Nestle Company: Global Logistics and Supply Chain Management Report

This report provides an in-depth analysis of Nestle's global logistics and supply chain management. It begins with an overview of the company and its global operations, emphasizing its value chain and its commitment to areas like nutrition, rural development, and water. The report then explores Nestle's vertical and horizontal integration strategies, as well as the strategic issues the company faces, such as transportation mode improvements, driver training, and procurement challenges including raw material shortages and supply chain disruptions. It examines the use of technology, particularly blockchain, for enhancing transparency and traceability in the food chain, along with inventory management practices. The report also addresses sustainability issues, highlighting the complexities of the supply chain. Finally, it discusses the application of agile methodology within the company to address innovation challenges and concludes by summarizing the key logistics and manufacturing issues, including management of operations, inventory, and transportation.

Global logistics and supply chain
management
Nestle Company

About company
• Nestle company is a Swiss multinational food and drink processing conglomerate
corporation with the head office in Vevey, Vaud, Switzerland.
• The company origin started from 1860s when the two separate Swiss enterprises
were established that would later from Nestle.
• The activities and products allow the company to make a positive difference to
society while contributing to the success of the business. The aim of the company
is to prioritize the three major areas that are nutrition, rural development, and
water. All these areas allow the company to form connections with society.

Global operations
• The company is established 150 years ago and since then the
company is considered as the world largest, most diversified
Food and Beverages Company (Nestle, 2019).
• The company have a unique worldwide footprint and it allows
them to sell the products in more than 190 countries across
the world.

Value chain concept
• This value chain allows the Nestle
Company to ensure that they are
able to maintain the quality of the
products that are required to reach
out to the customers as well as
consumers.
• Across the supply chain, Nestle
Company determine the different
issues which include the issue of
micronutrient deficiencies, non-
communicable diseases, the
possibility of the high nutritional
content of the products, additives,
preservatives and many others.

Vertical/horizontal integration
• Nestle company adopts the horizontal integration with some
of the company as it contributes in improving the revenue,
profit and market share.
• Nestle falls in the vertical integration as it is involved in the
traditional farming practices are not environmentally
sustainable which are every hard to bring the changes in the
mind-set of the family farmers which is the issue faced by the
company.

Strategic issue
• The company has the opportunity of improving the
options of the transportation modes and also
determining the less harmful fuels.
• It has been determined that the drivers also need
training for the handling which is leading issue for
the company as it is hard to provide the training to
the drivers in order to handle environmental and
safety issues in an effective manner.

Challenges
• Procurement issues: - Disruption of the operations because of the shortage of raw
material.
• Inventory: - The issue of the disruption that affects the IT infrastructure
• Inbound, inventory and outbound: - Being entirely sustainable in the operations of
the supply chain to drive the performance.
• Supplier issue: - The change in the climate is confronting the food sector of European
with an unexpected risk linked to the supplies of the raw material of agriculture.
• Sourcing issue: - One of the hurdles faced by the Nestle Company is related to the
sourcing of the 100% deforestation-free soy supply chain as it leads to the issue of
navigation of the complex supply chain where the business may not have the direct
contact with farmers (Southey, 2019).

Use of technology
• The Blockchain technology helps the
company to enhance the transparency in
their food chains and to track the goods in an
effective manner.
• The company has started with the pilot
based on the Blockchain distributed ledger
technology that allows the end-to-end
traceability of the food.
• Blockchain technology requires an expert as
it is difficult to manage and it also includes
the high cost.

Inventory management
• Nestle is operating its operations in the global due to
which it hard to manage the operations across the
world. The company find the issue when there is a
disruption of the IT infrastructure because they will
not be able to track the delivery of the products.
• Along with this, due to the expanded operations, the
company deals with the issue of high inventory
holding cost, transportation cost and many others.

Sustainability
• Nestle is dealing with the issue of the long and often the complex supply chain that
might vary the level of the deforestation commitments that are apprehended by
the dealers in areas of Brazil and Argentina.

Agile methodology
• The company is applying the agile principles to
deal with the challenges related to the innovation
process, ultimately empowering teams to be
courage’s and to make the strong decisions which
are essential to meet the expectation of the
customers.
• The agile methodology helps the company to
accelerate the time to market as well as empower
the teams to remain in confident and consumer-
driven decisions.

Conclusion
• At the end of the report, this is concluded that the Nestle Company is dealing with
the wide logistics and manufacturing issues which include management of the
operations, inventory, and many others.
• The major issues that are witnessed include handling of the logistics and
transportation of the products. In addition, the procurement issues, inventory
issues and many other issues are highlighted.

References
• Mangan, J. and Lalwani, C.L. (2016) Global logistics and supply chain management. John Wiley & Sons.
• Nestle (2019) All About NESTLÉ [Online]. Available from: https://www.nestle.in/aboutus/allaboutnestl%C3%A9
[Accessed on 14th February 2020]
• Nestle (2019) Nestlé’s material issues across the value chain [Online]. Available from:
https://www.nestle.com/sites/default/files/asset-library/documents/creating-shared-value/material-issues-across-val
ue-chain-2017.pdf
[Accessed on 14th February 2020]
• Simon, F. (2016) Nestlé executive: ‘We are all facing risks of having supply challenges’ [Online]. Available from:
https://www.euractiv.com/section/agriculture-food/interview/nestle-executive-we-are-all-facing-risks-of-having-supp
ly-challenges/
[Accessed on 14th February 2020]
• Southey, F. (2019) Nestle talks challenges in sustainable soy complex supply chains and legal deforestation [Online].
Available from:
https://www.foodnavigator.com/Article/2019/06/20/Nestle-talks-challenges-in-sustainable-soy-Complex-supply-chain
s-and-legal-deforestation
[Accessed on 14th February 2020]
• Supply chain Movement (2019) Blockchain helps Nestlé to improve transparency in the food chain [Online]. Available