Supply chain management of Nestle

Supply drawing string c be of NestleSupply train air has gaining its impressiveness in serving business op timetions and being blow up of strategic precaution of the business. Its procedure has been shifted from being a support department to being the core department of business with strategic importance and usance to play in boilersuit operations of the business. In modern business world no scheme derriere sustain without having a fountainhead established, effective and efficient go forth twine heed. The role of traffickers along with vendor management with the introduction of cultivation engineering is important consideration for organizations.Now with sum up of strategic importance of hand over drawstring management the utility provider is now becoming a partner to the organization, rather being that the vendor. The factor influencing warring ad vantage of the organization is now having the make better vendor management and vendor relations in the list. T herefore in coming years the importance of try chain management is expected to increase with the increase in competition and globularization.To understand the strategic supply chain management, key thoughts and use of education engineering to check the vendor alliances, this report in presented on one of the leading FMCG company Nestle. Their products range is wide and the concentration of this report is on organizations Pakistan operations. Since Pakistan is the part of their world(a) supply chain operations but for their milk products they dumbfound to rely on the topical anaesthetic milk suppliers who are non very much educated and well equipped. Therefore managing them is a dispute for the organization and very(prenominal) challenge and its handling is under study in this report. There are somewhat recommendations besides given at the end so that receiptss can be made in local supply chain.Assignment 2a2ai) Current Supply Chain Strategies in NestleIn these lines I shall be looking at the supply chain management of Nestle Pakistans operation and would not be discussing the global supply chain management of the organization. The organization has remark subject achievement facilities in the uncouth and they induct in like manner enjoyed the healthy market share for last few decades. One of the reasons of the success of the organization is their vendor management and the intelligent distribution carcass.The market in Pakistan is mostly dependent upon the distribution electronic ne 2rk and same has been managed by the organization in recent years by having excellent relationship with their channel members and logistics. Their distribution network makes sure enough that every product is distributed in the rentd areas at the required time and the accept and supply does not have any gap. Their distribution setup is synced with their production transcription therefore they do not have to manage the inventory of the product for the longer period of time. This strategy has saved the organization on financial side moreover they have been able to provide the product to the market at demand (Hugos, 2006).The second side of their supply chain management is their vendor management, they have applied the just in time management concept in their raw material procurance and vendors are very well synced with the procurement and procurement is synced with the production and other support departments. This just in time management has excessively saved the organization the inventory management address of the raw material and they are able to maintain a very low take aim of the inventory. Their vendor are besides required to make sure that their raw material reaches to the organization on time (Hugos, 2006).2aii) Use of IT to Maintain Vendor RelationshipsThe schooling engine room is serving organization to manage their business operations in variant ways the same concept can in addition be applied to manage vendor relati onships with Nestle Pakistans operations.The organization can heading a procurement network that is integrated with the various departments of the organization. And the procurement department can have information engineering based application that are also integrated with the systems of the vendors and are automated. By utilize this system organization have the concept of just in time management applied in total spirit and the vendors leave alone also be aware of the production schedules of the organization and they allow for be able to plan their delivery and their own production planning according (Hugos, 2006).The preceding(prenominal) mentioned scenario pull up stakes make it unprovoked and convenient for the vendors to do business with the organization and they allow for have better relationships with the organization and ordain stay to do business with them. With having these relationships with the organization they pass on be able to be partners of the company.As signment 2b2bi) Assistance of IT in Supply ChainThe use of information technology can assist a great do by in the management of supply chain in causa of Nestle Pakistan operations. In the global supply chain nestle is making use of supply chain management tools that are support by latest technology available. These tools are able to integrate different parts of the supply chain that includes the just in time management of raw materials, automation of order generation to vendors and the logistics of raw material from vendor to storage warehouse and the distribution of the finished tidys to the different channels (Chopra and Meindl, 2009).Previously all the above mentioned parts of the supply chain were disintegrated or in some organization these parts were partially integrated. Now information technology has made is possible and easy to manage all these parts of the supply chain from one close and more over these parts and integrated with more automation. Example of this desegr egation is simple, once the inventory level reaches to the pre defined minimum for the raw material at the production facility, then the order management system which is connected to the inventory management system, automatically generated order to the pre defined vendors. The order receiving systems of vendors are connected with the procurement systems of the organization (Chopra and Meindl, 2009).After the vendor is intimated, they manage to supply the required stuff and required quantity to organizations warehouse which is already intimated for the order delivery. All this emergence is done via an integrated system which is called ERP. The application of these information technology tools make the organization able to save their time and management resources and make the vendor the partners of the organization above all this impost of IT bring automation in the processes which is the requirement of production oriented organizations (Chopra and Meindl, 2009).2bii) Effectiveness of IT in Management of Supply Chain in NestleWhen we talk slightly the effectively apply the information technology in the Pakistan market with local vendors that we see that our case company has been able to improve a lot in recent years. Since the market of Pakistan is still in developing phase and the modern management and information technology practices are yet to be adapted in this market. Since Nestle for their business require a team of vendors that are able to provide the timely supplies therefore they had to work hard to lead up the modern practices in their supply chain in relation the market conditions (Cohen and Roussel, 2004).Apart from the current IT tools to overhaul the organization gain the best out of their supply chain management, there is a function in which information technology and its use can play an important part in the management of business, and which is still to be explored. This area is related to the supply chain management of their milk products . For their milk brand which is called draw PAK they need to collect he milk from far and village areas of the market as the milk production is mostly done in the rural areas of Pakistan.Their milk collection process is done on workaday basis and it is still on manual basis. There can be use of information technology by using this they can maintain the data base of their milk vendors which are small, geographically distributed and disperse in locations. Moreover they can also use information technology to locate their collection van using global positioning systems and install trekkers in them so that they can make sure the condom of the milk and the vans .Assignment 2c2ci) Role of Logistics in Supply ChainLogistics has an important role to play in the overall supply chain management of any organization. Logistics are the activities that are knowing to keep the full(a) or serve moving from one destination to the other destination. This movement of goods or services can be rel ated to the raw material need for production setup, and its movement would be from vendor set forth to the organizational premises and this movement can also be related to movement of finished good from organizational production facility to the channel member facility.In overall management of supply chain the logistics part has its own importance. Since the production oriented business is all about timing. If the raw material is not available to the production facility then the whole production cycle willing sign disgusted and similarly if the finished good are not reached to the channel members then they will not be able to distribute it on time and the result will be the complete failure of the business plan (Cohen and Roussel, 2004).Consideration for any organization would be to have the logistics setup planned and implemented that is consume less cost of operations more over which is integrated with the supply and demand channels of the organization. business leader to des ign such logistics setup helps the organization to achieve their supply chain objectives with putting minimum cost to it. The success of any supply chain management is dependent upon the design of logistics, the smarter the design which is able to set maximum in minimum cost the better the performance of supply chain roles will be. focusing of our case organization is to design the global logistics channel that is able to satisfy the global business needfully in minimum costs. And they have been able to handle this challenge smartly (Cohen and Roussel, 2004).2cii) Evaluation of procurement Practices in NestleProcurement practices in Nestle global as well as Nestle Pakistan are streamlined and on the job(p) on the smarter management concepts. It would not be wrong to say that one of the success factors for their profitability in the Pakistan is their vendor relations and smart procurement. Nestle Pakistan has to procure different good and services from different kinds of vendor for their operations these good ranges from the raw material for their finished good as well as the supplies for the support departments like marketing. The overall philosophy of Nestle Pakistan procurement is to focus on flavour as well as business capacity (Hugos, 2006).When we talk about the milk product of the case company then we see that the procurement of the milk from different villagers that are spread across Pakistan is a challenge and the organization has been able to cater to this challenge very well. The important factor in the procurement of the raw milk is to make sure that milk is pure, hygienic and fresh. These things are made sure by designing a well established vendor network that is responsible for the procurement of fresh milk upon the above mentioned properties (Hugos, 2006).Their procurement department has select the reliable and quality vendors that includes small to medium sized diaries that provides the quality milk to the company. Their procurement depa rtment also makes sure that the milk is fresh, hygienic and above the standards defined by the organization. Their logistics have made sure that the fresh milk reaches to the production facility on daily basis. The same care and quality consciousness have been practiced in other procurement tasks, and in footling we can say that procurement processes at the organization are of high standards (Hugos, 2006).2ciii) Factors for Improvement in Logistics ProcurementThere are several factors that are to be considered when organizations go for re meeting and improving their logistics and procurement. The offset factor that is to be taken care of is the bargaining power of the suppliers. The higher the bargaining power of supplier the higher will be the requirement for the organization to maintain and build good relationships with their suppliers. In industries where such power is with suppliers organizations have to design their procurement process which is supplier friendly and encoura ges the organizations to have good friendly relationships with their vendor, focusing on making them their partners in business and getting the competitive edge out of it (Chopra and Meindl, 2009).The second factor which is to be taken into consideration is the cost factor, the procurement and logistics can be costly to the organization if not designed creatively. The logistic are costly when their inbound and outbound management is not done the way to maximise the productivity. Therefore when organization design the procurement and logistics process they should keep in mind the cost of procuring the goods and service along with the distribution cost of the good should be minimum. These costs include the time and resources costs as well.Another important consideration is related to the integration of procurement and logistics with rest of the business operation. Organization when improving these processes should also make it sure that the maximum integration is possible with other departments like production. They should be working on the automation of the processes that should be managed by single hub. This way the costs of operations will be minimum and automation and integration of all the operations will save time and increase efficiency in the business processes. They should also make sure that integration also include the vendors (Chopra and Meindl, 2009).Assignment 2d2di) Strategy for the Improvement of Supply ChainPresented on a lower floor is the brief overview about the strategy that can be used to improve the supply chain management of the organization. The focus of the strategy to improve the supply chain management of Nestle Pakistans operations. While reviewing this strategy it should be kept in mind that Pakistan is developing country and their vendor management and logistics operations are being run on old school management. The mentioned below point are focusing on vendor management and to increase the use of information technology to bring o verall improvement (Chopra and Meindl, 2009).beginning of all the organization should work on the vendor relationship management, up till now the equilibrize of power was with the organizations in Pakistani market, but with the introduction of global economy and open market more players are entering into Pakistan and now the importance of vendors is increase. Keeping this view in mind the Nestle should be working on increasing the organization and vendor integration and they should be made partners in business. This can be done via having automation and integration with vendor systems and just keeping them motivated to be partners with the organization (Chopra and Meindl, 2009).The second improvement which is required is to start the use of information technology in their supply chain management processed. Up till now the organization is using the information technology internally but they have to move out and make their vendor also use this tool. One can argue that currently vend ors are not that advance in using technologies but I would say that organization would have to educate their vendors and make them part of their organizational process, this way they will be able to achieve the true partnership with their suppliers and the operations of supply chain will improve a great deal (Chopra and Meindl, 2009).2dii) Benefits of Improvement to Business OperationsThe improvements suggested above have different benefits to the organizational business operations, these benefits ranges from operation to strategic benefits. The first benefit that organization will have is that they will have a strategic competitive advantage by partnering with the suppliers of the raw material of their products. The business era is changing the market and now other players are also entering into the same market, now the competitive advantage will be with the organizations which have strategic partnership with their suppliers as well. The increases in competition have also made the suppliers aware of their important role and they are also feeling the shifting balance of power. So it will be advisable to make the partnership before others do (Hugos, 2006).The second improvement is related to the use of information technology in supply chain management and it has many benefits for the organization. First of all the organization will be able to achieve the integration between different departments play their part in value chain. Once this is done it will save time and financial resources to the organization as the processes will be streamlined and efficiency will increase. The second benefit of the IT usage will be that vendors and suppliers can also be made part of the organizational processes and with that supply chain overall and procurement processes in specific will be improved. This will again help the organization to get business efficiency (Hugos, 2006).The third benefit is related to distribution part of supply chain, organization will, with the usage o f information technology, have the most streamlined distribution network when they have partnered with their channel members, and this will also help in the improvement of business.2diii) Overcoming the Barriers to Change in Improvement StrategyWhenever there is a strategic change barriers are always there. These barriers are to be removed with the creation of understanding and delegation. The first process is to make the management understand that what are the benefits of the new strategy advised for the strategic change in supply change management. More over the management will also be informed about the challenges it has to face if they do not adapt the required changes in the market. The top management in the first phase will be made part of the process and strategic importance of the change will be introduced to them.In the second phase where the top management will already be convinced about the required change, the middle management will be taken into confidence, at this sta ge the vendors will also be made part of the process so that they are aware of their role in the organization. This stage will also be comprising the rough drafts of the change. In this process all the vendors and relevant departs will be encouraged to give their feedback about the suggested changes moreover their suggestion will also be mention for any improvement.All this discussion and delegation will create the sense of self-possession in management and their feedback will make them realize that this is something for their own benefit and they will start owing it. Once the ownership is there, the barriers to change will start reducing it and fear of unknown will be removed. With this process the capital punishment of the strategic change will be made successful and finally the concerned departments will also be provided with the required training.ConclusionIn this report I have discusses various kinds of supply chain strategies and use of information technology to improve the supply chain. The organization selected for the analysis was Nestle Pakistan, and their supply chain strategies were discussed briefly. The organization is having impressive supply chain management however they need to concentrate on two dimensions. One solution being the concentration on making the vendors partners of the organization. Second solution being increasing the use of information technology tools to manage their vendor relationships.