Nestlé is one of the world’s leading food and beverage manufacturers. It is based in Switzerland, but it operates in more than 100 countries (Chung et al., 2020). The company produces all possible types of foods and beverages, including baby foods, pet foods, cereals, frozen foods, pizza, and others (Chung et al., 2020). The chosen company is Nestlé Bangladesh, which uses the principle of decentralization. According to this principle, the country can decide how to run business in the most efficient and successful way.
Nestle Bangladesh’s supply chain utilizes the principles of inbound and outbound logistics. The role of inbound logistics is to ensure the “supply of products that are imported” and confirm their transportation to the factory (Zaman, 2017, p. 22). For instance, Nestle Bangladesh milk manufacture’s inbound logistics control that local farms and village centers supply milk in time to the milk reception and cooling centers and then to the factories. Inbound logistics is also responsible for customs clearance and import duties (Zaman, 2017). Outbound logistics manages the delivery of the goods to the warehouses and other points of sales (Ahmed, 2017). Thus, it regulates the delivery of products from the factories to Nestle warehouses, to the distributors, wholesalers, and retailers, and to the customers.
The company has different suppliers and types of distribution centers. For example, most of the suppliers for Nestle Bangladesh are foreign, which makes the supply chain process longer and more complicated (Zaman, 2017). At the same time, local suppliers provide milk, which is sometimes challenging in the hot weather. In general, Nestle owns 376 factories in 81 countries, 368 of them “achieved zero-waste for disposal” (Nestle, 2020, p. 5). The main and only distribution center of Nestle Bangladesh is a warehouse established at Gazipur center (Tahsin, 2016). The warehouse orders goods, using the Last in First Out (LIFO) method, the main advantage of which is lower taxes (Harris & Harris, 2017). The company receives products from local and foreign distributors. The end-users of the company are their customers or people who consume Nestle foods and beverages.
Although Nestle Bangladesh’ manufacturing logistics plan is efficient and successful, some adjustments could be done to improve it. For the new plan, the company should take into account its internal and external stakeholders, including farmers, suppliers, employees, consumers, pets, families, communities, and the planet (Espinoza-Orias et al., 2018). Moreover, the manufacture of milk and dairy products should be changed too. Since milk is a sensitive product, which can be easily spoiled, the distance between the factory and milk farms should be reconsidered. The following recommendations could be implemented to improve the supply chain.
The company has an efficient return policy that guarantees almost zero-waste, that is why this aspect may remain unchangeable. However, some issues with transportation and distribution could be changed. Nestle Bangladesh should think about establishing farms near their factory, utilizing the Lean philosophy (Goldsby & Martichenko, 2005). In such a way, the company will improve the process flow, save time and cost on transportation, and will be less dependent on local farmers. In addition, if distributors deliver products at the wrong time, they should be penalized for such delays. To meet the customers’ needs, the company should always keep track of the actual demand of the consumers and adjust their manufacture correspondingly. Nestle should also create some promotional offers for the distributors to encourage and satisfy them and strengthen their relations. Finally, if the company is constantly improving its supply chain, manufacture, and delivery processes, it will improve its performance and attract more suppliers and consumers.
References
Ahmed, M. N. (2017). Impact of outbound logistics in purchase decision of small electronic home appliance traders in Chittagong. International Journal of Applied Logistics, 7(2), 52-62.
Chung, E. Y., Kee, D. M. H., Chan, J. W., Tiong, S. Y., Choke, Y. W., Low, J. S., Ajmi, D. A., & Motwani, H. (2020). Improving food safety and food quality: The case of Nestlé. International Journal of Tourism & Hospitality in Asia Pacific, 3(1), 57-67.
Espinoza-Orias, N., Cooper, K., & Lariani, S. (2018). Integrated product development at Nestle. In E. Benetto, K. Gericke, & M. Guiton (Eds.), Designing sustainable technologies, products and policies (pp. 447-456). Springer.
Goldsby, T. Dr., & Martichenko, R. (2005). Lean six stigma logistics: Strategic development to operational success. J. Ross Publishing.
Harris, P., & Harris, A. (2017). The positive outlook of the Last in First Out inventory methods. Journal of Business and Economics Research, 15(1), 1-4.
Nestle. (2020). Annual review 2020.
Tahsin, T. (2016). Customer service & distribution of Nestle Bangladesh Limited. BRAC University.
Zaman, T. M. (2017). Overview of the supply chain function of Nestle Bangladesh. BRAC Business School.