NESTLÉ

INTRODUCTION
Nestlé is the world’s leading nutrition, health and wellness company. Nestle is a
nutrition company that aims at enhancing better and quality livelihoods to people. It
has varied products that mainly help in improving healthy lifestyle of the people.
Nestlé S.A. is a Swiss multinational nutritional and health-related consumer
goods company headquartered in Vevey, Switzerland. It is the largest food company in
the world measured by revenues.
Nutrition has been the cornerstone of Nestle Company since its inception in the
year 1867. Therefore, most products and services provided by the company revolve
around nutritional needs.
The company strives at providing quality products and services which will help
in promoting a better and healthy wellbeing of its consumers. Nestle has gained a
world reputation for its consistency in providing quality and safety products.
Many of the products generated by Nestle Company are beneficial based on the
nutritional aspects. They include breakfast cereals, milk and other dairy products as
well as bottled water which has diverse accrued advantages.
Nestlé’s products include baby food, bottled water, breakfast cereals, coffee,
chocolates, drinks, healthcare nutrition, sports nutrition, confectionery, culinary and
frozen food, dairy products, ice cream, pet foods and snacks. 29 of Nestlé’s brands
have annual sales of over 1 billion Swiss francs (about $ 1.1 billion), including
Nespresso, Nescafé, KitKat, Smarties, Nesquik, Stouffer’s, Vittel and Maggi. Nestlé has
around 450 factories, operates in 86 countries, and employs around 328,000 people.
It is one of the main shareholders of L’Oreal, the world’s largest cosmetics company.
HISTORY
In Vevey, Switzerland, founder Henri Nestlé, a German pharmacist, launched
his Farine lactée, a combination of cow’s milk, wheat flour and sugar, saving the life of
a neighbor’s child. Nutrition has been the cornerstone of the company ever since.
Nestle is a multinational packaged food company founded and headquartered in
Vevey, Switzerland, and listed on the SWX Swiss exchange with a turnover of 87
billion Swiss francs. It originated in a 1905 merger of the Anglo-Swiss Milk Company
for milk products established in 1866 by the Page Brothers in Cham, Switzerland, and
the Farine Lactee Henri Nestle Company set up in 1866 by Henri Nestle to provide an
infant food product. The two World Wars both affected growth: during the first, dried
milk was widely used but the second war caused profits to drop by around 70%.
Today, it’s the World’s largest food Company.
WHY MANUFACTURE GLOBALLY?

Cost/ Prices

Products Price

MILK (Nestlé NAN OPTIPRO One Milk Powder) ₽410.00 – 3,300.00

CEREALS (Nestlé GOLD Honey Flakes) ₽179.00

COFFEE (Nestlé Coffee mate) ₽459.00

Pet Food ( Purina Beggin Dog Treats) ₽148.00 – 363.00

CHOCOLATES (Nestlé Buncha Crunch Milk) ₽299.00

Access to Raw-Material
Nestlé’s Quality Management System starts on farms. We have a long history of
working with farmers to help them improve the quality of their milk by helping them
introduce special quality controls, like cooling and automated milking systems. Nestlé
collects fresh milk from farmers at special Collection Centres each day and tests the
milk right on the spot to confirm its quality. The higher the quality of the milk the
more we pay the farmer!
Raw Material inventory of Nestle consists of milk. Their Raw Material is kept in
Silos. Silos are the big tanks, which are used to store the milk. Inventories of their raw
materials cannot be maintained in bulk quality and for a longer period of time. The
factory can store the milk up to 596,000 liters. They have five silos for storing the milk
all have different capacities. The milk can remain for the period of 36 hours without
losing quality.

New Markets
New Products:

 Nestlé is now making plant-based dreams come true with the launch of KitKat
V, the vegan version of the iconic KitKat. KitKat V offers the same perfect
balance between crispy wafer and smooth chocolate that people know and love.
 DiGiorno- As delicious as a classic pizza, DiGiorno launched a breakthrough
gluten-free crust. Unlike other gluten free crusts that are thin, this one is hand-
tossed, thick and bready.
 Mezeast- After a successful pilot in the Netherlands, this innovative new brand
launched across France, Italy, Spain and Switzerland, allowing more consumers
to cook aromatic Middle Eastern food at home.
 Sweet Earth Three new delicious Mindful Chik’n flavors launched in the U.S.
market, meeting customer demand for a wide variety of plant based products
that can be substituted for animal based analogs.
 Maggi Fueled by engaging communications alongside a female empowerment
campaign, Maggi CukupRasa all-in-one seasoning in Malaysia is experiencing
strong consumer interest.
Multi-Point Communication (Communications between global markets)
Organizational communication is working extremely efficient in such a global
food producer as Nestle. The company has multiple branches all over the world, and it
has managed to work effectively through the help of Web communication. The process
of communication is not only effective within the company’s workers, but also between
customers and food suppliers, as the possibility to order products on-line has been
enacted.
The hierarchy of the Nestle Company is built in a way, where both upward and
downward open channels of communication are managed, which creates a very good
working environment to employees and increases the effectiveness of work.
Downward communication is the one that is running to a worker by means of formal
channels that include policy manuals, regulations, charts and other rules
(Sandilands). Nestle has developed a huge amount of downward communications, but
upward communications is more welcomed. Upward communication is perfectly
combined with an open culture of Nestle, and it is particularly encouraged in the cases
of redressal and grievance.
Horizontal communication is also encouraged in Nestle. Within this hierarchy,
managers have proven their accountability, and open horizontal communication
engages everyone to work on one’s personal development and achievement of the
company’s results. Nestle is the company that has certain prerequisites and values,
among which are trust, honesty, transparency and respect, which are essential
conditions that are present during effective communication. Thereafter, the style of
running business at Nestle is the same as its communications. Dealing with people is
always full of integrity and transparency, which stimulates balanced open dialogues.
This type of communication is one of the most effective in Nestle.
However, the diagonal type of communication is also present at Nestle Company, as
sometimes the management board members make decisions on behalf of the company
and communicate them to lower positions. Thus, even members of the management
team communicate with one another before making a final decision, and the practice
of asking for feedback of what a person thinks is the best for the company in case of
change implementation is not a rare matter.
The working environment in Nestle is very informal, and this motivates people
to communicate easily with co-workers. Nestle Company promotes communication
between all managerial levels, and suggestions are even encourages, as some bright
ideas for improvements can come from the very bottom where workers see the
situations from inside. Employees are encouraged to participate in different activities
and decision-making processes, which are offered by the company on a daily basis.
Moreover, the management of the company asks the opinion of workers, promotes the
practices of regular feedback both on peer-to-peer, subordinate to manager and
manager to subordinate levels.
Employees usually contact one another through emails or phone, which means that
this organization has many open channels for communication. If the company needs
to make a major decision, the members of the general management board
communicate with one another, and then the information is cascaded to the lower
levels. The company has a network of communicational links that helps it to achieve
institutional goals and objectives (“Organizational Behavior of Nestle”).
Formal type of communication is only used when needed, and it happens when they
need to announce certain official events, dates or policies. The company has a lot of
external communication, which refers to commercial breaks, media advertisements,
printed media, president’s messages, annual reports and others. It is also important to
mention that Nestle is one of those companies that takes care of consumers needs and
allocates numerous resources in order to build and support the strength of the
communication channel between the company and its consumers.
The other part of the following paper includes an interview that was conducted
with a shop assistant in Nordstrom in order to get an insight on how the
communication is built in their company and what are the similarities and differences
with Nestle. Jenny has been working for Nordstrom as a sales assistant for more than
two years, and she claims that “Nordstrom is the company that puts its customers
above everything!”. No one can dispute that, as this company is famous for its refund
policy and special treatment of customers. Thus, this company does not work as
Nestle does, and employees do not usually benefit from upward or horizontal
communication. “In majority of cases we are being informed what changes are
coming”, – said Jenny during the interview. Thus, she is happy with performance
appraisals, as open communication is encouraged within the company. Jenny
considers the communication in Nordstrom as “formal, because its appeals to
customers”.
In conclusion, it is important to mention that Nestle has improved its
communication channels since nowadays it is done via mails. Feedback and other
messages are sent electronically, and the company has its own prototype of a
Messenger System. Actually, informal and horizontal communications, as well as
upward, add the most of value to Nestle Company as they resemble its vision and
principles. People feel free to talk with colleagues, subordinates and managers; they
are welcoming feedback and try to improve; communication is open and transparent.
All these factors motivate employees to work efficiently, generate new ideas, and
improve their skills as well as get new knowledge. Simple workers have no fear to
communicate with top management as they know that the honest feedback can only
help to make the company better.

GLOBAL MANUFACTURING STRATEGIES

Setting up a subsidiary versus Virtual Manufacturing
Operation Strategy
Nestle is a global organization, and its international strategy should be the
heart of its competitive domain. The competitive strategy of the company mainly
focuses on foreign investment in dairy and other food businesses.
 When operating in a more developed environment, Nestle strives to attain the
economies of scale via foreign direct investment. In a developing environment, Nestle
Company goes the local way by utilizing the local raw materials and employing the
appropriate brand.
Nestle Company strikes strategic partnership with other large companies. For
example, the company entered an alliance with Coca Cola Company to produce ready-
to-drink beverages, such as tea and coffee.

What is Manufacturing Compatibility?

Compatibility depends on:
a. Efficiency
b. Dependability
c. Quality
d. Flexibility
e. Innovation
Manufacturing Configuration
Coordination and Control
Nestle growth, both geographically and in product lines, prompted the company
to introduce a new organizational structure to strengthen coordination and smooth
communications between management, manufacturing and financial control
functions. At the market level, coordination is established between a principal
company, in a given region, and another company (or companies) in one or more
neighboring markets. The principal company has a supervisory role over the other
companies, which is delegated by central management.
Plant Location Strategies
Plant Layout Planning Strategies
PLANT LAYOUT
Nestle is using a plant layout which is functional in nature. Layout that can
handle varied processing requirements.
GLOBAL SUPPLY CHAIN MANAGEMENT
Meaning of Supply Chain Management
Supply chain management is the overseeing of the flow of goods and services
from raw materials to final products. It includes all the processes involved in getting
products to customers, such as shipping. As the global economy recovers, demand
and supply continue to be at odds with each other.
Global supply chain management involves planning how the entire supply
chain will function as an integrated whole, with the aim of generating an optimum
level of customer service while being as cost efficient as possible.
Elements of Supply Chain Management
Supply Chain Management and Enterprise Resource Planning
E-Commerce
Internet, intranet, and extranet