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1 Faisal Salim Rahman 1710124
2 MD MustainBillah 1730364
Table of Contents........................................................................................................................................2
Letter of transmittal.....................................................................................................................................3
Executive summery.....................................................................................................................................4
History of nestle..........................................................................................................................................5
The pioneer years....................................................................................................................................5
The Belle Époque.....................................................................................................................................5
Crisis and opportunity.............................................................................................................................5
Greater consumer convenience..............................................................................................................5
Towards Nutrition, Health and Wellness.................................................................................................5
Creating Shared Value.............................................................................................................................5
Introduction.................................................................................................................................................6
Analysis......................................................................................................................................................14
Methodology.........................................................................................................................................14
Solution.................................................................................................................................................15
FINDINGS...................................................................................................................................................16
Conclusion.................................................................................................................................................17
References.................................................................................................................................................18
Letter of transmittal
Dear Sir,
It is indeed a great pleasure for us to be able to hand over the result of our hardship of the MGT-
330 report of supply chain on nestle. This report is the result of the knowledge which has been
acquired from the respective course and perceptive knowledge. We tried our level best for
preparing this report. Thank you for your supportive consideration for formulating an idea.
Without your inspiration this report would have been an incomplete one. The information of this
report is mainly based on the article found on the internet. All of us gave our level best for
making this report come together.
We, fervently hope that you will find this analysis worth reading. Please feel free for any query
or clarification that you would like us to explain. Hope you will appreciate our hard work and
excuse the minor errors. Thanking you for your cooperation.
Yours Sincerely,
Abrar Faizullah
MD MustainBillah
Sanjana Sultana
Shafat Saleh
Executive summery
Nestlé was formed in 1905 by the merger of the Anglo-Swiss Milk Company, established in
1866 by brothers George and Charles Page, and Farine Lactée Henri Nestlé. The company grew
significantly during the First World War and again following the Second World War, expanding
its offerings beyond its early condensed milk and infant formula products and now expanding to
baby food, medical food, bottled water, breakfast cereals, coffee and tea, confectionery, dairy
products, ice cream, frozen food, pet foods, and snacks.
The article was based on the supply chain of their main focused product coffee and cereals. The
article by Jens Hamprecht and Daniel Corsten interested us to look into it. We went through the
article many times that helped us find the analysis and findings from the report. Also the
overview of the report was firmly understood and explained as in the report they discussed on the
method of the supply chain of the raw materials where they retraced the supplier of the product.
History of nestle
Nestle was formed in 1905 by the merger of the Anglo-Swiss Milk Company, founded in 1866
by Henri Nestle. The company grows significantly during the First World War and again
following the Second World War. Nestle is one of the largest food companies in the world. The
product of Nestle mainly includes the cereals, baby food, coffee, tea as well as ice cream and pet
foods.
Supply chain is the heart of Nestlé as Nestle is the leading nutrition, health and wellness
company. Thus, even though it has a sophisticated chain, Nestle keeps customers at the centre
with the motto being the leader in supply chain in its industry. Supply chain professionals at
Nestle plays a critical role in ensuring the quality of the products that reached to the customers
and consumers. To achieve this Nestle collaborate with commercial teams to develop demand
forecasts and the suppliers around the world.
The purpose of the article was for the food industry, the depletion of arable land and a growing
world population demand controlling the sustainability of agricultural Inputs to the industry.
Controlling the sustainability of these supplies means controlling the economic, social, and
environmental performance of the supply chain. Supply chain is responsible for safely storing
and transporting the products to meet our customers and consumers. So, the authors propose a
method for integrating controls of social and environmental performance in a supply chain
controlling framework. This method is illustrated with case studies on Nestlé’s food supply
chains. The report provides an overview about the supply chain management of Nestle
Company. Mainly, the report explains how they traced the raw materials (milk and cereal) of
nestle down to their suppliers. And every control points were assessed so that the economic,
social and environmental safety and efficiency is ensured. Then the hand over points and control
points to guarantee food safety and quality in the supply chain.
We’ll discuss briefly about background, selection of supply chain management and the method
of integrating controls of social and environmental performance in a supply chain controlling
framework of Nestle.
See discussions, st ats, and author pr ofiles for this publication at : https://www .researchgate.net/publication/242019661
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Supply Chain Management: An International Journal
Controlling the sustainability of food supply chains
Jens Hamprecht Daniel Corsten Manfred Noll Evelyn Meier
Article information:
To cite this document:
Jens Hamprecht Daniel Corsten Manfred Noll Evelyn Meier, (2005),"Controlling the sustainability of food supply chains", Supply
Chain Management: An International Journal, Vol. 10 Iss 1 pp. 7 - 10
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http://dx.doi.org/10.1108/13598540510578315
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Craig R. Carter, Dale S. Rogers, (2008),"A framework of sustainable supply chain management: moving toward new
theory", International Journal of Physical Distribution & Logistics Management, Vol. 38 Iss 5 pp. 360-387 http://
dx.doi.org/10.1108/09600030810882816
Gabriela Alvarez, Colin Pilbeam, Richard Wilding, (2010),"Nestlé Nespresso AAA sustainable quality program: an investigation
into the governance dynamics in a multi-stakeholder supply chain network", Supply Chain Management: An International
Journal, Vol. 15 Iss 2 pp. 165-182 http://dx.doi.org/10.1108/13598541011028769
Craig R. Carter, P. Liane Easton, (2011),"Sustainable supply chain management: evolution and future directions",
International Journal of Physical Distribution & Logistics Management, Vol. 41 Iss 1 pp. 46-62 http://
dx.doi.org/10.1108/09600031111101420
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Abstract
Purpose For the food industry, the depletion of arable land and a growing world population demand controlling the sustainability of agricultural
inputs to the industry. Controlling the sustainability of these supplies means controlling the economic, social, and environmental performance ofthe
supply chain. In practice, little is known about how companies can efficiently extend their existing supply chain controls to cover these aspects. This
paper tries to address this particular gap.
Design/methodology/approach The authors propose a method for integrating controls of social and environmental performance in a supply chain
controlling framework. This method is illustrated with case studies on Nestle· s food supply chains.
Findings The case studies highlight why quality controls along the whole food supply chain are an import precondition for controlling sustainability.
Originality/value This study is useful for the food industry in the control of sustainability of agricultural inputs to the industry.
Keywords Switzerland, Food products, Supply chain management, Quality
The authors thank Dr Hans Joehr, assistant vice president Nestle· and
corporate head of agriculture as well as Professor Fritz Fahrni, ETH
Supply Chain Management: An International Journal Zu¤rich for their support of the project.
q10/E1m(2er0a0ld5)G7r o1u0p Publishing Limited [ISSN 1359-8546] The analysis of Nestle· s Swiss dairy supply chain was
supported by [DOI 10.1108/13598540510578315] Martin Maeder and Daniel Schmocker, Nestle· Switzerland.
7
Controlling the sustainability of food supply chains Supply Chain Management: An International Journal
Jens Hamprecht et al. Volume 10 • Number 1 • 2005 • 7 10
information on a supply chain should serve multiple purposes integrated in the total quality management (TQM) in
order to minimise time for data collection. framework of the factories. In the following, we provide an
This consideration motivated the joint project by Nestle· example of this method.
and the University of St Gallen. We sought to investigate how
controls of sustainability could be merged in a more efficient
manner. Application of the method at Nestle·
At Nestle·, we selected an existing TQM framework as the
Selection of the supply chains basis for integrating supply chain controls. The origin of the
selected TQM framework dates back to 1991, when a group
The project began with the selection of two of the business of 14 European businesses, including Nestle·, jointly
most important raw material supply chains: fresh milk and developed the business excellence model of the European
cereals. For each of these supply chains, we conducted case Foundation for Quality Management (EFQM, 2004).
studies in the Swiss market. At the beginning of the case The EFQM model allows an assessment of both current
studies, we faced an important question: Would the business practices (the so-called enablers) as well as results.
integration of economic, social, and environmental controls Today, the EFQM model includes partnerships with other
differ from supply chain to supply chain? Or would there be businesses as an assessment criterion. A controlling of
significantcommonalities we could build on? This presented a operational processes, however, has typically been limited to
challenge, since the nature of salient environmental and social firm boundaries in TQM frameworks. Usually, assessments of
issues in one supply chain can be very different from those in a supplier s operational processes have been done separately
another. To illustrate, excess inputs of nutrients can by the responsible purchasing managers.
contaminate ground water. This is a challenge that farmers We developed a supply chain-specific extension of the
in many European and North American regions need to TQM framework for milk sourcing Nestle· factories. This
address. In tropic regions, however, farmers need to avoid extension accommodates the controls of food safety, quality,
degradation of the thin soil due to a lack of nutrients. Hence, costs, flexibility, and sustainability of the factories major
at the beginning of the case studies, there was a question as to agricultural chain.
what extent the results of one case study could be generalised Following the identification of a suitable controlling
to other raw material supply chains. Throughout the case framework, we traced the flow of materials. We randomly
studies, however, common patterns emerged. selected a batch and traced the raw material flow from the
factory gate back to agricultural production. In addition, the
Method process of delineating the material flows allowed us to control
traceability in the supply chain. If a supplier of an agricultural
Figure 1 shows the method we developed for integrating raw material had been found unable to identify his/her own
controls of the sustainability of supplies. First, we selected a suppliers, then the first action would have been to ensure an
controlling framework of the factories that could update of his/her traceability records. In the case studies we
accommodate the broad range of economic, social, and verified that the cereals as well as the fresh milk supplies could
environmental performance aspects. Subsequently, we traced be traced to agricultural production.
the supplies of the factories key raw material back to Figure 2 shows the chart of material flow we found for a
agricultural production. batch of cereals delivered to a Nestle· factory. Note that
Once material flows and information flows were known, we beyond the mill, we did not retrace supplies to individual
followed a continuous improvement process. We short-listed farmers. Instead, we randomly selected one of the mill s silos
controls in the supply chain and revised these in line with the for wheat deliveries. From there on, we retraced the flow of
goals of improving economic, environmental and social materials back to the collection points and ultimately, back to
performance. Finally, a check for these controls was the farmers. At every stage we short-listed the present control
8
Controlling the sustainability of food supply chains Supply Chain Management: An International Journal
Jens Hamprecht et al. Volume 10 • Number 1 • 2005 • 7 10
Figure 2 Tracing a batch of cereals from food manufacturer back to agricultural production
points for food safety and quality in the supply chain. For receives a financial bonus from Nestle·. In addition, the state
every control point, we reported relevant information such as supports improved environmental performance of farming
the critical limits of the controls. A complete set of control operations financially.
points in the supply chain was considered highly important. It
emerged that especially those control points at the hand-over Collaboration is essential
from one party to another can serve several tasks.
Traditionally, these control points have been used for However, there is an important difference between the
controlling food safety and quality of the product. However, different supply chains that we studied. In the case of fresh
these control points can be enhanced to account for the milk supplies, the farmers sell their entire production to
sustainability of agricultural production. Nestle·. This means that a continuous improvement of supply
The first extensions of these control points cover chain controls, as shown in Figure 1, can be achieved on a
environmental performance aspects. To illustrate, in business-to-business level. However, in the cereals supply
Switzerland Nestle· now requires that dairy farmers calculate chain, Nestle· is only one of many customers of the mill.
the nutrition demands of their soils annually. Any over- Today, the mill depicted in Figure 2 processes wheat for three
fertilisation is forbidden. Compliance with this regulation will different eco-labels . These eco-labels guarantee the be
controlled by an independent body. The transport provider consumer that the cereals originate from a particular will
only accept and collect fresh milk from farms complying environmentally-friendly production. Each of the three with
the scheme. Consequently, existing food safety and customers of the mill has established slightly different quality
controls are complemented with an environmental standards on what constitutes environmentally-friendly performance
aspect. production. As a consequence, the mill now maintains
Similarly, social performance aspects such as a controlling separate storage containers for every label. During transport, of
labour standards can be integrated in existing supply chain wheat flour of one eco-label may not be mixed with wheat
controls. At the first hand-over in the supply chain, the buyer flour of the other two eco-labels. Clearly, system costs in this
can ensure that the farmer complies with certain standards. supply chain are higher than they would be in a supply chain
With the help of the following hand-over documents in the without such a multitude of labels. Furthermore, had the
supply chain, this information can be passed downstream to three businesses jointly designed a sourcing standard, they
the gates of the food-processing factory. Figure 2 illustrates might have achieved a leverage effect in the market. For
the hand-over points that are used to pass on information in additional customers of the mill it would have been easier to
the cereals supply chain. If the food manufacturer can trace join a common initiative rather than adopting a label
his/her supplies back to agricultural production, he/she is in a proprietary to one business.
position to verify compliance with these standards. Based on this consideration, Danone, Unilever and Nestle·
In summary, the procedures which had originally been founded the SAI Platform, the Sustainable Agriculture
designed for the purpose of quality and food safety assurance Initiative of the food industry in 2002. The initiative jointly
can provide a basis for ensuring sustainable practices. In the develops standards on the sustainable practices of agricultural
Swiss fresh milk supply chain, the focus has been placed on production. Today, it enjoys active participation of food
improving the environmental performance of the farms. operators such as McDonalds, Sara Lee and Kraft. Jointly,
9
Controlling the sustainability of food supply chains Supply Chain Management: An International Journal
Jens Hamprecht et al. Volume 10 • Number 1 • 2005 • 7 10
However, the efforts of the farmers are rewarded. If a farmer these businesses develop social, environmental and economic
improves the quality of his/her fresh milk production, he/she standards that they can communicate to commodity traders
10
Controlling the sustainability of food supply chains Supply Chain Management: An International Journal
Jens Hamprecht et al. Volume 11 • Number 1 • 2005 • 7 11
and the farming community more effectively than any single improvement process, building on both past experiences and
business could. new research findings.
Currently the Sustainable Agriculture Initiative runs pilot In the case studies described here, we focused on one pillar
projects on a number of commodities, including cereals (SAI, in the creation of sustainable supply chains: quality
2004). Once the sourcing guidelines are completed, management. In the food industry, the creation of the
continuous improvement efforts in the commodity supply Sustainable Agriculture Initiative points to the enabling role
chains can be achieved in a more efficient manner. that horizontal alliances can play. In other sectors such as the
As an outcome of this project, we have developed an electricity or the automotive industry, equally important
extension for the TQM frameworks of factories sourcing fresh initiatives have emerged (WBCSD, 2004). We encourage
milk. This extension allows us to evaluate quality, safety, cost, studies that investigate the role of these horizontal alliances in
flexibility and sustainability of suppliers processes as an various industries. Alliances as well as quality management
integral part of the factory s TQM framework. The same skills and a commitment to achieving change could prove vital
approach can be followed for factories sourcing commodities in creating sustainable supply chains.
such as cereals once the industry initiative has finalised its
guidelines on sustainable sourcing. References
11
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Analysis and Findings
Analysis
Nestle is the world's largest food and beverage company tries to maintain a certain standard of
quality. High quality can be provided by using the high quality of raw materials such as milk,
cocoa, coffee, cereals, etc. Nestle alone collects about 2 percent of global milk production.
Nestle must control the supply sustainability of these items. There are two major problems nestle
faces while ensuring supply sustainability is – The control needs to be regularly refined based on
new research and findings and secondly social and environmental performance aspects need to
be integrated with economic controls. The case aims to find out how controls of sustainability
could be merged in a more efficient manner. Two of the most important raw materials that are
fresh milk and cereals were selected. For both supply chain processes, we conducted a case study
and the questions that arise were -Would the integration of economic, social, and environmental
controls differ from supply chain to supply chain? Or would there be considerable commonalities
we could build on? This was hard to determine as the supply chain may vary depending on the
social and environmental issues. For example, some areas may require more nutrient input, and,
in some cases, nutrients should be avoided since it may contaminate the ground.
Methodology
To start with, a controlling framework of production lines that could accommodate the
wide scope of social, environmental, and economic issues was chosen. They traced back from
suppliers to the agricultural production of the raw materials. The process was followed, and total
quality management was integrated. The first TQM method that was followed was developed in
1991. Later, it was changed to the European Foundation for Quality Management (2004)
developed by 14 European businesses including Nestle. The EFQM model permits an evaluation
of both current strategic policies just as results. Today, the EFQM model incorporates
the flow of materials was traced back. The original suppliers of the raw materials were being
In figure 2 a random silo of wheat was selected and traced back to the supplier than to the farmer
keeping in might the control points of food quality and safety. For the milk production, the
farmers directly sell all their production to Nestle which is why a standard is maintained. But in
figure 2 we can see that food is processed for three different companies’ indifferent storage units
with eco-labels separate for each since the quality standards vary. To make it easier to ensure
control and to save cost and time the three companies came up with the SAI platform
(Sustainable Agriculture Initiative) which is a set standard for Quality management. SAI was
running piloting several commodities. Due to this project, an extension to the TQM framework
was developed to ensure the proper safety cost, quality, sustainability, and flexibility of the
Solution
The solution might be making laws that require all the parties involved to ensure social
and environmental control inability to follow which will directly cancel their ties with the
company. This will reduce time as every single party will stay responsible and the producer such
as Nestle does not have to separately go through the process of ensuring this for every single
Based on this consideration, Danone, Unilever and Nestle ́ founded the SAI Platform, the
“Sustainable Agriculture Initiative” of the food industry in 2002. The initiative jointly develops
standards on the sustainable practices of agricultural production. Today, it enjoys active
participation of food operators such as McDonalds, Sara Lee and Kraft. Jointly, these businesses
develop social, environmental and economic standards that they can communicate to commodity
tradersand the farming community more effectively than any single business could.
As an outcome of this project, we have developed an extension for the TQM frameworks
of factories sourcing fresh milk. This extension allows us to evaluate quality, safety, cost,
flexibility and sustainability of suppliers’ processes as an integral part of the factory’s TQM
framework. The same approach can be followed for factories sourcing commodities such as
cereals once the industry initiative has finalized its guidelines on sustainable sourcing
Conclusion
For the food industry, the depletion of arable land and a growing world population demand
controlling the sustainability of agricultural inputs to the industry. Controlling the sustainability
of these supplies means controlling the economic, social and environmental performance of the
supply chain.
In our case, we have decided to analyse the supply chain strategies of Nestle and its
sustainability. The organization is having impressive supply chain management but they need
focus on two particular factors. One is making vendors partners of the organization and another
is increasing information technology tools to manage their vendor relationship.
Corsten, J. H. (2015). Controlling the sustainability of food supply. Supply Chain Management: An
International Journal, 8.