24518533 nestle operation management final

8/9/2019 24518533 Nestle Operation Management Final

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11Nestle Milkpak Ltd.Nestle Milkpak Ltd.

THENESTLESTORY

Nestle S.A. the present Switzerland based international foodgroup, originally consisted of two companies and two products:Henri Nestle and his baby food in Vevey, and the AngloSwiss!ondensed "il# company and its condensed "il# !ompany andits condensed mil# in !ham, both in Switzerland. $n %&'' the(age )rothers form the *nited States set up a new industry in!ham, ma#ing condensed mil# from a raw material that wasavailable in abundance in the region. $n %&'+ Henri Nestle achemist in Vevey, created a mil# and cereal based food forbabies. he companies competed vigorously until %-/, whenthey merged and became the starting point of the present foodgroup.

01NA"$! 23(ANS$4N

he history of Nestle include the development of many di5erentproducts as well as ac6uisitions, mergers and the purchasing ofshares in companies, mainly abroad, over the course of the tears,this enabled it to broaden its range of products and diversify itsoperations, while at the same time strengthening the economicfoundations of the company. Amongst the most importantac6uisitions were !arnation in 7os Angeles 8mil# products and petfoods9 and more recently owntree "ac#intosh in 1or# 8chocolate

and confectionery9, )uitoni in (erugia 8pasa9 as well as (errier in;rance 8mineral water9.

Nestle which does -&< of its business outside Switzerland, alsohas interests in nonfood sectors, in cosmetics 8a large shareholding in 7=4real9 and ophthalmic products 8ac6uisition of Alconlaboratories $nc.9 while continuing to give priority to foodproducts.

NESTLE TODAY

Nestle is now the world=s largest food company. $t is present on>ve continents, has an annual turnover + billion Swiss francs,runs /?? factories in &% countries, ?operating companies, %basic research center and ? technological development groupand more than ?@%, employees the world over.


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he company owes its current status to the pioneering spiritinherited from its founders which continues to inspire it, to itsconstant search for new ways of satisfying man=s mutationalneeds.

herever possible, it sets up factories locally, employeespersonnel from the country concerned and relies on indigenousraw materials. $ts agricultural services provide assistance toimprove the 6uality and yield of the raw materials it uses. "uchattention is devoted to professional training and to theintegration of the company in its economics and socialenvironment.

Nestle Milkpak Ltd.

As a conse6uence of Boint venture arrangement between NestleS.A. of Switzerland and "il#pa# 7td. $n %-&&, the eCistingproduction facility of "il#pa# in Shei#hupura became a part ofNestle "il#pa#.

he "il#pa# Shei#hupura factory had commenced operations in%-&% as a producer of *H mil#. )y %-&&, it had eCpanded itsoperation and was also producing butter, cream, 0esi ghee D allunder the brand name of "$7E(AE and Buice drin#s under thebrand name ;4S.

!onscious of the large food mar#et that (a#istan o5ered, Nestle"il#pa# drew up ambitious eCpansion plans. hile reorganizingand reenforcing the production of eCisting brands, it lost no timein giving shape to new production lines. he >rst to come was amil# powder plant, which not only began producing N$04 in %--but was also critical to the production of several mil#basedproducts in the future. ith the installation of the roller dryer in%--, the >rst such product to come was !227A! D aninternationally recognized brand on infant cereal, followed by7A!4F2N % G ? in %--%.

he year %--? saw the introduction of tea whitener 2V210A1and mil# powder in bul# pac#ing named F74$A. "$74 andN2S7A! came under production in %-- and "$74 0, $n %--/.7ocal pac#ing of co5ee miCes under the name of N2S!A;2 @ in %commenced the same year. $n %--', Nestle "il#pa# 7td. >rstconfectionery plant of (474 "int was installed and the line ofN2S7=2 (*2 4ANF2 I*$!2 was also added. (ac#aging of co5ee


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under the brand name N2S!A;2 !7ASS$! was underta#en thesame year. $n %--+ N2S7=2 H2A and two variants of (474 viz.strawberry and 4range were introduced.

%--& has been, by far, the most outstanding year for Nestle

"il#pa#. As a result of the timely implementation of maBoreCpansion plans, involving a substantial capital outlay, no lessthan %+ products were launched during the year. Signi>cantly,the factory now houses three new Javors of (474 in addition totwo Javors of (474, namely )lac#current and Strong "intbrought the number of (474 variants to >ve. A new variant7emony was added to the range of popular ;4S fruit drin#Javors and a new %liter pac#ing of ;4S was introduced. hreeJavored mil# D Vanilla, Strawberry and "ango, under the brand;2SH G ;*$1, came under production on the new etra ;illing

"achine e6uipped with the modern KslimL format. "$74 0 and*H !ream were also shifted over to this new format. A JeCibleconfectionery line for the manufacture of a wide range of highand low boiled sweets and to5ees was commissioned, with4;;4 and two variants of S44H2S D "enthol 2ucalyptus andHoney 7emon, being the maiden products. Nestle "il#pa# alsocontracted to supply dairy miCes to "c0onald=s, for its popularsoft serves and mil# sha#es. And to top it all, the most prestigiousproBect, N2S72 (*2 7$;2 was also commissioned in 0ecember%--&. based on the latest water treatment and bottling

technology, this mar#ed the entry of Nestle "il#pa# in the(a#istan water mar#et.

$n the past, $ndus ;ruit (roducts 7td. has been coprocessing fruitpulping for Nestle "il#pa#. $n view of the growing needs of fruitpulp for its products as well as for eCports, Nestle "il#pa# enteredinto a /year lease agreement with the management enablesNestle "il#pa# to put in place its own systems to ensure betterproduct 6uality and capacity utilization. he new cold saucesproduction line has been established at this plant.


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ESTABLISHMENT OF NESTLE MILKPAK, KABIRWALAFACTORY

$n %-&' "il#pa# 7td. ac6uired the services of Eabirwala 0airy 7td.;or co pac#ing of *H mil# under the brand name "$7E(AE.

Nestle "il#pa# ac6uired E07 in %-- as a subsidiary and beganinstallation on a "AFF$ N44072S plant in %--%. this productionline became operational in %--? with two Javors: !hic#en and"asala. his second mil# powder plant was commissioned inSeptember %--'. the plant produces N$04, F74$A and s#im mil#powder. he *H line was discontinued in Iune %--' and thesame year witnessed the launching of the "AFF$ 1AEHN$ linewith @ Javors: !hic#en, "asala and !hatpata.

ith the merger of this factory with Nestle "il#pa# in April %--+,Eabirwala ;actory, as it is now called, is a fully owned unit of

Nestle "il#pa# 7td.

$n ;ebruary %--- the newly installed evaporator came on streamin Eabirwala ;actory, doubling the output of the spray dryer.Alongside, the warehouse capacity at Eabirwala to handle theincreased volumes of >nished products was proportionatelyincreased. %--- also saw the installation of a pouch>llingmachine, ma#ing Eabirwala ;actory independent fromShei#hupura for the >lling of full cream mil# powder.


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CORPORATE STRCTRE

Head 4Mce

he registered and corporate oMce of Nestle "il#pa# 7td. is in

7ahore.

@& D *pper "all 7ahore

(A)3: /+/+&?-/

;aC: /+%%&?

;actories

here are two factories of Nestle "il#pa# 7td. ;or dairy products.

Shei#hupura:Shei#hupura:?-th #m, 7ahore Shei#hupura oad,?-th #m, 7ahore Shei#hupura oad,

Shei#hupura, (unBab, (a#istan.Shei#hupura, (unBab, (a#istan.Eabirwala:Eabirwala:

Ehanewal D Eabirwala oad, EabirwalaEhanewal D Eabirwala oad, Eabirwala

0istrict Ehanewal, (unBab, (a#istan.0istrict Ehanewal, (unBab, (a#istan.here are two plants for "ineral ater situated in:here are two plants for "ineral ater situated in:

$slamabad :$slamabad :Earachi:Earachi:

RE!IONAL OFFICES

!ompany has ten regional sales oMces in following cities of

(a#istan:

Earachi

Hyderabad

Su##har


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7ahore

"ultan

;aisalabad

FuBanwala

uetta

$slamabad

(eshawar

MILK COLLECTION CENTERS

he core raw material of Nestle "il#pa# is mil#. 4ver the lastthirteen years the company prime concern has been to improvethe 6uality and volume of mil# for *H processing and for other

mil# base products. So the company has twenty>ve mil#collection centers in (a#istan.


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DI"ISIONS OF NESTLE MILKPAK LTD.

(roducts

Marketing DivisionMarketing Division

Customer Relation DepartmentCustomer Relation DepartmentDistribution DepartmentDistribution Department

Researc ! De"elopmentResearc ! De"elopment

DepartmentDepartment

Milk Collection Division

#$ricultural %er"icesDepartment

Lo$istic Department

HR DivisionHR Division

&ersonnel Department&ersonnel DepartmentFinance Division

'reasur( Department

#ccounts Department

Production DivisionProduction Division

)ualit( #ssurance. Depet)ualit( #ssurance. Depet*rand +ise &roduction*rand +ise &roduction

DepartmentsDepartments

&acka$in$ Department&acka$in$ Department


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,,Nestle Milkpak Ltd.Nestle Milkpak Ltd.

1ear (roduct Name

#$%# *H "il#

%-&@ )utter

%-&' "il# (a# !ream

0esi Fhee

;rost Iuice

"il# (a# *H "il#

%-- Nido

!erelac

%--% Nestum

7ectogen

%--? 2veryday ea hitener

Floria

"aggis Noodles

%-- "ilo

Neslac

%--/ "illo 0

Nescafe @ in %

%--' 2very day *H "il#

Nestle 4range Iuice


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--Nestle Milkpak Ltd.Nestle Milkpak Ltd.

Nestea

(olo

Nescafe !lassic

"aggi 1a#hni

%--+ Nestle heat

%--& o5o

Soothers

Nestle (ure 7ife

%--- "aggi Sauces

;ruit 0rops

)utter S#otch

&''# Nescafe !reamy ;lavors


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ole of Nestle "il#pa# 7td. in $ndustry

Nestle "il#pa# 7td. is the mar#et leader in food and beverageindustry. hey are producing high 6uality well #nown brands.here no is such competitor that can compete Nestle "il#pa# 7td.

in its total product miC. here are a few local competitors of thecompany in di5erent product item. hese competitors are:

afhan:

afhan is competing Nestle in infant and follow up cereals.

Shezan and )ambino:

Shezan and )ambino are competing Nestle "il#pa#=s localbrand K;rostL.

!07 and Adare#isan:

hese two competitors are competing in mil# and mil#

powder products.

$n spite of this competition, Nestle "il#pa# 7td. is enBoying about

++/< mar#et share in (a#istan.Selected (roducts

$n order to satisfy the prime obBective of this report, we have

selected following to product lines of Nestle "il#pa# 7td.


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%. !ondensed "il#

Kherever you live, only Nestle can provide the best and most

relevant food and beverage products to meet your needs

throughout your day, throughout your life. he Nestle Networ#

icon will ta#e you on the Bourney of discovery through our world

of food.L

"ission"ission


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OB(ECTI"ES OF NESTLE MILKPAK LTD.

Nestle "il#pa# believes in following obBectives:

he maBor obBective of the company is to sell high 6uality,he maBor obBective of the company is to sell high 6uality,innovative and superior products which satisfy needs and wantsinnovative and superior products which satisfy needs and wants

of consumers.of consumers.Nestle not maCimize pro>t through high mar#et share but useNestle not maCimize pro>t through high mar#et share but usemaCimize customer=s satisfaction. Nestle earn pro>t throughmaCimize customer=s satisfaction. Nestle earn pro>t through

satisfaction of consumer.satisfaction of consumer.he health of consumer and employees is at primary priorities. ohe health of consumer and employees is at primary priorities. oensure consumer=s health, Nestle provide 6uality products and forensure consumer=s health, Nestle provide 6uality products and for

employee health. Nestle provide the pollution free environmentemployee health. Nestle provide the pollution free environmentand provide the medical facilities.and provide the medical facilities.

Nestle establish policies, programs and practices to conductNestle establish policies, programs and practices to conductoperation in an environmentally sound manner.operation in an environmentally sound manner.

Nestle operate to achieve highest standard of ethical conduct,Nestle operate to achieve highest standard of ethical conduct,which ac6uire company=s activities and relationship worldwide inwhich ac6uire company=s activities and relationship worldwide in

each business sector.each business sector.Nestle aim to deal only with reputable suppliers who willing toNestle aim to deal only with reputable suppliers who willing to

apply Nestle uality Standard.apply Nestle uality Standard.Nestle has been committed to environmentally sound businessNestle has been committed to environmentally sound business

practices throughout the world.practices throughout the world.


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CORPORATE STRATE!Y

!orporate strategy de>nes the direction of the organization overthe long term and determines the goals that must be achieved

for the >rm to be successful.

E)TERNAL EN"IRONMENT

he top management of Nestle "il#(a# continuously carries onenvironmental scanning and within the environmental trends.4pportunities G opportunities they carry on re6uired adBustmentsin their organization to remain variable and to survice in the faceof competition.

CORE COMPETENCIES

Nestle "il# (a# has the following core competencies.

WORK FORCE

Nestle "il# (a# has a small wor# force as their most of theoperations are automated. hey have a very s#illful and trainedwor#force.

FACILITIES

he N"=s facilities i.e. oMces stores and plants are very welllocated and have the re6uisite capabilities, which is a bigcompetitive advantage for them.

SYSTEM AND TECHNOLO!Y

N" is an organization which heavily depends upon new systemsand technologies to eCcel in the mar#et. he organization is well


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e6uipped with new developed systems and technologiesespecially n their operations.

COMPETITI"E PRIORITIES

;ollowing are the competitive priorities of N".

i. !onsistent 6uality

ii. 0evelopment speed

iii. Volume JeCibility

*ALITY

uality is the cone competitive priority of N". hey ta#e 6ualityin two ways. High performance design and consistent 6uality.

CONSISTENT *ALITY

N" pays special attention for maintaining consistent 6uality. heyhave special sort of e6uipments and process which facilitates inmaintaining a consistent 6uality. So the each and every unit of itsproduct e6ually satis>es its customers.

DE"ELOPMENT SPEED

As for as develop speed is concerned N" is the industry leadernot only in (a#istan but all over the world. hey have a team ofvery innovative people which consistently focus on thedevelopment of new products and to improve the already eCistingproducts.

"OLME FLE)IBILITY

Volume JeCibility is one of the competitive priority of N". henthe availability of "il# is high in winter season they increase theirproduction as the mil# cannot be stored for longer period of time.$n season when there is shortage of mil# their production rates


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dropped. So they can adBust their volume of production accordingto their re6uirements.

FLOW STRATE!Y

;low strategy is one of the primary element of operationsstrategy. )ased on competitive priorities a Jow strategy isselected. $t speci>es has the operations system to be organizedand handled. ;or di5erent set of products di5erent Jow strategiescan be implemented.

LINE FLOW STRATE!Y

N" has adopted the line Jow strategy here the system isorganized around the product. $n this strategy all products followlinear pattern in facility. N" has high volume production with

highly automated facility and huge capital investment is thereand the standardized products they produce. So they follow theline strategy.

STRATE!IES BASED ON FLOW

;ollowing are the Jow based strategies adopted by N".

MAKE TO STOCK STRATE!Y

N" follows the ma#e to stoc# strategy. hey have high volumeproduction and the demand for their products can be forecasted6uite well, there eCist repetition of wor# and a consistent 6ualityis maintained old these priorities lead to ma#e to stoc# strategy.

STANDARDI+ED SER"ICE STRATE!Y

he products which are provided by N" are standardized.herefore the standardized service strategy also eCist in N" 7td.hey have standardized and consistent 6uality products.


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%pra( Dr(in$%pra( Dr(in$ &asteuri/ation&asteuri/ation0"aporation0"aporation

PRODUCTION PROCESSPRODUCTION PROCESS

Milk Collection ! ReceptionMilk Collection ! Reception

Coolin$Coolin$

%torin$%torin$ %tandardi/ation%tandardi/ation DeCreamin$DeCreamin$

&ackin$&ackin$


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PRODCTION PROCESSPRODCTION PROCESS

"$7E !4772!$4N"$7E !4772!$4N

"il# collection system of Nestle "il# (a# is eCcellent. According tothis system mil# is collected from area of about +?, #m .

Village "il# centers ??+@

Sub centers /&@

"ain !enters ?@

4n mil# centers price of mil# is paid according to percentage offats. $f the 6uality of fat is less than re6uired 8'c amount of "il# in speci>c time.

RECEPTION

;rom mil# collection centers mil# is collected and delivered tofactory daily seal of tan#ers are properly decided. eceivingcapacity of mil# is ', liters. At reception following tests areperformed before storing mil# to assure the 6uality of mil#.

% Alcohol precipitation test


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1,1,Nestle Milkpak Ltd.Nestle Milkpak Ltd.

? !lot an boiling

@ ;at 8/.&< '


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1-1-Nestle Milkpak Ltd.Nestle Milkpak Ltd.

PASTERI+ATION

$n his (rocess mil# is heated at -? o! for / seconds to removeremaining bacterias.

"il# powder process activities

After pasterization mil# to treated for canveersion into powder,following activities are performed to mil#:

2vaporation

8a9 7ow heat treatment

"il# is heated at high pressure of &&- milli bar so that it startboiling at about + o! .

8b9 e5ect falling >lm

"il# is evaporated in e5ect system. "il# is evaporated about/'


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C22li/

After drying there is a cooling process, in which powder is cooledbefore storing.

St2i/ 24 p25de

(owder is stored in bins there are bins , with capacity ofeach.

Pa0ki/

"il# is pac#ed in di5erent pac#ing according to the weightre6uired, form tote tilting station from bins.

Capa0it-

!apacity is the maCimum rate of out put for a facility. heoperations manager must provide the capacity to meet currentand future demandsO otherwise the organization will miss theopportunities for growth G pro>ts.

Nestle "il# (a#, Eabir ala has installed new evaporate, doublingthe Sout put of spray dryer in %---. Along said the were housecapacity at Eabir ala to handle increased volumes of >nishedproducts was proportionately increased. hey also installed pouch>lling machine, ma#ing Eabir ala factory independent fromShei#hu (ura for >lling of full cream "il# powder.

!apacity for receiving mil# is ', 7iterPHours.

"il# is stored in storage tan#s called Silos. he capacity to storemil# is /-' tons.

here are / Silos of% tons each,

? Silos of % tons each,

% Silo of + tons.

"il# can be stored maCimum for @' Hours in Silos.

!apacity planning is duty of top management and it is long term.$n Jush season when mil# is abundantly available they utilizecapacity %< as cleaning time is Bust hours daily and ? hours


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of wor#ing. $nstalled capacity is N$04 plant is /' tons, itproduces tons P Hours G in ? wor#ing hrs it can produce &tons per day. $n summer when availability of mil# is lower theyhave their annual shut down 8Iune9. hey have training sessionfor employees and vacations in that time. here are certain

standards for labor utilization. 2Mciency of employees iscalculated daily.

LOCATION

;acility location is the process of determining a geographic sitefor a >rm=s operations.

Nestle (ac# has located one of its factories at Eabirwala.

REASONS FOR SELECTIN! THIS LOCATION

PRO)IMITY TO SPPLIERS AND RESORCES

his factory has been located in this area because here thesupply of mil# is more than the re6uirement of the local area.his factory location is immensely surrounded by Argicultrualfarms, villages and small towns. he people o f thess areas havetheir own

Animals and the feudals of the region have their own live stoc#farms. So there is abundant mil# available.

;urthermore, by locating one factor y at Shei#hupura and theother at Eabirwala the Nestl "il#(a# can cover the geographicarea of mil# collection very well, especially the area of whole(unBab.

REPTATION OF THE LOCATION

(lacing of the factory at Eabirwala is also advantageous in thisway that at the current place there was actually the factory in thename of Eabirwala 0airies 7td. 8E079. So the place has thereputation of having a mil# factory. he suppliers of mil# arealready oriented with this location.

PRO)IMITY TO NATIONAL HI!HWAY


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Eabirwala factory is 6uite closer to National Highways so thetransportation of aw "aterial and ;inished Foods is also easier.

$n the end we can say that the most important and critical factorfor locating the facility at this place is the availability of the mil#

in this area.

SPPLY CHAIN MANA!EMENT

Supply !hain Q"anagement see#s to synchronize a >rms functions and those of its suppliers to match the Jow of materials ,services and information with customer demand. A basic purposeof supply !hain management is to control inventory by managingthe Jows of materials.

TYPES OF IN"ENTORIES

;ollowing types of inventories are #ept by Nestle "il#pa#Eabirwala:

RAW MATERIALS

aw "aterial inventory of Nestle "il#(a# consists of mil#. heiraw "aterial is #ept in Silos. Silos are the big tan#s, which areused to store the mil#. $nventories of their raw materials cannot

be maintained in bul# 6uality and for a longer period of time.he factory can store the mil# up to /-' liters. hey have >vesilos for storing the mil# all have di5erent capacities. he mil#can remain there for the period of @' hours without loosing6uality.

WORK IN PROCESS IN"ENTORIES

or# in process inventories are not to huge. hatever they putinto production they stop production after its completion if there

is no unusual brea# down.

he unpac#ed goods inventory can be considered as the $(inventory. he condensed mil# is stored in )ins. )ins are the bigboCes in which the mil# powder is stored before pac#ing it.


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hen through an automatic plant the mil# is pac#ed. he butter isstored in huge tubs. ;rom where that is pac#ed through theautomatic.

FINISHED !OODS IN"ENTORY

$nventories of pac#aging material can also be included in $(inventories. he pac#ing material is purchase eCternally. hesupplier of pac#ing material is pac#ages private limited (a#istan.

Nestle "il# (a# maintains huge amounts of ;.F. inventories. hereis a huge warehouse within the factory. $n the warehouse theystore the >nished goods.

2specially when the availability of mil# is high then the 7.". isproduced and stoc# in this warehouse and the same is released

when the "il# availability is lesser and the production is also low.

Normally it=s the ;F inventory the N" has " G $( inventoriesnot that huge.

MATERIALS MANA!EMENT

here is a separate department in the factory which isresponsible for purchasing the materials and managers its supply.

here is a centralized system of material management. hewhole operations of which are loo#ed after by the operationsmanagers. here is also a stores oMcer which also loo#s after thematerials management.

SPPLIER RELATIONS

he nature of relations maintained with suppliers can a5ect the6uality, timeliness and price of a >rm=s products and senior. hereare two types of supplier relation competitive orientation.

!44(2A$V2 4$2NA$4N.

Nm=S S*((7$2S 27A$4NS

N" follows the cooperative orientation. hey have very friendlyand cooperative relations with their supplier=s one hand and there


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are the suppliers of "il# and on the other hand the suppliers ofpac#ing N" have cooperative relations with both of its suppliers.

RELATION WITH MILK SPPLIERS

N" has very cooperative relations with its mil# suppliers. N"=speople themselves loo# after the animals of the former whoprovide them mil# and give them useful tips.

N" provides various facilities to its mil# suppliers. N" alsoprovides or facility to its suppliers. $t also provides themconsultancy facilities consultations s provided for improving themil# 6uality loo#ing after the health of the animals.

PRO!RESSI"E FARMERS

he progressive farmers are the farmers having lots of animalsand supply mil# to N". hese are farmers which wish to furthergrow. N" provides them loans for improving their farms and forthe purchase of animals. N" provides medical facilities to theanimals. he N" provides loans to these farmers for eCpandingtheir farms. So that the mil# re6uirements of N" can be >lled. $nturn the supplier of mil# also cooperate with N"

PACKA!IN! MATERIAL SPPLIERS

he pac#aging material is supplied to N" by the pac#ages 8(vt97td. (a# N" have very cooperative orientation with pac#ages andthey cooperate a lot with N" for maintaining high 6uality of >nalproduct.

Sole sourcing ( is the only supplier who provides are the pac#ingmaterial. So N" use sole sourcing.

So N" has very cooperative orientation with its suppliers.

IN"ENTORY CONTROL SYSTEMS

;or controlling inventory the N" use !ontinuous eview

C2ti626s Re7ie5


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N" use continuous review system. hey have the wholecomputerized system. How much stoc# is in the stone room howmuch stoc# has been further put into warehouse and how muchstoc# has been drawn from the storesR $n this way they #eep acontinuous control over their inventory. he stores oMcer not only

maintains records but also ma#es visits at the warehouses to seethe actual situation of materials. he oMcer can review theinventory at any time. 4perations manager and the auditingpeople also chec# the inventory and its records so that the ris#sof loss or manipulation may be minimized.

DISTRIBTION

0istribution is the management of the Jow of materials frommanufacturer to customer and from ware house to retailers.

$nvolving the storage and transportation of goods.

PLACEMENT OF FINISHED !OODS IN"ENTORY

he fundamentals decision is where to stoc# an inventory of>nished goods there can be two alternates.

i. ;orward (lacement

ii. )ac#ward placement.

FORWARD PLACEMENT

$n forward placement >nished goods are stored closer tocustomer .N" use forward placement as they use to #eep thestoc# of >nished goods in their regional oMces and distributioncenters. ;rom the distribution centers the goods are further sentto the retailers.

BACKWARD PLACEMENT

$n bac#ward placement >nished goods are stored at themanufacturing plant where they #eep goods stoc#ed. So in thisway they use bac#ward placement also. So for inventoryplacement N" uses a miC of forward placement and bac#wardplacement in order to provide goods to the mar#et on time.


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DISTRIBTION STRATE!IES OF NESTLE MILK PAK LTD.

0istribution plays important role in success and failure of anyorganization. he organization may fail, if its distributionnetwor#s are not eMcient and unable to provide the necessary

items at re6uired place and at reasonable time.0istribution system of Nestle is one of maBor source ofcompetitive edge over its eCisting rivals. Nestle has its owndistribution networ#s e6uipped with all necessary transportationfacilities. hey transport their products at maBor ten regionalsales oMces, which are situated at di5erent cities of (a#istan.hese sales oMce 8distribution centers9 have their own vans withsales people who sell and transport goods to the small retailers.$n general Nestle followed following se6uence for distribution ofits products.

his >gure indicates Nestle never sell directly is ultimatecustomers but follow above se6uence.

$n general, Nestle has following two distribution strategies:

Selective distribution strategySelective distribution strategy

2Ctensive distribution strategy2Ctensive distribution strategy

;or some products, Nestle adopt Kselective strategyL in which>rm distribute its products on few selective retail outlets while forsome products, Nestle people go for KeCtensive strategyL inwhich they distribute their goods on all possible retail outlets.

SELECTION OF TRANSPORTATION MODE

;or transportation of goods to the regional oMces N" has it ownvans and other vehicles. ;or further distribution to retailer the

distributor of each area uses its own vehicles.

;or the mil# collection the N" has their own tan#ers, which aremade of special material to maintain the 6uality of mil#.

FORE CASTIN!

Compan(Compan( Distribution CenterDistribution Center RetailersRetailers CustomersCustomers


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;ore cast is a prediction of future events used for planningpurposes.

;orecasts are needed to aid in determining what presences areneeded, scheduling eCisting resources and ac6uiring additional

resources. Accurate for casts allow schedules to use machinecapacity eMciently, reduce productions times and cut inventories.;orecasts are needed to anticipate changes in prices or costs orprepare for new laws or regulations, competitors, resourceshortage or technologies.

;orecasting methods may be based on mathematical modelsusing historical data available, 6ualitative methods drawing onmanagerial eCperience or a combination of both.

Nestle "il# (a# forecast the demand of products on annuallybasis with mutual understanding between planning and sellingdepartments on the basis of historical data and sales forecastestimates. hey conduct monthly meetings and >ne tune theforecast on monthly basis. As in summer when availability of mil#is scarce and demand is high, they have stoc# in winter to meetthis demand. hey produce more in pea# season 8Ian, ;eb, and"arch9 to meet the demand of lean seasons 8Iune, Iuly, August9.

A!!RE!ATE PLANNIN!

Aggregate plan is a statement of production rates, wor# forcelevels, and inventory holdings based on customer re6uirementsand capacity limitations.

PRODCTION PLAN

A manufacturing >rm aggregate plan is called as the productionplan which generally focuses on inventory holdings and

production rates.

N" has its production plan which is generally developed by theplanning department.


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2,2,Nestle Milkpak Ltd.Nestle Milkpak Ltd.

A!!RE!ATIONA!!RE!ATION

N" aggregate their plan on the basis of total mil# collection, totalN" aggregate their plan on the basis of total mil# collection, totalmil# re6uirements, total production etc.mil# re6uirements, total production etc.

TIMETIME

he planning horizons of N" are of two types one is the long termhe planning horizons of N" are of two types one is the long termplanning horizon which covers the period of ten years. he otherplanning horizon which covers the period of ten years. he otheris the shorter planning horizon normally or one year.is the shorter planning horizon normally or one year.

LON! TERM PLANNIN! HORI+ONLON! TERM PLANNIN! HORI+ON

$n long term planning horizon N" plans for about ten years. hey$n long term planning horizon N" plans for about ten years. heyplan how much production capacity to be achieved. How muchplan how much production capacity to be achieved. How muchproduction rates will be re6uired what will be the customerproduction rates will be re6uired what will be the customer

demand how will they collect the mil#. ;rom where they willdemand how will they collect the mil#. ;rom where they willcollect the mil#. How many number of animals would be there is acollect the mil#. How many number of animals would be there is aparticular area and from there how much mil# we will beparticular area and from there how much mil# we will becollecting. hey got all the information and plan for a longercollecting. hey got all the information and plan for a longerperiod of time.period of time.

SHORTER PLANNIN! HORI+ONSHORTER PLANNIN! HORI+ON

$n shorter planning horizon they plan usually for one year and$n shorter planning horizon they plan usually for one year andthen further decompose that in seasonal plan. How much tothen further decompose that in seasonal plan. How much to

produce in a year. How much mil# to be collected in one yearproduce in a year. How much mil# to be collected in one yearwhat is the de>ciency or surplus. How much inventories we willwhat is the de>ciency or surplus. How much inventories we willbe holding. his yearly plan is further divided into four 6uarters.be holding. his yearly plan is further divided into four 6uarters.argets are set for each 6uarter and the e5orts are made toargets are set for each 6uarter and the e5orts are made toachieve the targets.achieve the targets.

*ALITY

uality has no proper de>nition its vary from person to person. $ngeneral sense 6uality may be de>ned as meeting or eCceedingthe eCpectations of customers.

$n general business=s success depends on the accuracy of itsperception of customer=s eCpectations and its ability to bridge thegaps between those eCpectations and operating abilities. Food6uality can also pay o5 in high pro>ts. High 6uality products andservices can be priced higher then comparable low 6uality once.And yields a greater return for the same sales dollars. (oor


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2-2-Nestle Milkpak Ltd.Nestle Milkpak Ltd.

6uality erodes >rm=s ability to compete in mar#et place andincrease the costs of producing the product or service.

Nestle "il# (a# has 6uality as its top competitive priorities alongwith availability of its products all over.

$n 6uality they want to achieve consistent 6uality and even toimprove it continuously. $n this regard the stress on customersatisfaction, continuous improvement and employee involvement.

here is strict 6uality control by computerized system in controlroom, 6uality of product are assured at each stage.

C6st28e satis4a0ti2

Nestle ta#e their customer on top of its hierarchical chart. $ts toppriority is to satisfy the customer. hey design the product insuch a way that they con>rm their speciation, >t for use and givesupport to the company image.

E8pl2-ee i72l7e8et

Nestle mil# pa# involves their employees in ma#ing decisions andchanging in organization. hey have idea boCes in factories andoMces, employees are encourages to give ideas aboutimprovement.

hey conduct wee#ly meetings and discuss the ideasO good ideasare rewarded to motivate employee=s involvement. here areformal training sessions for employees to train them and enhancetheir capabilities. 2mployees are given rewards and incentives toinvolve them more in organization.

C2ti626s i8p27e8et

Nestle "il# (a# try to improve the 6uality of products

continuously they conduct continuous improvement meetings toimprovement the 6uality. hey train the employees for improving6uality tools, build team wor#, employee involvement anddevelop sense of operator ownership.

I8p27i/ 96alit- t126/1 T*M


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(rograms for employee involvement and continuousimprovement are aimed at improving 6uality in general sense.However, " often focuses on benchmar#ing, product andprocess design.

BENCHMARKIN!

)enchmar#ing is a continuous systematic procedure thatmeasures a >rm=s product and process against industry leaders.As N2S72 is industry leader in food products, each factory hasits benchmar# to improve 6uality. Nestle "il# (a# Eabirwala ta#esNestle ambula factory Australia as bench mar#, which is the bestNestle factory in all over the world. Nestle "il# (a# Eabirwala isat ?ndnumber.

PRODCT : PROCESS DESI!N

Nestle "il# (a# design the produce according to the customer=ssatisfaction and process is designed in such a way to maintainpurity and nutrition=s of the products.

*ALITY CERTIFICATION

Nestle "il# (a# has its own 6uality standard certi>cation whichhas much higher standards as compared to $S4, called Nestle

uality Standards. Nestle "il# (a# Eabirwala is approved byNestle uality Standards.

$n which 6uality is maintained right from the purchase of rawmaterial to the distribution of the products to the ultimateconsumers.

uality of "aterials

uality of (rocess

0istribution

!ontinuous improvement

!ustomer satisfaction

2mployee involvement


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DETAILS OF PRODCTION PROCESS

Milk C2lle0ti2

"il# !ollection system of $ndustry is eCcellent. According to this

system the companies= truc#s reach % mil#men and collect

mil# daily. he mil#men provide mil# on contract basis. (rices of

mil# vary in case of selfcollection and contract basis. 4n mil#

center price of mil#s is paid at s. /.& per liter at '< ;ats. $f

the 6uality of fat is less than re6uired '< then price will be paid

less proportionately.

(ercentage of ;A in Various Einds of "il#.

)u5alo '< ;at

!ow @./

24518533 nestle operation management final

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