KOLEJ UNIVERSITI TUNKU ABDUL RAHMAN

FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS

ACADEMIC YEAR 2020/2021

BACHELOR OF BUSINESS (HONOURS)

IN

LOGISTICS AND SUPPLY CHAIN MANAGEMENT

PROGRAMME NAME : SUPPLY CHAIN MANAGEMENT

PROGRAMME CODE : BBDS 2043

CLASS : RLM G3

TITLE : NESTLE

LECTURER/TUTOR : DR TEOH BAK AUN

STUDENT NAME STUDENT ID

1) BRANDON TAN JUIN KUANG 20WBR06198

2) LIM YONG CHING 20WBR01879

3) PANG WENG WAI 20WBR07783

FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS

COURSEWORK FEEDBACK FORM FOR WRITTEN REPORT

COURSE CODE/ COURSE TITLE: BBDS 2043 SUPPLY CHAIN MANAGEMENT

NAME OF STUDENT(s): ID No:

1) BRANDON TAN JUIN KUANG 20WBR06198

2) LIM YONG CHING 20WBR01879

3) PANG WENG WAI 20WBR07783

PROGRAMME: RLM

YEAR OF STUDY: 1 ACADEMIC YEAR: 2020/21

SEMESTER: 1

GROUP NO: 3

COURSEWORK NO : 1 NATURE OF MARKS ALLOCATED:

COURSEWORK: (e.g.
presentation,Q&A,
individual/group assignment /100
etc)

COMMENTS :
Student’s Date: Lecturer/Tutor’s Date:
Acknowledgement: Signature:

Faculty of Accountancy, Finance and Business

Plagiarism Statement

Read, complete and sign this statement to be submitted with your written work.

We confirm that the submitted work are all our own work and are in our own words.

Name (Block Capitals) ID. No. Signature

1. BRANDON TAN JUIN KUANG 20WBR06198 ……………….

2. LIM YONG CHING 20WBR01879 ……………….

3. PANG WENG WAI 20WBR07783 ……………….

Programme : …LOGISTICS AND SUPPLY CHAIN MANAGEMENT……

Tutorial Group :………RLM G3…………………

Date :………14-8-2020…………………

CW1: Group Assignment: Assessment Criteria

No. Criteria Description Marks Comments

Weak Fair Good Excellent
0–1 2– 3 4 5
1. Organisation Ideas are clear with
(5 marks) supporting facts and
references
No. Criteria Description Marks Comments
Weak Fair Good Excellent
0–5 6 – 10 11 – 15 16 - 20
2. Content Mastery of content
(20 marks) Topic was clear and
understandable

No. Criteria Description Marks Comments

Weak Fair Good Excellent
0-4 5–6 7- 8 9 – 10
3. Knowledgeable Application
(10 marks) Practicality

No. Criteria Description Marks Comments

Weak Fair Good Excellent
0–1 2–3 4 5
4. Layout  Flow
(5 marks)  Logical
No. Criteria Description Marks Comments
Weak Fair Good Excellent
0–4 5–6 7–8 9 – 10
5. Research depth Types of resources
(10 marks)
6. Conclusion Flow of summary
(10 marks)
TOTAL MARKS /60
CW2: Individual Presentation: Assessment Criteria
No. Criteria Description Marks Comments
Weak Fair Good Excellent
0–1 2–3 4 5
1. Organisation Ideas are clear with
(5 marks) supporting facts and
references
No. Criteria Description Marks Comments
Weak Fair Good Excellent
0–1 2–3 4 5
2. Content Mastery of content
(5 marks) - IT application
- Relevant evidence or
references
No. Criteria Description Marks Comments
Weak Fair Good Excellent
0–1 2–3 4 5
3. Research depth  Types of resources
(5 marks)
4. Conclusion Flow of summary
(5 marks)
No. Criteria Description Marks Comments
5. Presentation - Presentation style Weak Fair Good Excellent
(20 marks) (appropriate dressing, 0–5 6– 10 11– 15 16 – 20
facial expression,
confidence, body
language)
- Question & Answer
session
TOTAL MARKS /40
a)Definition the industry

When you mention the industry of food and beverage, Nestlé would be the first to come to
mind as it is one of the largest food and beverage companies known to the world. Since 1912,
Nestlé has been providing Malaysians with quality brands and products, whilst maintaining
the Halal excellence and integrity. Nestlé focuses on the purpose to enhance the quality of life
and contribute to a healthier future with promises of delivering good food, good life to all
(Nestle, 2020).

The goals of Nestlé which is to provide quality products to Malaysians dates back over 100
years ago. Nestlé started out as an Anglo-Swiss Condensed Milk Company in Penang in 1912
which was later expanded and moved to Kuala Lumpur necessary in 1939. Following the
nation’s independence in 1957, an increase in job opportunities and product options is
required. Nestlé began their Culinary Products Division in the mid-1960s in order to produce
exciting culinary solutions under the well-loved MAGGI trademark. This leads to the first
ever establishment of the Nestlé facility in Malaysia.

b) Brief overview of the company background

Nestlé is known worldwide as the largest in the food and beverage industry. It is a Swiss
company established by US brothers George and Charles Page in 1866 where they applied
their knowledge acquired from their homeland in order to establish their first ever production
facility in Europe for condensed milk in Cham. They saw the growth of condensed milk in
the United States and wanted to manufacture close to a large, quality source (Luenendonk
2019). They created their milk in Switzerland, but it was always meant for the English
market.

The company was later founded by Henri Nestlé during the year 1867 where he managed to
develop a breakthrough in infant food. Nestlé developed it for the consumption of infants that
cannot be breastfed to tackle the high mortality rates. It was around this time that the
company started using the current iconic logo of the company which is the ‘Nest’ logo. They
believed that by making a small change can impact their economical statics drastically. The
logo of ‘Nest’ represents a Mother Bird feeding its Young one (StudyDriver 2020). The
meaning behind that is the company cares deeply about their customer’s life as their goals are
to produce good, healthy and tasty foods which consist of many important nutrients. These
are what make Nestlé a unique business that profits through providing products that satisfies
customers. In 1875, Henri Nestlé decided to sell both his company and factory in Vevey and
retired, but even under new ownership, the company decided to retain his name as Société
Farine Lactée Henri Nestlé.

As the size of the company gets larger, the variety in the products offered by Nestlé also
increases. As one of Nestlé business strategies is encouraging product growth through
innovation and renovation. This strategy allowed Nestlé to develop various products such as
baby foods and dairy products to chocolates and confectionery.

c) Critically analyze the current supply chain process of the company's logistics such as
in the type of procedure, information technology and government policy involved.

Type of procedure

i) Waste hunting

Waste hunting method able to reduce the amount of resources to be used. Waste hunting
makes sure the products meet high quality in their production timeline by reducing the
defects. Nestle Malaysia is able to reduce the use of extra raw materials for production,
packaging and storing by using waste hunting methods. It is because Nestlé waters reduce the
use of equipment and raw materials by printing their labels for water bottles on a single
department and distributing it to various manufacturing units (Study driver 2020). Nestlé
waters gain competitive advantage and improve their day to day business activity.

ii) Just in time (JIT)

Just in time focuses on timings during the production process. Both storing and waiting for
materials will increase costs, so JIT reduces the capital that is tied up in stock and saves
resources by streamlining the production system. Nestlé uses transport and waiting times of
JIT. Moving materials unnecessarily waste time and energy. Waiting for materials also
wasting employee’s time and delaying the production. By using JIT, Nestlé is able to
minimize waiting times and transport costs. Too much stock will increase costs of storage.
Nestlé waters have been able to make most efficient use of storage and time at the factory.
Before Nestlé waters implemented JIT in the factory, stock had to be requested and then
needed time to arrive. After implementing JIT in the factory, transport and waiting times have
been reduced through raw materials being stored to the warehouse (Business case studies
2020). With a faster turnaround of stock, Nestlé doesn't need as much warehouse or storage
to store goods anymore.

iii) Kaizen

Nestlé waters used Value Stream Mapping (VSM) as their lean production technique. VSM
illustrates the flow of materials and information required to bring the finished product to the
consumer . VSM provides information to Nestlé employees where the production process
needed to be improved to reduce wastes (Business case studies 2020). Therefore, Nestlé
company' resources are used in a more judicious way and the business becomes more
profitable. Not only that, Kaizen also recognizes the efforts of employees in order to give
employees a sense of worth in the organization and they would have a better performance in
the future. In addition, Kaizen also helps to improve employee’s teamwork in the company so
that Nestlé employees will be able to work in a comfortable environment without prejudice.
teamwork helps to build cross-functional collaborations (Mahey 2020).

Information technology

Nestlé also uses Enterprise Resources Planning (ERP) as their technology. ERP is a computer
based system that is used to manage internal and external resources. SAP system is the kind
of ERP system that Nestlé uses. SAP system is used for accessing, distributing and sorting
the information. SAP system includes purchasing, financials, sales and distribution, accounts
payable and accounts receivable (UK essays 2020). By using SAP, Nestlé would be easier to
simplify the entire development process and at the same time support boosting company
employee’s productivity. Nestlé also uses a manufacturing improvement techniques program
(MITP) to train the managers. This program would help Nestlé provide its staff confidence to
deal with the changes in technology. It also helps Nestlé to improve the culture of the
company and high performance by staff. Nestlé also uses data warehousing to support the
web in order to leverage data and transform them into useful information. Data warehousing
helps Nestlé to gain competitive advantage because it supports Nestlé in the decision making
process through comprehensive data analysis .

Government policy

On 07 July 2013, Nestlé Malaysia reaffirmed its company investment as their commitments
to Malaysia. With the growth of Nestlé products, global consumer's demand increased
significantly over time, Nestlé also invested in multiple manufacturing facilities in Malaysia
to increase their output to match demand of Nestlé Halal products. By increasing its
manufacturing capacity, it will not only strengthen the Halal hub in Malaysia and increase the
export of Halal products, but will also attract potential investors to invest in Nestlé Malaysia.
The groundbreaking ceremony of Nestlé Sri Muda Factory will fulfill the growing global
consumer’s demand by producing a variety of ready-to-drink beverages for the convenience
of consumers to carry around their beverage. These facilities will be fully equipped with
state-of-the-art technology which would optimise capacity of the facilities and streamline the
manufacturing process, to ensure there’s higher productivity in Nestlé Malaysia. (Nestlé
Malaysia 2020). The Nestlé company not only provides job opportunities to their local
community, but Nestlé also emphasizes on the quality of products to ensure they can eat
healthily and get good feedback from the society.

Despite financial difficulties coming to Nestlé, they are still continuing growth in the second
quarter ended 30 June 2019, publishing a turnover of RM1.34 billion, which is 2 percent
higher in the same quarter last year. It is because those earnings come from continuous
consumer sales from supermarkets and some marketing investments which resulted in an
increase in Nestlé revenue. Net profit was slightly lesser compared to the same quarter last
year due to a planned increase in marketing investment, such as goods price and market share
rates which impact domestic exports growth. But Nestlé Malaysia sales still remained slightly
below expectations which reflected volatile and uncertainty in global markets. Therefore,
Nestlé started to focus on their new products like NESCAFÉ Gold launched in the second
quarter (NST Online 2020). These successful product innovations have continued to drive
domestic Nestlé growth in the first half of 2019 because they are very confident in their full
year performance against a series of global uncertainties and volatility. As Nestlé Malaysia
fundamentals are still solid, so they are willing to continue to work hard to maintain the
strong impression of their brands by the global consumers.
Nestlé also makes decisions like elimination of sales tax accountants and fastens the short life
time commodity due to the Government Service Tax (GST) impacting Nestlé Malaysia
expenses. In addition, Nestlé does not have a consistent quantity of exports to global as most
of the country has their own manufacturing facilities to produce Nestlé products. MIDF
Amanah Investment Bank Bhd said that some of the raw materials prices have started to
decline in the third quarter which will lead to a more favourable yearly average price. But
they still believe the decision of increasing price would improve Nestlé Malaysia gross
margin (The Malaysian Reserve 2020). And also, Nestlé were going to look for professional
advertisers to communicate with the customers, so that they can know their customers'
demands and try their best to fulfill them as possible.

Juan Aranols, the latest chief executive officer in Nestlé Malaysia, declared that they will
eliminate 200 million plastic straws by producing MILO UHT packaging (Ang, M. 2020).
Nestlé Malaysia was the first food and beverage company introducing paper straws for
packaged drinks and they committed to the public that MILO UHT packaging was fully
recyclable. Not only that, Nestlé Malaysia also stated that making the eco-friendly straws was
difficult because they need high quality material to make those straws at a very low cost.
Therefore, this challenge resulted in them need to identify capable suppliers to meet their
rigorous standards of making paper straws at a high volume production to assure those paper
straws fit MILO UHT packaging specifications remain in good condition and without posing
any harm to consumers.

Conclusion

In a nutshell, Nestlé is a worldwide known company as it is the largest in the food and
beverage industry around the world. It is important for a company to have a smooth supply
chain by using effective supply chain strategies. It is seen that Nestlé used waste hunting as
their procedure to go hunting for waste in order to eliminate them. Not only that, Nestlé also
applied the Just-in-Time (JIT) method into their company to reduce the stored inventories in
warehouses. Besides, Kaizen also helps Nestlé to continuously improve their operations to
make better products in the future, which would increase end-customer’s satisfaction. The
information technology that Nestlé used to manage their company is Enterprise Resources
Planning (ERP), which integrates all of the business processes and systems and moderates to
suit for operation of the company. Nestlé would collaborate with Malaysia's government so
that they are able to fulfill the local consumer demand and increase their company sales by
making some marketing investment to get more people to become familiar with their
products. Furthermore, the Nestlé and STARBUCK collaboration increases Malaysia Gross
Domestic Product (GDP) by selling high quality coffee with a competitive price. In addition,
Nestlé also needs to face Sales and Service Tax (SST) and overcome it by lowering the
expenses of the Nestlé company. Last but not least, Nestlé Malaysia came out with paper
straws for their latest product, MILO UHT 125ml drink packs, to test the new environment-
friendly packaging materials and develop it after successfully doing research about the paper
straw.

References

Ang, M. 2020, Nestlé Is Introducing Paper Straws For Milo Packet Drinks In War Against
Plastic Waste, viewed on 12 August 2020, <https://says.com/my/news/nestle-to-be-the-first-f-
b-company-in-malaysia-to-use-paper-straws-for-packaged-drinks>

Business case studies 2020, ‘8 Achieving Sustainability Through Lean Production’, viewed
on 2 August 2020, <https://businesscasestudies.co.uk/achieving-sustainability-through-lean-
production/>
Mahey 2020, Kaizen Advantages and Disadvantages, viewed on 8 August 2020,
<https://draminu.com/kaizen-advantages-and-disadvantages/>

Nestlé Global. 2020, Nestlé And Starbucks Close Deal For The Perpetual Global License Of
Starbucks Consumer Packaged Goods And Foodservice Products, viewed on 11 August 2020,

<https://www.nestle.com/media/pressreleases/allpressreleases/nestle-starbucks-close-deal-
consumer-packaged-goods-foodservice-products>

Nestlé Malaysia 2020, NESTLÉ Reaffirms Investment Commitments In Malaysia, viewed on

11 August 2020,
<https://www.nestle.com.my/media/pressreleases/allpressreleases/nestle_reaffirms_investme
nt_commitments_in_malaysia>

NST Online 2020, Nestlé Malaysia Bullish On Full-Year Growth, viewed on 11 August
2020, <https://www.nst.com.my/business/2019/08/516618/nestle-malaysia-bullish-full-year-
growth>

Study driver 2020, ‘Nestlé Company’S Management Challenge’, viewed on 2 August 2020,
<https://studydriver.com/nestle-companys-management-challenge/>

The Malaysian Reserve 2020，Nestlé:GST Impact On Company To Be Known Soon,

viewed on 11 August 2020, <https://themalaysianreserve.com/2017/03/31/nestlegst-impact-on-
company-to-be-known-soon/>

UK essays 2020, ‘Develop A Knowledge Management Strategy For Nestlé Information

Technology Essay’, viewed on 5 August 2020,
<https://www.ukessays.com/essays/information-technology/develop-a-knowledge-
management-strategy-for-nestle-information-technology-essay.php>

Luenendonk 2020, The history of nestle, viewed on 12 August 2020,

<https://www.cleverism.com/the-history-of-nestle/>