INTRODUCTION

Supply chain plays a pivotal role in such companies. It is indeed the lifeblood of an entity

and, therefore, should be managed well for sustainable and profitable growth. Wikipedia

defines supply chain management as the management of the flow of goods and services. It

includes the movement and storage of raw materials, work-in-process inventory, and finished

goods from point of origin to point of consumption. Supply chain management is relevant

because it aims to provide the right amount of the right products to the right place at the right

time.

In order to expand and broaden the researcher's knowledge and information regarding

this matter, a research was conducted. The main objective of this study is to assess current

developments and practices with regards to supply chain of such company. Nestle is one of the

world's leading nutrition, health and wellness the offers variety of product line. With this, the

researcher seeks to analyze and discuss the company's supply chain management. As such,

this study will help to understand supply chain management to the outmost.
 PRESENTATION OF THE COMPANY

Over a hundred years after it first started operations in the country, Nestl Philippines,

Inc. (NPI) today is a robust and stable organization, proud of its role in bringing the best food

and beverage throughout the stages of the Filipino consumers lives. Driven by its mission to

nurture generations of Filipino families, Nestl today produces and markets products under

some of the countrys well-known brands such as NESCAF, NIDO, MILO, NESTEA, MAGGI,

BEAR BRAND, NESTL, and PURINA, among others. Its product range has expanded to

include coffee, milk, beverages, non-dairy creamer, food, infant nutrition, ice cream and chilled

dairy, breakfast cereals, confectionery, and pet-care.

Today, Nestl in the Philippines has four factories located in Cabuyao, Cagayan de Oro,

Lipa, and Pulilan. The researcher chose to visit the factory in Lipa. The Lipa Factory started

operations in 1992 in Barangay Bagong-Pook, Lipa, Batangas. With the biggest land area of 29

hectares, the factory is the Nestl Export Center for breakfast cereals like NESTL KOKO

KRUNCH, MILO Balls, Honeystars, Snowflakes, Honey Gold, FITNESSE and its variants,

Banana Nut Clusters, Almond Nut Clusters, Cookie Crisp and Cornflakes. Lipa Factory is the

MILO production center of the Philippines. It is also responsible for packing COFFEE-MATE and

coffee in jars.
 In examining the supply chain, this study only covers MILO brand. Milo is the worlds

leading chocolate malt beverage that can be prepared with hot or cold milk or water.

Nestl is multinational public company with over 250,000 shareholders. Below is the

organizational structure of Nestle Lipa.

Nestle Lipa Organizational Structure

Factory Manager

Total Performance
Management
Admin Specialist

Corporate
Management Trainee Safety, Health &
Environmental Head

HR Head Finance and Operations Engineering Head Quality Assurance

Control Dept Head Performance Head Head

Factory Supply Application Group

Chain Head Head

MILO Production Breakfast Cereal

Head Production Head
 PRESENTATION OF SUPPLY CHAIN

MILO Supply Chain

Delivery of Dispatch of
Source of Raw Dispatch of
Raw and Milo Finished
and Production of milo Finished
Packaging Goods to
Packaging Warehousing Milo Finished goods to
Materials to Costumers
Materials for goods Distribution
Factory (Distributions
Milo Centers
Warehouse etc..)

The supply chain of MILO starts from the sourcing of raw materials and packaging

materials for the main product. Followed by the delivery of raw materials and packaging

materials to the factory warehouse. The factory warehouse is located at Barangay Bagong-

Pook, Lipa, Batangas. Then, warehousing follows. The production of MILO will be done and will

be considered as finished goods. The next process is the dispatching of MILO finished goods to

distribution centers. Lastly, distribution of MILO finished goods to end users.

According to Mr. Jie Baluyot, Factory Supply Chain Department Head of Nestle Lipa,

they partner with 3rd Party Logistics Provider(3PL). Nestle Lipa outsourced Warehouse

Management to One Stop Logistics, Inc. One Stop Logistics Solutions, Inc. provides logistics

services for customers complex delivery requirements throughout the Philippines.

In asking Mr. Baluyot if they use Six-Sigma Quality, he stated that "We dont use Six

Sigma Quality but we have similar approach on continuous improvement.". "Nestle uses its own

platform for continuous improvement. It's an internal system called Nestl Continuous

Excellence (NCE)." , he added. Nestl Continuous Excellence (NCE) program, a continuous

improvement initiative based on Lean and Total productive maintenance principles. It is a

sophisticated business model around continuous improvement projects that have extraordinary

impact on the business in becoming a successful Lean Enterprise.

Further, Mr. Buyot cited the importance of Nestle Value Chain.

Material issues were considered and mapped with regard to the degree of importance

stakeholders place on the issue in different parts of the value chain and with regard to where

financial, operational and reputational impacts would be felt in the value chain. Agriculture

covers small-holder farmers with whom we do not have direct relationships. Tier 1 refers to

suppliers in direct commercial relationships with Nestl.

Mr. Baluyot also pointed out the Nestle Supplier Code as follows:

The 4 pillars of the Nestl Supplier Code

1. Human Rights

Nestl fully supports the United Nations Framework and Guiding Principles on Business and

Human Rights and expects the Supplier to respect all human rights, including labour rights,

throughout its business activities.

2. Safety and Health

Nestl expects the Suppliers operating and management systems, as well as employees, to

work in preventing work-related injuries and illnesses.

 3. Environmental Sustainability

Nestl requires its Supplier to comply with all applicable legal environmental requirements and

demonstrate continual improvement of its environmental performance.

4. Business Integrity

Nestl requires the Supplier to comply with all applicable ethical trade laws and regulations in

the countries where materials are sourced, produced and incorporated into Nestl product

(country of use). In case of services, the location of service delivery should prevail.
 ANALYSIS OF CURRENT SUPPLY CHAIN MANAGEMENT

Without a doubt, Nestle Lipa manages its supply chain very well. Nestle Lipa has

remarkable production facilities and they have also enjoyed the healthy market share for the last

years. One of the reasons of the success of the organization is their vendor management and

the intelligent distribution system. Supply chain was managed by the organization by having

excellent relationship with their channel members and logistics. Their distribution network

makes sure that every product is distributed in the required areas at the required time and the

demand and supply does not have any gap. Their distribution setup is synced with their

production system therefore they do not have to manage the inventory of the product for the

longer period of time.

Aside from that, their procurement department has selected the reliable and a quality

vendor that includes provides the best quality of raw materials/products to the company. In line

with this, Nestl promotes activities which help establish awareness on the importance of

environmental protection, transforming this awareness to conviction and sustainable actions

among its employees, business partners and other stakeholders not only in business but even

on personal level. And so, it is expected that Nestle would continue or improve this

environmental concern for it is one of the top companies in the Philippines.

Also, Nestle did a great job in implementing the Value Chain so that Nestle can re-

assess its material issues and maintain sustainability.

 RECOMMENDATIONS

The initial supply chain analysis involved establishing the flows of product of the

remaining business streams and modelling the costs of alternative warehousing and transport

options. Having established the right supply chain strategy for change, it is recommended for

them to have Logistics consultants to undertake a more detailed analysis of supply chain and

the operational implications of providing an improved service to Nestl's customers and

stakeholders.

Nestle should take advantage of technology such as RFID, RTLS, mobility, warehouse

automation systems, warehouse management systems and the like. It is also recommended to

apply supply chain management software applications such as enterprise resource planning

(ERP) to improve efficiencies and minimize costs and inaccuracies.

Nestle should also have a close monitoring to all its supply chain partners. With this,

they will be able to evaluate the conditions of each participant and improve their business

relationship.
 SOURCES

https://en.wikipedia.org/wiki/Supply_chain_management

https://www.nestle.com.ph/assetlibrary/documents/aboutus/nestl%C3%A9%20production
%20centers.pdf

https://www.nestle.com.ph/aboutus

http://www.nestle.com/brands/allbrands/milo

https://www.nestlepurinacareers.com/blog/hot-topics/nestle-continuous-excellence/

https://www.nestle.com/asset-library/documents/library/documents/suppliers/supplier-code-
english.pdf

http://www.nestle.com/randd/nutrition/nutritional-value-chain