Supply Chain Management Strategies and Their Impact on Nestle

This report provides a comprehensive analysis of supply chain management (SCM) strategies, focusing on their application and impact within Nestle. The report begins by defining SCM and outlining its crucial role in managing the flow of goods and services, emphasizing its importance in enhancing customer service, reducing costs, and fostering competitive advantage. It then delves into specific SCM strategies employed by Nestle, such as adaptive and agile supply chains, demand-driven planning, and the utilization of resource-based view and strategic choice theory. The report also examines current trends and challenges in supply chain management, including the adoption of digital technologies and social media integration, alongside challenges like short lead times and changing market demands. Furthermore, it assesses the impact of effective SCM on Nestle's profitability, invested capital, and shareholder value, highlighting how optimized logistics contribute to competitive advantages through quality, speed, dependability, and flexibility. The report concludes by summarizing the benefits of strategic SCM for both consumers and the business, emphasizing its role in meeting stakeholder expectations and ensuring long-term success.

Strategies for Supply
Chain Management.

TABLE OF CONTENTS
 INTRODUCTION
 Role of supply chain management in the organization
 Importance of SCM
 Supply chain management strategies
 Theories of supply chain management
 Trends and challenges in supply chain management process
 Impact of supply chain management on Nestle
 Competitive Advantage Through Logistics
 CONCLUSION
 REFERENCES

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.

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.

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

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 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.

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.

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.
.

CONTINUE…
 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 strategy.

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
 Invested capital
 Shareholders value

CONTINUE…
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.

CONTINUE…
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 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.