Nestle Supply chain Management Strategy | Procurement | MBA case study examples with solutions

5 Minutes Learning

14 Oct 202206:44

Summary

TLDRNestlé, the world's largest food manufacturer, has a history rooted in solving child malnutrition and has since diversified into chocolate and pharmaceuticals. With a focus on innovation, customer value, and a strong brand, Nestlé excels in supply chain management, emphasizing responsible sourcing and ethical practices. The company's acquisitions and commitment to zero waste by 2020 showcase its environmental responsibility and contribute to its impressive net worth of 247 billion dollars.

Takeaways

📚 Nestle is the world's largest food manufacturing company with a global presence and a diverse range of products.
🍼 Founded in the 1860s by Henri Nestle to address infant malnutrition, the company initially offered a food supplement as an alternative to breast milk.
🍫 After merging with the Swiss General Chocolate Company, Nestle expanded into new countries and diversified its product portfolio, including chocolate.
🏆 Nestle owns some of the world's most famous brands, such as Milo, Nido, and Nescafe, and has diversified into pharmaceutical products.
🛠 The company's operational success is attributed to sound business strategies that focus on product innovation and renovation, as well as customer value creation.
🌐 Nestle emphasizes core values like cultural diversity, quality, brand strength, customer satisfaction, and high-performance goals.
🔄 The company outsources some activities and uses supply chain management to maintain product quality and ensure smooth operations.
👥 Nestle has a large workforce to support its supply chain operations and achieve a competitive edge through customer satisfaction.
🏆 Nestle's supply chain management is highlighted by four main strengths, demonstrating excellence in the industry.
📈 The company uses a strategy called 'Building the Nestle Way' to create appealing products and actively engages with customers through social media, gathering feedback across various platforms.
🌱 Nestle places a high priority on responsible sourcing, respecting agricultural communities and ensuring ethical practices in its supply chain.
💼 The company has grown through acquisitions, such as purchasing Ralston Purina and other brands, to introduce new products and eliminate competition.
🌿 In response to environmental concerns, Nestle revamped its policies, committing to zero waste to landfill by 2020 and improving supply chain efficiency to save costs.

Q & A

What is the primary focus of the 'Five Minutes Learning' channel?
-The 'Five Minutes Learning' channel focuses on providing a global and diverse collection of case studies to help management students.
Who is the founder of Nestle and why was the company established?
-Henry Nestle founded the company in the 1860s to address the issue of child malnutrition caused by mothers' inability to breastfeed.
What was the initial product offering of Nestle?
-Nestle initially made a food supplement from cow milk, wheat flour, and sugar as an alternative to breast milk to reduce infant mortality.
How did Nestle expand its product portfolio after the merger with the Swiss General Chocolate Company?
-Following the merger, Nestle reorganized itself and expanded its product portfolio to include chocolate, and diversified into other countries and product categories.
What are some of the most famous brand names owned by Nestle?
-Nestle owns some of the most famous brand names in the world, including Milo, Nido, and Nescafe.
What are the core business values emphasized by Nestle?
-Nestle emphasizes core business values such as cultural diversity, quality products, brand strength, consumer satisfaction, and high-performance goals.
How does Nestle approach supply chain management?
-Nestle embraces supply chain management by outsourcing some activities and utilizing a large workforce to ensure smooth operations, maintaining product quality throughout the supply chain.
What is the strategy Nestle uses to create products that appeal to consumers?
-Nestle uses a strategy called 'brand building the Nestle Way' which focuses on profiling its brands and engaging actively with consumers, especially through social media.
How does Nestle gather customer feedback efficiently?
-Nestle gathers customer feedback efficiently through its active online presence, with 210 million fans on 850 Facebook pages for various brands, and by posting around 1,500 new items per day.
What is Nestle's approach to responsible sourcing and why is it important?
-Nestle emphasizes responsible sourcing by tracking the origin of its products to ensure compliance with ethical practices, which earns loyalty from suppliers and customers.
How has Nestle addressed environmental concerns in its supply chain?
-Nestle revamped its environmental policies after a media backlash in 2010, implementing a no deforestation policy and committing to becoming fully zero waste to landfill by 2020.
What can other companies learn from Nestle's business model?
-Other companies can learn the importance of market research, responsible sourcing, product diversity, and waste reduction from Nestle's business model.

Outlines

00:00

🌟 Organizational Strategies and Nestle's Success

This paragraph introduces the concept of learning organizational strategies through case studies and highlights Nestle as a case study. Nestle, founded in the 1960s by Henry Nestle to combat child malnutrition, started with a food supplement and expanded globally after merging with the Swiss General Chocolate Company. The company's operational success is attributed to sound business strategies focusing on product innovation, customer value creation, and core values like cultural diversity and quality. Nestle's supply chain management is emphasized, with a focus on customer satisfaction and a unified supply chain maintaining product quality. The paragraph also discusses Nestle's strengths in supply chain management, including brand building, active customer engagement, responsible sourcing, and the importance of understanding customer needs for successful supply chain analysis.

05:02

💼 Nestle's Acquisitions, Environmental Policies, and Business Model

The second paragraph delves into Nestle's growth through acquisitions, which not only introduces new products but also eliminates competition and secures access to suppliers. It mentions significant acquisitions like Ralston Purina and others, contributing to the company's diverse portfolio. The paragraph also addresses Nestle's revamped environmental policies post-2010, focusing on eliminating deforestation and waste in the supply chain, with a commitment to zero waste to landfill by 2020. The summary underscores the importance of market research, responsible sourcing, product diversity, and waste-free operations in Nestle's business model, attributing the company's substantial net worth to these practices. The paragraph concludes with an invitation to subscribe for updates on upcoming case study videos.

Mindmap

Keywords

💡Organizational Strategies

Organizational strategies refer to the methods and plans a company uses to achieve its goals and maintain a competitive advantage. In the video, Nestle's success is attributed to its sound business strategies that focus on product innovation and renovation, which is a key part of its organizational strategy.

💡Case Studies

A case study is an in-depth analysis of a specific situation or subject, often used in educational and professional settings to illustrate principles or practices. The video script mentions a collection of case studies that help management students understand organizational strategies, with Nestle being a prominent example.

💡Supply Chain Management

Supply chain management (SCM) is the oversight of materials, information, and finances as they move from supplier to manufacturer to wholesaler to retailer to the final consumer. The video discusses how Nestle's supply chain management is a key component of its competitive edge and profitability, emphasizing the importance of maintaining product quality throughout the supply chain.

💡Brand Building

Brand building involves creating a unique identity for a product or company that resonates with consumers and differentiates it from competitors. The video script mentions 'brand building the Nestle Way,' highlighting how Nestle creates products that appeal to consumers by profiling its brands and engaging with customers online.

💡Customer Value Creation

Customer value creation is the process of delivering products or services that meet or exceed customer expectations, thereby creating value for the customer. In the context of the video, Nestle emphasizes customer value creation as part of its business core values, aiming to satisfy and retain customers through quality products and services.

💡Cultural Diversity

Cultural diversity refers to the inclusion of individuals from various cultural backgrounds within an organization or society. The video script notes that Nestle values cultural diversity, which likely contributes to its global appeal and ability to cater to a wide range of consumer preferences.

💡Product Innovation

Product innovation is the process of developing new products or significantly improving existing ones. The video mentions that Nestle's operational success is tied to its sound business strategies that incorporate product innovation, which helps the company stay relevant and competitive in the market.

💡Acquisitions

Acquisitions refer to the purchase of one company or entity by another, often to expand the buyer's market presence or product offerings. The script discusses how Nestle's supply chain includes a large portion based on acquisitions, such as the purchase of Ralston Purina, which helps the company introduce new products and eliminate competition.

💡Environmental Policies

Environmental policies are guidelines or rules set by an organization to minimize its impact on the environment. The video script mentions that Nestle revamped its environmental policies in response to criticism, implementing a no deforestation policy and committing to becoming fully zero waste to landfill by 2020.

💡Zero Waste to Landfill

Zero waste to landfill is a sustainability goal where an organization aims to eliminate all waste that goes to landfills, instead finding ways to reuse, recycle, or otherwise prevent waste generation. The video highlights Nestle's commitment to this goal as part of its environmental policy, which is a key aspect of its supply chain efficiency and sustainability efforts.

💡Market Research

Market research is the process of gathering, analyzing, and interpreting information about a market, including consumers' needs and wants. The video script indicates that Nestle extends beyond traditional market research to understand its demographic and what drives them, which is critical for successful supply chain analysis and product development.

Highlights

Nestle is the world's largest food manufacturing company with global reach.

Founded by Henry Nestle in the 1960s to address child malnutrition.

Began with a food supplement made from cow milk, wheat flour, and sugar.

Merged with Swiss General Chocolate Company, expanding to include chocolate in its products.

Nestle owns famous brands such as Milo, Nido, and Nescafe.

Underwent transformations including diversification into pharmaceutical products.

Emphasizes sound business strategies with a focus on product innovation and renovation.

Customer value creation and practical business core values are central to Nestle's approach.

Outsources activities and employs supply chain management for efficiency.

Utilizes a large workforce for smooth supply chain operations.

Customer satisfaction is key to Nestle's competitive edge and profitability.

Nestle believes in a unified supply chain to maintain product quality.

Brand building through the 'Nestle Way' to create consumer-appealing products.

Actively engages with customers online, with 210 million fans on Facebook.

Nestle posts 1,500 new items daily for high customer response rates.

Responsible sourcing and ethical practices are top priorities for Nestle.

Over 2,000 brands and 10,000 products, showcasing Nestle's market diversity.

Supply chain based on acquisitions, such as Ralston Purina and other companies.

Revamped environmental policies in response to media backlash, focusing on no deforestation.

Committed to becoming fully zero waste to landfill by 2020.

Nestle's supply chain analysis offers lessons on market research, product diversity, and waste reduction.

Nestle's net worth of 247 billion dollars reflects its successful business model.