Supply Chain Management of Nestle Milkpak in Pakistan

1. OPERATIONS & SUPPLY
CHAIN MANAGEMENT

2. 2
Presented By:
Group Members
Group #6
Asad Rehman
Arafaat Ahmed
Mahnum Gillani
Shamsa Kanwal
Ali Tariq
Presented To:
Sir Kaleem Ullah

3. Introduction
• Nestlé in Pakistan is operating since 1988 under a
joint venture with Milk Pak ltd and took over
management in 1992. Nestle, The company has also
introduced products of daily utilization and use,
such as Nestle Milk, Nestle Slim Milk. Milk is the
most perishable and fast moving customer good.
The very first and initial requirement or feed for any
human being is milk. Milk is complete diet as it
contains every nutrient except iron.

4. Board Of Directors
Syed Yawar Ali
(Chairman)
Freda Yahan Duplan
(CEO)
Syed Saiful Islam
(Director)

5. Mission
• Optimize and consolidate resources and
processes for a low-cost but efficient.
• Develop and manage simplified and effective
supply network to achieve a high level of
service.
• Create a continuous improvement culture
driven by performance measures and
reward.

6. Vision
• “Nestle’s ambition is to achieve high level of
customer satisfaction through low cost,
highly efficient operations driven by value
creation and continuous improvement”

7. Principle
• Nestlé is based on the principle of
decentralization, which means each country
is responsible for the efficient running of its
business - including the recruitment of its
staff.

9. Nestle Products

10. SWOT Analysis
Strengths Weakness Opportunities Threats
Continuous
Improvements
Contaminated
Products
Transparency in
material sourcing
Poor quality of
milk and its
scarcity, instead of
using chemicals
Export Forcing Child Labor
For work
Growing ready-to-
drink
Increased
competition in the
beverage and food
industries
Research and
Development
teams are
innovative
Contaminated
Food Recalls
Accurate labelling
indicating of any
harmful products
Government
policies
Best Quality Uses Unethical
practices

11. Supply Chain

12. Over View of Supply Chain of
Milk Pack

15. Functions of Supply
Chain of Nestle
• Milk Collection System
• Inbound Logistic
• Nestle Factories
• Planning
• Manufacturing
• Milk Processing
• Factory Warehouse
• Outbound Logistics
• Distribution
• Distribution Process
• Distribution Channels

16. Milk Collection System
Steps:
A small farmer in rural Sheikhupura district milks his
buffalo twice a day and takes about 4 liters to one of
Nestlé's 500 Village Milk Collection Centres
At the Village Milk Collection Centre the farmer's milk is
poured into aluminum churns.
The Secondary Reception Station has a large electrically
powered cooling tank. A milk inspector measures the fat
content, the non-fat solids content, and the milk's acidity
At the Main Reception and Cooling Stations the milk is
poured into huge tanks and is thoroughly checked for
quality.
At the Sheikhupura and Kabirwala factories, the milk is
processed and packed into the familiar Nestlé cartons
you can find in your grocery store. It is checked for
quality thrice before being released for sale.

17. Inbound Logistic
• Inbound logistics used for milk collection
from different milk collection centre is
centrally owned by nestle Pakistan limited.
In Pakistan, logistics has always been a
problem especially for sensitive product like
milk in the hot weather. Initially the supplier
who supplied there milk

18. Nestle Factories
• Sheikhupura Factory
• Kabirwala Factory
• Islamabad factory

19. Planning
The successful execution of a planning
strategy demands that the analysis has been
performed with:
Confidence in the accuracy of the
information provided;
Clarity in the way the information is
presented;
Completeness of the information to be
considered.

20. Manufacturing
• Manufacturing is very important part of supply
chain. In our factories, the objective is to
maximize
• Eco-efficiency – that is to maximize the
production of goods
• Minimizing of consumption of resources
• Reduce wastage and emissions.
• The factories are equipped with complete
testing and monitoring facilities for wastage and
emission and ensure that these are in
accordance with environmental standards
(NEQS).

21. Milk Processing
Steps:
Milk Reception
Mixing
Heating and Cooling
Standardization
Pasteurization
UHT treatment
Packaging Materials

22. Factory Warehouse Of Nestle
Inventory Management in the warehouse
• The inventory is managed by software called
SAP (System Applications and Products).
Another method for managing the inventory is
“Manual Counts” that is done by the “inventory
clerk” on daily basis,
How the goods are ordered?
• The goods are ordered on the basis of LIFO
method. Orders are received from distributors
across the country.
• As for Nestle MilkPak, it has an expiry of
6months, so it needs to be delivered first.

23. Outbound Logistics
• Outbound logistics concerns finished milk
movement from factory to different
warehouses located in different cities.
• The logistics usually take 3 days to arrive at
Nestlé’s warehouses in Karachi from their
manufacturing factories at Lahore, kabirwala
and shaikhupura.

24. Objectives Of Nestle’s Distribution
Centers Or Warehouses
There are three main objectives of Nestlé’s
distribution centers.
• Meeting the targets
• Distribution at Right time
• At Right place

25. Distribution
• According to the distribution, Pakistan is
divided into three geographical zones and
then in further Regional Sales Offices.
North Zone:
• Islamabad
• Peshawar
• Jhelum
Central Zone:
•Lahore
•Faisalabad
•Gujranwala
•Multan
•Sahiwal
South Zone:
• Karachi
• Hyderabad
• Quetta
• Sukker

26. Distribution Process
The distributors have sales force to collect orders.
There are two methods for distribution of goods.
ORDER BOOKING
(Where sales force first books orders from the
shops or retailers and then delivers the goods)
SPOT SELLING
(Where sales force is given a van full of Nestle
goods to sell)

27. Distribution Channels
• Nestle employs different distributors for
different areas. Distributors employ their
own sales force and vans, which deliver Milk
Pak to the doorstep of the retailers.

28. Return Policy Of Nestle
Milkpak
• Nestle milkpak has an efficient return policy
for inventory in case of any defect.
• Every carton and item has assigned a certain
batch number.
• If any defect has found in item or carton
then the batch number of that item or
carton is noted and disposes the defected
item right on there.

29. Recommendations
Nestle Pakistan can establish their own dairy
farms near their factory
• a. Transportation cost that incurs from the
collection centre's to the factories will be
minimized.
• b. Less dependency upon local farmers.
• c. These dairy farms will act as Crisis
Management point in dynamic conditions as
we have recently faced in the form of worst
floods in all over Pakistan.

30. • Nestle can also establish a few of their own
retail outlets or franchises in major cities of
Pakistan to fill the demand and supply gap
more efficiently just like Millac (Pvt) Ltd.
Benefits.

31. Conclusion
• In the end, we would like to conclude that
Nestle Pakistan is the leader in FMCG
industry. Nestle keeps track of its goods by
maintaining its supply chain all over the
country. From Nestlé’s manufacturing
system to its Distribution channels,
everything is properly managed. They have a
strong relationship not only with their
customers but also with their suppliers,
distributors and retailers. They maintain a
proper Corporate Social Responsibility by
training their local farmers about milking
and feeding of their animals.