Operation and Supply Chain Management of Nestle

Question: Discuss about the Operation and Supply Chain Management of Nestle. Answer: Introduction This report aims to look in to the huge and complex operations of Nestle so that their chocolate products are available in the market all throughout the year. To achieve this feat, the company has to have meticulous planning process and a proper organizational management. The history of chocolate can be traced back to the Mayan civilization who found out that the beans of cocoa trees can be harvested and made in to drinks who were living in the now called Mexico (de Mejia Ramirez-Mares, 2014). The Spaniards who invaded the South American states learned the secrets of making this product and shipped back large cargoes of cocoa beans. In the midst of the 19th century, an Englishman by the name of Joseph Storrs Fry mixed cocoa butter, sugar and cocoa powder to introduce the blocks of chocolate to the world. The Nestle company manages the production of Kit Kat bars very efficiently and looks in to the production process on a daily basis so that there is no hassle for the consumers in pr ocuring the product from the market (Denoeud et al., 2014). Company Background Henri Nestle, a pharmacist by profession launched a product named Farine Lactee Nestle in the year 1867. The product was a nutritional supplement for the kids in Switzerland. He used his surname in giving a name to the company and the logo of the company, which is like a nest. It symbolizes family and nourishment and still plays a crucial role in the company profile. It was founded in the year 1905 as a merger between the Anglo Swiss Milk Company, which was established by two brothers whose names were George, and Charles Page respectively and the Farine Lactee Nestle Company. It grew in a significant manner during the First World War and expanded beyond the condensed and infant products following the Second World War. Currently the company operates in more than eighty-six countries and employs around 280,000 people ("History", 2017). Nestle Singapore Nestle Singapore celebrated its 100 years since the inception in the year 1912 in that country. In the year 1968, the company opened its first plant in Jurong, which produced Sweetened Condensed Milk back then. The factory maintained the best standards in Food Safety HACCP, Quality Management and Good Manufacturing Practice (GMP), which was in accordance with the Nestle Quality System (NQS). The company was awarded many rewards with respect to Food Processing, Sanitation and Hygiene and from the Ministry of Environment. It started as a humble manufacturer of Milkmaid, which is a sweet condensed milk and then expanded in to making other products such as MILO, Kit Kat and other products. The company aims to be the most recognized brand in Singapore while generating sustainability, profitability growth and improving the relationship with the shareholders and the employees at the same time ("History of Nestl", 2017). The factory is located in Jurong, West of Singapore and produces noodles, cereals, dairy products and nutritional products for the infants. The company keeps on growing because of the policy that they follow regarding constant innovation and concentrating on the core competencies with the aim of providing the best products to the people of Singapore (Denoeud et al., 2014). Product profile of Nestle Singapore The company has over 8000 brands worldwide. However, in this country the company concentrates on the products that are related to adults and children. The company is very much concerned with the standards of the quality of the product (Lewis, Ruemmele Wu, 2014). The products that the company have in Singapore and are liked by the people there are: Cerelac MILO Kit Kat Maggi instant noodles Nescafe etc. This product was manufactured in New York in the year 1935 and was known back then as Rowntrees Chocolate Crisp. In the year 1988, Nestle acquired the Rowntree company and in the following year the production of the chocolate by Nestle began in Japan. During the early period of the 1990s, the production of the chocolate started in Malaysia and Singapore as well (Wang, 2014). Kit Kat is one of the most appealing products of the company in Singapore. The people of the country love the product and the children in particular are very fond of it. They come in varieties of packs such as the single bar of wafer known as Kit Kat Chunky, the traditional four wafers known as the Kit Kat and the family pack, which consists of six packs of wafers each containing four wafers in the wrapper (Bharucha, 2016). The Production process of Kit Kat This stage deals with the growing of the cocoa beans. The small farmers live away from the market and cultivate their own lands for the production of cocoa trees. It is produced on a mass scale in countries like Ivory Coast, Brazil etc. The company plays a very important role in dealing with the consignments that are up to the quality for the production of the chocolate wafers (Moura, Branco Camoesas, 2015). The company buys it directly from the warehouses where it is stored to export to different companies that deal with the making of chocolate. The company purchases it and then sends it to the various manufacturing plants that it has globally and even to the Singapore plant where the product is mixed with sugar, cocoa and various other raw materials to bring out the final product. The factories take the whole consignment of the coca beans and make the beans sun-dry for seven days before putting it in the manufacturing process (Coombs, 2014). Once that process is completed, the bea ns begin a journey of three hours, which begins by cleaning which helps to remove the dirt from the material and de-shelling the product with a series of rolls to help the beans release the nib that is required to make the chocolate. The cocoa nibs are then put in to the ovens where it will come in direct contact with the pressure and heat, which will make the nib release the chocolate liquid (Mahal Hossain, 2015). The liquid is then mixed with cocoa powder along with sugar and milk to create the chocolate liquid in which the wafer will be dipped before packing the product. Finally, a process called tempering helps to make sure that the chocolate has melted and has reached a particular temperature. After the process of tempering, the liquid is then again heated to around 31 degrees to avoid the process of the crystallization because if that happens then the chocolate will lose its appealing factor to the customers (Visser, 2014). The waffle is made in a different section of the factory where the flour is mixed with water to form a batter like solution. Then the product is put on the waffle lanes and carried in large conveyor belts where it is baked on a temperature of around 150 degrees and is then cooled down to be covered with the chocolate filling in between the three layers (Galera, 2017). The wafers are then piled over one another making it look like a three-layered sandwich. The chocolate filling is applied on each layer and then stacked over one another. The liquid chocolate is then pumped into moulds where the wafers are deposited and the final layer of chocolate, which covers the entire part of the bar, happens after the liquid has cooled off. After the products are finished, the quality managers inspect the product and check for any defects if they are present (Coombs, 2014). Supply Chain Management Supply chain is defined as the system that includes suppliers, manufacturers, distributors, retailers and the customers where the material and the financial information flow in both the directions. In any organization, the chain consists of a variety of functions that involves the receiving and the entire fulfillment of the request that the customer does. The functions include the development of new product that is introduced in the market., the operations in the market and the functions related to distributing, financing and the service that is provided to the customers (Cordon, Hald Seifert, 2013). The supply chain management is the way in which a company finds ways to improve the product life cycle in the market. The Nestle Company follows a basic supply chain, which includes the suppliers of the raw materials from various places, the manufacturers who produce the particular product. Another important thing is the storage facilities where the product will be fresh and not go bad, the transportation facilities through which the products are sent to the various markets, the distributors who distribute the products to the retailers and finally the customers can lay hand on the product by purchasing it from the retailers (Bach, 2015). The company procures the raw materials from the West African countries that is the cocoa beans from the warehouses where it is stored from the suppliers. The company then transports it to the manufacturing unit in Jurong, Singapore where the process of making the product takes place. When the process is completed, the chocolate bars are taken to the storage which is adjacent to the factory from where the company owned trucks takes the delivery of the product and embarks on a journey to reach all the whole sellers of the country who will purchase the product from the company itself (Galera, 2017). The whole sellers then have their own sets of retailers who are informed that the products have arrived to them. The retailers purchase the product from them at a rate in which they are able to keep a certain profit margin for themselves. The retailers then advertise the products on the shelves of the shop so that the customers can get the knowledge of the availability of the product. The ta rget customers are the children that are there in the country who accounts for the maximum selling of Kit Kat candy bars (Meqdadi, Johnsen Johnsen, 2016). Sustainability practices The company has taken many steps to help main the sustainability with respect to the environment and on the child labor front. The company and the stakeholders have come in jointly to look into some of the aspects. They are: Nutrition- It is one of the most important factors of the company as it deals majorly in this part. Nestle promotes healthy lifestyle activities and has an active communication process to give information relating to this field (Hill, 2015). One of the current issues that it faced was in the production of the instant noodles, Maggi where in some countries it was found that there were certain percentages of lead in the production process. The company called back all its product and prevented the consumers from the consumption of the product. The company looked in to the matter and manufactured new sets of the product that was well below the permissible limit of the chemical and allowed it in the market because nutrition forms a major part of their food production pyramid (Bharucha, 2016). Water- The Company has efficiently managed the consumption of water both in its production process and the supply chain of the company. The company has reduced the emission of carbon dioxide by a good margin (Wolf, 2014). Rural Development- Nestle Singapore supports many local communities and helps them develop sustainably. They actively take part in the community services and sponsors many events to create brand awareness amongst the locals (Lee Vachon, 2016). Fair-trade activity- The Company has started to pay its cocoa suppliers that are based in Ivory Coast and the other places according to the current market rate that is there for each tone of the product. The company pays a minimum of $3,535 (978) for every tone of cocoa purchased. The company also pays a premium price of $150 (92) per ton to support the developmental projects that includes health and education of the farmers ("Kit Kat to be Fairtrade - Supply Management", 2017). No to Child Labor- The Company takes necessary steps to prevent child labor that is used in the cocoa plantations so that the children are not trafficked by the traffickers who want them to work in the fields for a meager amount. The company takes necessary steps to curb some of the ill practices that are very much prevalent in countries that are known for their coffee (Miah et al., 2015). The Future of the Company The company with its location in Singapore has vast market opportunities. The operations in the firm needs to be well maintained as the employees will always want a healthy environment to work in to. The company provides medical and residential facilities to all its employees and their families because the company ensures to keep its workers happy so that the manufacturing of the product can continue without any hassle. In the daily operations, the workers may get bored due to the same activities that they are working upon every day. To stop that the company organizes valuable workshops for the employees so that they can learn the new techniques that are available in the market with the latest technologies (Li, 2015). The supply chain of the company needs to be managed very cautiously and transportation facilities need to be increased more so that the availability of the product is never out of stock in the market. The consumers should always have access to the product as they might get demotivated with the product not being available and may shift to some other products. The whole sellers need to keep their prices according to the average market conditions so that the consumers are not affected in the end. The company needs to look in to this matter as it may affect the image of the brand if these malpractices are carried out by the subsidiaries. The motto of the company that is Good food, good life needs to be followed by not only the company but also the processes that are required in between the company and the consumer (Meqdadi, Johnsen Johnsen, 2016) . Conclusion Therefore, to conclude it is seen that the brand is making good progress in Singapore because of the demand that it has amongst the consumers and the company always metes out the supply. The Kit Kat is one of the favorite things of the children and the company does not compromise on the quality. The manufacturing of the product is carried out meticulously and the minimum errors in the production are also avoided at all cost. The procurement of the cocoa from where chocolate is made is also good as the company follows a fair-trade policy where the exporting countries are not exploited and curbing the child labor, which is very much prevalent in those coffee producing countries. Reference List Bach, D. (2015). A politics and public policy approach.The Routledge Companion to Non-Market Strategy, 66. Bharucha, J. (2016). Cadbury Vs Nestle: A Study of The Chocolate War.International Journal of Research in Social Sciences,6(9), 609-620. Coombs, W. T. 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