Global Logistics and Supply Chain Management of Nestle Company

This report provides a comprehensive analysis of Nestle's global logistics and supply chain management. It begins with an introduction to logistics management and the Nestle Company, including its history and value chain concept. The report then explores the types of logistics strategies employed by Nestle, including vertical and horizontal integration, and the types of supply they utilize. It identifies strategic issues faced by Nestle, such as challenges in logistics and supply chain, procurement issues, inventory management, and supplier issues. The report also examines Nestle's use of technology, particularly blockchain, for enhancing transparency, and discusses inventory management practices, sustainability initiatives, and the adoption of agile manufacturing. The conclusion summarizes the key findings, highlighting the challenges and strategies related to Nestle's complex supply chain, emphasizing the importance of technology, sustainability, and agile methodologies in optimizing their operations.

Global logistics and supply chain management
Nestle
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Contents
Introduction......................................................................................................................................2
About the company..........................................................................................................................2
Value chain concept.........................................................................................................................3
Type of logistic strategy..................................................................................................................4
Vertical and Horizontal integration.................................................................................................4
Types of supply............................................................................................................................5
Strategic issue of Nestle...................................................................................................................6
Challenges in logistics and supply chain.........................................................................................6
Use of technology Nestle.................................................................................................................7
Inventory management....................................................................................................................7
Sustainability...................................................................................................................................8
Agile manufacturing........................................................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

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Introduction
Logistics management is that portion of the supply chain management that plans, implement as
well as control the efficient, effective forward as well as the reverses flow and storage of the
products and services that are connected to the data between point of the origin as well as point
of consumption with the motive to encounter needs of customers. However, this has been found
that the external environment leads to the different challenges for the companies that affect them
while managing the logistics. The report is prepared with the motive to determine the issues in
the logistics tackled by Nestle Company.
About the 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 the 1860s
when the two separate Swiss enterprises were established that would later from Nestle (Nestle,
2019). In the year 2014, the company is the largest food business which is measured in terms of
revenue and other metrics. The motive of the company is to touch billions of life on an everyday
basis. Along with this, the company support to shape a better as well as a recovering world for
the individuals and relatives for all our societies and for world (Nestle, 2019).
The approach of Nestle Company is creating shared value which is fundamental for how we
require doing the business at Nestle. The company will get the success in the long-term by
forming the value for both the shareholders and also for the society (Nestle, 2019). The company
is established 150 years ago and since then the company is considered as the world largest, most

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expanded Food and Beverages Company (Nestle, 2019). In addition, it has a unique worldwide
footprint and it allows them to sell the products in more than 190 countries across the world.
Value chain concept
The value chain includes collection of various activities that share the relatedness to some extent.
This value chain allows the Nestle Company to ensure that they are able to maintain quality of
goods that are required to reach out to customers. Nestle value chain is liable for the responsible
for safely storing and transportation of products to meet the needs of clients (Nestle, 2019).
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. It has been found that the
company has global operations which include the countries with political issues (Nestle, 2019).
The major issue that has been witnessed include the operations in the conflict zone and countries
include Venezuela, Myanmar, and Iran.

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(Source: Nestle, 2019)
Type of logistic strategy
Nestle company make use of the inventory planning which is forecast and minimization of the
supply chain and logistics costs to make the most of revenue of the company and also to
encourage the performance. In the effective logistics management-oriented it is essential to
ensure the satisfaction among the customers in terms of cost structure, rise in income,
enhancement in customer service, and many others (Nestle, 2019).
Vertical and Horizontal integration
Nestle company adopts the horizontal integration with some of the company as it contributes in
improving the revenue, profit and market share. The company started acquiring good human
talent, the technology of the competitors and also the quality equipment and many others
(Copacino, 2019). The company acquired numerous companies which include preserved and
frozen food, bottled water and pet foods. Nestle falls in 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
(Pérez-Lara, et al, 2018). While the integration, it is hard for the company to select the right
member for the integration.
Types of supply
The type of supply Nestle has is Tier 1 and Tier 2 dealers who help company to distribute the
products effectively in the market.

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Strategic issue of Nestle
The strategy for the logistics and supply chain management that is used by Nestle Company
includes different distribution routes and planning for the networks for their entire operations.
The company has the opportunity of improving the options of the transportation modes and also
determining the less harmful fuels (Lyall, Mercier and Gstettner, 2018). However, all these
opportunities make the company bring the changes in their planning and operations which affect
the consistency of the operations. 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

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drivers in order to handle environmental and safety issues in an effective manner (Bozarth and
Handfield, 2019).
Challenges in logistics and supply chain
It has been determined that there are different types of challenges that are associated with the
logistics and supply chain management which are given below: -
 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 processes of the
supply chain to drive the performance (Mangan and Lalwani, 2016).
 Supplier issue: - The change in the climate is confronting food area of European with an
unexpected danger linked to the deliveries of the raw material of agriculture (Simon,
2016).
 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 compound supply chain where business may not have the straight
contact with planters (Southey, 2019).
Use of technology Nestle
The Blockchain technology helps the company to enhance the transparency in their food chains
and to track the goods in an effective manner. Swiss multinational company Nestle plans to make
use of the Blockchain in order to increase more transparency in the food chain (Min, 2019). The

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company has started with the pilot based on the Blockchain distributed ledger technology that
allows the end-to-end traceability of the food (Supply chain Movement, 2019). However,
Blockchain technology requires an expert as it is difficult to manage and it also includes the high
cost.
Inventory management
In the inventory management, there is an efficient supply chain at Nestle that need entire stock
preparation as well as working actions which are required to be combined into a unchanging
flow of the corporate process. 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
(Meredith and Shafer, 2019). 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
The business is engaged seriously with their dealers to achieve the 100% traceability, zero
deforestation and also to keep the biodiversity in the soy-producing areas (Southey, 2019).
However, 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.

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Agile manufacturing
Nestle company has adopted the agile manufacturing which is a period applied to the company
that has formed processes, tools and working out to allow it to respond rapidly to their customer's
requirement as well as changes in the market that helps in controlling the cost as well as quality.
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 (Sindhwani and Malhotra, 2017). 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.

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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 analysis of the logistics has been done which shows the material issue that
affects in generating value among customers. The horizontal and vertical integration allows the
company to expand the business. 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. The discussion about the technology, management of the
inventory, sustainability and manufacturing methodologies used consider the large and complex
supply chain is discussed.

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References
Bozarth, C.C. and Handfield, R.B. (2019) Operations and Supply Chain Management.
Copacino, W.C. (2019) Supply chain management: The basics and beyond. Routledge.
Lyall, A., Mercier, P. and Gstettner, S. (2018) The Death of Supply Chain Management [Online].
Available from: https://hbr.org/2018/06/the-death-of-supply-chain-management [Accessed on
14th February 2020]
Mangan, J. and Lalwani, C.L. (2016) Global logistics and supply chain management. John Wiley
& Sons.
Meredith, J.R. and Shafer, S.M. (2019) Operations and supply chain management for MBAs.
Wiley.
Min, H. (2019) Blockchain technology for enhancing supply chain resilience. Business
Horizons, 62(1), pp.35-45.
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:
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material-issues-across-value-chain-2017.pdf [Accessed on 14th February 2020]
Nestle (2019) Our approach [Online]. Available from: https://www.nestle.in/csv/what-is-csv
[Accessed on 14th February 2020]

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Nestle (2019) We're enhancing quality of life and contributing to a healthier future [Online].
Available from: https://www.nestle.in/stories#/category/featured-stories/1 [Accessed on 14th
February 2020]
New, S. (2010) The transparent supply chain. Harvard Business Review, 88, pp.1-5.
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Vasant, P. (2018) Vertical and horizontal integration systems in Industry 4.0. Wireless Networks,
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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-supply-challenges/ [Accessed on 14th February
2020]
Sindhwani, R. and Malhotra, V. (2017) A framework to enhance agile manufacturing
system. Benchmarking: An International Journal.
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-chains-and-legal-deforestation [Accessed on 14th February 2020]
Supply chain Movement (2019) Blockchain helps Nestlé to improve transparency in the food
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