• Established by Henri Nestle in 1866.
• World largest food processing company with total sales of 88785 million Swiss F in
• 435 production factories operating in 35 countries.
• More than 15000 products are sold across 189 countries.
• Focus on CREATING SHARED VALUE across all channels
& Ice Cream
Confectionery Pet Care
Nestlé’s Typical Supply Chain
Group A Group B
Class 1 82 95
Class 2 76 88
Class 3 84 90
• First bullet point here
• Second bullet point here
• Third bullet point here
Sourcing & Procurement
• Nestle buys approximately 10 percent of the world's coffee
production, 10 percent of the cocoa crop, and 2 percent of the
milk and sugar.
• Also responsible for the supplier’s way of doing business
• Supply Chain Mapping programme for responsible sourcing
• To create value among suppliers, technical training is
provided to farmers level which in turn will improve quality.
Nestlé's Quality Management System
• Ensuring quality standard are met globally at each step in entire
• Starts with farms by addressing key global environmental and
• R&D network theme is “Quality by design”.
• Good Manufacturing Practices (GMP) to ensure quality and food
• ISO 9001:2005, ISO 22000:2005/ISO 22002-1, HACCP standards
verified by external bodies
Build trust by
Comply with food
No waste attitude
with Zero Defect
• Nestle transports more than 140000 tonnes of product from 1600 warehouses.
• Most of transportation and logistics is outsourced to third parties.
• Under VMI, Nestle distributor makes the replenishment decision.
• Nestle monitors the inventory level using Electronic Data Interchange.
• EDI provides the data related to inventory, pricing, and product movement etc.
• Distributor further connect with retailers to ensure delivery of products to end
IT Tools & Improvement Programs
• Achilles Supply chain mapping to tracing the source of materials
• EDI to facilitate instant and paperless purchase orders with suppliers.
• Also, ERP, SAP-SCM software are used to ensure seamless information flow across the globe.
• BARLOWORLD CAST Program for supply chain modelling and optimization.
• Project GLOBE: $2.4bn project aimed at standardizing the procurement, distribution
and sales management systems across globe.
• Ingenious: crowdsourcing initiative to facilitate communication about supply chain
challenges, problems and ideas across supply chain teams worldwide.
• Blue Number Program: started by United Nations in 2015. Giving farmers an online
presence, encourages them to improve their sustainability practices by enabling self-
assessment of voluntary standards, and connects them to buyers
Sourcing in India
• Target – responsible and traceable sourcing in all product categories
• Working alongside NGO partners, they map the supply chains, and conduct supplier
audits and farm assessments to ensure the procurement of 12 priority ingredients
• Example : milk
1.3 million kilograms of milk
110,000 farmers 2,815 milk collection centres
This leads to effective quality control and helps in garnering vendor
• 8 factories ( 4-north; 4-south)
• Internationally recognized Good Manufacturing Practices
(GMP) to ensure quality and food safety
• Improving quality through TQM
• Inventory : Continuous Review model using a complete
• WIP inventory is maintained low
• Ware house management systems (WMS) with Radio
Frequency (RF) technology
• During the last 15 years, for every tonne of production, the
Company has reduced the usage of energy by around 47%,
water usage by around 55%, greenhouse gases by around
57% and waste water by around 61%.
Promotion in Distribution Network
• Nestle Super Awards as motivation for channel partners
• Incentives for specific target achievements in form of additional margins and
Certificate of acknowledgement
• Dealership in Practice (DIP) training
– Nestle Quality System
– Good Warehousing Practices (GWP)
– Good Distribution Practices
Maintaining excellent relationships with vendors will help garner
support in times of difficulty
Carrying and forwarding agent
• Due to prioritizing on shared value it gained
immense support during the Maggi crisis
• enabled to speedily complete the withdrawal
without hampering the sale of the Company’s
• almost zero attrition amongst the business
partners during this time
• Realises the growing importance of e-retailing and
continues to successfully engage with the leading e-
• Established in 1892 in central Kolkata
• In FY2016, the company recorded a net margin of 9.6%,
compared to a net margin of 8.8% in FY2015.
Al Sallan Foods
Britannia and Associates
Britannia Dairy Holdings
“Your Company has been making focused efforts to balance cost, quality and aspiration
in its brand for consumer affordability. Cost effectiveness has been a key pillar of
your Company’s value creation strategy and this was achieved through scale in
operations, technology interventions and wastage reduction in the value chain along
with efficient management of working capital. Your Company will continue and
intensify the thrust on cost effectiveness in the coming year as well.”
• Some components are sourced locally.
– E.g.: Wheat, Sugar, Butter
• Some components are imported
– E.g.: Crude Palm Oil which gets refined here in India
• Sourcing is not integrated in the supply chain as we saw in case of Nestle.
Engaging with vendors will lead to better control on quality and definitely cost
advantages in long run
• Increasing control on capacity
– Acquisition of contract manufacturing unit
• Investments in greenfield projects in Tamil
• Trying to leverage synergies in cost with
• Consolidation of SKUs done to enhance
operational efficiency but also new product
lines are created
Distribution & Retailing
• Intensive distribution strategy
• Emphasis on expanding into rural market
• Trade channels
– General Trade : Standalone shops, retail shops
– Modern Trade : Big Bazar, Reliance Fresh, etc.
– Institutional Trade : Hotels, Airlines, IRCTC, etc.
• Use of SAP-APO solution to achieve better inventory
deployment across supply nodes
Supply chain metrics
Britannia (in INR) Nestle Global (in CHF) Nestle India(in INR)
2015-16 2014-15 2015-16 2014-15 2015-16 2014-15
Sales 8097.81 crores 7269.26 crores 88785 million 91612 million 8430.44 crores 10129.5 crores
Cost of goods sold 4622.33 crores 4316.84 crores 44730 million 47553 million
Average inventory 185.58 crores 166.38 crores 8662.5 million 8777 million
Average trade receivable 88.84 crores 62.34 crores 12855.5 million 12832.5 million
Average trade payable 637.33 crores 549.95 crores 17237.5 million 16754.5 million
Inventory days 14.65 days 8.35 days 70.69 days 67.38 days
Trade receivable days 4 days 3.13 days 52.85 days 51.12 days
Trade payable days 50.32 days 46.50 days 140.92 days 128.61 days
Cash conversion cycle -31.67 days -35.02 days -17.38 days -10.11 days -37.59 days -23.2 days
• Depending upon the management objective, supply chain activity system varies
• Nestle focuses on CSV while Britannia on Cost Effectiveness.
• Nestle engages closely for long term while Britannia’s relationships are short term
and transactional in nature.
• Britannia is planning to expand its distribution network in rural area under new
• Nestle already has strong and intensive distribution in India.