 14001 and OHSAS
18001. Global Food Industry award was given to this commercial establishment in the year
2010 by International Union of Food Science and Technology (IUFoST). At the same time
Nestlé also won the gold medal award in the year for their contribution to environment
sustainability.
1.2 Insights of the operation
Contribution to the society is one of the most important priority of this commercial
establishment as strategies and operations. Being of the world’s leading nutrition maintaining
the resources is one of the prime challenges of this commercial establishment and operational
strategies are created by the operational managers of each of the business heads of Nestlé.
Rural development is also considered in the operational strategies of the
New plans and strategies are increasingly used in this commercial establishment, at
the same time IT innovations such as big data technologies are used by this organization to
categorise the structured as well as the raw data which are collected from numerous sources
such as the distributors and consumers (Ramesh 2018). The operations strategies are made in
such a way so that it have a direct impact on the society and as well as business.

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Transparency is maintained across most of the operations in the production room. It can also
be said that creating shared value is very much considered in the operation room of Nestlé.
Each of the operations are made in such as way so that that the net profitability of the
business is maintained (Garimella 2018). Discounted prices and other facilities are set in such
as way so that most of the probable consumers are attracted to this organization. Producing
the products and services is also maintained in such a way so that the expectation of the
consumers is met.
The entire manufacturing process of this commercial establishments are very much
optimised and they are managed using the Information System. This organization have an
extensive department as they provide services in terms of the health and wellness products
over 100 years. Improving accuracy and demand planning is the one of the key strategies
regarding the operations of this commercial establishment (Espinoza-Orias, Cooper and
Lariani 2018). Most of the promotional activities are managed according to needs and
expectation of the consumers in each countries. Cultural considerations and the risks of the
local market conditions are highly considered by the operational team of Nestlé.
The operational mangers of each branch identifies and monitors the performance of
each of the stakeholders of the business so that organizational growth is maintained.
Operational strategies includes designing of products and application of Just In Time and
establishment of supply chain.

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Figure 1: Operations of Nestlé
(Galalae and George 2017)
1.3 Supply chain and quality challenges
There are numerous supply chains and quality challenges associated with Nestlé such
as maintaining the correct ingredients of the baby products. Management of the resources
sued in the production room such as water management is the other challenges of this
organization as eater is a not regularly obtained in developing countries such as China and
India (Akhtar 2016). There are numerous health related issue associated with the collection of
the raw materials for this organization. Pollution coming from the factories of this

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organization is the other environmental challenges faced by this organization which have a
direct impact on the quality of service.
The prime supply chain challenges of the supply chain of this organization is the
aggressive marketing campaigns. The negative effects of the formulas used in the production
rooms are also very much challenges for the strategic team of this organization. Maintaining
the government regulations is one of the biggest challenges considering the supply chain
managed by this organization (Navaneetha et al. 2017). Liability is one of the one significant
challenge faced by this organization over a period of time. Promotion of the unhealthy foods
and mislabelling are the primary challenges are the prime supply chain challenge faced by
Nestlé.
1.4 Quality issues associated with the suppliers
There are lots of complexities due to the maintenance of both local as well as
international suppliers for Nestlé. Each of the suppliers of this organization does not maintain
the required standards in a consistent manner, which is the main reason behind reputational
loss of this organization. Quality Assurance team of Nestlé keeps on identifying quality
issues of this organization.
However, it can also be said that this organization uses the quality management
systems which are used to identify the uncertainties of the product and services (Svensson et
al. 2018). The most significant root causes of the issue which occurs due to the suppliers are
flow restriction, insufficient clamp force, and poor mold design.
It can also be said that the non-conformance is the other significant quality issues
associated with the suppliers of this organization (Kronrod and Lowrey 2016). There are lots
of terms and conditions associated with each of the suppliers of Nestlé across all the

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countries, each country have their own economic conditions which is the main reason behind
the quality issues of the suppliers.
Most of the suppliers are not properly trained to give the best possible service to
Nestlé which is the main reason behind the quality issues of the suppliers, thus it can be said
that quality management training can be very much useful to make the suppliers understand
the significant of maintaining quality service.
Nestlé have an efficient recruitment and selection system which allows them to recruit
the best suppliers considering their market reputation and business over the recent years. The
performance and monitoring of the activities of the suppliers can be very much important for
the growth of Nestlé over the years (Sasson 2016). It can be said that the Service Level
Agreements can be very much beneficial to measure the performance of the suppliers of this
organization (Pandey and Puntambekar 2016). Key Performance Indicators such as gross
profit margin, net profit, net profit margin, aging accounts receivable and current ratio are the
prime KPI which can be improved the performance of the suppliers.
2. Operation strategy and exploring solution to address challenges
2.1 Present operations strategy
The key aspects of the operational strategy are as followings:
2.1.1 Product and design
Utilization of the resources and minimization of the wastes are the most significant
criteria of the products and service design of this commercial establishment (Galalae and
George 2017). Product development and design process are increasingly updated in this
organization according to requirements of the consumers.

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Economic management: Analysis of the products and services are key economic
aspects of the distribution of products and services. Economic ways of analysing time
products and services are considered by the strategic manger of Nestlé (Hamschmidt 2017).
Website based tool such as Ecodex are widely used in the operation rooms of this
organization. Reduction of the environmental impact and monitoring the development
process is one of the prime specification of the departmental heads.
Data management: Data management experts are present in each of the department
of this organization ad they help in maintaining the life cycle of the products in a structured
way. This also helps in adding value to the overall company.
Sustainable by design: Holistic approach are maintained by the strategic team of
Nestlé in order to manage the business processes of the production rooms.
2.1.2 Process Design
Each of the primary activities are sequentially managed in this organization starting
from inbound logistics, operations, outbound logistics, sale and marketing and service.
2.1.3 Planning and control
Resources as well as the capital are very much monitored and analysed by the Quality
Assurance team of this organization (Probst and Bassi 2017). Brand identity are the other
essential aspect of planning and control of this product and design.
Level capacity plan: This plan includes the individual quality of stock which are
maintained by this organization (Sodhi and Tang 2018). Both the durable as well as the non-
durable products are considered in the level capacity planning.
Chase Demand Plan: This plan is considered for the workers of this organization,
this plan are created and incorporated by the strategic manager which help them to recruit

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better quality services on a long term basis. The maintenance of the contractual agreements
are considered in this phase of the planning and control.
2.1.4 Innovation
Diverge range of products considering the expectation of the consumer across all the
countries are the main innovation strategy adopted by this organization which includes the
preferences of the local communities and demographics.
2.2 Short and long term solutions
Each of the challenges faced by this organization was resolved using both long term
as well as short term solutions.
Short term solutions: The detailed analysis of the strength and weakness of the
organization assets are very much significant for managing the short term solutions adopted
by this organisation (Rajan 2018). Skill level of the employees are also examined during the
following up of the shit terms solutions. The short term solution includes the selection of
resources and service providers.
Long term solutions: The organizational targets are the main point of concern for
managing the long term solutions of Nestlé. The long term decision includes the changes of
technology which are used in the production laboratories of Nestlé such as the big data
technology and block chain technology (Browne et al. 2018). The management of the tax
regulation from the government bodies are the long term solution of the Nestlé in order to
maintain sustainable development.

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2.3 Internal considerations
Both the short terms as well as the long term solution of the identified challenges can
have a significant impact on the internal stakeholders of Nestlé such as the strategic
managers, floor managers and employees.
The SLA of the provider of the raw materials can also their job and position in Nestlé
duo to the short terms planning adopted by this organization.
2.4 External considerations
The changes of technology can also have an impact on the dedicated programmer
which works for this organization on a long terms basis and their services are no longer
required (Nelson and Phillip 2018). The stringent government protocols are also included in
the external considerations which can have direct impact on the long term goals of this
organization. Each of these considerations has to be managed in an organized manner as they
are aligned with the long term goals of Nestlé.
2.4.1 PESTEL Analysis
Regulations Explanations
Political Changing food regulation in each countries and governments stability in
new emerging countries are the political consideration of Nestlé.
Economic Adverse business conditions such as recession and inflation of the
dynamic market conditions are the economic considerations of Nestlé.
Rising prices of the raw materials is the other significant economic
consideration of Nestlé.
Social Changing life style of the consumers, changing mood of the consumers
and adapting to the cultural change can be the other social interaction of
the Nestlé.
Technological Incorporation of the use of social media, range of technologies which are
used in this commercial establishment are the block chain technologies
are the prime technological considerations of Nestlé. This organization
uses e-commerce platforms which helps them to improve their customer
engagement.
Environmental Maintaining the corporate social responsibility is the prime
environmental considerations of Nestlé. Packaging and the recycling of
the products are the environmental considerations of Nestlé.
Legal Engineering standards and global standards are needed to be taken