This document provides a summary of Nestle Waters Pakistan's distribution network and inventory management practices. It discusses the company's distribution design for both its HOD (Home and Office Delivery) and PET (polyethylene terephthalate) products. For HOD, the distribution network involves reverse logistics as bottles are returned. Factors like cost, facilities locations, and transportation costs influence the design. Inventory management involves tracking physical and digital inventory using SAP software. Differences in managing inventory for HOD versus PET are also outlined. The report provides insights from interviews on trends, controls, and Nestle's relationships with suppliers.
Nestlé is a multinational Swiss Company operating in Pakistan through its direct subsidiary Nestlé Pakistan. It has a variety of products including confectionery, cereals, dairy products, bottled water, and so on. Operating in 189 countries; today, Nestlé is one of the world’s most leading company. It aims at enhancing quality of life and contributing to a healthier future. This study analyses their Supply Chain Management of bottled water.
Nestlé is a multinational Swiss Company operating in Pakistan through its direct subsidiary Nestlé Pakistan. It has a variety of products including confectionery, cereals, dairy products, bottled water, and so on. Operating in 189 countries; today, Nestlé is one of the world’s most leading company. It aims at enhancing quality of life and contributing to a healthier future. This study analyses their Supply Chain Management of bottled water.
Channel & distribution system of nestle india ltdGopal Kumar
An In depth Study on Sales & Distribution Management practices at Nestle India Ltd. Finding were counter analysis,distribution system and order taking.Suggestion was to have an efficient distribution system according to the counters
Nestle Mineral Water-Operation & ProductionSalma Bashir
In the manufacturing of product what essential factors are required for production. Role of plant layout, plant location, employee, product design for a successful product...
Channel & distribution system of nestle india ltdGopal Kumar
An In depth Study on Sales & Distribution Management practices at Nestle India Ltd. Finding were counter analysis,distribution system and order taking.Suggestion was to have an efficient distribution system according to the counters
Nestle Mineral Water-Operation & ProductionSalma Bashir
In the manufacturing of product what essential factors are required for production. Role of plant layout, plant location, employee, product design for a successful product...
The role of manufacturing operations is the process of beginning a production process to a task of final assem-bly, with increased reliance on a significant number of supply chain participants who have differing objectives, perspectives and processes. However, an effective partnering between companies and their suppliers remains a key to lean supply chain management excel-lence. A lean supply chain offers competitive advantage to the suppliers, therefore the need for the Nigerian mar-ket to embrace the idea of lean based supply chain system. This paper examines the prospects of transforming from the traditional supply chain system to a lean supply chain system in Nigeria. But it is noted that the process could be tasking. It was observed that to succeed in lean supply chain management, organizations must be willing to share risks and rewards, and to build the underlying infrastructure to apply these tools. In this paper it was resounded that the rewards could be in-flaming as various benefits such as a stronger costumer, supplier relationship, increased competitive advantage with velocity of supply etc, applies. It is concluded that, to the Nigerian economy it will be increased cash flow from the costumers and increased market forces.
Supply Chain Prescriptions Improve Margins for Global Pharmaceutical CompanyAntuit
Antuit’s supply chain optimization models have helped the client achieve nearly US$2 million in cost savings, further enhancing the profitability of the company’s best selling product.
THE PRODUCT DESIGN OF WATER BOTTLED FOR ADULTS ACCORDING TO CUSTOMER NEEDS US...AM Publications
Manufacturing of ‘refilled’ water bottled is an effort to help active adults in fulfilling the daily drinking water needs, and reduce the use of un-eco-friendly disposable water bottled. In order to reduce the errors that occur in the production process and to ensure that the product design has ‘good’ selling power and ‘great’ quality value, accordingly necessary to execute the product development planning that focuses on customer satisfaction needs. The research aims to design the water bottled product that meets the customer needs using Quality Function Deployment (QFD) method. The results of QFD and House of Quality (HOQ) translate customer needs in the form of technical characteristics with the calculated value of absolute importance. Based on the QFD results, the level of importance of the costumer needs is the affordable price (11%), portable (10.9%), light weight (10.8%), easy to use (10.8%), safety (10.7%), thermostat (9.98%), large capacity (9.93%), simple design (9.11%), elegant appearance (9.02%), glass storage (7.69%). In addition, based on the overall QFD calculation results, the specification target in design and development of adult water bottled from the greatest technical importance value are: Bottle dimension (15.8%), bottle shape (13.6%), bottle material (12.8%), bottle cap / cover shape (9.71%), temperature control system (8.91%), bottle cap / cover mechanism system (7.47%), bottle color (6.12%), additional for storage space (5.12%).
How could the linkage between upstream and downstream value chain activities...musadoto
The firm's margin or profit then depends on its effectiveness in performing these activities
efficiently, so that the amount that the customer is willing to pay for the products exceeds the
cost of the activities in the value chain. It is in these activities that a firm has the opportunity to
generate superior value. A competitive advantage may be achieved by reconfiguring the value
chain to provide lower cost or better differentiation.
The value chain model is a useful analysis tool for defining a firm's core competencies and the activities in which it can pursue a competitive advantage in terms of Cost advantage(by better understanding costs and squeezing them out of the value-adding activities) and Differentiation( by focusing on those activities associated with core competencies and capabilities in order to perform them better than do competitors
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Best Practices in Sustainable Supply Chain Managementijtsrd
Supply chain sustainability refers to the impact a companys supply chain can have on promoting human rights, fair labor practices. There is a growing need to incorporate sustainable options into supply chain management. The growing attention to sustainability is changing the way companies do business. Whether driven by customers, company values or business opportunity, traditional priorities such as quality, efficiency and cost often compete for attention with issues such as working conditions and the environmental impact. Sustainable supply chains capture value chain opportunities and provide early adopters and process innovators with a significant competitive advantage. This study is based on learning the fundamental concepts of sustainable techniques in supply chain management. Ms. Shivani Chandrakant Bhandakkar | Dr. Mahesh Uday Mangaonkar "Best Practices in Sustainable Supply Chain Management" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-7 | Issue-2 , April 2023, URL: https://www.ijtsrd.com.com/papers/ijtsrd55060.pdf Paper URL: https://www.ijtsrd.com.com/management/operations-management/55060/best-practices-in-sustainable-supply-chain-management/ms-shivani-chandrakant-bhandakkar
The 21st century has proven to be as economically tumultuous as the two preceding centuries. Between a pandemic, wars, technological developments, progress in civil rights, and breakthroughs in science and medicine, the old order has been swept away, sometimes giving way to freer forms of governing and sometimes not. This period has seen multiple financial crises striking nations, regions, and—in the case of the Great Recession—the entire global economy. All financial crises share certain characteristics, but each tells its own unique story with its own unique lessons for the future. Due to these lessons we were able to experience a smoothened run of economy during the covid-19 syndemic that halted the logistics industry at once and created bottle-necks, hurdles and even complete shut-downs in other sectors while creating a need of overtime for front-line workers who are fighting against the virus on the forefront.
Cpec will galvanize industrailization and employment in pakistanAyesha Majid
China-Pakistan Economic Corridor is a framework of regional
connectivity. Through CPEC China aims to connect its eastern side through
Kashgar to the warm waters of Arabian Sea through Pakistan as it will be
shorter and safer for china to transport goods via this route than through the
china sea to the Arabian Peninsula and surrounding areas. CPEC will not only
benefit China and Pakistan but will have positive impact on Iran, Afghanistan,
India, Central Asian Republics, and the region. Through the enhancement of
geographical linkages having improved road, rail and air transportation system
with frequent and free exchanges of growth and people to people contact,
enhancing understanding through academic, cultural and regional knowledge
and culture, activity of higher volume of flow of trade and businesses, producing
and moving energy to have more optimal businesses and enhancement of cooperation by the win-win model will result in well connected, integrated region
of shared destiny, harmony and development.
Infrastructural issues being addressed in the energy sector of pakistanAyesha Majid
Pakistan is facing key challenges and issues in
the development of social sector mainly in
education, health, energy, security and the
environment due to lack of policy framework,
lack of governance, lack of technological
advancement, unstable strategies, lack of
leadership, poor project management, lack of
innovation and inefficient utilization of
resources. Pakistan’s world ranking as per GCI
is as follows infrastructure (121st)—particularly
for electricity (135th)—remains in a dire state.
Moreover, the country displays some of the
lowest education enrolment rates in the world
and basic education is poor (137th).
An overview of Mercantile Law in PakistanAyesha Majid
This overview of business laws of Pakistan is a very brief description of common forms of businesses adopted by private and public sector investors in Pakistan. An attempt has also been made to outline general requirements and regulatory regimes for each of these forms of businesses in Pakistan.
Microfinance service in pakistan over the decadeAyesha Majid
Pakistan has made considerable developments in Microfinance though a late starter in this
industry. The sector formally started to develop from 1999 although; semiformal sectors since the 1980s
are providing micro-credit in Pakistan. Including Non-Government Organizations (NGOs) and Rural
Support Programs (RSPs). Subsidies have played an important role in the growth and promotion of the
microfinance sector’s growth phase. Now the sector is in its maturity phase. MFBs funding structure
suggests lack of own-resource base through deposits mobilization. For long-term sustainability, Financial
Self Sufficiency is vitally important for microfinance institutions.
Presentation: Philip Morris (Pakistan) Limited: Business Strategy Ayesha Majid
Phillip Morris international is one of the leading cigarette manufacturing companies in the world
with the current share price of $73.78 (Philip Morris International). The organization is known
for the making of cigarettes, other tobacco products and nicotine-containing products in
countries outside of the United States. Its portfolio comprises of both global and local brands.
Philip Morris (Pakistan) Limited (“PMPKL”), is a public limited company and is listed on the
Pakistan Stock Exchange. PMPKL is affiliated with Philip Morris International (“PMI”), which
is listed on the New York Stock Exchange and has operational Headquarters in Lausanne and
Corporate Headquarters in New York. The company is one of the largest manufacturers of
cigarettes in Pakistan and contributes in many charitable projects where they source and
manufacture their tobacco. Some of these projects are provision of economic opportunities,
women empowerment and making education available. It currently has 739 employees in 15
offices with 1 cigarette factory and 1 tobacco leaf plant in Pakistan (PMI - Pakistan). Philip Morris Pakistan follows the business model of Profit Pyramid Model.
Philip Morris (Pakistan) Limited: Business Strategy Ayesha Majid
Phillip Morris international is one of the leading cigarette manufacturing companies in the world
with the current share price of $73.78 (Philip Morris International). The organization is known
for the making of cigarettes, other tobacco products and nicotine-containing products in
countries outside of the United States. Its portfolio comprises of both global and local brands.
Philip Morris (Pakistan) Limited (“PMPKL”), is a public limited company and is listed on the
Pakistan Stock Exchange. PMPKL is affiliated with Philip Morris International (“PMI”), which
is listed on the New York Stock Exchange and has operational Headquarters in Lausanne and
Corporate Headquarters in New York. The company is one of the largest manufacturers of
cigarettes in Pakistan and contributes in many charitable projects where they source and
manufacture their tobacco. Some of these projects are provision of economic opportunities,
women empowerment and making education available. It currently has 739 employees in 15
offices with 1 cigarette factory and 1 tobacco leaf plant in Pakistan (PMI - Pakistan). Philip Morris Pakistan follows the business model of Profit Pyramid Model.
Apple INC.: Managing a Global Supply ChainAyesha Majid
As part of her analysis of Apple’s stock, she wanted to look at the company’s supply chain to see if she could gain some insight into the pros and cons of Apple as a key holding in BXE’s fund. When. Apple Computer was founded on April 1, 1976, by Steve Jobs, Steve Wozniak and Mike Markkula to manufacture and distribute desktop computers.
While claiming to learn from the Chinese way of handling the crisis, there is no on-ground action in Pakistan that supports the claim. The Prime Minister denies national lock down despite the fact that without proper lock-down the virus spread trajectory can be rapid resulting in collapse of national health facilities which can bring the national economy to a halt.
Pakistan is an important maritime state in the Indian Ocean blessed with approximately 1,050 km long coastline and the Exclusive Economic Zone covering about 240,000 sq. The vast coastline of Pakistan naturally offers the option of deep sea water ports which means a much bigger volume of ship could be stationed along the coastline.
Factors Affecting Consumer Purchase Intention When Buying Toyota Corolla in P...Ayesha Majid
The economy of Pakistan and the consistent increase in dollar rates has taken a huge toll on the sales of the multinational manufacturer. Focus group analysis show that majority of the people preferred Honda over Toyota due to several reasons including near to none change in the designs of Toyota Corolla’s variants. Another factor was that Toyota was seen more as a car for the rural areas which was best suited for a rugged terrain. Although the general perception is that Toyota has better car suspension and fuel efficiency, people would still prefer Honda and other Japanese cars. Respondents said that advertisements played a crucial role but they do not compel the customer to buy a product like a car, there are other factors that are taken under consideration. Pakwheels and olx were the first two online platforms that they mentioned when asked about their go to online source. Family and friends advice played a major role in deciding which car to buy. According to the research conducted by our group through questionnaire, a regression was done and seen that the general perception that a reduction in prices will increase sales was not true because people usually associate low prices with low quality products. According to the regression, only advertisement and product have a significant result. All the variables are positively correlated with each other and less than one and positive indicating a formative relationship to the dependent variable. Branding has an insignificant positive relationship with purchase intention because consumers are only considering three competitors; Honda, Suzuki and Japanese cars.
Factors Affecting Consumer's Purchase Intention When Buying Toyota Corolla in...Ayesha Majid
Toyota is a name almost everyone is familiar with. It has been the market leader in automobiles specially hybrid and electric automobiles. It has been operational in Pakistan since 1989.
Toyota is a one of a kind Japanese multinational automotive manufacturer. As of September 2018, it was the sixth largest company in the world in terms of revenue. The economic conditions however have not been very favorable for the automotive industry. The economy of Pakistan and the consistent increase in dollar rates has taken a huge toll on the
sales of the multinational manufacturer. Focus group analysis show that majority of the people preferred Honda over Toyota due to several reasons including near to none change in the designs of Toyota Corolla’s variants.
Another factor was that Toyota was seen more as a car for the rural areas which was best suited for a rugged terrain. Although the general perception is that Toyota has better car suspension
and fuel efficiency, people would still prefer Honda and other Japanese cars. Respondents said that advertisements played a crucial role but they do not compel the customer to buy a product like a car, there are other factors that are taken under consideration. Pakwheels and olx were the first two online platforms that they mentioned when asked about their go to online source. Family and friends advice played a major role in deciding which car to buy. According to the research conducted by our group through questionnaire, a regression was done
and seen that the general perception that a reduction in prices will increase sales was not true because people usually associate low prices with low quality products. According to the regression, only advertisement and product have a significant result. All the variables are positively correlated with each other and less than one and positive indicating a formative relationship to the dependent variable. Branding has an insignificant positive relationship with purchase intention because consumers are only considering three competitors; Honda, Suzuki and Japanese cars.
The British Rule's lasting sway on lives of PakistanisAyesha Majid
The British rule still has a sway on us and we still unconsciously see them as our masters/ or a better race than us in terms of looks, language, traditions clothing style and hobbies. Though the Britishers only enforced their norms through law and schooling but its impact was long-lasting and deep-rooted amongst the young natives.the current architectural format of Pakistani buildings is inspired from British architecture as opposed to local designs and aesthetics specially regarding room aeration and lightening. Many of the botanical flowers and ferns that we see in Pakistan were introduced by Britishers which were than made part of the gardening aesthetics by the then influential Pakistanis to show-off their civilised family background.
Reko-Diq and Saindaq Reserves Similarities and DifferencesAyesha Majid
On Pakistan's side reserves of Copper and Gold were discovered in district Chagai at Saindak and Reko Diq. Experts say that the deposits of Gold at Saindak and Reko Diq are of finest quality.
The Basel III regulations are devised to mitigate damage to the economy caused by banks that take on excess risk. This third instalment of the Basel Accords was developed in response to the deficiencies in financial regulation revealed by the financial crisis of 2007–08. It is aimed at improving the banking sector's ability to deal with financial stress, improve risk management, and strengthen the banks' transparency. It is part of the continuous effort to enhance the banking regulatory framework and builds on the Basel I and Basel II documents.
Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s DholeraAvirahi City Dholera
The Tata Group, a titan of Indian industry, is making waves with its advanced talks with Taiwanese chipmakers Powerchip Semiconductor Manufacturing Corporation (PSMC) and UMC Group. The goal? Establishing a cutting-edge semiconductor fabrication unit (fab) in Dholera, Gujarat. This isn’t just any project; it’s a potential game changer for India’s chipmaking aspirations and a boon for investors seeking promising residential projects in dholera sir.
Visit : https://www.avirahi.com/blog/tata-group-dials-taiwan-for-its-chipmaking-ambition-in-gujarats-dholera/
Recruiting in the Digital Age: A Social Media MasterclassLuanWise
In this masterclass, presented at the Global HR Summit on 5th June 2024, Luan Wise explored the essential features of social media platforms that support talent acquisition, including LinkedIn, Facebook, Instagram, X (formerly Twitter) and TikTok.
Discover the innovative and creative projects that highlight my journey throu...dylandmeas
Discover the innovative and creative projects that highlight my journey through Full Sail University. Below, you’ll find a collection of my work showcasing my skills and expertise in digital marketing, event planning, and media production.
buy old yahoo accounts buy yahoo accountsSusan Laney
As a business owner, I understand the importance of having a strong online presence and leveraging various digital platforms to reach and engage with your target audience. One often overlooked yet highly valuable asset in this regard is the humble Yahoo account. While many may perceive Yahoo as a relic of the past, the truth is that these accounts still hold immense potential for businesses of all sizes.
Personal Brand Statement:
As an Army veteran dedicated to lifelong learning, I bring a disciplined, strategic mindset to my pursuits. I am constantly expanding my knowledge to innovate and lead effectively. My journey is driven by a commitment to excellence, and to make a meaningful impact in the world.
FIA officials brutally tortured innocent and snatched 200 Bitcoins of worth 4...jamalseoexpert1978
Farman Ayaz Khattak and Ehtesham Matloob are government officials in CTW Counter terrorism wing Islamabad, in Federal Investigation Agency FIA Headquarters. CTW and FIA kidnapped crypto currency owner from Islamabad and snatched 200 Bitcoins those worth of 4 billion rupees in Pakistan currency. There is not Cryptocurrency Regulations in Pakistan & CTW is official dacoit and stealing digital assets from the innocent crypto holders and making fake cases of terrorism to keep them silent.
LA HUG - Video Testimonials with Chynna Morgan - June 2024Lital Barkan
Have you ever heard that user-generated content or video testimonials can take your brand to the next level? We will explore how you can effectively use video testimonials to leverage and boost your sales, content strategy, and increase your CRM data.🤯
We will dig deeper into:
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Premium MEAN Stack Development Solutions for Modern BusinessesSynapseIndia
Stay ahead of the curve with our premium MEAN Stack Development Solutions. Our expert developers utilize MongoDB, Express.js, AngularJS, and Node.js to create modern and responsive web applications. Trust us for cutting-edge solutions that drive your business growth and success.
Know more: https://www.synapseindia.com/technology/mean-stack-development-company.html
Company Valuation webinar series - Tuesday, 4 June 2024FelixPerez547899
This session provided an update as to the latest valuation data in the UK and then delved into a discussion on the upcoming election and the impacts on valuation. We finished, as always with a Q&A
3.0 Project 2_ Developing My Brand Identity Kit.pptxtanyjahb
A personal brand exploration presentation summarizes an individual's unique qualities and goals, covering strengths, values, passions, and target audience. It helps individuals understand what makes them stand out, their desired image, and how they aim to achieve it.
Top mailing list providers in the USA.pptxJeremyPeirce1
Discover the top mailing list providers in the USA, offering targeted lists, segmentation, and analytics to optimize your marketing campaigns and drive engagement.
At Techbox Square, in Singapore, we're not just creative web designers and developers, we're the driving force behind your brand identity. Contact us today.
1. LAHORE SCHOOL OF ECONOMICS
SUPPLY CHAIN MANAGEMENT
FINAL PROJECT REPORT
BSc SECTION: C GROUP NUMBER: 6
GROUP NAMES: Aisha Arshad, Ayesha Majid, Mahnoor Babar, and Zainab Mahmood
SUBMITTED TO: MS. MAHVESH MAHMUD
INDUSTRY/ORGANIZATION NAME: FMCG/ NESTLÉ WATERS
TOPIC: DISTRIBUTION & INVENTORY MANAGEMENT
DATE OF SUBMISSION: 26/05/2018
Declaration:
This is report is solely based on the original effort of the group and has not been plagiarized.
Signature(s):________________________________________________________________
2. Nestlé Waters Pakistan 1
Introduction
Nestlé is a multinational Swiss Company operating in Pakistan through its direct
subsidiary Nestlé Pakistan. It has a variety of products including confectionary, cereals, dairy
products, bottled water, and so on. Operating in 189 countries; today, Nestlé is one of the
world’s most leading company. It aims at enhancing quality of life and contributing to a
healthier future.
Operating since 1988, Nestlé Pakistan through a joint venture with MilkPak Ltd. later
took control over management in 1992. It is the leading Food and Beverages Company in
Pakistan mainly aiming at Nutrition, Health and Wellness. One of the major brands is Nestlé
Pure Life that provides safe and pure drinking water. It launched in 1998 being successful
globally. Today, it plays their role as a leading player in the bottled water market globally as
well as in Pakistan. Nestlé Pure Life is available in two basic categories, PET and HOD (Home
and Office Delivery), with the following formats:
0.33 Liter Fit Bottle
0.33 Liter Hero Bottle
0.5 Liter
1.5 Liter
5 Liter
12 Liter (Karachi only)
18.9 Liter (Home and Office Delivery)
This report is focusing on the distribution network in supply chain and inventory management.
3. Nestlé Waters Pakistan 2
Distribution Network in Supply Chain
Distribution network is the flowchart of a company indicating all possible routes for
flow of inventory, information and other resources to and from different levels of supply chain
both physically and virtually. However, our study only focuses on the physical flow across the
distribution network. Supply chain management has two part planning and execution.
Distribution Network Designing is the core component of the planning stage. It covers all
aspects of supply chain from planning of inventory warehousing to inventory flow across all
levels of the supply chain. At Nestlé more than 100 different control tools are applied on the
product from water source to final bottle packaging, in order to ensure the perfect quality of
the final product (nestle.pk/…/ nestle-pure-life-detail). Thus the distribution network also
covers quality check-points along with logistics. Distribution is half of supply chain, as
mentioned by Mr. Hashim.
Factors influencing Distribution Network
Distribution network is designed on the core base of meeting the customer needs and
the cost associated with servicing them. The main factors which need to be catered by the
companies while establishing their distribution network on these two dimensions are namely,
response time, product variety, product availability in markets, customer experience, order
visibility and product or product part returnability. This translates into warehousing and
transportation expenses, information management cost and facilities costs to the company.
According to the interviewer since their customer is quality conscious and for Nestlé
customer’s value comes first the firm prioritizes quality over cost for their SKU’s. Thus they
deliver value to the customers on ground of product freshness, easy access to the products and
minimal cost to the customer. “Nestlé itself never compromises on its customers and quality”
(Refer to Appendix III, Q2). At Nestlé Waters customers also act as a key factor in distribution
network as the design has three forms based on its customers, Retail Storage with Consumer
Pickup for regular PET consumers, Distributor Storage with Delivery for its corporate PET
customers like Metro, Alfatah etc. and lastly manufacturer storage with direct delivery to
customers for its HOD products.
Designing Distribution Network at Nestlé Waters
4. Nestlé Waters Pakistan 3
Nestlé Waters for its distribution strategy prioritizes lead time, constant availability in
markets, product quality and deliverance of premium experience to its clients (Refer to
Appendix III, Q3). As drinking water is a low innovative product there is not much variety in
the product range nor constant innovation hence, for them, lead time is more about efficient
product replenishment than successful launch of new products.
In designing their distribution route the key factor is length of distance from one point
to another and ultimately from start point to end point as the firm aims at optimizing cost and
time-to-market in its distribution phase. In order to maximize value for its customers while
geographically covering the maximum points of sale across the country.
Due to the dynamics of the categories of products of Nestlé Waters their distribution
design is not based on the product type but on the category of the product (drinking water). The
distinguishing point amongst the two categories in network design is returnablilty factor of the
product.
Since their PET Bottles (polyethylene terephthalate) are disposable bottles they never
come back to Nestlé. Though customers can recycle it. The PET category network design has
one-way product flow to the end consumer, hence is usually done through Nestlé distributors
instead of the company itself, apart from major PET category clients like Metro & Hyperstar.
For the second category; HOD (Home and Office Delivery) reverse logistics is used that is two
way flow of product, to and from the end consumer. For this category the company delivers
the product itself as the container needs to come back to the factory floor. Hence offers doorstep
delivery to its HOD consumers. The HOD category has two SKU’s of Nestlé Pure Life 12 &
18.9 liter bottles.
Design Options for a Distribution Network
Nestlé Waters is present in most distribution channels, including traditional trade,
offices, restaurant, modern trade and homes. The distribution network is designed based on the
HOD and PET rather than on the stock keeping units (SKUs). The distribution network is
basically based on the cost benefit analysis under each category (Refer to Appendix III, Q4).
The distribution network throughout the country is designed in such a way that it ensures that
Nestlé water is easily available to consumers. The company maintains strong relationship with
its customers. The distribution design is channel based, cost based and demand based. Channel
based is where the product is required, whether in the offices, shops, houses etc. The cost varies
5. Nestlé Waters Pakistan 4
under each category as it is designed according. Demand based is when the demand varies
under each SKU’s, for example, in restaurants there is no demand for 5 liter Nestlé water bottle.
The distribution network in Lahore under HOD and PET is same because of the distance.
Distribution Design Under PET
The final product flows through intermediary under PET as the final product first
reaches the distributor and then to the retailer. Under PET, restaurants are also the target
market. The restaurants demand 1.5 liter water bottle and 0.5 litter water bottle (Refer to
Appendix III, Q4). In Quetta, there is only one category that Is PET. (Refer to Appendix III,
Q5).
Distribution Design Under HOD
The distribution design varies under HOD, as the product flows from the manufacturer
to the distributer and the final retailer that includes only office and shops (Refer to Appendix
III, Q4). The distribution design varies primarily due to the cost component. HOD is the reverse
logistics which means that the water bottle returns back to the company so involves incurs extra
cost. The long distance routes are not suited under this category, for this reason the factories
are located near to the final consumers. In the interview, it was discovered that there is only
HOD requirement in Islamabad so plant line is also built. If the water is delivered and
transported through the factory that is situated in Sheikhpura, the delivery cost will be higher
and it would be very expensive for the company to operate under this category. HOD is
primarily cost driven because of return ability factor that is associated with it. In Karachi only,
there is direct selling to the final customers (Refer to Appendix III, Q5).
Direct Selling to the Customers
They only sell directly to its key customers and strong relationship is maintained with
them. The key customer includes Nestlé water are Metro, Macro and Hyper star. The company
value its key customer because they are their global customers and they purchase quantities are
also greater globally and huge amount of revenue is generated from them (Refer to Appendix
III, Q4). Only in Karachi, there is no third party distribution.
Facilities and Distribution Network
The distribution network is designed and altered according to the facilities in the supply
chain. The facilities under HOD are near to the customers because of the cost factor. Location
6. Nestlé Waters Pakistan 5
of factories are planned and located near to the customers to avoid long distance routes.
Locating near to customers ensures freshness, availability and minimizes cost. Facilities
decision has an impact on the transportation and delivery costs (Refer to Appendix III, Q6).
Transportation and Distribution Network
Transportation costs are directly proportional to the location of the factories. If the
water is transported from Karachi to Islamabad, the delivery and transportation cost would be
higher. In the long distance routes product might get damaged and affects the quality (Refer to
Appendix III, Q7). If there is no HOD production line in Islamabad, it would be expensive for
company to meet the demand through transportation form other cities.
Inventory Management
Inventory Management includes process that assure availability of products while
lowering investment costs. There are mainly two types of inventory, physical that includes
tangible materials needed to make the final product like caps, bottles, and logical inventory that
includes databases, use of SAP in this case.
Factors Affecting Inventory Management
It is firstly important to learn that keeping low inventory is the ultimate goal as
inventory is money, and too much or idle inventory is like blocked money. Had this money
been invested elsewhere, one could make profit out of it (Refer to Appendix III, Q18).
According to the interview, forecasting customer demands, studying the market dynamics,
looking at past trends is very important. They also place importance to planning since preparing
for the demand to be catered and ensuring required funds must be there. If this is not done it
leads to another important factor that is, cost. There are three types of cost; raw material cost,
processing cost, and inventory holding cost and one has to make sure these costs do not increase
when too much inventory is tied up (Refer to Appendix III, Q18).
Trends in Inventory Control
It was learnt that Vendor Managed Inventory (VMI) and Customer Managed Inventory
(CMI) were two major phenomenon being used at Nestlé Waters. In VMI, the vendor keeps a
check on the raw material and replenishes inventory as soon as it went below the set level. In
case of bulk even, the vendor takes care of the inventory level, production or purchases. While
in the case of CMI, they keep a check on the inventory in the case of HOD and make sure that
7. Nestlé Waters Pakistan 6
the required stock level and quota system set is being followed. Eventhough sufficient stock is
kept but if stock levels are about to drop, stock is replenished. In the case of their distribution
centers, Nestlé Waters keeps a check on it and no one influences this control, (Refer to
Appendix III, Q9).
Inventory Management Control
Inventory management is surely an incumbent part of a company. At Nestlé Waters,
SAP is engraved within the companies’ operations to ensure complete control and well-
integrated processes. SAP can be customized to a particular customer’s needs. At Nestlé
Waters, SAP has been designed a very advanced way. Rather than tallying inventory 2 times
in a week, weekly or on a monthly basis, they have a daily physical check where the inventory
is counted in the morning. High emphasis is put upon tallying physical and logical inventory
(Refer to Appendix III, Q10). It has been designed in their own way to make sure almost
everyone is using SAP at Nestlé Waters, just that every person carrying a different activity,
like placing orders, how much load to transfer in a truck, and so on (Refer to Appendix III,
Q12).
According to Mr. Hashim, the company used to have local software before the use of
SAP. Adding on, Mr. Ali mentioned they worked more on Excel which was extremely time-
consuming until 2004 when SAP was adopted that saved time and was user-friendly. This
change occurred as automation, controls like traceabiliy, maintaining files, communication,
and information flow have all grown stronger and were not possible with the local software
(Refer to Appendix III, Q14). An example of better control being, if for instance, stock has to
be picked, and 500 cases are reported in SAP, while 50 are to be delivered, SAP will record
450 in it. Now if 100 are delivered, SAP will still have 450 in its system but physically 100
will not be there. Hence, tallying physical and logical inventory is extremely important to
Nestlé Waters.
Not only this, but ease and guidance is also provided by SAP (Refer to Appendix III,
Q11). Mr. Ali mentioned that every palette has an identification number, and SAP knows all
these identification numbers. Adding on he told if they are 1000 palettes from which 50 are to
be delivered and the physical operator delivers 55 instead, SAP will have 50 while 55 have
been delivered, thus a difference of 5 will exist. When the delivery is to be picked, SAP will
tell where the particular delivery is and when it will see that 5 is missing it will give a message
of “Does not exist”. The person picking up the delivery would know that SAP would not let
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this happen as those extra 5 are missing. It knows where every palette comes from, where it is
delivered, its location, and so on. Thus, this system also serves better control in the form of
traceability. This is especially helpful in the case of HOD as the concept of reverse logistics
apply and Nestlé Waters needs to know how many bottles are located around Pakistan. Every
palette and location had a barcode but with time there was less use of barcodes but SAP
knowing all identification numbers of all units (Refer to Appendix III, Q11).
Differences in HOD and PET
As mentioned earlier Nestlé has two main categories/businesses in their Pure Life
brand, namely HOD and PET. There are different SKU’s that come under these categories. So,
Nestlé has to cater to both these categories differently, and has to manage inventory differently
for both. HOD is very much different from PET because its bottles are returned to Nestlé so
there is a two way cost incurred in its case, whereas in case of PET once the bottle is out of the
factory it is gone and Nestlé is no longer responsible for it. In HOD’s case Nestlé has to cater
for its reverse logistics as well meaning, that is the inbound inventory for Nestlé. For this Nestlé
looks at the amount of bottles present in the market, how many are there nationwide, how many
are with the distributors and how many are with them. In this way they can analyze how many
more they might need to produce and the inventory they inventory they would need buy for
that. HOD bottles are also very expensive and its production cost is extremely high as compared
to PET. For that reason Nestlé has to make sure that it is not stocking on HOD’s inventory and
is keeping its inventory as low as possible. They also make sure that they only produce that
amount which is needed in that moment.
Inventory management in PET is very different from HOD. This is because it is much
cheaper to produce so Nestlé might stock up on it in advance to fulfill the demand. Also, as
mentioned earlier it is not returned to Nestlé so once the bottles are handed over to the
distributers and once they go out of the factory they are gone and Nestlé is no longer responsible
for it or its management. So, there is a great differences in their costs and also in their logistics.
(Refer to Appendix III, Q16)
Nestlé and its Suppliers
Nestlé has very good relationships with its suppliers as it makes sure that it creates a
win win situation for both parties i.e. it makes sure that whatever is agreed upon benefits Nestlé
as well as the suppliers. This is because Nestlé says that its suppliers are its partners and in
9. Nestlé Waters Pakistan 8
order to succeed both have to walk side by side. As Nestlé is an ethically driven company it
also makes sure that it invests in its suppliers for their development especially when they are
local small time suppliers. This helps such suppliers to grow and in turn benefits Nestlé as well.
Nestlé did this for their bottle suppliers SPEL and Mehran as well. As Nestlé is such a big
company many suppliers, especially local suppliers are always very keen to work with Nestlé,
so they also make sure to maintain good relations with them. Such suppliers also take some
measures to make sure they maintain the good relations with Nestlé and also gain more business
from them, these measures include them willing to keep inventory with them for, for example
20 days so that Nestlé does not have to worry about it.
To make sure that Nestlé manages its inventory smoothly and without any hindrances,
it makes sure that it picks such suppliers that are close to it and which provide lesser lead time,
best quality products, at best rates. Overall, Nestlé works with the best suppliers as it cannot
afford a supplier that will fulfill the order once but will not be able to do so the next time
around. Nestlé does not compromise on its quality, availability, or freshness of product. (Refer
to Appendix III, Q15)
Also, Nestlé and its suppliers work together as partners to make sure that the demand
is met and fluctuations in the demand is forecasted beforehand so no mistakes are made. Nestlé
has warehouses in which inventory is kept, so in case of off season, which is January and
February when demand is low Nestlé covers for 40 days of inventory and in those days the
warehouse is full. In peak season that is May and June the demand is very high and the suppliers
also know that so they also prepare for it in advance and make sure that raw material is ready
for Nestlé to use so the demand is met. It does vary from situation to situation though, in some
cases the inventory is carried by the suppliers and sometimes Nestlé carries all of its own
inventory. Nestlé has a procurement department that makes a sourcing strategy for each of its
materials. (Refer to Appendix III, Q17)
Nestle, Efficient or Responsive?
Nestlé makes sure that it focuses on both responsiveness and efficiency. It believes that
their number one priority is their customer, so they need to keep the customer happy and meet
the demand. They cannot afford to for example lose their customer to another brand just
because their product was not available in a shop. So, to maintain the product’s quality and
make it easily available for the customer is Nestlé main focus. To achieve this responsiveness
is extremely important in their operations. Nestlé is in business because of its customers and it
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can only talk about maintaining efficiency as long as it is in business. Efficiency is also very
important for Nestlé in their different processes. They focus on making themselves more
efficient while maintaining responsiveness. If they had to choose they would go for
responsiveness over efficiency. (Refer to Appendix III, Q20)
Conclusion
It has been learnt that there are various factors that influence distribution network and
inventory management where transportation, costs, facilities, information influenced the
former while costs, planning, forecasting influence the latter. Both of these two being
extremely important. As we know now that all planning is done based on the two categories of
Nestlé Waters; HOD and PET. The distribution design and some system controls for inventory
management varies for the two in some aspects while remaining the same on others like HOD
is the one being delivered to customers making its distribution design different from that of
PET. The difference also exists that HOD follows a reverse logistic concept while PET are
never returned. On the other hand, inventory management has been well-integrated amongst
the organization with the help and use of VMI, CMI and SAP. It has an outstanding relation
with its suppliers and key customers that are the major customers that Nestlé Waters cannot
afford to lose. As Nestlé’s number one priority is its customers so it focuses on responsiveness
as it helps it achieve its goal of meeting the demand while maintaining quality and ease of
availability of product to the customers. All in all value provided to the customers and quality
are the two most important factors that Nestlé Waters would never compromise on as the trust
in the brand is based on quality and according to Nestlé Waters customer is the BOSS!