Supply Chain Management and Product Innovation at Nestle Report

This report examines Nestle's approach to supplier relationship management and product innovation, highlighting their strategies for maintaining market leadership. The analysis covers Nestle's use of crowdsourcing through the InGenious platform to foster employee involvement in supply chain decisions and innovation. It also details the implementation of Responsible Sourcing to ensure ethical and sustainable practices within their supply chain. The report emphasizes the close relationship between product innovation and supply chain management, illustrating how Nestle integrates these processes, particularly during product launches. By focusing on these areas, Nestle effectively manages its supply chain and continues to launch new products to meet consumer demands. The report concludes that Nestle's success is rooted in its well-executed supplier relationships, innovation, and efficient supply chain management, all of which are essential for controlling market share.

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Introduction
Nestle is the largest food and beverage firm in the world having nearly 2000 brands and
has established its presence in over 200 countries in the world. It is a real giant in the industry.
Supplier relationship management is an approach used by companies in their
procurement process and it calls for firms to develop a very close association with its suppliers in
order to unlock their values and remain a leader in the industry. A good supplier relationship is
vital in the success of any company (Neutzling, Land, Seuring, & Do Nascimento, 2018, p. 24).
Product innovation, on the other hand, is the development of new products or a change in
the design of an existing product. It can also be the use of new raw materials in the manufacture
of already existing brands (Govindan, Govindan, Seuring, Zhu, & Azevedo, 2016, p. 194).
In this discussion, we are going to look at how Nestle as a company has managed both
supplier relationship management and product innovation to stay ahead of others and achieve
greater heights.
In 2019, Nestle adopted a new approach in its supplier relationship management. The
approach is called crowdsourcing, which is the coming together of a number of people to find a
solution to a problem or fund a project (Liao & Barnes, 2015, p. 45).
Nestle has an estimate of 35000 employees who form part of its decision making as far as
supply chain decisions are concerned. Nestle has a crowdsourcing initiative called Ingenious
which enhances a two-way interaction on issues to do with supply chain challenges, ideas
generation, and problem-solving (Arnold, 2017, p. 87).

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InGenious has been deemed as an incredible place for suppliers to swap ideas and make
proposals regarding any viable startup businesses. This platform allows employees to post ideas
on Nestlé’s internal website after which all the stakeholders are allowed to scrutinize them and
vote on them. Through this initiative, nearly 15 ideas have been implemented.
Another strategy developed by Nestle is Responsible Sourcing which requires proper
verification of all the raw materials to ensure that they comply with Nestlé’s Responsible
Sourcing Standards. Nestle ensures that their supply chain is well mapped so that they are able to
trace where the raw materials are coming from (Govindan, Govindan, Seuring, Zhu, & Azevedo,
2016, p. 62). Among the issues being looked out for are human rights violations, labor rights,
and transparency.
Product innovation and supply chain management seem like completely different
processes but are in fact very closely related. This is because immediately after the product
innovation and designing, the supply chain takes over the next process by ensuring the sourcing
of raw materials, its manufacturing and finally releasing it to the market (Govindan, Govindan,
Seuring, Zhu, & Azevedo, 2016, p. 154). The new product usually encounters four cycles and
during these cycles, how supply chain responds is very essential to the product’s survival. Nestle
has made sure that as they launch the new products such as the recent launch of KitKat chocolate
bar, ways of reaching consumers have also been enhanced.

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Conclusion
In a nutshell, any research done on the most successful companies such as Nestle will
reveal a very smooth and well-executed supplier relationship, coupled with innovation and
proper supply chain management. All these are vital to the success of any business and for
control of market share in any industry.

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References
Arnold, A. (2017). Fostering sustainability by linking co-creation and relationship management
concepts. Journal of Cleaner Production, 67(13), 179-188.
Govindan, K., Govindan, K., Seuring, S., Zhu, Q., & Azevedo, S. (2016). Accelerating the
transition towards sustainability dynamics into supply chain relationship management and
governance structures. Journal of cleaner production, 112(17), 1813-1823.
Liao, Y., & Barnes, J. (2015). Knowledge acquisition and product innovation flexibility in
SMEs. Business Process Management Journal, 154(43), 254-354.
Neutzling, D. M., Land, A., Seuring, S., & Do Nascimento, L. F. (2018). Linking sustainability-
oriented innovation to supply chain relationship integration. Journal of Cleaner Production,
172(4), 3448-3458.