nestle coffee supply chain case study

An Insight into Nestle Supply Chain Strategy

Are you curious about the secrets of Nestle’s supply chain strategy? Do you want to know how the world’s largest food and beverage company has successfully managed its supply chain for years? This article will provide an insight into Nestle’s supply chain strategy and how it has helped shape the company into a global powerhouse. Read on to find out more about Nestle’s unique supply chain strategy and how it has enabled them to remain competitive in the ever-changing business environment.

Table of Contents

Overview of Nestle Supply Chain Strategy

Nestle is one of the largest food and beverage companies in the world. The company has adopted a comprehensive supply chain strategy as part of its business strategy. This strategy covers all areas of its operations, from sourcing raw materials to delivering finished products to customers. Nestle’s supply chain strategy is focused on ensuring quality, efficiency, responsiveness, and sustainability.

Nestle’s supply chain strategy begins with sourcing raw materials and ingredients. The company works with suppliers to ensure that its products and components are of the highest quality and are produced sustainably. The company also ensures that its suppliers comply with international standards and regulations.

Once the raw materials have been sourced, Nestle’s supply chain strategy focuses on ensuring that the finished products are produced efficiently and delivered to customers on time. The company has invested in modern manufacturing technologies and integrated supply chain systems designed to optimize operations and reduce costs to achieve this.

Finally, the company’s supply chain strategy is focused on sustainability. Nestle uses renewable energy, sustainable production, and recycling to lessen its environmental effect. The company assures its suppliers follow ethical labor norms and socially responsible supply chains.

In the previous blogs, we looked into the supply chains of famous and leading companies, which you can read about each of them in the section below.

The Four Pillars of Nestle’s Supply Chain Strategy

Nestle’s supply chain strategy is based on four key pillars: quality, efficiency, responsiveness, and sustainability.

Quality is a key focus for Nestle, and the company works to ensure that the products and ingredients it sources from suppliers are of the highest quality. The company also works with its suppliers to ensure that they are compliant with international standards and regulations.

Nestle’s supply chain strategy focuses on ensuring its operations are efficient and cost-effective. The company has invested in modern manufacturing technologies and integrated supply chain systems to optimize operations and reduce costs.

Responsiveness

Nestle’s supply chain strategy is also focused on ensuring that its products are delivered to customers in a timely manner. The company works to ensure that its supply chain is agile and responsive, so that it can quickly and efficiently adapt to changing customer needs.

Sustainability

Nestle is committed to reducing its environmental impact and ensuring that its supply chain is socially responsible. The company works to reduce its environmental impact through the use of renewable energy sources, the adoption of sustainable production practices, and the implementation of waste reduction and recycling initiatives. It also works to ensure that its suppliers follow ethical labor practices.

Nestlé was one of the first companies to make a commitment to deforestation-free supply chains. At the time we knew it would be challenging, but we felt it was a moral imperative – for our environment, for the people, and for our planet at large. Magdi Batato Executive Vice President, Head of Operations, Nestlé

Advantages of Nestle Supply Chain Strategy

The advantages of Nestle’s supply chain strategy are numerous. By investing in modern manufacturing technologies and integrated supply chain systems, Nestle is able to optimize its operations and reduce costs. This helps to ensure that the company is able to remain competitive in the market.

Nestle’s focus on quality and sustainability also helps to ensure that the company is able to meet customer needs and expectations. The company’s commitment to ethical labor practices and environmental responsibility helps to build trust with customers, which in turn leads to loyalty and repeat business.

Finally, Nestle’s supply chain strategy helps to ensure that the company is able to deliver products to customers in a timely and efficient manner. This helps to reduce costs and ensure customer satisfaction.

Challenges of Nestle Supply Chain Strategy

Despite the advantages of Nestle’s supply chain strategy, there are still some challenges that the company needs to address. One of the biggest challenges is the need to ensure that the company’s supply chain is agile and responsive. This means that Nestle needs to be able to quickly and efficiently adapt to changing customer needs.

Furthermore, as the company expands its operations, it may become difficult to maintain the high standards of quality and sustainability that it has set for itself. This means that Nestle needs to be vigilant in monitoring its supply chain and ensuring that its suppliers are compliant with international standards and regulations.

Finally, as the company continues to expand its supply chain, it needs to ensure that its operations remain efficient and cost-effective. This can be a challenge, as Nestle needs to balance the need for quality and efficiency with the need to remain competitive in the market.

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What is Nestle’s Supply Chain Strategy?

Nestle’s Supply Chain Strategy focuses on creating a competitive advantage through innovation, cost efficiency, customer centricity, and sustainability. It strives to ensure that its supply chain is as efficient and responsive as possible, while still meeting the needs of its customers.

How does Nestle manage its global supply chain?

Nestle has a global network of suppliers, and works with them to ensure that its supply chain is as efficient and cost-effective as possible. It also works with its partners to ensure that its products meet the highest standards of quality.

What are Nestle’s key objectives for its Supply Chain Strategy?

Nestle’s key objectives for its Supply Chain Strategy include increasing efficiency, reducing costs, improving customer service, and driving sustainability.

What are Nestle’s strategies for staying competitive in the global market?

Nestle is committed to staying competitive in the global market by focusing on innovation, cost efficiency, customer centricity, and sustainability. It also works to ensure that its supply chain is as efficient and responsive as possible.

How does Nestle use technology to enhance its Supply Chain Strategy?

Nestle utilizes digital tools and technologies to streamline and optimize its supply chain processes. These include advanced analytics, predictive analytics, machine learning, artificial intelligence , Internet of Things (IoT) , and blockchain .

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Case Study: A Deep Dive Into Nestlé’s Supply Chain

By michael wilson.

When it comes to the food and beverage market, Nestlé dominates over the competition as the world's biggest company of its kind. Established in 1866 by Swiss pharmacist, Henri Nestlé, the organization originally specialized in infant cereal. From these humble beginnings, Nestlé...

1. Profiling the Consumer

To create products that appeal to consumers, Nestlé believes in a strategy they call "Brand Building the Nestlé Way (BBNW)". One of BBNW's six founding principles is focused on profiling their brand's consumers. Indeed, Nestlé is very engaged with their customers, specifically over online venues. The company goes far beyond market research to reach their clientele, as they strive to see who their demographic is and what makes them tick. As a company, Nestlé excels at interacting with real-life consumers on social media. For instance, their 850 Facebook pages for various brands carry a total of 210 million fans. It's an inspiring way to quickly and efficiently gather customer responses. To receive a high response level, the company posts around 1,500 new items per day across their online platforms! When it comes to supply chain analysis, having an intimate knowledge of what your customers want from your products is imperative in running a successful operation.

2. Focusing on Responsible Sourcing

During the supply chain analysis of Nestlé, it's immediately clear that responsible sourcing is a huge concern for the company. With 700,000 farmers working for Nestlé, the Swiss company puts a strong emphasis on acting respectfully toward the many families and agricultural communities who are dependent upon them. Consequently, Nestlé goes to great lengths to track their food product's origins, thus ensuring that they're compiling with ethical practices. This honorable attitude gains Nestlé loyalty from both their suppliers and their consumers.

3. Acquisition for Better Product Diversity

With over 2,000 unique brands and 10,000 products on the market, Nestlé certainly has its fingers in a lot of pies. Much of the company's supply chain relies on acquisition, as they're consistently bringing new companies into their fold. This wave of buyouts happened after the Berlin Wall fell in 1989, opening up the European and Chinese markets.

Nestlé's first major acquisition was Ralston Purina Company, a popular pet food maker, in 2001. They followed this purchase up with Dreyer's, Movenpick, Jenny Craig, and Gerber over the following years. Nestlé commitment to investing in other companies allows them to continuously put new, exciting products on the market. Plus, by buying former competitors, they're eliminating any threats and gaining access to these companies' suppliers in the process.

4. Transforming Into a Zero-Waste Company

After a media backlash in 2010 against Nestlé's environmental practices, the company moved quickly to revamp its policies. Their first change was implementing a "no deforestation" policy, in response to Greenpeace's allegations over Nestlé's methods for gathering palm oil. The company's current priority is to eliminate waste in their upstream supply chain. By 2020, Nestlé has committed to becoming fully zero-waste-to-landfill , according to Pascal Gréverath, Nestlé's Head of Environmental Sustainability. Through these practices, the company is invested in improving its supply chain's efficiency. It's clear that Nestlé will save itself money in the long run, since no amount of food will be wasted.

Overall, supply chain analysis shows that Nestlé's business model has a lot to offer all companies. Whether you're a fledgling start-up or a long-standing cooperation, this Swiss conglomerate displays the true importance of market research, responsible sourcing, product diversity, and going waste-free. After all, Nestlé didn't reach a $247 billion net worth by accident.

About Michael Wilson

Michael Wilson is AFFLINK'S Vice President of Marketing and Communications. He has been with the organization since 2005 and provides strategic leadership for the entire supply chain team. In his free time, Michael enjoys working with the Wounded Warrior Project, fishing, and improving his cooking skills.

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How Nestlé Became The World's Largest Food Company

Table of contents.

Let’s trace the origins of Nestlé and its exceptional legacy of 150+ years that have led it to become a company with:

Market cap of $326.07 Billion as of Feb 9, 2023
Over 2000 brands worldwide
Monumental presence in 186 countries
A workforce of nearly 276,000 employees
Revenue of CHF 87.1 billion in 2021
354 factories in 79 countries

Grab a Kit Kat or sit back with a cup of freshly brewed Nescafe, and let’s go back to 1866 , the year it all began.

A Merger Lays The Foundation Of Nestlé’s Success

The story of Nestlé begins with Henri Nestlé of Vevey, a namesake of the company, and unsurprisingly, its founder. But it is also linked with two brothers, Charles and George Page, who were located far away in America at the time.

While the world of business was not a global village back then, perhaps it was fate, the love for milk, or sheer successful marketing strategy that brought the businesses of the two together to form the Nestlé we see today.

The creation of Anglo-Swiss Condensed Milk Company

Charles Page was a U.S. consul who visited Switzerland and became intrigued by its Swiss cows and beautiful meadows. The country had been a primary milk production center since the 19th century due to its available resources of high-quality cows and attracted people with a passion for milk production from far and wide.

Page was one such individual with a different aspiration: he wanted to create condensed milk. Easy to store and transport, condensed milk, according to him, was the next big thing in the entrepreneurial world.

Therefore, with his brother George Page, he created the Anglo-Swiss Condensed Milk Company and opened the doors of the first-ever condensed milk factory in Switzerland, in the town of Cham, in 1866.

Henri experiments

Meanwhile, Henri Nestlé was a local pharmacist in Vevey who loved experimenting with anything and everything he could get his hands on. This meant creating incredible food fusions was right up his alley.

During the 1860s, infant mortality rates remained a grave problem in Switzerland. As a man with 13 siblings, Henri understood the woes of infants. Yet, the turning point came when he saw that premature babies faced difficulty in consuming breast milk.

Invoking his creativity, he combined available resources and his scientific knowledge to produce “ Farine Lactee ” in 1867, an infant formula made with cow’s milk, wheat flour, and sugar.

This proved to be a breakthrough, and soon, sales increased to 1000+ cans in 1871 and more than 2000 in 1873. Two years later, Nestlé’s products could be found worldwide, including but not limited to Indonesia, Egypt, and the U.S.

As sales increased exponentially, Henri gave his company a logo symbolizing his family name that meant “Little Nest”. The logo, therefore, contained a bird’s nest.

Today, the logo has been simplified but remains its original idea and charm as an ode to the founder.

A rivalry emerges

In 1875, Henri retired, and the company was led forth by three local businessmen in Vevey. However, simultaneously, the Anglo-Swiss Condensed Milk Company expanded to newer markets in Europe, and upon discovering Nestlé’s infant formula and its success, it developed a rival product and floated it into the market.

To Nestlé, this was nothing less than a declaration of industry war, and soon after, Nestlé added a new product to its portfolio: a Farine Lactee condensed milk. Fierce competition developed, followed by price wars and predatory market strategies.

As both companies competed for a greater market share and ROI on their rival products, it did not come as a surprise when both began generating lower revenues and making losses.

The price war lasted roughly for about 30 years until the death of all three – Henri, George, and Charles.

In 1905, the current directors of the companies agreed to halt their rivalry and combine their businesses for greater market share, revenues, and expanded reach over the globe.

As a result, Nestlé and Anglo-Swiss Condensed Milk Co. was founded – that eventually became Nestlé.

Nestle-Anglo-Swiss-Condensed-Milk-merger-1918

Certificate for 100 shares of the Nestlé and Anglo-Swiss Condensed Milk Co., issued 1. November 1918

Key takeaway 1: leave emotion out of strategy

For many years, Henri and the Page brothers went head to head in the milk industry, expanding into European markets, creating substitute rival products, adopting predatory pricing strategies, and undercutting price benchmarks.

All this only yielded the worst for both businesses in the form of reduced revenues, higher price elasticity of demand, and a confused clientele.

Their saving grace was the strategic decision of the directors to call a truce and join forces – shared winners over lone losers. With the main competition becoming the same company, the focus was brought back to improving operations and opting for practices the business could sustain. Resultantly, the only path now was onwards and upwards.

This means foresight, strategy, and impartial business sense take priority over emotional responses, especially in the business world.

World War I, Government Contracts, & Innovative Strategies

Most companies take a few years to establish themselves in their local markets, minimizing risks. Only once they are comfortably settled and have enough brand appeal and resources to expand do they risk entering the global market.

But Nestle is not like most companies, is it?

Henri Nestle had become a big player in the Western Europe Market, and Page Brothers were leading the way in Britain. Thus, the merger already allowed Nestle to be the go-to condensed milk brand.

From there, it was always going to spread itself and capture as much of the global share as it could, and so it did. Within a decade, this newly merged company had taken its operations around the world, establishing factories in the UK, Europe, the United States, and Asia.

An unexpected opportunity

WWI broke out in 1914, and the scale of disruption around the globe was huge. Almost every industry was affected. Some thrived and grew, but many collapsed or barely survived.

Nestle also faced an initial period of hardship where it was difficult to maintain its supplies due to severe shortages, and maintaining a smooth distribution network in Europe was near impossible. Hence, most of their supplies ran out of catering to the needs of locals.

However, the war presented a unique opportunity. The demand for milk shot up, and consequently, governments around the world sought contracts with major milk producers and distributors.

Nestle acquired several of these contracts that enabled it to not only come out of the difficult situation it was in but also rapidly expand its operations. It developed most of its factories in the US, where supply and distribution were easier, and recovery began. In fact, by the end of the war, the company had over 40 factories in the world, nearly doubling Nestlé’s overall production.

Moving forward by embracing innovation

Of course, the circumstances around WWI were unusual and worked in favor of Nestle. But it wasn’t the only reason the firm grew at such a pace. Research and innovation had defined the companies that came together to form Nestle. Hence, the same qualities were inherited and ingrained in Nestle. At a time where global infrastructure was going through a phase of transformation, Nestle was at the forefront of it utilizing it and spreading it.

For instance, railways and steamships were the new business logistics, and they became the company’s ticket into established and untapped urban markets overseas. Print media became the main face of modern marketing. Nestle cleverly capitalized on it by projecting its brand through newspapers, magazines, and billboards. The adverts focused on what made the company stand out: quality, taste, nutrition, safety, and affordability – characteristics Nestle still proudly stands by.

All while these advancements were being embraced, Nestle didn’t lose sight of what they were truly about: their products. Hence, as far as production is concerned, they continued to introduce more efficient methods in their factories, expanding their capacity and boosting quality.

Key takeaway 2: growth follows the ambitious

Both World Wars were make-or-break events. From a decrease in demand to a disruption in supply, Nestle faced all sorts of challenges. But Nestle, even before it merged, was always looking for opportunities to grow, and the government contracts gained during the war were essentially the result of it. If Nestle didn’t have its operations worldwide, it would never have captured the governmental radar. It may have survived the shortage; it may not have.

These contracts allowed the company to grow, which worked perfectly with its innovative strategies, such as tapping urban markets and marketing using print media to enhance the brand appeal and create brand affinity. This highlights the importance of being proactive and always looking for potential opportunities, even in challenging times.

World Wars & Expanding The Product Portfolio

1918 , the year WWI finally ended.

The fighting did stop, but the unstable economic situation the world was in couldn’t be fixed easily. Nestle’s government contracts were up, and it found itself amongst the many companies facing the force of the crisis. To add to their difficulties, consumers that had shifted to condensed milk during the war shifted back to fresh milk as supply resumed.

The company went into a loss for the first time in 1921 .

Timely response

At that point, sales were down, and production costs were high for Nestle. Its operations needed an overhaul to reach sustainability. For this purpose, Swiss banker Louis Dapples was handed the task of reorganizing the company.

Not only was he able to match production and sales, but the move also helped Nestle clear its outstanding debt. Thereafter, the company spent a good part of the decade staying afloat and focusing on sustaining its operations.

More than a milk company

First milk, and then condensed milk; despite having a global reach, Nestle hadn’t really made an effort to expand its product portfolio.

Perhaps, till the 1920s , it had never felt the need to. It had been growing at a rapid pace and adding several countries to its customer base. Now, as growth stagnated and consumer demand shifted to fresh milk, something different had to be done.

Thus, they made a series of acquisitions that opened their doors to new industries, the most notable of which was the Kohler Swiss Chocolate company in the mid-1920s . Consequently, chocolate became the second most important product of Nestle.

‍ Nestlé buys Switzerland's largest chocolate company Peter-Cailler-Kohler

Alongside chocolate, the company also introduced malted milk, a powdered beverage named Milo, and powdered buttermilk for small children.

Malted chocolate drink Milo launches in Australia

The Nescafe revolution

The chocolate business was going well for Nestle, but they were yet to launch the product that would change the company’s future forever.

In 1930 , the Brazilian Coffee Institute approached the company with a unique problem. Brazil had a huge surplus of coffee, but there was no real demand or use at the time. Nestle spent the next 8 years researching and experimenting with products to develop from this coffee.

While the Brazilians suggested coffee cubes, Nestle had a better idea instead.

Voila, in 1938 , Nestle launched “Nescafe” an instant soluble coffee solution, the first of its kind and one of the most popular Nestle products to date. This was later followed by Nestea, another incredibly popular product that continues to drive the tastes of many across the globe today.

Nestlé launches NESCAFÉ in Switzerland on 1 April 1938

The USA again becomes the helping hand

There was immense potential in Nescafe, but at the same time, Nestle began to experience the severe impacts of WWII even before it broke into a worldwide conflict. The company’s revenues nosedived from $20 million in 1938 to $6 million in 1939 .

Although Switzerland remained neutral in both world wars, the situation in Europe was highly volatile, and business could not be conducted normally. Again, Nestle looked towards America by shifting its base of operations to Connecticut, far away from the conflict.

Their previous experience during WWI had allowed the company to form healthy relationships with the states, which helped them settle in. Unfortunately, the USA could not stay away from the war for too long and joined the allies in 1941 .

For Nestle, it was a complete blessing; Nescafe became a staple food for the US military as it was easily preservable, and the taste has already become a hit. Hence, without having to spend a fortune on advertisements, the coffee product penetrated worldwide, and funnily, its first brand ambassadors were allied soldiers.

Nestle sent tons and tons of Nescafe to the frontlines and managed to turn around their sales completely. From making $100 million in 1938 to reaching up to $225 million in 1945 .

Key takeaway 3: diversify and innovate

The end of WWI and the economic depression brought by it made life difficult for almost every business, including Nestle. Plus, the fact that customers preferred fresh milk instead of condensed milk meant that Nestle found it difficult to sustain its business.

Customers’ demands and preferences, as well as the market scenarios, can change drastically over time. Nestle learned that they needed to be flexible enough to adapt and bold enough to take risks. Otherwise, they will be left with no choice but to shut up shop.

This is when the milk company gradually began expanding by introducing new products and exploring new markets. It, in turn, allowed the company to grow despite the difficult situation.

Hence, companies should never rest on their laurels and try to improve consistently, be it by innovating, branching out, and increasing the quality and quantity of products or services they offer.

Growth Through Acquisitions and Diversification

The end of the world war had set the perfect stage for Nestle to take its business to the next level. Sales were at an all-time high, Nescafe and Nestea were making waves, and through military and government supports, the company had opened up new markets for its products.

On top of it, the world did not go into a similar depression like WWI. Instead, it marked a period of stability and peace, one which firms everywhere looked to capitalize on. Likewise, Nestle did not waste any time in getting in on the action and making some very key and monumental moves. In fact, these post-war years are often termed as the most dynamic period in the company's history!

Seasoned Maggi Soups and Broadein Food Products

As the world recovered from the war, Nestle followed an aggressive acquisition policy acquiring multiple brands worldwide. The most significant name it added to its portfolio was fellow Swiss company, Maggi.

The journey for this soup and noodles company started somewhat around the same time as that of Henri Nestle. Its founder, Julius Maggi shared the same vision of serving nutritious yet convenient foods to the public.

After the war, in 1947 , Maggi went through a number of restructurings and changes in leadership. Resultantly, the best way for the company to move forward was to join hands with Nestle. Their established factories in numerous countries introduced the Maggi brand to the world, and it became a sensation. In fact, in many Asian regions, Maggi is synonymous with instant noodles.

The Magic of Maggi

Following Maggi’s acquisition, Nestle took over several other firms in the food industry, including:

1960 : Crosse & Blackwell, a British can and preserved food manufacturer
1963 : Findus, a Swedish frozen food company
1971: American fruit juices company Libby
1973: Stouffer, a frozen and prepared foods brand

With these moves, Nestle extended its product range and established a stronghold in the preserved foods industry.

Developing new & improving existing “convenience” products

While Nestle spread its wings by bringing other brands under its umbrella, it did not lose sight of the products it developed itself.

For instance, the Nescafe coffee, which had been a huge success during the war, continued its astonishing path upwards. From 1950 to 1959 , its sales almost tripled, and with the development of an anti-freeze version in 1966 , its sales quadrupled in the next decade.

Simultaneously, Nestle also worked on launching new products. In 1948 , it further embedded itself in American households with Nesquik, a chocolate powder that would instantly mix in cold milk.

Owing to the product’s success, they even introduced the Nesquik Bunny to win over both adults and children.

During the same time, Nestle rebranded its infant cereals as Cerelac while launching an extensive range of canned foods under Maggi.

Diversifying beyond the food industry

By the 1970s , Nestle had well and truly occupied a dominant position in the food industry. It was now time to step out of the comfort zone and venture into new industries.

The big break came in 1974 when Nestle made a move for a Parisian hair care company, L'Oréal. Established in 1909 , this company had gone from making hair dyes to a full range of cosmetic care products. It has also formed a loyal customer base in France.

With big plans, Nestle offered the family owners of L'Oréal a 3% stake in Nestle in return for a 50% share. The offer was too attractive to refuse, and the two companies entered into a new partnership. This merger reaped multifold returns for both parties, and by the 1980s , the brand was the leader in its industry.

The cosmetic arena wasn’t the only one Nestle aimed to capture. There was an economic slowdown and general volatility between the French and Swiss markets. The price of cocoa and coffee went up more than three times. Nestle decided to take a risk and leap into waters it had never been in before.

In 1977 , it also became the owner of the American pharmaceutical company, Alcon. This, too, was a success with the brand operating in 75+ countries and being sold more than twice that number.

Merger to remember & the future of coffee

Nestle never looked to slow down despite its numerous acquisitions and diverse brand offerings.

In 1984 , it offered a mind-blowing $3 billion to buy out the food company, Carnation. Many believe this to be one of the largest acquisitions outside the oil industry – at least at the time. The scale of the deal was such that it took a year for it to be approved and finalized.

It wasn’t just being in the same industry that sparked Nestle’s interest; it was also the fact that Carnation had a diverse portfolio, including a profitable pet food brand, Friskies, and Contadino tomato products.

Nestle also added UK confectionery company Rowntree Mackintosh to its list of acquisitions in 1988 , giving it ownership of popular chocolates, Kitkat and Smarties. In the same year, it also included Buitoni-Perugina, a major Italian pasta and confectionery company to its mix.

Alongside the mergers, Nestle was also actively working on making a comeback with its coffee products. Thus, in 1986 , it rolled out Nespresso, a premium version of its coffee, different from the previous freeze-dried budget version. The idea behind it was simple: present a DIY system for any person who wanted to enjoy luxury coffee.

Key takeaway 4: seek opportunities in both new and existing industries

Many firms that plan to diversify their portfolios lose grip on their main industry. Nestle wasn’t one of them. Its initial strategy for growth post-WWII was to cement its hold in the food industry with a series of acquisitions and new product offerings. Then, it made its move in other industries while still improving on its basic offerings of food, coffee, and chocolate-related products.

Nestle grew exponentially by tactfully merging and acquiring companies it thought would add value to its brand. This paid off handsomely and turned Nestle into a force to be reckoned with. It highlights the need for brands to enhance their value offerings, using whatever means they have at their disposal, right from diversifying to collaborating with others.

International Force - Nestle's Global Strategy

With the fall of the Berlin wall in 1989, markets in Central and Eastern Europe, as well as China opened up. Trade barriers disintegrated, liberalization picked up the pace, and economic markets around the globe started to integrate well.

This proved to be quite beneficial for Nestle. There were new diverse markets to expand to and favorable policies that encouraged them – not that they needed any second invitation.

Onwards & upwards with tactful acquisitions

From the late 1990s to the late 2000s, Nestle went on an aggressive acquisition spree and acquired the following companies:

San Pellegrino group , the leading Italian mineral water business, in 1998 paved the way for Nestle to launch Nestle Pure Life and lead in Europe while making a way into developing countries worldwide.
Spillers Petfoods in 1998 enabled Nestle to cement its position as a key player in the pet food business around the globe and Europe in particular.
Ralston Purina , U.S.'s pet food business, in 2002 and merged with Nestlé Friskies Petcare, creating a market leader in the pet care industry, Nestlé Purina Petcare.
The U.S. ice cream business merged with Dreyer's in 2002, establishing Nestle as the leader in the U.S., the world's largest ice cream market.
Movenpick Ice Cream in 2003 to complement Nestle's super-premium ice cream brands portfolio in North America and Italy.
Delta Ice Cream in 2005 as Nestle's realized that the ice cream business was a profitable opportunity and the company could make inroad in the growing Greek and Balkans ice cream market.
Chef America Inc in 2002 as Nestle continued with its horizontal integration and expanded into the frozen foods market, which was growing.
Jenny Craig and Uncle Toby's in 2006 as Nestle wanted to stay true to its commitment to nutrition, health, and wellness and reinforce its presence in the U.S., the world's largest nutrition and weight management market.
Medical Nutrition division of Novartis Pharmaceutical in 2007 as it was complementary to Nestle's Healthcare Nutrition Business and enhanced Nestle's capabilities to cater to the needs of its customers with special nutritional requirements.
Henniez in 2007 to augment its position in the competitive Swiss bottled water market, leveraging the solid industrial capacity and distribution network of the company.
Gerber , the iconic U.S. baby food brand, in 2007 became the number 1 player in the U.S., the world's largest baby food market, transforming Nestle Nutrition into a global leader.

A number of other partnerships were also made, such as the one with Belgian chocolatier Pierre Marcolini , helping Nestle augment its position in the food and nutrition industry while allowing it to diversify in health, wellness, and beauty.

Now, why did Nestle do that?

The answer is to remain attuned to the changing consumer tastes and remains ahead in a market that never stays still.

Sure, continuous innovation is essential, but Nestle didn't just rely on that and continued to acquire businesses and benefit from synergies to become the undisputed leader in the business world.

All this while, Nestle has remained true to its roots and continued to delight its customers worldwide.

Realizing that with expanding its global footprint, there was bound to be an array of issues that it needed to deal with effectively, Nestle launched a Group-wide initiative called GLOBE (Global Business Excellence) .

The primary purpose behind this initiative was to harmonize and simplify business processes and empower Nestle to make the most of its competitive advantage while alleviating the risks and drawbacks.

Key takeaway 5: growth & diversification through acquisition

From San Pellegrino in 1997 to Henniez and Gerber in 2007, Nestle's relentless strategy to acquire an array of businesses in different markets, ranging from pet care and baby food to ice cream and bottled water, strengthened its overall position and breathed new life into the company.

Nestle not only wanted to expand to new product lines but also become the market leader in all of them, in different parts of the world. The fastest and most effective way to do just that was through strategic acquisitions.

In an ever-evolving market, staying still or focusing solely on a select few activities is risky for large businesses. The key, at times, to grow is to embrace an external growth strategy by acquisitions in different industries with distinctive lines of business.

Commitment To Innovation

Nestle stays firmly committed to its goals of helping people, families, and pets around the globe live happier and healthier lives. From meeting the ever-evolving needs of the modern consumer to providing safe and premium-quality of food on-demand, Nestle does it all.

However, it understands that dramatic shifts are happening in the market with consumer demands dynamically changing, new entrants offering endless choices, and people living and shopping in ways never seen before.

Winning in such an environment requires disruption and a hybrid-growth model. No one understands that better than Nestle, and here’s how it is driving value from its base portfolio while embracing new ventures to scale up.

Nestle: 150-year-old start-up innovating from within

Unlike other business entities that outsource the innovation part and fail to prepare for the future, Nestle has strategically decided to combine its scale and capabilities with the mentality and speed of a start-up.

InGenius , Nestlé's employee innovation accelerator, is the ultimate platform that encourages intrapreneurship within the company. Internal start-ups within the company are launched , and employees are encouraged to think big and creatively.

Moreover, Nestle’s global R&D accelerator program brings together scientists, students, and employees, empowering them to come up with new innovative products.

Lean designs, fast prototyping, quick testing, continuous hustling, and room for big risks make the incubator program a success. The goal of the internal start-ups is to help promptly develop new product lines from scratch within 9 months, paving the way for the future of food.

What’s more is that employees are given challenges to solve, ranging from improving the quality of food to helping achieve the net-zero target. On top of this, Nestle also helps young social entrepreneurs, outside its fold, by offering them holistic support, mentorship, and access to its R&D and innovation experts by partnering up with Ashoka – an organization that identifies and supports social entrepreneurs.

Rethinking & reinventing

To better tap into today’s consumer trends, Nestle goes the extra mile to revive the brands with modern innovation.

It does this by introducing new varieties of products and adding unique flavors to attract new customers and retain existing ones. For instance, in 2017 alone, Nestle launched 1000 new products. Yes, that’s right!

From bringing in new flavors of juices and milk to launching frozen organic meals and non-dairy desserts, among others, it tries its best to exceed its customers’ expectations.

Enhancing capabilities

Fueling growth through innovation and improving operational efficiency are two key components of Nestle’s value creation model.

While innovation is considered everyone’s job at Nestle , increasing operational efficiency is also stressed.

Each and every aspect of the business, be it hiring people, using data analytics to make decisions based on logic, optimizing supply chains, or deploying manufacturing solutions, is reviewed and revamped to increase efficiency and deliver desired business outcomes.

Future of food

Nestle, together with Swiss academic and industrial partners such as ETH Zurich, Ecole Polytechnique Fédérale de Lausanne (EPFL), and companies Bühler and Givaudan, announced a joint research program, Future of Food , that will help develop nutritious, tasty, sustainable, and trendy food and beverage products.

It's just another example of Nestle leveraging innovation and partnerships to move forward. Plus, it highlights Nestle’s commitment to providing healthy food while doing right by the environment.

The future is healthy, sustainable, and personalized

Nestle is actively working on providing healthier diets to people worldwide. It's even reformulating its popular products such as Kit Kat and Maggi, among others, to reduce the sugar, salt, and saturated fat in them while also transitioning its brands towards organic.

In addition to this, it is actively working towards ensuring its supply chains have zero environmental impact and reducing its carbon footprint by changing its plastic packaging.

Nestle has announced that it will phase out all packaging that’s not recyclable by 2025 and ensure the packaging it uses is eco-friendly.

Last but not least, Nestle, in its quest to stand out and scale, is emphasizing the need to please customers in every way possible. It aims to do that by delivering customers exactly what they want, how they want it, and in the taste, and shape they want it.

Meeting the needs of consumers on an individual level, according to Nestle will make all the difference. Hence, it is investing in it. Nestle acquired a start-up in UK, Tails.com, which provides tailored diets to dogs on a monthly basis based on age, breed, and weight among other factors.

Key takeaway 6: innovate, innovate, and innovate

Ascending to the top is one thing, but remaining at the top is the real challenge. Nestle’s strategy of launching incubators, experimenting with products, enhancing capabilities, and thinking ahead to create a new future highlights the importance the company places on innovation.

Nestle never hesitates to be bold and go out of its way to innovate to accelerate its growth and achieve scale. It realizes the value that can be derived from innovation and hence, leaves no stone unturned in thinking out of the box and putting its money where its mouth is. More than anything else, this fundamental strategy has helped the company dominate and remain a customer favorite.

Nestle In The New Normal

Nestle: the multi-national company that adapts

A vital company in the challenging times of Covid-19, Nestle made many changes in its processing and manufacturing processes to continue supplying good food. As supply chain challenges intensified, Nestle focused its efforts on streamlining the supply chain end-to-end, from sourcing supplies to logistics.

Nestle had 8.1% organic growth in the first half of its fiscal year 2022.

Nestle: the best employer

Making the health and safety of its employees a priority, Nestle implemented enhanced safety measures on and off its premises, including factories, distribution centers, labs, and offices.

Nestle responded to Covid-19 effectively and made sure its employees are protected and motivated by:

Allowing working from home
Restricting travel and exposure to the virus
Introducing the best hygiene practices
Implementing effective social distancing measures
Giving a special 14-day COVID-19 leave
Offering financial support in the form of loans

Nestle: the company that gives back to the community

Nestle extended a helping hand to those in need in the crisis. It provided holistic support to medical institutions, food banks, food delivery organizations, and relief organizations in the local communities who are on the frontline.

Not only did Nestle donate essentials such as food and bottled water but also money. Nestle joined forced with the International Federation of the Red Cross and Red Crescent Societies (IFRC) and donated CHF 10 million . Plus, in order to speed up the vaccination and ensure fair distribution of vaccines, it partnered up with COVAX and donated CHF 2 million.

Key takeaway 7: stay resilient

There’s no doubt that the Covid-19 pandemic disrupted the global markets and adversely impacted Nestle in ways more than one. However, Nestle managed to survive and thrive by continuously adapting, being proactive, and striving to do right by the people and the communities it served, as evident from its increased market share and growth during the period.

Nestle in a nutshell

Nestle products are recognized, consumed, and valued in all corners of the world. It is a company that has ingrained itself in the day-to-day life of people and continues to raise the bar higher. From innovation, people management, and a long-term strategic approach to the quality of products and services, social responsibility, and competitiveness, Nestle ticks all the boxes.

Here are the four main lessons derived from the growth of Nestle from a relatively small Swiss-based company established in 1866 to one of the most successful, admired, and profitable multinational companies in the world:

Key takeaway 1: globalize but also localize

A company as big as Nestle, which operates in almost all countries worldwide, has achieved success by localizing its offerings and catering to the needs of each individual market.

Sure, it could have made generalized global strategies and campaigns, but it took the difficult path by localizing everything from sourcing, product planning, production, marketing, and even its brand strategy.

It highlights the importance of being customer-centric regardless of who you are as a company and where you operate.

Key takeaway 2: innovate – change is an opportunity

Whether it be changing consumer demands, the evolving marketplace, or crisis situations, Nestle has never stopped innovating. Sure, it has paid the price of a few campaigns gone wrong, but one thing that it has been relentless at is continuing to strive to be a step ahead.

Nestle does it all, from committing to sustainability to coming up with new creative ways of providing more value to all stakeholders. It serves as a lesson for brands in this modern digital age. You can only survive and succeed if you innovate. Period.

Key takeaway 3: grow through acquisitions

Nestle has over 2000 brands. Yes, that’s right. Nestle has rapidly grown, gained a competitive advantage, increased its market share, achieved synergies, and enhanced efficiency in its business by acquiring companies.

It actively looks for potential acquisition opportunities and doesn’t hesitate to take risks. This showcases that if you want to grow as a company, you need to broaden your horizons and partner up with others. Foresight, strategic decisions, and impartial business sense are critical - now more than ever.

The external growth strategy has worked wonders for Nestle by allowing it to expand into new industries and distinctive production lines - all of which have contributed immensely to its growth over the years. Simply put, if you can’t beat them, just join them, or well, in Nestle’s case, buy them.

Key takeaway 4: importance of brand & values

As a company, your values are bigger than your revenue. If you truly focus on and stick to your values, you can attract consumers and scale your company. Nestle has done just that by not only saying but becoming the “Good food, Good Life” company.

It firmly abides by its core principles of “ Unlocking the power of food to enhance the quality of life for everyone, today and for generations to come .”

Every decision that is made, every product that is launched, every customer that is served, is served to shape a better and healthier world. No wonder Nestle has become a global icon from a local favorite.

Nestlé Company’s Supply Chain for Nescafé Research Paper

To find inspiration for your paper and overcome writer’s block
As a source of information (ensure proper referencing)
As a template for you assignment

Introduction

Topic statement, methodology, recommendation.

The primary goal of this research paper is to examine the level of importance of supply chains in the industry. Such networks are discussed in great detail, and it is focused on a brand of coffee that is known all over the world, Nescafé. The data that has been collected is presented in a comprehensive manner to ensure that it can be used to get a better understanding of such aspects as efficiency, sustainability, and others. Possible issues that the company has to deal with at the moment were also identified, and possible ways in which some of these problems may be addressed are also listed.

The methodology for this research paper has consisted of a review of the literature on this topic and analysis of the data about supply chains of the company. It is imperative to mention that it was able to establish numerous networks that are incredibly efficient, but several issues that need to be addressed are also present and should be taken into account. The firm operates all over the globe and is capable of meeting the expectations of consumers thanks to well-developed supply chains.

The problem is that some of the approaches that are used by the company are frequently criticized, and it may not be an easy task to address all of the problems because many processes have already been established. Overall, the company should be recommended to focus increasing sustainability, social responsibility and others. The fact that the company does not provide information that is regarded as essential by many may be quite problematic and leads to issues with trust, and many consumers are lost because they are worried about such problems as child labor and safe workplace environment for employees.

Nescafé is a well-known brand of coffee that is produced by Nestlé, a transnational company with headquarters in Switzerland. The mission of the company is to become an enterprise that is inspiring and focused on growth. It is determined to provide customers with creative and innovative products that would meet their needs and expectations. This mission statement indicates that the company wants to build long-term relationships with its suppliers, and is ready to offer support and other benefits. The fact that the company suggests what technologies and approaches should be used by their suppliers to increase the efficiency of operations is also vital, and helps to develop trust.

Significant amounts of resources are devoted to marketing and advertisement. The introduction of modern technologies such as the Internet and social media was also critical, and the company may utilize them to their full potential to promote their products. The role of online advertising has also been increasing, and enterprise frequently partners with other firms to support promotional activities. It is also necessary to maintain the image of the company as one of the most well-known producers of coffee. The company understands that it is necessary to be socially responsible, and tries to ensure that its operations do not damage the environment. The enterprise acknowledges that both farming and production should be rational to make sure that the harm that may be caused in the long-term is reduced. The fact that the firm has won numerous awards also should not be disregarded, and it indicates that the business devotes significant amounts of resources to improve the quality of their products and sustainability.

The primary objective of this research paper is to examine Nestlé, S.A., and the supply chain that the company uses to support Nescafé, its well-known brand. The fact that the role of supply chains has been increasing over the years should not be disregarded, and it is evident that they have become an essential part of the industry. Also, it is imperative to understand that it includes several processes. First of all, supplies are delivered to the manufacturer, and the product is produced. The final stage that should not be disregarded is the distribution with a use of networks that have been established. The role of a well-developed set of supply chains is critical most of the time.

Also, it is imperative to understand that it is necessary to reduce any possible risks that are associated with supply chains. For instance, disagreements with one of the suppliers can be quite problematic and may affect an ability of the company to produce products promptly. Also, one of the most significant aspects that should not be overlooked is that many businesses have started to devote enormous amounts of resources to sustainability because it is viewed as an essential step by enterprises that value opinions of its consumers. The overall efficiency of current supply chains that are used by the company will be examined in this paper because it may be viewed as one of the core indicators of a successful firm. The most attention should be devoted to such aspects as social responsibility, influence on the environment and others factors that affect opinions of clients.

The set of methods that was chosen for this research paper will consist of two approaches. First of all, a broad range of literature on this topic will be reviewed to determine current trends in the industry and possible improvements that may be considered in this particular case. It is paramount to note that many scientists have focused on problems that are associated with sustainability, and various approaches were suggested. Also, another aspect that should not be disregarded is the examination and analysis of current supply chain, and its unique aspects. The most significant factor that needs to be considered is the determination of advantages and possible weaknesses. It is imperative to focus on such issues as effectiveness and sustainability because they frequently determine the level of efficiency of operations.

Descriptive research method will be used in this case because it has proven its effectiveness. Also, it is imperative to mention that issues that are related to the validity of the information that is received are not expected because only trusted sources such as peer-reviewed journals will be used. Overall, this approach will help to make a list of suggestions that should be considered by the company based on the information that is available. It is necessary to mention that it will be incredibly efficient in this case because the information that is provided by the enterprise is limited, and it is not possible to get a full understanding of all the processes that take place in the organization because of its policies.

The supplier code that is available on the website suggests that the demands of the company are incredibly high. The fact that the company understands that there is a need of improvement also should not be overlooked, and it indicates that the enterprise values opinions of its customers and does not want the brand to be affected by any issues because it may lead to severe complications most of the time.

It is imperative to mention that all the operations are performed by trained professionals, and the company is determined to make sure that each employee is competent and meets the expectations of the enterprise. Each one has a broad range of responsibilities and is focused on a particular area. Nestlé uses only the latest technologies that have proven their efficiency to ensure that the speed of operations is sufficient, and most attention is devoted to quality of the products. Also, it is necessary to note that the role of engineering teams should be taken into account, and they are responsible for maintenance of valuable equipment.

Also, the company invests enormous amounts of resources in innovations because it recognizes that some technologies and techniques may be disruptive. The development of new products is also vital because demands of consumers are always growing. An understanding of the process of coffee production is essential. Cultivation is the first stage in the process of development, and it is followed by processing. Also, such stages as blending and roasting should be mentioned. The first one is critical because the company tries to select correct proportions of seeds to ensure that the taste of the product is outstanding. Roasting is viewed as one of the essential stages because any mistakes should be avoided at this point.

The enterprise tries to ensure that temperature is monitored to guarantee that taste of the coffee is not lost, and different techniques allow creating unique flavors. The role of extraction is also critical, and the primary objective of this process is to achieve highest possible concentration. Drying also needs to be controlled, and unique techniques help to preserve qualities of the product (How coffee is made, n.d.). Agglomeration and aromatization are also vital, and it is followed by the process of filling. The core objective of this technique is to avoid deterioration, and the final one is focused on making the coffee soluble (see Figure 1).

It is also necessary to mention that Decaffeination is a core stage in the production of various types of coffee that contain no caffeine. Significant percentages of consumers prefer such products because of numerous reasons, and it is valued by customers because the taste is not lost.

It is imperative to understand that the company uses various supply chains, and the process is different in some regions. However, one of the approaches may be discussed (see Figure 2).

It can be seen that farmers are regarded as primary sources of resources most of the time. Organizations are frequently established to make sure that the process of production is much easier to conduct. The role of intermediaries also should not be overlooked, and Nescafé has built relationships with professional ones. Exporters and importers are also incredibly important and are viewed as core links of many supply chains. The process is monitored to ensure that there are no issues with quality, and everything is going according to the schedule. It is paramount to mention that the business was able to master this process, and it is performed with a use of computer technologies to guarantee precision and consistency. Also, it is necessary to mention that the enterprise pays a lot of attention to delivery to consumers. The fact that products may be purchased online is also vital and indicates that the firm takes advantage of the technologies that are available to ensure that its customers are satisfied.

It is also paramount to note that the company has revealed its plans to optimize supply chains in 2010. It is expected that the enterprise will invest enormous funds into coffee projects. The Nescafé Plan is particularly interesting and needs to be discussed. The company has recognized that the demand for the product has been increasing, and it is expected to grow in the future. The enterprise attempts to make sure that its suppliers are capable of meeting the expectations and understands that it cannot be achieved without support, and other activities that would be helpful, and would be beneficial in the long-term.

The fact that some of the products are produced directly on the territory of the countries in which the company operates should not be disregarded, and the enterprise was able to build relationships with local suppliers to increase the efficiency of operations. It is necessary to mention that it complicates the management most of the time, and it is especially problematic to control the quality of supplied resources, but the company has developed a range of techniques that would help to address this issue.

The fact that the company creates numerous jobs every single year also needs to be discussed. Also, Nestlé attempts to increase the overall capacity of some of the factories, and it can be incredibly helpful in most cases. Currently, there are thirty facilities, and they are located all over the globe, and the most significant ones are on the territory of Brazil and Mexico, and such placement may be regarded as incredibly efficient and has numerous advantages. Competitiveness is one of the aspects that influence the decision-making process of the company, and it highly valued by the enterprise. It is necessary to mention that this factor is especially important because resources are managed very carefully, and the firm is determined to maintain the spot as one of the leaders in the industry.

Also, the company wants to ensure that its influence over supply chains is increased, and several alterations may be made if it is necessary. Such approach is going to be incredibly beneficial in the future because flexibility is essential in this industry. The standards that are used by the company have already been improved, and the company is determined to implement numerous other improvements to guarantee the quality of the product that is delivered to the consumers. The fact that the company has incredible control over direct purchases is also critical, and the company uses this advantage to ensure that sustainability standards that have been set are maintained. The cooperation with such globally-known organizations as 4C Association and the Rainforest Alliance is also vital because the information that is provided by experts is regarded as valuable, and it helps to develop the vision of the company (Lo, 2013). The fact that there is a particular entry point is vital, and it guarantees that the resources that are used for production are of highest possible quality.

Another core aspect that should not be overlooked is that the company supports a significant number of farmers to ensure that it has access to resources of highest possible quality. Cooperation with other organizations also plays a vital role most of the time and helps to develop efficient approaches. The company is determined to be able to distribute close to two hundred and twenty million of coffee plantlets that will meet current sustainability standards. It is also paramount to note that Nestlé tries to develop distribution routes that would be much more efficient. The issue is that many farmers do not have access to local training, technical assistance, and markets, and it can be quite problematic most of the time.

However, it needs to be mentioned that it should be viewed as an outstanding opportunity for development. It is understandable that the management of supply chains may be regarded as a significant issue that needs to be addressed, and a broad range of approaches have been developed. However, it is important to mention that it is especially problematic for such companies like Nestlé because of the high level of complexity of operations. The role of cost-saving also should not be overlooked, and it is necessary to limit any unnecessary expenses if it is possible because the core goal of the company is to increase profits.

It is understandable that the range of products is incredibly broad at the moment, and it complicates the process of production because it is not an easy task to establish efficient supply chains. Aspects that are related to ethics also should be considered, and their role in the industry has been increasing because a significant percentage of the population is worried about the environment. It is imperative to mention that the improvements that are implemented by the company are meaningful most of the time, and their impact is quite significant. The role of sustainability reports also should be discussed. The company expects that suppliers will be capable of providing high-quality coffee, and this approach would help them to look for opportunities for development and improvement (Moyano, 2010). The enterprise has managed to earn an excellent place on the market, and it is regarded as one of the most influential brands in the world.

It is paramount to note that various distribution centers are involved in the process. They can be described as particular buildings that contain the necessary equipment such as refrigerators and air conditioners. Also, the fact that there are many types of such warehouses should not be overlooked. For instance, some of them are focused on retail distribution, and some on order fulfillment. Facilities that are used to transport the products to many other destinations are also incredibly important and should be mentioned. The company provides wholesalers with a range of benefits such as discounts if they make bulk purchases.

It is necessary to note that the enterprise has managed to build valuable relationships with many companies, and it leads to significant profits. The role of retailers also should not be overlooked, and they ensure that the product is delivered to consumers through various shops. Also, it needs to be mentioned that business with companies that are related to modern trade may be incredibly efficient because it helps to reduce expenses on channel distribution most of the time. It is necessary to understand that the firm uses a broad range of approaches to make sure that the products are distributed, and it is dependent on the region and location in most cases. Direct delivery from warehouses to retailers is regarded as the most efficient approach because supermarkets are extremely popular at the moment.

The role of packaging also should not be overlooked, and the enterprise ensures that coffee does not lose its qualities with a use of glass and plastic containers that have proven to be incredibly useful. It is evident that the enterprise is not happy with the current situation, and understands that numerous improvements should be made to ensure that the products that are produced meet all possible standards because opinions of society and its consumers are highly valued by the enterprise. It is paramount to note that the situation has been improving over the years. For example, the enterprise was able to increase the volume of coffee that is responsibly sourced by twelve percents in 2013. Also, the percentage of resources that meet the standards that were developed by 4C have increased from 48 to 70 percents in 2014, and it is expected that the company will be able to accomplish its current goals in 2020 (Nescafé Plan, n.d.).

It is necessary to mention that the industry has to deal with numerous issues at the moment. For instance, Climate change may also be considered as extremely problematic, and may affect the business in the long-term. It is imperative to understand that possible shifts could lead to significant changes, and it should be expected by companies that produce coffee because the ones that are ready to deal with such problems are expected to gain enormous competitive advantages. The fact that current supply chains are well-developed should not be overlooked, and the enterprise has managed to establish relationships with firms all over the world.

However, issues that are related to flexibility may still occur, and it could lead to numerous complications. Economic aspects also should not be disregarded, and it may be hard to deal with global crises. The company may struggle if key suppliers are lost, and it is necessary to develop a list of alternatives that should be considered in the case of emergency. Another critical issue that needs to be discussed is that the company does not provide an adequate list of suppliers on its website, and this may be regarded as a significant problem because customers should be able to have access to this information. Furthermore, the enterprise loses an enormous number of consumers because they are not able to make responsible decisions based on the data that is provided by the company.

Also, the information about the amounts of coffee that are purchased from sources that are trusted is not available, and this approach may seem suspicious most of the time. Another core aspect that is worthy of a discussion is that many regions suffer from the lack of investments, and the firm should look at it as an excellent opportunity for development that needs to be considered. The role of education is also vital because many farmers in some areas do not know how to regenerate crops, and it can be quite problematic.

The company has tried to address this issue, but the current program needs to be expanded. It is understandable that the business may not want to report such data because it has to deal with numerous competitors at the moment, but this approach damages the business in most cases. However, it is nearly impossible to know if the resources are bought from certified sources, and if the company provides its customers with a broad range of benefits. Living conditions and child labor are regarded as especially problematic.

The company acknowledges that the damage that is caused to the environment is significant, and this aspect needs to be considered during the development of new strategies. It is understandable that it may not be possible to address all the issues at the same time, but controversies should be avoided because they may be quite problematic in some cases. The company should be able to respond to such situations to avoid possible losses of profit and clients. Any significant changes to current supply chains are not suggested, but the company may have to review some of the approaches because satisfaction levels of consumers are affected. It is also suggested that the company needs to improve the way it manages its supply chains with a use of various modern tools.

For instance, a use of balanced scorecard may be considered because one of the recent studies suggest that this approach would help to increase the efficiency of operations (Tseng, Lim, & Wong, 2015). Another aspect that is worthy of a discussion is that it is necessary to keep track of latest trends in the industry to stay ahead of competitors, and most stakeholders have an understanding of the fact that operations should be sustainable for such business to ensure that it is profitable. Also, results of another research suggest that sustainable chains would help to reduce any possible financial risks and may be used to increase profits in the long-term (Mefford, 2011). Overall, it is imperative to mention that the strength of brand plays a vital role in this case, and the enterprise takes advantage of this fact.

It is understandable that the business is incredibly profitable at the moment, but sustainability levels are not sufficient, and there is a need for further improvement. Activities that are related to social responsibility and sustainability should be justified from the financial perspective to make sure that they are beneficial in the long-term, and the enterprise does not suffer from significant losses. The establishment of factories in several areas may also be suggested. Furthermore, current approach that is used by the company is incredibly efficient, but possible issues in the industry should also be considered because it may lead to complications that are hard to resolve in most cases. Such changes would help to increase the level of sustainability (see Figure 3).

Overall, it is likely that the enterprise is going to improve supply chains that are currently available in the future, but numerous internal and external factors should be considered to reduce the possibility of issues and complications that may hurt the company.

In conclusion, it is necessary to mention that supply chains of Nestlé are well-developed, and the company is incredibly experienced in this industry. However, the issue that needs to be addressed is that the demand for high-quality products has been increasing, and the company is not able to meet the expectations of consumers at the moment. Another aspect that should be taken into account is that it has to deal with numerous competitors in the market, and it is imperative to provide suppliers with a range of benefits to avoid complications. It is necessary to understand that a well-developed supply chain may be considered as a significant competitive advantage most of the time, and it may have to be expanded in some cases.

It is also imperative to note that some of the approaches may be regarded as innovative, and ability to utilize modern technologies and techniques is valuable in most cases. The fact that the company does not provide any information about the use of child labor is especially worrying and affects the perception of many clients and image of the business. It is necessary to mention that it affects brand as a whole, and it can be incredibly problematic because the firm offers a broad range of products, and any damage to the reputation should be avoided.

Overall, it is evident that the strategy of the company has been incredibly successful so far, and the focus on sustainability was a vital decision that has been quite helpful, but it may have to be improved in the future because it has several weaknesses that should be addressed.

How coffee is made . (n.d.). Web.

Lo, C. (2013). Sustainable coffee: Nestlé looks beyond the cup . Web.

Mefford, R. (2011). The Economic value of a sustainable supply chain. Business and Society Review, 116 (1), 109-143.

Moyano, C. (2010). Nestlé promotes sustainability reporting among suppliers . Web.

Nescaf é plan . (n.d.). Web.

Tseng, M., Lim, M., & Wong, W. (2015). Sustainable supply chain management. Industrial Management & Data Systems, 115 (3), 436-461.

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IvyPanda. (2020, June 13). Nestlé Company's Supply Chain for Nescafé. https://ivypanda.com/essays/nestl-companys-supply-chain-for-nescaf/

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IvyPanda . (2020) 'Nestlé Company's Supply Chain for Nescafé'. 13 June.

IvyPanda . 2020. "Nestlé Company's Supply Chain for Nescafé." June 13, 2020. https://ivypanda.com/essays/nestl-companys-supply-chain-for-nescaf/.

1. IvyPanda . "Nestlé Company's Supply Chain for Nescafé." June 13, 2020. https://ivypanda.com/essays/nestl-companys-supply-chain-for-nescaf/.

Bibliography

IvyPanda . "Nestlé Company's Supply Chain for Nescafé." June 13, 2020. https://ivypanda.com/essays/nestl-companys-supply-chain-for-nescaf/.

ProcureCon Indirect East 2024

September 09 - 11, 2024

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How Nestle Maintained a "Robust" Supply Chain in 2020 and Prepared Itself for the Future

(Source: Food Business News )

Brought to you by WBR Insights.

Supply chains are growing in complexity in almost every industry, and there's no indication that things are going to get simpler anytime soon—at least, not based on market forces.

But many organizations are innovating in the space to make their supply chains more resilient. Not only are they deploying new technologies to enhance supply chain visibility and automation, but they're also working toward a better tomorrow by embracing ethical sourcing and sustainable supply chain initiatives.

One company that has consistently innovated in this area is Nestle. The Swiss multinational food and drink conglomerate may be most well-known for its chocolate and candy products, but the company is responsible for over 2,000 brands and has a footprint in 186 countries. As the largest food manufacturer in the world, Nestle is an integral part of the global food supply, and the company has gone to great lengths to ensure its supply chains are resilient, flexible, more sustainable, and more technology-enabled than most.

Here's how Nestle is breaking the mold in the supply chain space.

Embracing Blockchain

Blockchain is often praised for its supply chain potential, but up until now, many organizations haven't implemented a successful use case of the technology, much less one that spreads from their organization to the bulk of their supplier relationships. Potentially, the technology could greatly enable faster, more transparent, and more cost-effective delivery of products. It can also help companies reduce risk and improve how they coordinate with suppliers.

But according to Tech Wire Asia , Nestle is "investing significant resources into innovations that make tracking a product's journey as simple, easy, and standardized as flipping a bag of chips and checking its ingredients."

As a founding member of the IBM Food Trust—a SaaS solution that gives users immediate access to food supply chain data— Nestle is deploying blockchain across the supply chain to create a complete history of their products and ingredients, from source to store shelf. In a collaboration with blockchain platform OpenSC, Nestle became the first major food and beverage company to pilot open blockchain technology.

Open blockchain technology may be key to achieving widespread visibility across the food supply chain in the future. Most companies only have limited visibility into their supply chains because some of their partners can't implement proprietary blockchain technology. With an open-source model, organizations large and small could participate, sharing data points securely across a vast blockchain network to create a traceable system that is unmatched by other technologies.

Sustainability Goals

Last year, Nestle also accelerated its sustainable packaging initiative, investing $2 billion. The company set a goal to reduce its use of "virgin" plastics by one-third by 2025, according to SupplyChain Digital .

The investment is part of the conglomerate's push to invest in a more sustainable future. According to the Nestle websites, its other sustainability initiatives include achieving water efficiency goals, creating programs for better water stewardship, and improving access to water access and sanitation through conservation.

A Commitment to Responsible Sourcing

Finally, Nestle is working with its suppliers to create a more sustainable and ethical future. Many organizations are pursuing responsible and sustainable sourcing to improve their image, but several are also realizing significant business value as a result.

Not long ago, Nestle announced that it would disclose its list of suppliers, as well as other data, for its priority commodities. The purpose of the disclosure was to be more transparent with consumers: "Consumers want to know what is in their food and where it comes from. Therefore, transparency in our supply chains is essential, and we will continue to lead in this area."

It was the first disclosure of this type in the industry.

Nestle has also made a commitment to responsible sourcing, and its blockchain capability will be key to demonstrating that commitment. Traceability has enabled the company to confirm that 73% of its total spend for its most important ingredients qualifies as "responsibly sourced," which means the spending aligns with a long list of guidelines established by the company's Responsible Sourcing Standard .

Among its other initiatives, the company is monitoring over 86,000 children who are at risk of child labor and has helped more than 40,000 children access education. The company has established a "forest-positive" approach to sourcing ingredients and plans to move toward 100% deforestation-free ingredients by 2022.

Hear From Nestle at the Next ProcureCon Supply Chain Virtual Event

Nestle has demonstrated a sincere knack for supply chain innovation, both through its technology deployments and its commitments to sustainability, responsibility, transparency, and human rights.

If you'd like to learn more about how Nestle has succeeded in its supply chain initiatives, you don't want to miss Christophe Villain, Nestle's global head of procurement excellence, who will be speaking at the next ProcureCon Supply Chain Virtual Event. The event is happening online from June 29 th to June 30 th .

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A Nestle Case Study

The Supply Chain Critical Review: Nestle© is a pioneer in purchasing coffee direct from growers. A growing percentage of the company’s coffee is bought direct from the producer and it is now one of the Normal’s largest direct purchasers.

In countries where this is not possible Nestle© operates in a way that takes it as close to the growers as possible. Nestle© began its direct buying policy in 1986 and the amounts involved have steadily increased. In 1998, around 15 per cent of its green coffee purchases were bought directly.

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As an example, in the Philippines, farmers bring their produce to Nestle©’s buying centers situated in the coffee growing regions. Quality is analyzed while they wait and growers are paid on the spot. In 1998, direct purchases accounted for over 90 per cent of the green coffee destined for its two instant coffee factories in the country.

Today, a Jar of instant coffee can be found in 93 per cent of British homes and increasingly consumers are trying out different types of coffee, such as cappuccino, espresso, mocha and latte.

The expanding consumer demand for product choice, quality and value has led to an increase in the coffees being made available to a discerning public. ‘Value’ is the way in which the consumer views an organization’s product in comparison with competitive offerings. So how does coffee get from growing on a tree perhaps 1,mom up a mountainside in Africa, Asia, Central or South America, to a cup of Ensnare in your home, and in millions of homes throughout the Enroll?

This case study explains why Nestle© needs a first class supply chain, with high laity linkages from where the coffee is grown in the field, to the way in which it reaches the consumer. A supply chain is only as strong as its links. Different relationships exist between organizations involved in the separate stages of the chain – whether it is in the structuring of product distribution, arrangements for payment and arrangements for handling, or in storing the product.

At the heart of these relationships is the way in which people treat each other.

Long-term business relationships need to be based on honesty and fairness – parties to a trading agreement need to feel that they are getting a fair deal. Creating wonderful cups of coffee is not only Nestle©’s business; it is the business of everyone involved in the supply chain. It is in everyone’s interest – the farmers’ and Nestle©’s – that farmers receive a fair income from their coffee. This ensures that they will continue to grow coffee, and to invest in increasing their yield and quality, and this in turn guarantees the supply of quality coffee which companies like Nestle© require.

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COMMENTS

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