Nestle Operations

THE NESTLE STORY

Nestle S. A. the present Switzerland based international food group, originally consisted of two companies and two products: Henri Nestle and his baby food in Vevey, and the Anglo-Swiss Condensed Milk company and its condensed Milk Company and its condensed milk in Cham, both in Switzerland. In 1866 the Page Brothers form the United States set up a new industry in Cham, making condensed milk from a raw material that was available in abundance in the region. In 1867 Henri Nestle a chemist in Vevey, created a milk and cereal based food for babies.

The companies competed vigorously until 1905, when they merged and became the starting point of the present food group.

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MEANING OF NESTLE: Henri Nestle endowed his company with the symbol derived from his name. His family coat of arms, the nest with a mother bird protecting her young, became the Company's logo and a symbol of the Company's care and attitude to life-long nutrition. The Nestle nest represents the nourishment, security and sense of family that are so essential to life.

BRIEF HISTORY OF NESTLE: 1866 -1905

In the 1860s Henri Nestle, a pharmacist, developed a food for babies who were unable to breastfeed. 1905-1918 In 1905 Nestle merged with the Anglo-Swiss Condensed Milk Company. By the early 1900s, the company was operating factories in the United States, Britain, Germany and Spain.. 1918 -1938 . The 1920s saw Nestle's first expansion into new products, with chocolate the Company's second most important activity. 1938 -1944 Nestle felt the effects of World War II immediately. Profits dropped from $20 million in 1938 to $6 million in 1939.

Factories were established in developing countries, particularly Latin America. Ironically, the war helped with the introduction of the Company's newest product, Nescafe, which was a staple drink of the US military.. 1944 -1975 In 1947 came the merger with Magi seasonings and soups. Crosse & Blackwell followed in 1950, as did Findus (1963), Libby's (1971) and Stouffer's (1973). Diversification came with a shareholding in L'Oreal in 1974. 1975 -1981 Nestle made its second venture outside the food industry by acquiring Alcon Laboratories Inc.. 1981 -1996

Nestle divested a number of businesses1980 / 1984. In 1984, Nestle's improved bottom line allowed the Company to launch a new round of acquisitions, the most important being American food giant Carnation. 1996+ The first half of the 1990s proved to be favorable for Nestle: trade barriers crumbled and world markets developed into more or less integrated trading areas. Since 1996 there have been acquisitions including San Pellegrino (1997), Spillers Pet foods (1998) and Ralston Purina (2002). There were two major acquisitions in North America, both in 2002: in July, Nestle merged its U.

S. ice cream business into Dreyer's, and in August, a USD 2. 6bn acquisition was announced of Chef America, Inc NESTLE TODAY Nestle is now the world’s largest food company. It is present on five continents, has an annual turnover 70 billion Swiss francs ,runs 522 factories in 81 countries, 200operating companies, 1basic research center and 20 technological development group and more than 231,000 employees the world over. The Nestle factories are operating in the region of  Africa America Asia Europe Oceania

Being a company dedicated to food from the beginning, Nestle remains sensitive to culinary and eating habits, and responds to specific nutritional problems, whilst also setting and matching new trends such as growing out-of-home consumption and caring about the well being of its consumers.

MISSION STATEMENT Nestle, believe that research can help them make better food so that people live a better life. Good Food is the primary source of Good Health throughout life. Nestle strive to bring consumers foods that are safe, of high quality and provide optimal nutrition to meet physiological needs.

In addition to Nutrition, Health and Wellness, Nestle products bring consumers the vital ingredients of taste and pleasure. As consumers continue to make choices regarding foods and beverages they consume, Nestle helps provide selections for all individual taste and lifestyle preferences. Research is a key part of heritage at Nestle and an essential element of future. There is still much to discover about health, wellness and the role of food in lives, and continue to search for answers to bring consumers Good Food for Good Life

VISION STATEMENT

The Nestle global vision is to be the leading health, wellness, and Nutrition Company in the world.

NESTLE BRANDS At Nestle, products are developed keeping consumers, their preferences and health in mind. Millions of consumers the world over trust Nestle products for good reason: when they choose a Nestle product they have the satisfaction of choosing quality, taste, variety, convenience and the good nutrition. With over 140 years of experience and expertise, Nestle take great pride in bringing us a portfolio of health and wellness because happy, healthy consumers are important to Nestle.

The ten principles of business operations Nutrition, Health and Wellness Nestle core aim is to enhance the quality of consumers’ lives every day, everywhere by offering tastier and healthier food and beverage choices and encouraging a healthy lifestyle. Nestle express this viatheir corporate proposition Good Food, Good Life. Guided by their commitment to Nutrition, Health and Wellness, they work to increase the nutritional value of their products while also improving taste and enjoyment. Nestle also develop brand communication and information that encourages and empowers onsumers to make informed choices about their diet. Quality assurance and product safety Everywhere in the world, the Nestle name represents a promise to the consumer that the product is safe and of high standard. Nestle commitment is never to compromise on the safety of any product. Their Quality Policy summarizes the essentials of their passion for excellence:

• to build trust by offering products and services that match consumer expectation and preference;
• to comply with all internal and external food safety, regulatory and quality requirements.

Quality is everybody’s commitment. Nestle continuously challenge theirselves in order to constantly improve and achieve the highest levels of quality. It maintain the same high food safety standards in all countries in which they operate. They ensure the delivery of high quality products through their Quality Management System. Consumer communication Nestle is committed to responsible, reliable consumer communication that empowers consumers to exercise their right to informed choice and promotes healthier diets.

They respect consumer privacy. Their core business strategy is built around helping consumers to have a balanced, healthier diet. The Nestle Consumer Communication Principles contain mandatory rules on marketing communication to all consumers, including accurate representation and portrayal of foods in a way that does not encourage over? consumption. In addition, specific principles guide their communication to children including no advertising or marketing activity to children under 6 years of age.

Advertising to children from 6 to 12 years is restricted to products that meet predetermined nutritional profiling criteria, including clear limits on energy and healthsensitive ingredients such as sugars, salt, saturated fat and trans fatty acids. Human rights in business activities Nestle fully support the United Nations Global Compact’s (UNGC) guiding principles on human rights and labor and aim to provide an example of good human rights and labor practices throughout nestle business activities.

Leadership and personal responsibility Nestle success is based on their people. It treat each other with respect and dignity and expect everyone to promote a sense of personal responsibility. Nestle recruit competent and motivated people who respect their values, provide equal opportunities for their development and advancement, protect their privacy and do not tolerate any form of harassment or discrimination. Nestle Management and Leadership Principles

Nestle Management and Leadership Principles describe the culture and basic values they expect their employees to uphold, as well as the attributes needed to be successful in management and leadership Safety and health at work Nestle is committed to preventing accidents, injuries and illness related to work, and to protect employees, contractors and others involved along the value chain. Nestle Policy on Safety and Health at Work establishes safety as a non-negotiable priority of their culture.

They recognize and require that everyone play an active role in providing a safe and healthy environment, and promote awareness and knowledge of safety and health to employees, contractors and other people related to or impacted by their business activities by setting high standards. Nestle monitor their performance through the Nestle Occupational Safety and Health Management System to assure a safe and healthy life. Supplier and customer relations Nestle require their suppliers, agents, subcontractors and their employees to demonstrate honesty, integrity and fairness, and to adhere to their non-negotiable standards.

In the same way, they are committed to their own customers. The Supplier Code includes requirements such as business integrity, sustainable operating and agricultural practices, labor standards, safety, health and environmental . practices. Agriculture and rural development Nestle contribute to improvements in agricultural production, the social and economic status of farmers, rural communities and in production systems to make them more environmentally sustainable.

To ensure that their factories obtain raw materials competitively and at required quality and safety specifications Nestle engage in developing sustainable agricultural practices and systems that contribute to long-term production efficiency, viable incomes for farmers and the transfer of agricultural knowledge to suppliers;

• Nestle support the application of new technologies and advances in agricultural science, including the opportunities offered by bioscience when their positive effect on food safety, environment, agricultural practices and production efficiency are scientifically confirmed and accepted by consumers. Environmental sustainability Nestle commit themselves to environmentally sustainable business practices.

At all stages of the product life cycle they strive to use natural resources efficiently, favor the use of sustainably managed renewable resources, and target zero waste. They invest continuously to improve their environmental performance. Water Nestle is committed to the sustainable use of water and continuous improvement in water management. It recognize that the world faces a growing water challenge and that responsible management of the world’s resources by all water users is an absolute necessity. Water is a particular area of focus for Nestle. The Nestle Commitments on Water set out their priorities nd objectives on responsible water usage. These are to continue their efforts to reduce the amount of water used in their operations, ensure that activities respect local water resources, ensure that the water they discharge into the environment is clean, engage with suppliers to promote water conservation, especially among farmers, and reach out to others on water conservation and access. Nestle is a founding signatory of the United Nations Global Compact CEO Water Mandate. It monitor and improve water efficiency through their water resources management specialists and in their factories with their environmental Nestle specialists n line with the Nestle Environmental Management System. It recognize the right of all people to have access to clean water to meet their basic needs.

SWOT ANALYSIS: Strengths: The first and the most important strength of Nestle is the name of company itself. They never compromise on quality. They produce quality products according to the specification of customer. Their system of sale & sale promotion is also one of the strength of Nestle. In the area in which they want to sell the product they hold seminars and shows. In this area they monitor the sale and increase the production.

They try to convince ultimate consumer. The milk collection procedure of Nestle is also one of its strength. They collect milk from selected people and check its purity at the location. Then special trucks take it to factory. Where they boil milk at 140 degree centigrade and then cool it. This process is repeated for 3 to 4 times. There milk contains 3. 5% fat, which is recommended internationally. Weaknesses: One of the weakness of nestle is the product range of Nestle. As there product line is very vast, so they cannot give equal attention toward the promotion of each product.

We can take the example of candies produced by Nestle, they give absolutely no attention toward promoting them despite the fact that if we consider the trust people have on nestle brand there is a large market for candies, While they are promoting their milk products effectively. The reason behind this discrepancy is that they have limited budget to promote their products. The other weakness of Nestle is that the company has a very limited number of sales staff in the southern Punjab due to which they are losing some market. Opportunities: Nestle can increase their share if they focus on lower middle class.

We can take the example of small pack of Every Day tea whitener whose introduction increases the sales of nestle tremendously. The reason for this was that the price of Every Day tea whitener was with in the range of lower middle class. So, Nestle can increase its share by focusing on lower middle class. The other opportunity for Nestle is that if they introduced milk bottle like Candia and sell them directly to the customers they can increase their share. By selling directly to customers means that they provide milk to the people at their doorsteps. Threats:

In Pakistan Nestle face threats from lower companies. We can take the example Haleeb and Dairy Queen. The sales of these products have badly affected the sale of Nestle Milk Pack. Haleeb is well promoted than the Nestle Milk Pak. Nestle also face threat from Cadbury, which is multinational company. Cadbury sell candies and chocolates and it affect the sale of Nestle products in the field of candies Research & Development Nestle's research and development centers have two primary objectives: to create new products and manufacturing processes and to improve those that already exist.

Along with product quality and safety, the conservation of resources and the preservation of the environment form an integral part of the development criteria for new projects. Research and development encompasses a wide range of environmentally-related activities with emphasis on: ? environmentally sound production techniques and sourcing criteria for agricultural raw materials; ? processing methods that minimize water and energy consumption, as well as waste generation ? packaging designs that reduce total waste and enable environmentally sound disposal options while safeguarding product safety and quality innovative ways to recover by-products and thus generate secondary raw materials and energy. For important product or process innovation and renovation, Nestle's research and development centers prepare an environmental impact study. This covers significant aspects in the product life cycle, from the sourcing of raw materials, through processing, to the packaged consumer product and the end-life of the packaging material. This study is carefully evaluated, in conjunction with detailed information on the potential manufacturing site, to ensure that new projects meet Nestle's environmental standards.

Of the 807 million Swiss francs spent in 1998 on Nestle R throughout the Group, a good part went towards enhancing the wholesomeness of our products. Additionally, these expenditures improved our production process, created better packaging, and avoided waste and unwanted residues.

R IS MAKING A DIFFERENCE As an example, significant progress has been made in recent years in energy and water intensive blanching and cooking operations. At the end of these processes water must be removed which resulted in wasted energy and raw materials — vegetables or pasta for example.

Now water is replaced by steam at low pressure. As a result, water consumption was reduced by 80% and product losses during cooking were more than halved. This means lower costs for energy and for wastewater treatment, while at the same time increasing the product yield by 6%. In another example, extraction residues from the production of chicory-based instant drinks, which were expensive to dispose of, have been turned into a valuable animal feed ingredient. A recent processing improvement for french fries showed product quality can be significantly improved while also saving energy.

One conclusion of R is that what is good for the environment is often synonymous with good industrial practice. Preserving Species The disappearance of many species and varieties of animals and plants is a reality. Over the past few years, this issue has attracted increasing recognition and much is being done today to preserve the earth's biological diversity. Industry plays an important role in these efforts since many business sectors depend on nature's diversity for their sustainable success.

Nestle, as the world's largest single buyer of coffee and cocoa, lives up to its responsibility by developing the most advanced preservation techniques for many different coffee and cocoa varieties threatened by extinction. In addition, Nestle collaborates with public research institutes to share its experience and makes its results freely available. In the future, Nestle R&D units are determined to build environmental protection into products and processes right from the start. High on the agenda are integrated farming techniques involving minimal use of fertilizers and chemicals, and ecourse to biological pest control methods whenever possible. SUPPLY CHAIN Agricultural Raw Materials In general, Nestle is not directly involved in the production of raw materials. Wherever possible, locally available raw materials are used.

They are either obtained directly from producers or purchased through trade channels. Nestle applies the following principles when sourcing raw materials: ? all raw materials must meet both legal and internal quality criteria, including limits on possible environmental contaminants; ? whenever possible, preference is given to raw materials that are produced by environmentally sound farming methods (e. . integrated crop management); and; ? farmers are encouraged to apply sustainable farming methods and, where appropriate, are provided with assistance in crop production and dairy farming.

Such assistance includes the provision of recommendations for the conservation of natural resources (soil, water, air, energy, bio-diversity) and techniques for reducing environmental impact. Manufacturing Manufacturing comprises all processes that are necessary to transform perishable raw materials into safe and convenient food products for consumers. Nestle strives to achieve optimal performance in its manufacturing activities, including the nvironmental aspects. As such, the manufacturing practices of the Group: ? respect natural resources by emphasizing the efficient use of raw materials, water and energy; ? ? ? minimize the use of environmentally-hazardous substances; continuously seek improvement in the efficiency of production facilities; and reduce waste generation and emissions as much as possible, consider recycling of waste a priority and dispose of non-recyclable waste in an environmentally sound manner.

Regular environmental assessments of Nestle's manufacturing practices are conducted to: ? ? valuate factory performance; review factory compliance with applicable legislation and Nestle's own standards; ? fully investigate incidents that could affect the environment and take relevant measures; and ? compare results with previous targets and set new improvement objectives. In addition, Nestle exchanges information on environmental protection technology and practices in order to ensure a wide use of best practices. Nestle encourages its contract manufacturers to use environmentally sound manufacturing practices.

Environmental Performance of Our Factories Minimizing the environmental impact of our factories has always been a prime onsideration. Therefore, we periodically review environmental performance of the entire Nestle Group. The results are very encouraging: ? ? Nestle has no major environmental problems. Nestle complies with relevant regulations or, in a few exceptional cases, has initiated action to do so. ? Measures taken are proactive and often anticipate future regulations. Many times, measures taken to improve the environment also reduce costs. These surveys also allow us to put concrete figures to our efforts: Over the past years, Nestle has invested an average of some 100 million Swiss francs per year in specific measures to protect the environment.

This amounts to approximately 3% of total capital expenditure and includes only readily identifiable environmental investments. In addition, substantial amounts were expended as part of regular capital investment projects and factory environmental operating costs. Examples of these additional expenditures include environmental aspects related to factory construction and renovation, environmental training of personnel, and maintenance costs for wastewater treatment facilities.

Packaging

Packaging serves a major role in our daily lives. It protects food products from spoilage and ensures safety from manufacture through storage, distribution and consumption. Packaging may also provide tamper-evidence features. It communicates information, including nutritional information and serving instructions, and provides the convenience demanded by today's consumers. Nestle is committed to reducing the environmental impact of packaging, without jeopardizing the safety, quality or consumer acceptance of its products.

It is Nestle's objective to develop safe and wholesome packaged foods using the most efficient and appropriate packaging materials available, while, at the same time, satisfying consumer requirements and expectations. Nestle seeks packaging solutions that: ? ? result in the lowest possible weight and volume of packages; take into account new packaging materials and processes that reduce the impact on the environment; ? avoid the use of substances that can adversely impact the environment during packaging production and disposal; ? ecrease packaging waste at all stages, including package manufacturing, use and disposal; ? ? increase the use of recycled materials wherever possible; and increase the recyclability and compatibility of its packages with existing packaging waste management schemes. Regular assessments of Nestle's packaging are carried out and action plans are implemented. Nestle supports industrial and governmental efforts to promote integrated waste management that takes into consideration matters such as source reduction, reuse, recycling, composting, energy recovery, and landfill.

Nestle encourages suppliers of its packaging materials to adopt sound environmental practices. Packaging Source Reduction Packaging waste is one environmental issue that affects the entire consumer goods industry. However, the gap is wide between reality and perception: While food packaging accounts for less than 1% of total solid waste in most countries, it is highly visible to consumers. Even if the problem of food packaging is small in relation to overall environmental problems, it is nevertheless an important issue for Nestle. The most direct opportunity to educe the scale of the problem is to use as little material as possible. This is not a recent effort by the food industry. Over the last four decades, between the 1950s and 1990s, the weight of a glass milk bottle has been reduced by 36%, a steel food can by 66%, and an aluminium beer can by 81%. Even though packaging source reduction has always been a consideration, we decided to reinforce these efforts in a more systematic way. The first world-wide environmental packaging survey was completed in 1991 for the Nestle Group and has been repeated annually ever since.

The last survey revealed that by the end of 1998, Nestle, without compromising product quality, reduced our use of packaging materials by nearly 150,000 tons compared to 1990. A few recent examples that underline Nestle's efforts: In Australia the Easter Egg Novelty cartons were reduced in size by altering the design to provide support for the egg. The new design resulted in a 31% reduction in use of paper board. In Pakistan the Nestle NIDO package, which consisted of 4 bags in a display box, was replaced by an aluminium stand-up pouch. This resulted in a 39% reduction, or 47 tons, and saves 290,000 Swiss francs per year.

In Indonesia the Nestle Dancow 200 and 400g display boxes were reduced in size by 18 and 25%, respectively. This resulted in a waste reduction of 38 tons and saved nearly 100,000 Swiss francs per year. In Columbia the display box for Maggi bouillon tablets was eliminated. This resulted in a reduction of 303 tons of packaging material and represented a savings of over one million Swiss francs per year. While important progress has already been achieved, we strive to continuously identify opportunities for further reduction. Distribution Distribution of products from the factory to the customer involves transport and storage.

Efficient management of the distribution system is essential to preserve the safety and quality of Nestle's products, to ensure a high level of customer service, and to meet its commitment to environmentally sound business practices. To this end, Nestle: ? selects appropriate transportation modes, with particular attention given to optimum unit loads (pallets), vehicle-capacity utilization, route planning, and consolidation with outside partners, scheduling, and fuel conservation; ? optimises warehouse and distribution center locations and environmentally efficient operational systems; and ? dentifies and implements measures to reduce energy consumption and waste. Nestle encourages its distribution service providers to use environmentally sound practices. Distributing our goods from factory to retail centers consumes some 400 million liters of fuel each year. While we undertake every effort to reduce this, it is useful to put this figure into perspective: the distribution of 10 kg of our products from factories to retail outlets in Europerequires an average of 0. 25 liters of fuel. To transport the same amount from the supermarket to home, consumers burn, on average, one to two liters of fuel. Efficient Container Loading

Improving transport efficiency benefits the environment, but it also makes economic sense. Seemingly simple measures, such as replacing bulky wooden pallets by thin, carton-type slip-sheets, have the potential to save more than 600 international truck journeys a year in our European operations alone. Optimizing shipping cases to fill transport vehicles without leaving gaps between differently shaped containers, together with optimal route planning, Nestle has already achieved substantial savings. Pioneering Rail Transport In countries with competitive railways, moving goods from road to rail is an effective option to reduce road congestion.

For example: ? Vittel has developed a specially adapted block train concept to supply its regional terminals in France. Vittel transports nearly half of its production, or over 930 million bottles per year, by rail. ? Our Swiss, and later the Austrian subsidiary, convinced the railways to offer overnight trains to bring goods from the national distribution centers to terminal stations for local deliveries by road. Marketing Marketing is based on the principle of satisfying consumers' needs. The overall trust of consumers in Nestle's brands and products comes from a quality image that has been continuously strengthened for over 130 years.

Nestle strives to increase this trust through its commitment to environmentally sound business practices. For this reason, Nestle: ? opposes short-term, opportunistic "green marketing" that can mislead the consumer; ? bases environmental claims in advertising, promotional material, labelling, and corporate communications on solid scientific evidence; and ? selects materials and printing methods for merchandising materials such as consumer offers, in-store promotions, display materials, leaflet, and printed materials in light of environmental considerations.

No "Green Marketing" Nestle adheres to the Code on Environmental Advertising established by the International Chamber of Commerce. This Code is based on the principle of self- regulation and self-discipline and is intended to assist companies in making responsible use of environmental claims in advertising. Sustainable Development For Nestle, respect for the environment is part of a broader perspective on sustainable development. Nestle has adhered to The Business Charter for Sustainable Development of the International Chamber of Commerce (ICC) since its publication in 1991.

Measures for environmental protection often trigger beneficial economic and social effects, and vice-versa. Since the Rio Summit in 1992, all of society, be it governments, industry, NGOs or others, have tried to translate the sustainable development concept into reality. As part of this effort, we participate in the work of several organizations dealing with this subject: For example, we are a founding member of the World Business Council for Sustainable Development (WBCSD) in Geneva, and we contribute actively in the Working Group Sustainable Development in the City of Vevey. Nestle Working with Communities

South Africa Nestle is supporting several community-based organizations in putting sustainable development into practice. Recently, in South Africa, we have given support to Eco Link and LEAP to finance and help manage programs which clean up the environment and improve hygiene in rural areas. The Eco Link project is aimed at providing assistance through education. People are taught to collect litter such as paper, cardboard and cans, which when put in a trench and covered with a compost can then be used to plant vegetables. The litter provides the necessary drainage and moisture retention.

The project has dual advantages: it cleans up the environment and provides fresh vegetables for the family, as well as providing an income when surplus food is grown. This program is now being presented to school children who are encouraged to grow small gardens at school. In rural areas water supply is a major problem. Women can spend almost 5 hours a day collecting water for the home. In addition, the springs from which they take the water are often used by animals and can be polluted. Nestle is taking part in a project to help villagers establish a supply of clean water near to home.

People were taught how to identify sources of underground springs and to channel rain water and store it in reasonably hygienic conditions. The team taught villagers how to construct a tank to catch the rain water using corrugated iron and wire mesh as a "mould" which is then plastered with a cement, stone and sand mixture. With a wooden cover on top and a tap at the base the villagers have the means to store clean, drinkable water. Information, Communication & Training Nestle provides information on its activities, including those related to the protection of the environment.

Within this context, Nestle: ? communicates its environmental efforts, both inside and outside the Company, to build understanding concerning its environmental commitment; ? fosters strong environmental awareness and responsibility among its employees through training programs; and ? shares environmental information with governments, local communities, industry, consumers and other interested stakeholders. We do this through a wide variety of means. For example, our factory environmental surveys involve thousands of people at all levels, from top management to the factory floor.

These practical exercises are reinforced by in-house magazines, specialized newsletters, and videos. To help educate the public, Nestle works with organizations that produce films on environmental issues, sponsor re-forestation programs, or create educational materials for the public. These activities are also important to our role in sustainable development. At our international training center in Switzerland, environmental issues are now a regular part of courses attended by Nestle's international executives. These efforts are multiplied by countless training sessions organized by our Group companies.

Internal communication and training are a priority for Nestle. As a people-driven company, employees are our most important asset. Thus, we emphasize all measures that help them act in an environmentally responsible manner. Legislation Nestle complies with all laws and regulations which apply to its activities, including those involving the environment. To promote an effective regulatory system with respect to the environment, Nestle: ? participates in legislative and regulatory discussions between international organizations, government representatives, industry, the scientific community, and consumer associations; ? ? supports appropriate voluntary initiatives designed to protect the environment; fosters rational environmental laws and regulations; opposes unjustified prohibitions and other discriminatory measures; and ? favors the harmonizing of environmental laws, regulations and standards in order to eliminate existing and future trade barriers. Nestle Environmental Management System Nestle has made systematic efforts to account for environmental concerns of all its activities.

In particular, we have appointed environmental officers, issued policies, conducted environmental surveys, reinforced training efforts, developed environmental communications, and made many innovations in our packaging. To complement and integrate these efforts, we created and implemented Nestle's own Environmental Management System. The Nestle Environmental Management System (NEMS) is an essential corporate management tool that consolidates all organizational and technical measures taken by the Group to achieve environmentally sound business practices.

The NEMS objectives include the following: ? to provide a systematic approach that ensures compliance with Nestle's environmental policy, applicable legislation and Nestle's operational standards; ? to ensure the continuous improvement of Nestle's environmental performance, for example, through the conservation of natural resources and minimizing waste; ? to achieve compatibility with international voluntary standards on environmental management systems, such as ISO 14001 and the European Union Eco-Management and Audit Scheme; and ? o build mutual trust with consumers, governmental authorities and business partners. The Nestle Environmental Management System is being implemented throughout Nestle's entire operation. We believe NEMS will enhance our global performance and contribute to our competitiveness in the world market. NEMS in Action: Germany First EMAS Registration of a Nestle Factory at Weiding, Germany On December 19, 1995, our factory in Weiding, Germany became the first Nestle factory in Europe to be registered in the European Eco-Management and Audit Scheme (EMAS).

This means that Weiding's environmental management system and public environmental statement have been examined and validated by an external, accredited verifier. Weiding Factory Greatly Reduced Disposed Waste Even Prior to EMAS Employing around 900 people and producing more than 550 high-value products ranging from infant foods to condensed milk to chilled deserts, the Weiding factory is one of largest plants in Germany. The existence of a comprehensive waste management scheme at the factory was of great assistance in developing the new environmental management system.

As part of the development of the environmental management system, environmental manuals were prepared both for the factory and Nestle Germany. These manuals provide the foundation of the system setting policies, principles, and management procedures related to the environmental aspects of the operations. In addition, a site-related environmental statement was published that included an "invitation to dialogue" addressed to employees, authorities, clients, suppliers, the media, and neighboring communities. The EMAS registration has been successfully repeated in 1998 and complemented with an ISO 14001 ertification. Following Weiding, several other Nestle factories throughout the world have succeeded in obtaining ISO 14001 certification and EMAS registration. NEMS in Action: USA In 1996, the Danville, Virginia, USA factory was the first Nestle US factory to fully implement NEMS - which is based on and consistent with ISO 14001 Danville has shown that good environment is also good business. In the first year of implementing NEMS, the factory reduced solid waste by over 10% resulting in savings of $370,000 and reduced its wastewater impact and concentrations by 8%.

These successes were made possible through the dedication of the factory employees and a strong emphasis on training and awareness. The factory implemented an environmental training program as part of the new employee orientation and the semiannual environmental training for all employees. Waste Reduced Through NEMS NEMS Supports the Environment and Business Cumulative Savings The continuing nature of NEMS has facilitated similar accomplishments annually. To date, factory savings related to NEMS have exceeded $800,000 and solid wastes have been reduced by 41%.

NEMS in Action: Philippines Part of NEMS is ensuring a high degree of employee environmental awareness. As an example, Nestle Philippines, in implementation of NEMS, prepared through an interdisciplinary task force, a highly regarded environmental training program. This program is continuously provided to groups of employees and highlights specific issues related to their job functions and protection of the environment. The success of this program is evidenced by the numerous awards received by Nestle Philippines manufacturing facilities.

Most notable of these are: ? "Outstanding Healthy Workplace Award" given by government agencies including the Department of Health, Department of Environment and Natural Resources, and the Department of Labor and Employment, to the Cabuyao and Lipa Factories in 1998. ? "Mother Nature Award" given by the Pollution Control Association of the Philippines in 1998. ? "Anvil Award of Excellence" given by the Public Relations Society of the Philippines for Nestle's efforts in enhancing the environmental awareness of the public. "Most Environment-Friendly Company" Award given by the Laguna Lake Development Authority to three Nestle factories (Cabuyao, Aurora, and Alabang) in 1996. ? One of the "Greenest Company" Awards given by the DENR to the Aurora factory in 1996. The water discharge from these facilities is of very high quality. Tilapia, a fresh water fish, often harvested for food, abundantly grows in the clarifying ponds and discharge canals of their treatment facilities. Nestle Pakistan Nestle MilkPak Limited (NESTLE MILKPAK LTD.

L) was incorporated in Pakistan under the Companies Ordinance, 1984 & listed on Karachi and Lahore stock exchanges since 1980. Joint venture between Nestle Switzerland and MilkPak Limited came about in 1988. Nestle Pure Life was launched in Pakistan in 1998 REGIONAL SALES OFFICES Nestle has 10 Regional Sales Offices in all over the Pakistan. : Karachi F - 77/1, Block 7,Clifton, KDA Scheme 5,Karachi, Sind, Pakistan Phone: (021) 5833935-6 Fax: (021) 5833937 Hyderabad 178, Block C, Unit 2Latifabad, Hyderabad, Sind, Pakistan Phone: (0221) 860403Fax: (0221) 863202 Sukkur F - 33/5 - CWorkshop RoadSukkur, Sind, Pakistan.

Phone: (071) 615946Fax: (071) 615946 Lahore 29-B, Main Gulberg,Lahore, Punjab, PakistanPhone: (042) 5754335-6, 5761484Fax: (042) 515061 Quetta 63 B - D, Chaman Housing Scheme, Opposite Askari Park Quetta, Baluchistan, Pakistan Phone: (081) 834887Fax: (081) 822297 Islamabad 74-W, Yaseen Plaza, 1st Floor, Blue Area, Islamabad, Pakistan Phone: (051) 271874-75,824328, 824384, 274376 These offices work under their respective zonal offices Registered & Corporate Office Is in Lahore 308 - Upper Mall, Lahore PABX: 5757082-95 Fax: 5711820 Faisalabad House No. 4-Y-103 Madina Town,Faisalabad, Punjab, Pakistan Phone: (041)726993Fax: (041) 47438 Gujranwala Plot No: 144-A, First Floor Satellite-Town Market, Gujranwala, Punjab, Pakistan. Phone: (055) 3733415 Fax: (055) 3733415 Peshawar 201, 2nd Floor, City Tower, Jamrud Road, B Block,Peshawar, N. W. F. P. , Pakistan Phone: (091) 840859, 842415Fax: (091)45516 Multan Surij Miani Road, Chungi No. ,Multan, Punjab, Pakistan Phone: (061) 515061Fax: (061) 515061 Quetta 63 B - D, Chaman Housing Scheme, Opposite Askari Park Quetta, Baluchistan, Pakistan Phone: (081) 834887Fax: (081) 822297 Islamabad 74-W, Yaseen Plaza, 1st Floor, Blue Area, Islamabad, Pakistan Phone: (051) 271874-75,824328, 824384, 274376 These offices work under their respective zonal offices Registered & Corporate Office Is in Lahore 308 - Upper Mall, Lahore PABX: 5757082-95 Fax: 5711 SALES ORGANIZATION HIERARCHY Managing Director IAN Donald Sales Director Zafar Hussain Shah Zonal Sales Manager Ammad Malik

Regional Sales Manager Abdul Mateen Khan Area Sales Manager 6 ASM Territory Incharge TI 14 Order Booker FACTORIES 250 Nestle has two factories in Pakistan for the production of different food items. One in Sheikhupura near Lahore and other in Kabirwala near Multan Product Design Product design can be defined as the idea generation, concept development, testing and manufacturing or implementation of a physical object or service The Nestle Pure Life water bottles themselves have a shaped design, sort of a hour-glass shape with larger top and bottom with indented waist.

The bottom 1/3 of the bottle has ridged lines to help with hold and grip on the bottle There is a bright blue label strip that runs around Unique bottle design, developed by designer’s team, catchy self-adhesive and glossy label, and trendy name, give to the product the edge that is needed to be spotted on the shelves INFLUENCES UPON DESIGN ? Service Expected. ? Appearance ? Shipping Costs ? Cost to Manufacture ? consumer preferences Nestle Milkpak Ltd. As a consequence of joint venture arrangement between NestleS. A. of Switzerland and Milkpak Ltd.

In 1988, the existing production facility of Milkpak in Sheikhupura became a part of Nestle Milkpak. The Milkpak Sheikhupura factory had commenced operations in1981 as a producer of UHT milk. By 1988, it had expanded its operation and was also producing butter, cream, Desi ghee – all under the brand name of MILKPAK and juice drinks under the brand name FROST. Conscious of the large food market that Pakistan offered, Nestle Milkpak drew up ambitious expansion plans. While re-organizing and re-enforcing the production of existing brands, it lost no time in giving shape to new production lines.

The first to come was a milk powder plant, which not only began producing NIDO in 1990but was also critical to the production of several milk-based products in the future. With the installation of the roller dryer in1990, the first such product to come was CERELAC – an internationally recognized brand on infant cereal, followed by LACTOGEN 1 & 2 in 1991. The year 1992 saw the introduction of tea whitener EVERYDAY and milk powder in bulk packing named GLORIA. MILO and NESLAC came under production in 1994 and MILO RTD, In 1995. Local packing of coffee mixes under the name of NESCAFE 3 in 1commenced the same year.

In 1996, Nestle Milkpak Ltd. first confectionery plant of POLO Mint was installed and the line of NESTL’E PURE ORANGE JUICE was also added. Packaging of coffee under the brand name NESCAFE CLASSIC was under taken the same year. In 1997 NESTL’E WHEAT and two variants of POLO viz. strawberry and Orange were introduced. 1998 has been, by far, the most outstanding year for Nestle Milkpak. As a result of the timely implementation of major expansion plans, involving a substantial capital outlay, no less than 17 products were launched during the year.

Significantly, the factory now houses three new flavors of POLO in addition to two flavors of POLO, namely Black current and Strong Mint brought the number of POLO variants to five. A new variant Lemony was added to the range of popular FROST fruit drink flavors and a new 1-liter packing of FROST was introduced. Three flavored milk – Vanilla, Strawberry and Mango, under the brand FRESH & FRUITY, came under production on the new Tetra Filling Machine equipped with the modern “slim” format. MILO RTD and UHT Cream were also shifted over to this new format.

A flexible confectionery line for the manufacture of a wide range of high and low boiled sweets and toffees was commissioned, with TOFFO and two variants of SOOTHERS – Menthol Eucalyptus and Honey Lemon, being the maiden products. Nestle Milkpak also contracted to supply dairy mixes to McDonald’s, for its popular soft serves and milk shakes. And to top it all, the most prestigious project, NESTLE PURE LIFE was also commissioned in December1998. based on the latest water treatment and bottling technology, this marked the entry of Nestle Milkpak in the Pakistan water market.

In the past, Indus Fruit Products Ltd. has been co-processing fruit pulping for Nestle Milkpak. In view of the growing needs of fruit pulp for its products as well as for exports, Nestle Milk pak entered into a 5-year lease agreement with the management enables Nestle Milkpak to put in place its own systems to ensure better product quality and capacity utilization. The new cold sauces production line has been established at this plant. ESTABLISHMENT OF NESTLE MILKPAK, KABIRWALA FACTORY In 1986 Milkpak Ltd. acquired the services of Kabirwala Dairy Ltd. For co packing of UHT milk under the brand name MILKPAK.

Nestle Milkpak acquired KDL in 1990 as a subsidiary and began installation on a MAGGI NOODLES plant in 1991. this production line became operational in 1992 with two flavors: Chicken and Masala. This second milk powder plant was commissioned in September 1996. the plant produces NIDO, GLORIA and skim milk powder. The UHT line was discontinued in June 1996 and the same year witnessed the launching of the MAGGI YAKHNI linewith 3 flavors: Chicken, Masala and Chatpata. With the merger of this factory with Nestle Milkpak in April 1997,Kabirwala Factory, as it is now called, is a fully owned unit of Nestle Milkpak Ltd.

In February 1999 the newly installed evaporator came on stream in Kabirwala Factory, doubling the output of the spray dryer. Alongside, the warehouse capacity at Kabirwala to handle the increased volumes of finished products was proportionately increased. 1999 also saw the installation of a pouch-filling machine, making Kabirwala Factory independent from Sheikhupura . YEAR 1981 1983 1986 UHT Milk Butter Milk Desi Frost PRODUCT NAME Pak Cream Ghee Juice Milk Pak UHT Milk 1990 Nido Cerelac 1991 Nestum Lectogen 1992 Everyday Gloria Maggis Noodles Tea Whitener 1994 Milo Neslac 1996

Nestea Polo Nescafe Classic Maggi Yakhni 1997 Nestle Wheat 1998 Toffo Soothers Nestle Pure Life 1999 Maggi Fruit Butter Skotch Sauces Drops 2001 Nescafe Creamy Flavors Cream milk powder Nestle Milkpak Ltd. Market Leader Nestle Milkpak Ltd. is the market leader in food and beverage industry. They are producing high quality well known brands. There is no such competitor that can compete Nestle Milkpak Ltd . in its total product mix. There are a few local competitors of the company in different product item. These competitors are: Rafhan Rafhan is competing Nestle in infant and follow up cereals.

Shezan and Bambino Shezan and Bambino is competing Nestle Milkpak’s local brand “Frost”. CDL and Adar-e-kisan: These two competitors are competing in milk and milk powder products. In spite of this competition, Nestle Milkpak Ltd. is enjoying about 70-75% market share in Pakistan. DIVISIONS OF NESTLE MILK PAK ltd. Production Division Quality asst Department Brand wise production departments Marketing Division Customer Relation Department Distribution Department Research & Development Milk Collection Division Agriculture service Department Logistic Department HR Division Personnel department

Finance Division Treasury department OBJECTIVES OF NESTLE MILKPAK LTD. ? The major objective of the company is to sell high quality, innovative and superior products which satisfy needs and wants of consumers. ? ? Nestle not maximize profit through high market share but use satisfaction of consumer. The health of consumer and employees is at primary priorities ? Nestle provide the pollution free enviroNestle Milkpak ltd. ent and provide the medical facilities ? ? Nestle establish policies, programs and practices to conduct operation in an enviroNestle Milkpak ltd. ntally sound manner. Nestle operate to achieve highest standard of ethical conduct, which acquire company’s activities and relationship world-wide in each business sector. ? Nestle aim to deal only with reputable suppliers who willing to apply Nestle Quality Standard. ? Nestle has been committed to enviroNestle Milkpak ltd. entally sound business practices throughout the world. EXTERNAL ENVIRONMENT NESTLE MILKPAK LTD. The top management of Nestle MilkPak continuously carries on environmental scanning and within the environmental trends.

Opportunities & opportunities they carry on required adjustments in their organization to remain variable and to survive in the face of competition. CORE COMPETENCIES Nestle Milk Pak has the following core competencies. WORK FORCE Nestle Milk Pak has a small work force as their most of the operations are automated. They have a very skillful and trained workforce. FACILITIES The NESTLE MILKPAK LTD. ’s facilities i. e. offices stores and plants are very well located and have the requisite capabilities, which is a big competitive advantage for them.

SYSTEM AND TECHNOLOGY Nestle Milkpak ltd. is an organization which heavily depends upon new systems and technologies to excel in the market. The organization is well equipped with new developed systems and technologies especially in their operations COMPETITIVE PRIORITIES Following are the competitive priorities of NESTLE MILKPAK LTD.. Consistent quality Development speed Volume flexibility QUALITY Quality is the cone competitive priority of NESTLE MILKPAK LTD.. They take quality in two ways. High performance design and consistent quality. CONSISTENT QUALITY

NESTLE MILKPAK LTD. pays special attention for maintaining consistent quality. They have special sort of equipments and process which facilitates in maintaining a consistent quality. So the each and every unit of its product equally satisfies its customers. DEVELOPMENT SPEED As for as develop speed is concerned NESTLE MILKPAK LTD. is the industry leader not only in Pakistan but all over the world. They have a team of very innovative people which consistently focus on the development of new products and to improve the already existing products. VOLUME FLEXIBILITY

Volume flexibility is one of the competitive priority of NESTLE MILKPAK LTD.. When the availability of Milk is high in winter season they increase their production as the milk cannot be stored for longer period of time. In season when there is shortage of milk their production rate dropped. So they can adjust their volume of production according to their requirements. FLOW STRATEGY Flow strategy is one of the primary element of operations strategy. Based on competitive priorities a flow strategy is selected. It specifies has the operations system to be organized and handled.

For different set of products different flow strategies can be implemented. LINE FLOW STRATEGY NESTLE MILKPAK LTD. has adopted the line flow strategy here the system is organized around the product. In this strategy all products follow linear pattern in facility. NESTLE MILKPAK LTD. has high volume production with highly automated facility and huge capital investment is there and the standardized products they produce. So they follow the line strategy. STRATEGIES BASED ON FLOW Following are the flow based strategies adopted by NESTLE MILKPAK LTD.. MAKE TO STOCK STRATEGY NESTLE MILKPAK LTD. ollows the make to stock strategy. They have high volume production and the demand for their products can be forecasted quite well, there exist repetition of work and a consistent quality is maintained all these priorities lead to make to stock strategy. STANDARDIZED SERVICE STRATEGY The products which are provided by NESTLE MILKPAK LTD. are standardized. Therefore the standardized service strategy also exist in NESTLE MILKPAK LTD. Ltd. They have standardized and consistent quality products. PRODUCTION PROCESS Milk Collection & Reception Storing Standardization De-Creaming

Cooling Spray drying Evaporation Pasteurization Packing MILK COLLECTION Milk Collection system of Industry is excellent. According to this system the companies’ trucks reach 140000 milkmen and collect milk daily. The milkmen provide milk on contract basis. Prices of milk vary in case of self-collection and contract basis. On milk center price of milks is paid at Rs. 5. 80 per liter at 6% Fats. If the quality of fat is less than required 6% then price will be paid less proportionately. Percentage of FAT in Various Kinds of Milk. Buffalo 6% Fat Cow 3. 5% Goat 3% Sheep 6% Human 3. 5%

At milk collection centers, Gerber Test in done for the determination of Fat. Companies are bounded to maintain 3. 5%Fats under pure Food Laws. It is legal requirement throughout the world Milk collection system of Nestle Milk Pak is excellent. According to this system milk is collected from area of about 72,000 km . Village Milk centers Sub centers Main Centers 2273 583 23 On milk centers price of milk is paid according to percentage offers. If the quality of fat is less than required (6%) than price will be paid accordingly. At milk collection centers, gerber test is performed for determination of fat.

In milk collection centers temperature of milk is kept at 4oC. Nestle purchase milk directly few frames, there is no middle man. Collection Areas are in all over Punjab Nestle Milk Pak divide the areas in following Categories: ? ? ? ? Sahiwal, Burewala, Okara etc. Pindi Bhattian, Chaniot, Sarghoda Kabir Wala, Mian Channu, Shorkot, Kahane wal, Kacha KHU Bahawalpur , Bahawalnagar, Chistian, Ahmadpur There are Area collection managers, Milk collection Cocoordinators and Milk Collection Supervisors in each Area for collection of specific amount of Milk in specific time. RECEPTION

From milk collection centers milk is collected and delivered to factory daily seal of tankers are properly decided. Receiving capacity of milk is 60,000 liters. At reception following tests are performed before storing milk to assure the quality of milk. 1. Alcohol precipitation test 2- Clot an boiling 3- Fat (5. 8% - 6%) 4- SNF (Solid non fat) (8. 5-8. 9) 5- PH test (6. 8 – 6. 9 Up to reception temp of milk is about 8-10oC, there is no rejection on temperature basis. Trollers are not preferred to stay more than 1. 75 Hrs. in factory so that they can in time collect milk for next day.

STORING OF MILK Milk is stored in storage tanks called Silos. The capacity to store milk is 596 tons. There are 5 Silos of100 tons each, 2 Silos of 10 tons each, 1 Silo of 70 tons. Milk can be stored for 36 Hours in Silos. STANDARDIZATION All the animals have different composition of fats in their milk indifferent seasons. Standardize milk according to the recipe milk is given temperature of 72oC for 15 seconds to reduce bacteria’s in milk, this process is called thermization life of milk is increased by this process and in standardization composition of fats and SNF are standardized.

DE-CREAMING In this process dirt particles, SNF and cream is separated, milk is given temp of 60oC and 60,000 rpm in de-creamer. So that dirt particles cream can be separated. Cream is send to butter section. Dirt is drained after 30 seconds milk is send for further processes. PASTEURIZATION In This Process milk is heated at 92 oC for 5 seconds to remove remaining bacteria’s. Milk powder process activities After pasteurization milk to treated for conversion into powder, following activities are performed to milk: Evaporation a) Low heat treatment Milk is heated at high pressure of 889 milli bar so that it start boiling at about 70 oC . (b)4-effect falling film Milk is evaporated in 4 effect system. Milk is evaporated about 56%, 62%, 67% and 75% after 1st 2nd 3rd and 4th effect respectively. After 3rd effect Homogenization is done which uneven composition of fats and SNF is homogenized Spray drying In this process there are 5 lateral high pressure nozzles which exert high pressure on milk after that there which exert high pressure on milk after that there are about 50% water and 50%solids are remained in milk.

After this step about 320oC hot air is thrown on milk, it is very quick process in which powder settle in base and moisture evaporate in forms of vapors. Central lecithination Lecithinate is sprayed on powder so that it is converted into highly dissolvable powder. That way Nestle Milk Pak say “ Nido is instant Milk” (easily dissolvable in hot ad cold water). Drying After all these procuress still powder has 5. 5 % moisture in it, Powder is dried through xEgran System to reduce moisture level up to 3. 1% Cooling After drying there is a cooling process, in which powder is cooled before storing.

Storing of powder Powder is stored in bins there are 40 bins. Packing Milk is packed in different packing according to the weight required, form tote tilting station from bins. Capacity Capacity is the maximum rate of output for a facility. The operations manager must provide the capacity to meet current and future demands; otherwise the organization will miss the opportunities for growth & profits. Capacity planning is duty of top management and it is long term . In flush season when milk is abundantly available they utilize capacity 100% as cleaning time is just 4 hours daily and 20 hours for working.

Installed capacity in NIDO plant is 560 tons, it produces 4 tons / Hours & in 20 working hrs it can produce 80tons per day. In summer when availability of milk is lower they have their annual shut down (June). They have training session for employees and vacations in that time. There are certain standards for labor utilization. Efficiency of employees is calculated daily. LOCATION Facility location is the process of determining a geographic site for a firm’s operations. Nestle Pack has located one of its factories at Kabirwala

REASONS FOR SELECTING THIS LOCATION PROXIMITY TO SUPPLIERS AND RESOURCES This factory has been located in this area because here the supply of milk is more than the requirement of the local area. This factory location is immensely surrounded by Agricultural farms, villages and small towns. The people o f these areas have their own animals and the feudal of the region have their own live stock farms. So there is abundant milk available. Furthermore, by locating one factor y at Sheikhupura and the other at Kabirwala the Nestl MilkPak can cover the geographic area of milk collection very well, especially the area of whole Punjab.

REPUTATION OF THE LOCATION Placing of the factory at Kabirwala is also advantageous in this way that at the current place there was actually the factory in the name of Kabirwala Dairies Ltd. (KDL). So the place has thereputation of having a milk factory. The suppliers of milk are already oriented with this location. PROXIMITY TO NATIONAL HIGHWAY Kabirwala factory is quite closer to National Highways so the transportation of Raw Material and Finished Goods is also easier. In the end we can say that the most important and critical factor for locating the facility at this place is the availability of the milk in this area.

SUPPLY CHAIN MANAGEMENT Supply Chain |Management seeks to synchronize a firms functions and those of its suppliers to match the flow of materials ,services and information with customer demand. A basic purpose of supply Chain management is to control inventory by managing the flows of materials. TYPES OF INVENTORIES Following types of inventories are kept by Nestle Milkpak Kabirwala: RAW MATERIALS Raw Material inventory of Nestle MilkPak consists of milk. Their Raw Material is kept in Silos . Silos are the big tanks, which are used to store the milk.

Inventories of their raw materials cannot be maintained in bulk quality and for a longer period of time. The factory can store the milk up to 596000 liters. They have five silos for storing the milk all have different capacities. The milk can remain there for the period of 36 hours without loosing quality. WORK IN PROCESS INVENTORIES Work in process inventories are not to huge. Whatever they put into production they stop production after its completion if there is no unusual break down. The unpacked goods inventory can be considered as the WIP inventory. The condensed milk is stored in Bins.

Bins are the big boxes in which the milk powder is stored before packing it. hen through an automatic plant the milk is packed. The butter is stored in huge tubs. From where that is packed through the automatic. FINISHED GOODS INVENTORY Inventories of packaging material can also be included in WIP inventories. The packing material is purchase externally. The supplier of packing material is packag

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