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EXECUTIVE SUMMARY
This is an internship report regarding Nestlé Pakistan Lahore. It starts with an
acknowledgment followed by a preface and table of contents. Then comes the introduction
about Nestlé proceeded by the history of Nestlé. After discussing the company’s objectives
and policies; the objectives of internship report has been highlighted to describe the purpose
of writing this report to the reader. This report also gives the objectives of studying Nestlé. Its
history has also been added to tell the reader from where did it originated. An overview of the
management of Nestlé with its organizational structure and leadership style has been
described to see how authority and responsibility is divided amongst the employees here.
Then a list of major competitors of Nestlé at national level has been given to see the impact
of these on the sales of the company. After giving a description of the company, I mentioned
in detail about all the activities that I have been indulged in during my six weeks of
internship. I had been designated to do my internship in the Supply Chain Department. My
major project was to automate the daily stock report of Nestlé. The steps taken to accomplish
this task along with other assigned tasks have been described in detail in this report. In-depth
analysis of the departments of Nestlé along with roles, responsibility and significance has
been illustrated. This will let the reader evaluate the performance of each department, and
learn about their importance to the performance of the business. The report shows an internal
architecture of the working of the Nestlé business. It gives a detail about the supporting
departments that has helped the business in their daily working. For the proper assessment of
the internal and external environment of Nestlé, SWOT analysis and PESTLE analysis has
been added. BCG matrix has also been included in this report to know about the current
standing of brand in Pakistani culture. Also it discusses the major problem faced by Nestlé
currently, along with the suggestions/recommendations for the business. Finally this report
has been ended with a conclusion summarizing the company as a whole with my key learning
and accomplishments.
1
PREFACE
This document is an internship report describing the objectives of internship, my
experiences during it and key learning. The company I chose for my internship was Nestlé
Pakistan Lahore for its prestigious repute not only in the national market but in global market
as well. Nestlé being a multinational is highly known for its quality standards and high
performance worldwide. I worked in their ‘Supply Chain Department’ for duration of six
weeks.
The brand ‘Nestlé’ was enough to motivate me and inspire me to be a part of this
integral organization.
Getting a six weeks experience of work with such an organization was a full time
learning process for me. From getting myself disciplined by strictly following office hours, to
getting acquainted with new faces and interacting not only with the employees there but with
different interns of my age group, to getting equipped with the rules & morale and ways of
doing different tasks; all contributed positively in polishing my skills and equipping me with
a taste of professional life.
The purpose this report is to let the readers know how I found practical life different
from that of university life, and how my experience added on to my knowledge and
personality both. Moreover, I’ll be highlighting some of the problems I faced during this
period, and the way I tackled them.
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ACKNOWLEDGEMENT
I have made efforts in the project I was designated for during my internship.
However, it would not have been possible without the kind support and help of many
individuals. I would like to extend my sincere thanks to all of them.
I am highly indebted to Mr. Tanveer Zia (Supply Chain Controller) and Mr. Qasim
Mughal (Financial Analyst in Supply Chain) for their guidance and constant supervision as
well as for providing necessary information regarding the project & also for their support in
completing the project.
I would like to express my gratitude towards my father who referred me to the
organization, as he is working as Corporate Controller at Nestlé Pakistan. It is with his kind
co-operation and encouragement which helped me in completion of this project.
I would like to express my special gratitude and thanks to other employees who
helped me in my work and gave me such attention and time.
My thanks and appreciations also go to my Ms. Saira Farooqi (Head of Department
Business Administration Kinnaird College) who permitted me for doing this internship.
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TABLE OF CONTENTS
EXECUTIVE SUMMARY........................................................................................................1
PREFACE..................................................................................................................................2
ACKNOWLEDGEMENT.........................................................................................................3
INTRODUCTION......................................................................................................................6
Nestlé’s vision.........................................................................................................................6
Nestlé’s mission......................................................................................................................7
Goals & objectives..................................................................................................................7
Policies of Nestlé....................................................................................................................7
Nestlé products in Pakistan.....................................................................................................8
Objectives of internship report...............................................................................................9
Objectives of studying Nestlé...............................................................................................10
HISTORY................................................................................................................................11
Nestlé Pakistan history..........................................................................................................11
Nestlé today..........................................................................................................................12
MANAGEMENT OF THE ORGANIZATION.......................................................................13
Organizational structure........................................................................................................13
Decentralization....................................................................................................................14
Leadership style....................................................................................................................14
Role of management information system.............................................................................15
Location of offices & factories.............................................................................................15
COMPETITORS......................................................................................................................16
FIELD OF ACTIVITIES.........................................................................................................17
WORK DONE BY ME............................................................................................................19
First step................................................................................................................................19
Second step...........................................................................................................................19
Third step..............................................................................................................................20
Purpose..................................................................................................................................20
Current status........................................................................................................................20
Merits of automating stock report.........................................................................................20
How can stock report help its users?....................................................................................20
Objectives.............................................................................................................................21
Frequency..............................................................................................................................21
Cross function requirement...................................................................................................21
A few screenshots of the SAP system..................................................................................22
Fourth step............................................................................................................................23
DEPARTMENTS DESCRIPTION & ANALYSIS.................................................................27
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Marketing department...........................................................................................................27
Sales department...................................................................................................................27
Human Resource department................................................................................................27
Finance & Control (F&C) department..................................................................................28
Customer Service department...............................................................................................28
Production & Technical Department....................................................................................28
COMPANY ANALYSIS.........................................................................................................30
SWOT Analysis....................................................................................................................30
Strengths............................................................................................................................30
Weaknesses........................................................................................................................30
Opportunities.....................................................................................................................30
Threats...............................................................................................................................31
External (Pestle) & Internal Assessment (Pestle Analysis)..................................................31
Political & Legal Forces....................................................................................................32
Economic forces................................................................................................................33
Social forces & Cultural forces.........................................................................................33
Boston Consultancy Group (BCG) matrix............................................................................34
CONCLUDING REMARKS FOR ANALYSIS.....................................................................35
PROBLEM FACED BY NESTLÉ PAKISTAN......................................................................36
Recommendations.................................................................................................................36
CONCLUSION........................................................................................................................37
What have I learned in internship?.......................................................................................37
Personal learning...............................................................................................................37
My Key Takeaways..............................................................................................................38
REFFRENCES.........................................................................................................................39
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LIST OF FIGURES
Figure 1. Organization’s structure............................................................................................14
Figure 2. Snapshot of first step of work done..........................................................................19
Figure 3. Snapshot of SAP system...........................................................................................22
Figure 4. Snapshot of SAP system...........................................................................................22
Figure 5. Snapshot of SAP system...........................................................................................23
Figure 6. Snapshot of proposal.................................................................................................23
Figure 7. Snapshot of proposal.................................................................................................24
Figure 8. Snapshot of the work done.......................................................................................26
Figure 9. Boston Consultancy Group Matrix (BCG)...............................................................34
6
INTRODUCTION
Nestlé is a food processing company, registered on the Karachi and Lahore stock
exchanges and operating in Pakistan since 1988 under a joint venture with Milk Pak Ltd and
took over management in 1992. For ten years in a row, the company has won a place among
the top 25 companies of the Karachi stock exchange. Nestlé headquarter is in Lahore.
Company operates four production facilities. Two of its factories in Sheikhupura and
Kabirwala are multi product factories. One factory is in Islamabad and one is in Karachi.
Nestlé Pakistan operates in many ways but people, brand and product are the main flag
bearers of the company image and Nestlé continues to enhance the quality of life of people.
Nestlé Pakistan is the major milk distributor in Pakistan, it is estimated that Nestlé collects
milk from 190,000 farmers and spread over 145,000 sq/km in the province of Punjab and
Sindh. Nestlé Pakistan is the leading Food and Beverages Company in Pakistan. Nestlé vision
is on Nutrition, Health and wellness of its consumer by serving quality products through its
dynamic, passionate workforce. Nestlé is such a brand which believes in creating shared
value and is committed to the people it works and lives with. Nestlé is working with the
communities in areas related to Nutrition, Water and Rural development and continues to
enhance the quality of life of people throughout its value chain. Nestlé’s target market
includes everyone from children to old age people.Nestlé’s operations are spread across three
global zones covering Europe, the America, Asia, Oceania and Africa. Recognizing that
every region has its own special needs, the three zones operate locally but are united with
same vision and priorities.
The branches of Nestlé Pakistan are in:
Lahore
Karachi
Islamabad
Faisalabad
Shaikhupura (factory)
Nestlé’s vision
Nestlé’s global vision is to be the recognized leading Nutrition, Health and Wellness
Company. Nestlé Pakistan subscribes fully to this vision of being the number one Nutrition,
Health, and Wellness Company in Pakistan.
In particular, they envision to:
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Lead a dynamic, passionate and professional workforce – proud of their heritage and
positive about the future.
Meet the nutrition needs of consumers of all ages – from infancy to old age, from
nutrition to pleasure, through an innovative portfolio of branded food and beverage
products of the highest quality.
Deliver shareholder value through profitable long-term growth, while continuing to
play a significant and responsible role in the social, economic, and environmental
sectors of Pakistan.
Nestlé’s mission
“To positively enhance the quality of life of the people of Pakistan by all that we do
through our people, our brands and products and our CSV activities.”
Goals & objectives
Goals & Objectives of Nestlé Pakistan are simple & well designed with the core strategy
to meet the demand of the consumers & to fulfill the needs of the customers. The goals &
objectives are:
To be the best & quality brand in Pakistan.
To meet the needs & requirements of the consumers.
To capture the desired market share.
To dwell in to the life of people & consumers.
To be the number one nutritious company of Pakistan.
To be the leading FMCG company around the world as well as in Pakistan.
To be the socially responsible company & be helpful in bad times.
Nestle aims to be proactive innovation and renovation culture, which is the key to
Nestlé’s success in the marketplace.
Nestle aims to have fully integrated systems with suppliers & retailers so that every
single market can be tapped & focused.
Policies of Nestlé
Nestlé is committed to the following Business Principles in all countries, taking into
account local legislation, cultural and religious practices:
1. Their 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. They express this via their corporate proposition 'Good Food, Good Life'.
2. Everywhere in the world, the Nestlé name represents a promise to the consumer that
the product is safe and of high standard and quality.
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3. They are committed to responsible, reliable consumer communication that empowers
consumers to exercise their right to informed choice and promotes healthier diets.
They respect consumer privacy.
4. They 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 their business activities.
5. Their success is based on their people. They treat each other with respect and dignity
and expect everyone to promote a sense of personal responsibility. They 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.
6. They are committed to preventing accidents, injuries and illness related to work, and
to protect employees, contractors and others involved along the value chain.
7. They 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 towards their own customers.
8. They 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.
9. They 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.
10. They are committed to the sustainable use of water and continuous improvement in
water management. They 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.
Nestlé products in Pakistan
Nestlé MilkPak
Nesvita
Nido
Everyday
Milkpak cream
Nestlé yogurt
Nestlé Raita
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Nestlé Actiplus
Nestlé Riwayati Mazaa
Nestlé Fruita Vitals
Nescafé
Milo
Nestlé Pure life
Maggi Noodles
Nestlé Cerelac
Nestlé Koko Krunch
Nestlé Cornflakes
Objectives of internship report
The basic objectives of doing Internship were:
To get acquaintance to the business operations. I studied how day to day business
activities are carried out in an organization, how all the functions of the company are
interdependent on one another, identified the primary activities and support activities
performed by various departments i.e. understood their industrial value chain.
To know what sort of changes Supply Chain brings in managerial activities. Supply
Chain has always remained my area of interest. In academics, I have had a brief
introduction to what Supply Chain is and how it functions. But when I saw those
activities happening in practical life, my understanding undoubtedly enhanced.
Supply Chain of any organization is of immense importance, as it controls all business
processes starting from procurement of raw material to delivering the final product to
customer.
To see the application of my Professional studies especially. Theory/books do
contribute a lot to our knowledge and make our concepts clear. But that is not
sufficient. Application of professional studies in practical life shows how do things
really work out and how we and take advantage of the all the knowledge we acquire.
To make recommendations or implementation plans for the improvement of the
operations of Nestlé in the light of my professional studies. There were several areas
that my supervisor discussed with me to analyze and evaluate what theory says today
and compared and contrasted their work with theory. This one to one discussion not
only gave me a chance to examine the application of my studies, but it also gave them
a chance to reinforce their concepts and understanding. So this process initiated two-
way learning.
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To complete partial fulfillment of credit hours as a requirement for the completion of
BBA (Bachelors in Business Administration) degree. It was my course requirement to
complete at least six weeks of internship in a renowned organization to get hands on
experience of practical demonstration of our professional studies.
To objectively observe the operations of Nestlé Pakistan Ltd in general.
Objectives of studying Nestlé
The objectives of internship are to learn the existing business practices being followed
at Nestlé. The main objectives are given as under:
1. To understand role of Nestlé in world’s economy.
2. To understand the application of theoretical knowledge in practical life.
3. I wish to pursue Supply Chain for higher education i.e. I plan to do my masters in
Supply Chain. Added to this, I would prefer to start my career by doing job in
corporate sector.
4. Nestlé is a leading multinational in Pakistan.
5. To study the standards and policies of Nestlé which have given it a competitive edge.
6. To be a part of a competitive environment like Nestlé and enhance my skills.
7. To be a part of organization that is socially responsible.
8. To identify problems, opportunities and providing recommendation there on.
Nestlé is counted amongst the organizations which can help a student learn business
practices being followed in a system fully equipped with latest technology that cater the
needs of present business environment.
HISTORY
Henri Nestlé founded Nestle in 1866 in Switzerland. Nestlé means ‘little nest’ in
Swiss German. Nestlé first customer was a premature infant who could tolerate neither his
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mother’s milk nor any other conventional substitute. Thus, Henri’s ultimate goal was to help
fight the problem of infant mortality due to malnutrition for which he developed a product
combining various cow’s milk, wheat flour and sugar and name it Farine Lactee Nestlé,
which was the first product of Nestlé being marketed in Europe.
In 1974, Jules Monnerat purchased Nestlé and collectively they launched a condensed
milk product of its own. In 1905, Nestlé got merged with Anglo-Swiss condensed milk. After
some time, when Nestlé got fully established and all its operations were properly functioning
in Europe and was gaining fame around Europe, then Nestlé decided to set up production
plants around the globe to ensure the growth of the organization and to become multinational.
The decision to set up industrial operation in new market needs a lot of research, as
there are various factors that affect the growth of the organization and turns out to be a loss
for the company. Such factors are as follows:
The availability of raw material
Cost factor
Economic climate
Consumer purchasing power
Consumer tastes
The history of Nestlé includes the development of many different products as well as
acquisitions, mergers, and the purchasing of shares in companies, mainly abroad. Over the
course of the years, this enabled it to broaden its range of products and diversify its
operations, while at the same time strengthening the economic foundations of the company.
Amongst the most important acquision were Carnation in Los Angeles (milk, culinary
products and pet foods) and more recently Rowntree Mackintosh in York (chocolates and
confectionary), Buitoni in Perugia (pasta) as well as Perrier in France (mineral water).
Nestlé Pakistan history
Nestlé has been serving Pakistani consumers since 1988, when their parent company,
the Switzerland-based Nestlé SA, first acquired a share in Milkpak Ltd. Today they are fully
integrated in Pakistani life, and are recognized as producers of safe, nutritious and tasty food,
and leaders in developing and uplifting the communities in which they operate. Convenience
is at the heart of the Nestlé philosophy, and their aim is to bring products to people's
doorsteps.
Nestlé today
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Nestlé is now the world’s largest food company. It is present on all five continents,
has an annual turnover of 74.7 billion Swiss francs, runs 509 factories in 83 countries and
employs about 231,000 people worldwide.
The Company owes its current status to the pioneering spirit inherited from its
founders which continues to inspire it, to its concern with quality and to its constant search
for new ways of satisfying man’s nutritional needs.
Wherever possible, it sets up factories locally, employs personnel from the country
concerned and relies on ingredients raw materials. Its agricultural services provide assistance
to improve the quality and yield of the raw material it uses. Much attention is devoted to
professional training to the integration of the Company in its economic and social
environment.
MANAGEMENT OF THE ORGANIZATION
Nestlé has a Board of Directors, led by our Chairman Peter Brabeck-Letmathe, who
was the former Nestlé CEO. There are 14 members of the Board of Directors. The day-to-day
13
management of the Nestlé business is taken care of by our Executive Board. The 13
designated Board Members manage diverse parts of the global business.
The Nestlé Group is managed by geographies (Zones Europe, Americas and
Asia/Oceania/Africa) for most of the food and beverage business, with the exceptions of our
globally managed businesses, which include Nestlé Waters, Nestlé Nutrition, Nespresso,
Nestlé Professional and Nestlé Health Science. They also have joint ventures such as Cereal
Partners Worldwide and Beverage Partners Worldwide.
Organizational structure
It is a combination of network and hierarchy. It is operated by more than 90%
countries and the other 10% are operated by their agents. It has a decentralized culture with
matrix structure; having wide span of control and small chain of command (low number of
levels). It is centralized at the top level and the top level strategies are finalized by using
centralized approach. Nestle is decentralized at the middle level management and they take
decisions of their own. Strategic decision making is done by the top level management which
mostly includes the long-term decision making of the company. Enterprise resource
planning (ERP) is a centralized system in Nestle which integrate internal and external
management of information. ERP is worldwide connected and the organization coordinates
and communicates with its branches by ERP. ERP is used for transactional data while there is
also a system GWAN (global wide area network) used for communication across its
branches. GWAN provide services like e-mail, live broadcasting etc for collaboration. Nestle
at present is using the version named ‘ECC6’. It is going successful and has a rating of 5.6/7
for global users of it. So being the user of this version, Nestle is quite happy.
14
Figure1. Organization’s structure
Decentralization
Switzerland is home to Nestlé’s Swiss subsidiary, its international headquarters and the
registered office of Nestlé’s holding company, but Nestlé does not regard its Swiss
headquarters as the center of the universe. Decentralization is a basic principle of Nestlé.
Its policy is to adapt as much as possible to regional circumstances, mentalities and
situations. By decentralizing operational responsibility, it create strength and flexibility and
are able to make decisions that are better attuned to specific situations in a given country.
Policies and decisions concerning personnel, marketing and products are largely
determined locally. This policy creates stronger motivation for Nestlé’s executives and
employees and a greater sense of identification with Nestlé’s business. It is not Nestlé’s
policy to generate most of its sales in Switzerland, supplemented by a few satellite
subsidiaries abroad. Nestle strives to be an “insider” in every country in which it operates, not
an “outsider.”
Leadership style
Nestlé supports democratic style in the company which means facilitating the
conversation, encouraging people to share their ideas and then synthesizing all the available
information into the best possible decision. Some time Nestle follow situational style, if
decision is not made then NIMCOM, an empty market comprising of functionary heads,
15
come forward to make decision. It also uses top down and bottom up decision making. If
innovation is needed to be introduced they use bottom up. , the top management gets different
ideas from the bottom level and selects the best idea from among the several ideas. You can
say Nestlé has mix leadership style and is operated by executives and not by Board of
Directors who are simply shareholders.
Role of management information system
Information system of Nestle is wide having a working system to manage information
is tantamount to success for companies. Everything from financial data to customer tracking,
payroll and project development must be organized and easily assessable. A management
information system plays an integral role in Nestle. Without information system, the
company couldn’t locate data when needed, chaos ensued and company lost time, resources
and sustainability. Information system helps in providing fast and efficient results and saves
time. It allows employees to use their time for other value added activities when they
complete their first task. Information systems have improved efficiency of employees rather
than the manual system.
Location of offices & factories
The registered & corporate office is Nestle Pakistan Ltd. 308 – Upper Mall, Lahore
54000, Pakistan.
Four factories of Nestlé are located in Pakistan in:
Kabirwala
Karachi
Islamabad
Shaikhupura
The Regional Sales Offices comprise of North Zone (Islamabad, Jehlum & Peshawar),
Central Zone (Lahore, Gujrawala, Faisalabad & Multan) and South Zone (Karachi, Quetta &
Hyderabad).
Nestlé has more than 231,000 employees worldwide but however have more than
2500 employees in Nestlé Pakistan. Nestlé’s Pakistan is the best in its HR systems and which
has approximately 2435 employees. Nestlé performance is the result of professionally
integrated management, investment & technology and mostly the commitment of our
workforce and employees, bonded together with trust and integrity.
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COMPETITORS
Nestlé Pakistan has many competitors in the market to cut their market and capture their
market. These competitors are:
Haleeb Ltd
Engro Food Ltd
Shezan Ltd
Others
They have to face many hurdles in order to be the best and deliver the best because they
have a cutthroat competition with their competitors.
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FIELD OF ACTIVITIES
I have been doing my internship at Nestlé Pakistan Lahore, at their Head office
located at 308 Upper Mall Lahore. The duration of internship was six weeks, starting from 3 rd
June 2013 till 19th July 2013. I did my internship in Supply Chain Department under Mr.
Tanveer Zia (Supply Chain Controller) and Mr. Qasim Mughal (Financial Analyst Supply
Chain).
Supply Chain is committed to enhance its sustainability by improving efficiencies and
effectiveness across the organization’s value stream. This focus has helped in reducing their
operational cost and enhancing competitiveness. They are working to increase eco efficiency
and reduce their environmental footprint, ensuring a safer work place and better job-
satisfaction. It means getting things right first time and it leads to higher quality products,
improved customer relationships and happier consumers. Putting the consumer at the centre
of all our efforts, they have safely delivered 88 Mio cases in 2011, thus enabling wider and
deeper distribution of Nestlé products. They have redesigned their route-to-market with a
focus of ensuring ‘one face to the customer’ and aligned themselves with evolving business
strategies and objectives to support profitable growth.
As part of their ongoing capability development they have finalized their future
Supply Chain foot print. This will guarantee the required capacity to manage their operations
till 2016. They have also increased their focus on people development under the umbrella of
“Nestlé Continuous Excellence” program. This initiative emphasize on alignment,
compliance and engagement at all levels to ensure sustainable performance. The role of
Procurement has become even more challenging with volume growth and higher complexity
of business in this competitive environment. They have restructured their Procurement
function in 2011 to address these challenges and enhance its ability to deliver competitive
advantage.
Nestlé has four distribution channels called DCs:
Shaikhupura DC
Karachi DC
Islamabad DC
Kabirwala DC
My major project was concerned with ‘Automation of Stock Report’, which is made on a
daily basis at Nestlé. Currently this report is being compiled by DC staff, manually. Nestlé
required a resource to work with Supply Chain, to perform a few initial steps required to
18
automate this stock report. This would help the DC staff to update it automatically without
consuming much time.
19
WORK DONE BY ME
First step
As an initial step, I was given a stock report to study in detail. All the technical terms
were explained to me, and I was required to deeply analyze how the values pasted on the
stock report (Excel Sheet) had been calculated. This detailed study of the report made a
strong basis for me to carry out my next steps. Here is a screenshot of a stock report of
Nestlé.
Figure 2. Snapshot of first step of work done
Second step
I attended a meeting in which my supervisors, the concerned person who handled
making stock report of Shaikhupura DC, Mr. Khaild Chaudhary, and Mr. Ali Sajid (Business
Excellence Management-Supply Chain) participated. In this meeting I was briefed about my
project and was taught in detail how they were making the stock report, and what changes did
they require through stock report’s automation. Basically they are using software named
SAP, from which they extracted raw data, and then by running macros in Microsoft Excel,
they updated the stock report on a daily basis.
After this meeting, I was asked to make this report myself without the use of macros.
As I wasn’t allowed to access their software, they gave me all the raw data using which I had
to apply the right formulas that I discovered in my detailed study of stock report. This step
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helped me identify few areas where the company was making wrong calculations. I
discovered this by matching my values with that of company’s stock report values.
This manual task was very long and it took me about four days to make this stock
report manually.
After making of manual, I was required to run macros and see if my values matched
with the values that came after I run the macros.
Third step
A detailed charter was made by me, discussing the purpose, objectives, and users of
stock report, its merits and a complete step by step procedure for automating the stock report
was written by me. Here is an overview of what I studied and discussed in the Charter:
Purpose
The main purpose is to fully automate Daily Stock Report of Nestlé by extracting
information from system.
Currently this report is being compiled by DC staff of the three DCs of Nestle namely,
DC in Shaikhupara, Karachi and Kabirwala. The users of this report are increasing day by
day.
Current status
Currently this report is being produced by DC staff of the three DCs of Nestlé. High
dependency on human resources is involved. It takes about an hour of manual work daily.
Merits of automating stock report
It Eliminates waste by:
1. Saving time
2. Won’t have to email it. Total recipients are 150, out of which about 10 to 50 are
its users.
3. Avoid occupying computer memory of non-users
4. Preventing information overload & keeps staff focused
5. Reports become online
6. Producing Systematic & well-organized reports
7. Efficient business process
8. Better forecast
9. Visibility on real-time data
How can stock report help its users?
Stock report contains information regarding production, sales, demand & stock at
hand at all DCs. Stock report helps users analyze & compare actual vs. forecasted values to
21
form effective financial planning. The ‘percentage achieved’ helps measure efficiency. It can
assure retention of customers with a smooth supply of deliveries by monitoring inventory at
hand and counting the days cover. Quality standards can be rechecked & met.
Objectives
The objectives of stock report are:
Availability and visibility of stock, sales and production for demand and production
planning and inventory management.
To improve the monitoring of stock visibility throughout Nestle nationwide by system
generated report.
To acquire accurate figures for accurate planning of production, inventory
management and demand forecasting.
To reconcile the order planning to see whether the company would be able to serve
the customers’ orders.
Frequency
The frequency of generation of stock report is on a daily basis due to production cut-
off.
Cross function requirement
Report is required by the following functions:
Demand & Supply (D&SP)
Customer Service
Distribution department/DC operation
Factories’ logistics
Sales & Marketing
Nestle professional
Water business
Exporters of Nestlé products
All marketing brands
Supply chain control
Business control
Quality assurance:
o Factory quality assurance
o Corporate quality assurance
o Supply chain quality assurance
22
A few screenshots of the SAP system
Figure 3. Snapshot of SAP system
Figure 4. Snapshot of SAP system
23
Figure 5. Snapshot of SAP system
Fourth step
A formal document was filled by me. This was a proposal which was sent forward by
Supply Chain Department to the LGO (Local Globe Organization) as a proposal. Attached
with this document was the detailed Charter I prepared. The proposal’s screenshot:
Figure 6. Snapshot of proposal
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Figure 7. Snapshot of proposal
Accomplishments of this project
1. Studied current stock report end to end process.
2. A charter/process overflow was established.
3. Discussed/synchronized the charter with DC staff & BEM.
4. BEM (Business Excellence Management) took up the matter to LGO (Local Globe
Organization).
5. LGO made it part of their OMP (Operational Master Plan).
6. LGO committed to deliver it in next 3 months.
Apart from this project, I have been indulged in some other activities as well. I was given
an Investment budget to study. The budget was made by the organization to decide whether
the company must make a warehouse by themselves nearby their Shaikhupura factory or
should it hire the services of an outsourcer who would provide their warehouse to Nestlé at
rent. This investment budget was made to make a comparison of the two proposals to decide
which would be more economical for the company. Payback period, Internal Rate of Return
and Net Present value had been calculated to do investment appraisal. I was required to
compare how the organizations made these financial calculations, and how theory tells us to
calculate. My supervisor asked me to explain him in detail what I have learnt about these
calculations in theory. This was sort of an oral session of knowledge sharing in which I
shared my knowledge about theory, and he told what actually happens in Practical life. This
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session allowed me to understand how theory differs from its practical application in
professional life.
Moreover, I was asked to identify and write the ways in which the company could avoid
cost by constructing the warehouse themselves, rather than outsourcing it to a third party.
Here is a list explaining how the company can incur higher cost by outsourcing this project:
The company has to relinquish the control to outsourcer: Errors in the building
process of the warehouse can’t be eliminated, as the client company doesn’t know
which type of materials or business processes are being used. Secondly, outsourcer
has his own priorities and business considerations.
A great amount of integration will be requires required. Outsourcing this project to a
third party may require a lot of collaboration b/w the client company and outsourcer.
Effective communication is a prerequisite for clearly communicating the requirements
to the third party for proper implementation of investment project. They will then sign
an agreement.
It will take more time to deliver products. The company can lose its customers if the
order is not delivered on time. Goodwill will also be negatively affected.
Permanent staff is required to monitor the stocks at the warehouse: i.e. prevent stocks
from being destroyed, moderate the desired temperature of the warehouse, act in case
of emergency etc.
Company has to pay outsourcer’s fee in addition to bearing the initial cost of
investment.
Outsourcer may be unclear about where to start. The company understands its needs
and objectives better than a 3rd party. It can thus take a better initiative and carry out
all processes of building a warehouse with those requirements clearly defined in their
minds.
Has to carry out market research for finding the best outsourcer in market who is
experienced.
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Figure 8. Snapshot of the work done
In addition to this, I was given some documents to study which were related to Capital
expenditures. It provided an overview of the process and summary of submission
requirements for Investment proposal. It divides capital investment process into two phases
called Investment Plan Phase in which the total value of new investments is identified i.e.
‘WHAT’ do we want to invest in, regardless of timing of implementation, and Investment
Plan “Update” phase which is the period during which the Markets can submit to the Centre
for approval, discussing the justifications for projects. The documents also discussed terms
used in capital investment to develop Investment strategies based on the business long-term
priorities and objectives. The sequence of steps in investment planning process were
discussed for major, minor and small purchases/unforeseen projects. It was learnt that
Executive Board approves investment plan and sets strategic priorities and sets spending limit
for coming year. The transmission of data and information b/w Markets and the Centre
during the whole capital investment process will be via CIAT (Capital Investment &
Tracking) tool. The approved Major Projects including Special Credits can be brought-
forward to the next year if not completed in the year of approval.
27
DEPARTMENTS DESCRIPTION & ANALYSIS
Marketing department
The Marketing Department is responsible for all sorts of activities including the
promotion, advertising and tools used for generating demand.
The Marketing department is also responsible for arranging stalls and function for the
promotional and official reasons respectively. These stalls are conducted in different public
places so that more of the people become aware of the importance of products that ensure
quality. These stall activities remain active for around 4-5 days. Thus, in a month 4-5 such
stalls are managed.
After a stall activity finishes, the person who conducted the stall activity has to report
to their seniors about the response they received from the public and the number of new
customers they have been able to attract during their stall activity.
Sales department
Nestlé’s success has been made possible by a motivated sales team fully geared to
make the most of the opportunities offered by the challenging environment of Pakistan and
by an efficient distribution network that spans over 600 cities and small towns. A distributor
sales force of more than 6000 people and over 1500 distributor’s vehicles plays a vital role in
ensuring that Nestlé brands remain among the most widely distributed brands of the industry.
Their robust distribution network was complimented by a strategy to modernize our business
processes. They leveraged the resourcefulness offered by information technology as an
effective business decision making tool and embarked upon the implementation of a fully
integrated sales automation system. The system now covers all direct distributors and
handling distributors and has opened new vistas of efficient planning and management right
down to the product and shop level. Their quest for deeper and wider distribution penetration
in rural/semi urban centers continued in 2011. Building on the success of the bike and tri-
wheeler operations that was launched in 2010 for their Popularly Positioned Product (PPP)
portfolio, the scope of the activity was extended to several cities nationally in 2011. The
operation has played a pivotal role in giving masses an access to affordable quality products.
Human Resource department
The Human Resource department is dedicated to their employees, and ensures that
they have all the right people with the right skills, in the right places at the right time.
Understanding that their people are the bedrock of all their business strategies, it is their
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mandate to enhance their skills with cutting-edge training and provide them with world-
standard facilities.
Nestlé selects flexible, innovative people who are ready to confront new challenges
and make a difference. Their ground-breaking Management Trainee Program aims to develop
talented young men and women and help them achieve their potential in a dynamic and
enabling environment. Over a hundred people travel abroad every year to take advantage of
our international training and development events.
Finance & Control (F&C) department
The successful implementation of the House of Finance (Specialist Services, Scalable
Business Services, Decision Support and Co-piloting) which has provided them with a
management framework to deliver the full capability of their F&C role across the
organization, with the necessary speed and discipline in execution. In addition they have also
introduced the “Nestlé Continuous Excellence (NCE)” in F&C, which will further help in
enhancing their operational efficiency throughout the organization, focusing on creating
value for their Consumers and Customers, and to all their stakeholders. More specifically,
NCE in F&C focuses on optimization of cash flow. The above activities will further enable
F&C to deliver its mission which is “to drive sound business decision making and innovative
planning to optimize profitable growth, cash flow and total return to share holders”.
Similarly, Local GLOBE Organization (LGO) Pakistan is at the forefront of delivering
Innovative Business Solutions, ensuring state of the art IT Infrastructure and smooth IS/IT
operations. The mission of LGO is to “Provide Nestlé Pakistan a Sustainable Competitive
Advantage, winning with Consumers and Customers while focusing on Business Processes
and Waste Elimination.” One of their key initiatives in 2011 was to implement a strategic
framework for sustained performance, housekeeping and compliance. The drivers of this
strategy were to focus on being proactive, cultivating a root cause elimination mindset and
building the knowledge base. This resulted in a significant reduction in the number of IS/IT
incidents faced by their end user.
Customer Service department
Customer service is concerned with delivery at customer premises on schedule day
and routing time. It ensures delivery on special request forwarded by customer services. It is
also responsible for attending all delivery related complaints on time.
Production & Technical Department
Nestlé Pakistan has four production facilities, two of its factories at Kabirwala (KBF)
and Sheikhupura (SKP) are multipurpose factories, whereas a factory in Islamabad and one in
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Port Qasim produces bottled water. The Factory at Kabirwala is the largest milk intake plant
in the Nestlé world. 2011 was a challenging year for the technical function where they had to
sustain all the good work done from previous years while ensuring continued growth of
factories and the technical team.“Nestlé Continuous Excellence (NCE)” assessment was
passed with an excellent result across the technical function. Audits for goal alignment,
compliance and leadership development were cleared in flying colors. A monthly recognition
program was also launched for many initiatives to acknowledge the dedicated efforts of their
staff. This journey of NCE has resulted in an overall improvement in safety and
environmental compliance. New processes and projects will focus to further reduce the water
and energy consumption in their factories. During the reporting period, their factories have
delivered consistent high quality together with new product launches. They have improved
their facilities for providing better work environment and support for their people. This is
done either by constructing new support facility and or by improving the existing ones. The
key facilities include day care centers to take care of the children of the employees at site,
improved canteens, new social block, laundry, lockers and training rooms.
The projects completed include expansions for juices, dairy and waters at
Sheikhupura factory and for liquid and ambient dairy in Kabirwala factory together with new
technologies and processes installed to support new product development. They put great
emphasis on people engagement and learning. Several trainings were held, focusing on both
technical and softer skills. External team building exercises and change management
workshops were also held. Significant investment was also done to improve and expand their
milk collection and dairy development operations. This includes building new infrastructure,
transportation mechanism and investment in improving their processes and capacities in the
value chain.
30
COMPANY ANALYSIS
SWOT Analysis
Strengths
Socially responsible
Nestlé products enjoy strong brand image and material pull.
Innovative and constantly growing product line. It launched 17 new products,
including variants of existing products in recent past.
Sales force is the major resource strength in terms of physical resources.
Periodic research carried out to judge market trends.
Multinational
Growing Sales and profits.
Major shareholder in the food industry of Pakistan
Aggressive Marketing
Efficient Distribution networks throughout the country.
Quality products.
Solid Financial position
Strong supply chain network
Qualified workforce
Commitment to high quality products
Focus on research and development
Weaknesses
Selective investment due to uncertain economic and political conditions.
Feasibility of new products needs to be analyzed, e.g. Nestea was launched some
years back but it failed because no customer demand for it existed.
There is weak marketing of MilkPak as there is no advertisement of MilkPak on
official website.
Lack of awareness among the target market.
Its dependency on others (govt. & sponsors) for the arrangement of events. The target
market of Nestlé MilkPak is upper middle and high class because lower middle and
poor class can’t afford to buy UHT milk due to its premium price.
Opportunities
Pakistan is the seventh largest producer of milk in the world with annual output of
over 22 billion liters.
31
There are substantial growth opportunities considering the average yield of Pakistani
animals at only 1100 liters/annum as compared to 6000 liters/annum for animals in
Europe and USA. There are nearly 20 million milk producing animals in the country,
mostly in Punjab (80%).
The overall milk market in Pakistan is 20 billion liters, out of which processed milk
contributes only 3 million liters. Nestlé MilkPak along with other processed milk
businesses contributes only 2% to this large market.
Nestlé MilkPak has expanded its product range by entering the cold dairy market
recently by launching Nestlé plain yogurt and now fruit yogurt is also added to it.
Credit policy can be adopted to increase sales.
No multinational competitor exists for Nestlé.
There is a huge potential for Nestlé to tap the untapped markets in Pakistan for
expansion and diversification of their business.
Threats
Price fluctuations due to rupee devaluation as raw material are imported.
The uncertainty of economic conditions poses a great threat as the major funds
invested in the country come from outside Pakistan.
The present economic crises in the world, led to the withdrawal of foreign
management from the company and the investment has come to a halt.
Legal and ethical issues.
Market segment growth could attract new entrants.
Economic slowdown can reduce demand. Two main competitors Haleeb and Olpers
are main threat for MilkPak especially the Olpers is growing very fast.
Inflation is getting higher and higher so the purchasing power of the people is
decreasing day by day.
There is no entry barrier for new entrants as the Olpers has come in the market.
Taste of consumer has already developed which is hard to change.
Majority of the population of Pakistan lives in the rural areas, hence they are not fully
aware of the importance of using packed milk. They prefer using fresh milk readily
taken from their cattle.
External (Pestle) & Internal Assessment (Pestle Analysis)
PESTLE analysis is a powerful tool to visualize your external surroundings, which
enables you to understand the external factors such as Political, Economic, Technological,
Legal and Environmental factors affecting your business. So for understanding Nestlé’s
32
position in the market and to visualize the Nestlé’s position among its competitors, PESTLE
analysis is the best technique to understand the external forces.
Political & Legal Forces
The Taxation Law is imposed. If government imposes heavy taxes on the industry, it
badly effects the industry’s growth. The taxes are imposed from government side and
it varies from industry to industry. FMCG’s have to pay heavy taxes, changes in any
taxation system can badly affect Nestlé’s productivity and sales. Some of Nestlé‘s
products like butter and cream are charged with more taxes.
The Labor Laws are imposed. Labor is being privileged here having all the laws.
Nestle company also follows these laws, like government announce minimum salaries
of an employ Rs 6000. But if any labor laws changes it will affect the Nestlé’s
management to gather because it’s difficult to get potential labor now a days. Nestlé’s
main a im is to keep the i r employees happy & contented for the overall
prosperity of the organization.
The laws on hiring & promotions are imposed. Hiring & promotion is followed by
law. People with better capabilities are prioritized because they deserve to be selected
due to their extraordinary skills and personality. A well educated and experienced
person can be a precious asset for the company. They are hired on the basis of legal
criteria.
The Environmental Protection Laws are imposed. They do concern for
environment and contribute more and more for the betterment of environment.
Nestlé considers a lot about Customer Service Relations (CSR), Nestlé is a worldwide
environmental company so as Nestle Pakistan, Nestlé care for poor and urban areas.
Nestlé initiated the concept of friendly environment and conservation of environment.
Foreign Trade Regulations are present. Foreign trade regulation does not affect the
overall policy and the working of Nestlé because they operate nationally not
internationally. However, it affects it when the condition gets so worst. But as the last
two years whole of the world is suffering from great depression so any economy of
the world.
Pakistan has political instability. The government’s stability also plays a great role for
any industry. In Pakistan government face a lot of difficulty from the side of
terrorism. Recently the instability of government due to shortage of electricity creates
a lot of problem for the industry and thus badly affects its operational processes.
33
Recently Nestlé wasn’t much affected by this situation. But now it is apparent that it
is facing difficulty in carrying out its operations.
Economic forces
Now in Pakistan inflation rate is almost 22.3%, so any increase in inflation rate
increases the prices of Nestlé products which eventually affects Nestlé Pakistan.
Inflation rate affects mostly every business in the industry. But by the effective
decision making, Nestlé is able to retain 55% of the market share in Milk & Nestlé
Pure Life.
The GDP of Pakistan in 2013 is about 3% which is eventually affecting Nestlé’s
productivity & sales.
Social forces & Cultural forces
Today people are more health conscious. So Nestlé produces its products b y
identifying this need of the people they are also producing health conscious products
with more elements of pure & quality, which create the market for Nestle & trend of
its products in the market.
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Boston Consultancy Group (BCG) matrix
High
Low
Low
High MARKET SHARE Low
Figure 9. Boston Consultancy Group Matrix (BCG)
CONCLUDING REMARKS FOR ANALYSIS
MA
RK
ET
GR
OW
TH
Maggie Umda Maza
Everyday/tea creamers
Nestlé Cornflakes
Koko Krunch
MilkPak
Cerelac
Nido
Crunch
Nestlé Pure Life Water
Fruit Juices
Nesvita
Maggie Noodles
Nestlé MilkPak Cream
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Based on the opportunities identified above in the SWOT Analysis, Nestlé has made
some future plans. Nestlé is planning to enhance its investment in Pakistan and by the year
2014, its total stakes would reach an aggregate of $374 million. The company has chalked out
long-term investment plan. Nestlé is setting up a most modern and latest milk plant with the
cost of $70 million which will be operative within next couple of months. Company would
invest to the tune of $209 million in five years period ending 2009. Nestlé is investing $70
million in milk production by increasing capacity of milk powder by 40,000 tons annually;
$44 million would be injected in Sheikhupura factory, $12 has been allocated for expanding
milk collection, and $31 million in bottled water plants.
PROBLEM FACED BY NESTLÉ PAKISTAN
36
It is hard to persuade potential customers to switch to pack milk because of the taste
of fresh milk that has been developed in them. This is the major hurdle for drastic decline in
market share of MilkPak. MilkPak plays a crucial role in the total sales of Nestlé Pakistan.
MilkPak indeed requires high attention as it has a potential to have a high market size.
Recommendations
Nestlé MilkPak should concentrate on all age groups (by showing its benefits) instead
of concentrating just on child growth.
They should try to create strong brand loyalty among customers.
They should keep in mind the competing environment while designing their
strategies.
They should concentrate on customer retention.
They should improve their customer services.
They should try to exploit the loopholes of their competitor’s products.
Should try to cater the mind of the customer by creating some attractive some
attractive jingle like Haleeb: Chai banaye khoob haleeb…sab se garha dood haleeb.
Bonus packages and increment in salaries for a selective level of work and efficiency
should be awarded to attract the employees’ concern.
Staff should be made more responsible by implementing strict rules and regulations
and taking disciplinary actions against any un-professional behavior.
Skilled workers of the company should join the security department to enhance the
system.
Long term agreements to be signed with governmental departments.
A small part of the budget should be spent for the management of the office.
Inventory should be maintained.
CONCLUSION
37
Nestlé is the market leader for different reasons. Its price is high against its
competitors but it matches its quality with its competitors. Nestlé is using its brand name to
promote its products and it is very popular as compared to its competitors. Its packaging is
good. We can easily find Nestlé’s products from any retailer shop. Due to its advertisement,
Nestlé attracts more customers and has very prosperous future if it continues to promote its
products and bring all the possible innovational aspects using different product line strategies.
It has always maintained the quality of its products. Despite all the facts, there is need to
maintain the condition of office and enhance the security. Behavior of employees is not
professional and every department should treat equally.
The objective of this report is to study and analyze the different areas of the
organization, with major emphasis on the areas where I have been doing my internship. From
this report it is concluded that Nestlé has a good reputation as a strong consumer brand. 66%
of the consumers use Nestlé’s products regularly. 60% of the consumers associate quality
with Nestlé. 57.3% of the consumers prefer Nestlé over other brands of pure water that are
available in the market. 66% consumers bought Nestlé water because of its brand image
which is of good quality products. This is also proved by the statistical and graphical analysis
of the data obtained from consumers that they are quite satisfied from Nestlé pure water.
Nestlé formulation a good strategy and they are trying to go for mass-marketing.
What have I learned in internship?
Personal learning
Personal learning is a moral and ethical obligation set by a person to move in a
mellow way to excelling present and future. During the internship I realized the importance
of cohesiveness. A team player can achieve more than an individual. Good coordination and
cooperation with peers and other staff members can impulse a person to perform better in
difficult situations. During my internship I noticed that the degree of cohesiveness among the
Nestlé employees is high. Secondly, I learnt how to be ready for meeting challenges. I learnt
that if a person can handle problems and challenge adequately, he can grow especially in
marketing field where everything is presently dynamic. Thirdly, I acknowledged the
significance of having broad vision. I learnt to think positive to avoid any kind of discrepancy
and hurdle in my task. Positive thinking and broad vision helped me achieve something
different and new. Moreover, I learnt that to avoid any kind of misunderstanding with your
boss, communicate freely with the boss. Furthermore, attractive appearance can be very
useful to impress others. I learnt that a professional should be dressed up properly to
influence others.
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My Key Takeaways
Manually made calculations of the stock report and reconciled them with that
produced by DC (Checking accuracy of data).
Developed understanding of how precise production & demand planning is crucial for
ensuring optimal production & sales.
In the light of guidelines based on capital expenditures, I suggested
modifications/recommendations & did mapping.
Saw practical implications of Discounted Payback period, NPV & IRR i.e. analyzed
to what extent Nestlé is following theory, how theory differs from practical life and
what are their uses.
REFFRENCES
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