Analysis of Supply Chain Management Strategies at Nestle

This report provides a detailed analysis of supply chain management (SCM) strategies implemented by Nestle, a prominent food processing company. The report begins by defining SCM and highlighting its critical role in enhancing customer service and optimizing production costs within the organization. It then explores the importance of SCM in gaining a competitive advantage, emphasizing its impact on customer satisfaction, cost reduction, and timely delivery. Various SCM strategies adopted by Nestle, including adaptive and agile supply chains and demand-driven planning are discussed. The report also delves into the theoretical underpinnings of Nestle's SCM, focusing on the resource-based view and strategic choice theory. Furthermore, it examines current trends and challenges in SCM, such as the adoption of digital technologies and the need to address short lead times and access to the latest technologies. Finally, the report assesses the overall impact of SCM on Nestle's performance, emphasizing its influence on profitability, customer satisfaction, and product availability.

Strategies for Supply Chain
Management.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Role of supply chain management in the organization................................................................1
Importance of SCM......................................................................................................................2
Supply chain management strategies...........................................................................................2
Theories of supply chain management........................................................................................3
Trends and challenges in supply chain management process......................................................4
Impact of supply chain management on Nestle...........................................................................5
REFERENCES:...............................................................................................................................7

INTRODUCTION
Supply chain management (SCM) can be defined as planning and execution of flow of
goods and services in order to manage inventory and producing high quality products to gain
competitive advantage. Nestle company is being taken for the study, it is the popular food
processing firm which is known for its integrity and fairness in operations. Purpose of business
is to enhance quality of life by providing healthier products to consumers. Present report will
critically analyse supply chain management in the firm. It will describe role of SCM and its
importance for organisation. Furthermore, examples will be given to demonstrate the extent to
which SCM can support the firm in gaining competitive advantage.
MAIN BODY
Role of supply chain management in the organization
Supply chain management plays the role of customer service manager as it supports
Nestle company in improving consumer service activities in business. Its major role is to
manage flow of goods and services hence consumers can get high quality products on time
which supports the firm in serving buyers as well and retaining them in the organisation for
longer duration. SCM department continuously work to resolve quarries of consumers so that
customer like its services and retain with firm.
It works to reduce production cost of business unit. Nestle is popular for its high quality
food products, entity always ensure to use quality raw material that can support in improving
quality of end products. It minimises changes of error in final products hence production cost of
the organisation can get minimised easily. Nestle uses advance machinery in production units
and buy material from the good suppliers which makes the firm unique from other brands. This
has resulted in minimising number of failed items and raises efficiency of production to great
extent.
Supply chain management works as supportive element as it improves financial positon
of business unit. Use of quality raw material aids in improving quality of products and
consumers like to pay more for such kind of quality materials. This satisfy consumers and help
the Nestle in raising its profitability to great extent. Furthermore, SCM activities ensure that all
resources of the organisation are being used in effective manner. Supply chain management of
Nestle ensure that its machineries, financial resources are used in proper manner so that wastage
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can be minimised. It increases value of the firm and company has become able to deliver quality
food materials to its wide range of customers.
Importance of SCM
Supply chain management is considered as integral part in business which always support
organisation in gaining competitive advantage and creating strong image in the mind of
consumers. It is beneficial in boosting customer service in Nestle. By managing flow of goods
and services Nestle can meet expectation of buyers and can deliver quality material to them. It
ensures that all end users het items on time and they get great after sales service. It raises their
satisfaction level and they spend more money in the business. Furthermore, SCM is beneficial
for the firm in reducing purchasing cost. Nestle is highly depended upon the supply chain
activities, when companies depend more on limited suppliers then they have to pay high cost for
raw material to suppliers. But Nestle has built strong relationship with many suppliers hence it
has opportunity to switch supplier if it is not satisfied with its raw material.
Nestle gets advantage from SCM activities because it creates value for business, as it is
beneficial in reducing cost of operations which results in improving the production efficiency. It
raises consumer satisfaction hence supports in increasing cash flow in the firm which aids Nestle
in gaining competitive advantage in market. On time delivery is another benefit of SCM to
Nestle. Consumers always want fast delivery of their products, Nestle ensure to have right
quality material all the time and whenever consumer demand for the item it delivers it on time.
This creates positive brand image of Nestle in the mind of end users and help in reducing
problems like bottlenecks. Nestle always take care of thing that people get right products within
promised time. That is the reason that Nestle has wide range of customer across the world and
they are highly satisfied with the organisation.
Supply chain management strategies
There are various supply chain management strategies which is adopted by Nestle in
Malta is that company has adopted an adaptive as well as agile supply chain. With the help of
this strategy company is able to understand as well as shape the demand and the risk. This
strategy has helped company to adapt its supply chain with respect to changing marketing events
and opportunities. Also, Nestle is able to make a dynamic planning and continuously improving
its operations which has ensured company's responsive agility in order to meet the changing
demand. Nestle has also adopted a demand driven planning and has also adopted business
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operation model and this model is based on the real time demand shaping and demand insights.
With the help of this strategy company has been able to predict the contingency planning tools
which has ensured to get a proper view and effective response to the risks which are faced by the
suppliers. Within the company product flow is something that starts from the raw materials to the
finished products. Nestle is also ensuring that there is high level of quality as well as safety of
the products before it reaches to the final customers. Also organisation is ensuring high standards
within their supply chain that begins with raw material through packaging and then distributing it
to consumers across the country. Within the product line products of Nestle are being checked
due to which customers feels safe and confident with the product purchased any retail store of
the country. There is a smooth money flow between the customers to manufactures as well as
manufactures to suppliers. Also, company has adopted a proper information flow between
suppliers and the customers. All the strategies which are adopted by the company has resulted in
the smooth flow of goods and services within the country.
Theories of supply chain management
There are various theories of supply chain management which can be implemented by the
organisation to manage their supply chain effectively. Theories which are adopted by Nestle in
order to improve their supply chain management are Resource based view and strategic choice
theory. As per the resource based view theory it has helped the company to get more insights in
order to understand the values system within the organisation as this theory put emphasis on
importance of resources for the production process of the organisation. It has also been defined
that in order to achieve a competitive advantage company should human and economic
resources. Higher attention are paid to the application of resources based view in the
organisation's supply chain management as it results in the effective use of resources within the
organisation in order to improve company's supply chain. With this Nestle has also improved its
organisational supply chain capabilities as well the company performance. On the other hand
another theory which has been adopted by Nestle has also adopted strategic choice theory and
this theory is mostly concerned with the decision making process of Nestle in order to achieve its
defined goal with the help of supply chain process of the company. As this theory provides some
answers for the supply chain management which includes supply chain strategies which can help
in address Nestle's organisational strategies, what is the direct and indirect effects of supply
chain of the company with respect to stock prices and profitability, what is the best strategy of
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supply chain which can be adopted by the organisation and also involves the conditions which
can make supply chain management strategies more effective for the company. It also focuses on
to what extent a company has got the best value supply chain model in the organisation which
can result in the success of the organisation.
Trends and challenges in supply chain management process
Nestle's supply chain managers and leaders are facing some uncertainties as well as
opportunities which can result in effective supply chain for the organisation. There are various
digital technologies which are becoming prevalent in the company's supply chain functions.
There are various technologies available which can be used by Nestle in order to improve its
supply chain for its products and services. One of the latest trends for improving supply chain for
the company is Data visualisation, as this will help the company to shorten the delivery time for
the company. It can be applied in Nestle's supply chain process which will present the
information with an immediate adjustments of sharing information and improving the operations.
Another technology which can be used by Nestle is Radio technology, with the help of this
technology company can monitor every supply line and production line. In this process RIFD
(Radio Frequency identification) chips are placed in the company's products due to which
employees of can easily detect any sort of anomalies in the order. This is considered as the best
and innovative way for correcting the problems in the entire supply chain.
Another trend which can be adopted by Nestle for enhancing their supply is using a social
media for example Nestle can make use of Facebook for its supply chain process as there are
more than 1.3 billion people across the world which are active on Facebook. So, this number is
huge and can make more sense for Nestle entering the modern business in order to leverage the
power of social media for maximising the supply chain operations.
There are also various challenges which are faced by Nestle for managing its supply
chain effectively which may include profit maximisation, increasing of shareholders values and
conserving cash flows in the organisation. There are various challenges which are faced by the
company with the developing the effective supply chain management strategies or are facing
some issues in the supply chain of the organisation. One of the basic challenge which is faced by
Nestle is the short lead times as some of its products has got shorter product life-cycle and the
changing market demand. Thus, Nestle has to embark on lean journey but it is challenging factor
for the company that supply strategy within a lean environment should support their operational
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strategy. So, it has been always challenging for Nestle to find he not only the lean concept but
working lean solution as well. Another issue which is faced by Nestle us access to latest
technologies as it is challenging for the company to have a right experts which can provide a
great support for the new product development of the company. Also, the engineers of the
company are struggling to find effective solution in order to fasten their supply chain process i.e.
what is the latest technology which has to be adopted for supply chain which can help in
maximising the profitability of the organisation, increasing the shareholders value and
conservation of cash flows within the company. So, it is important for Nestle to minimise these
challenges in order improve their supply chain across the country which can help in meeting the
competitive advantage for the company.
Impact of supply chain management on Nestle
Supply chain management have a strong impact on the organisational performance as it is
directly effecting the profitability and the invested capital of the company and also help in
improving the customers satisfaction and making the products easily available across the country
and this can result in high growth. But on the hand it can be analysed that company having an
effective logistics can reduce the operating costs for Nestle. Effective supply chain management
can have a strong impact on the various factors of the organisation which can be explained
below:
Profitability: By effective supply chain management strategies Nestle can be able to increase it
profitability to higher level. For example, Nestle with proper supply chain management will
result in the high level of customer care service as it will result in making its products easily
available in every corner of country. This will improve the customers perception and will attract
them towards the produce which will bring higher revenue for the company. Another best
example for Nestle's supply chain management resulting profitability is that it can decrease the
cost of goods and transportation cost, effective handling of materials, etc. This will result in
minimising the costs for the company which will ultimately result in the profitability of the
organisation.
Invested capital: With the help of the effective supply chain management strategies Nestle can
decrease its invested capital to higher levels. This can even prove profitable for the company for
example company can reduce its investments in working capital as it will result in the shorter
order to cash cycles which can prove effective for the company. Another example is that Nestle
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with effective supply chain will make optimal use of raw material in the workplace and this will
reduce the investment in raw materials. Also, also decrease the Work-in-progress cycle in the
company which is an effective way of decreasing investment in the working capital. Also, SCM
will also reduce the investments in fixed capital which has been used in the process of supply
chain as it will allow the company to have fewer physical assets which increased the fixed cost
for the company. For example Nestle can make effective use of their warehouses in the country
which will decrease it fixed cost, also will allow the employee to make effective use of
equipment and handle the material in the best manner.
Shareholders value: As Nestle is world's largest food company so, its supply chain has to be
efficient in order to offer quality and safe products to its customers. So, it's really important for
the company to ensure it has got the best supply chain in the business which can increase its
shareholders value to higher level. This can be done by maximising the profitability of the
organisation to higher levels and reducing the investment for the company.
Competitive Advantage Through Logistics
There are various ways through which Nestle can gain competitive advantage through
logistics but it is really important for the company to the things right which can result in
improving the logistics of the company. It can be done by following ways:
Quality: In order to gain the competitive advantage Nestle should improve the quality of
logistics by enhancing its logistics system across the country and increasing the capability to
reach wider areas of the country.
Speed: It also plays an important role in the logistic management, transferring the products as
quickly as possible but safely without in any breakages.
Dependability: Nestle should make its logistics service more dependable across the across the
country.
Flexibility: Also, flexibility of transportation services should be maintained in order improve its
supply chain in the country.
CONCLUSION
Above study can be summarised as strategic supply chain management is considered as
beneficial tool for the business unit, it creates value for consumers and business as well. By
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managing flow of goods and services enterprise can easily control over purchasing and
production cost. It improves quality of products and also support entity in raising satisfaction
level of consumers. Each stakeholder has different expectation from organisation. SCM activities
helps the firm in meeting with their expectation and retaining them in the enterprise for longer
duration.
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REFERENCES:
Books and Journals
Cooper, R., 2017. Supply chain development for the lean enterprise: interorganizational cost
management. Routledge.
Fan, H and et.al., 2017. An information processing perspective on supply chain risk
management: Antecedents, mechanism, and consequences. International Journal of
Production Economics. 185. pp.63-75.
Fan, Y. and Stevenson, M., 2018. A review of supply chain risk management: definition, theory,
and research agenda. International Journal of Physical Distribution & Logistics
Management. 48(3), pp.205-230.
Heckmann, I., Comes, T. and Nickel, S., 2015. A critical review on supply chain risk–Definition,
measure and modeling. Omega. 52. pp.119-132.
Kırılmaz, O. and Erol, S., 2017. A proactive approach to supply chain risk management: Shifting
orders among suppliers to mitigate the supply side risks. Journal of Purchasing and
Supply Management. 23(1). pp.54-65.
Mangan, J. and Lalwani, C. L., 2016. Global logistics and supply chain management. John
Wiley & Sons.
Mohammaddust, F and.etal., 2017. Developing lean and responsive supply chains: A robust
model for alternative risk mitigation strategies in supply chain designs. International
Journal of Production Economics. 183. pp.632-653.
Silvestre, B., 2016. Sustainable supply chain management: current debate and future
directions. Gestão & Produção. 23(2). pp.235-249.
Xie, G ., 2016. Cooperative strategies for sustainability in a decentralized supply chain with
competing suppliers. Journal of Cleaner Production, 113, pp.807-821.
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