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Case Study: A Deep Dive Into Nestlé’s Supply Chain

Michael Wilson | Aug 23, 2017

When it comes to the food and beverage market, Nestlé dominates over the competition as the world's biggest company of its kind. Established in 1866 by Swiss pharmacist, Henri ...

netsle-case-study.jpgWhen it comes to the food and beverage market, Nestlé dominates over the competition as the world's biggest company of its kind. Established in 1866 by Swiss pharmacist, Henri Nestlé, the organization originally specialized in infant cereal. From these humble beginnings, Nestlé grew over the years by acquiring other companies into its fold. This mammoth organization now operates from 70 different countries and hires almost 250,000 people worldwide. 

Through supply chain analysis, other businesses can learn a lot from Nestlé's immense success, as the Swiss company continues to expand and evolve their products. Below, you'll find more about the business's four main strengths, alongside how they have outshone expectations in these areas.

1. Profiling the Consumer

To create products that appeal to consumers, Nestlé believes in a strategy they call "Brand Building the Nestlé Way (BBNW)". One of BBNW's six founding principles is focused on profiling their brand's consumers. Indeed, Nestlé is very engaged with their customers, specifically over online venues. The company goes far beyond market research to reach their clientele, as they strive to see who their demographic is and what makes them tick. 

As a company, Nestlé excels at interacting with real-life consumers on social media. For instance, their 850 Facebook pages for various brands carry a total of 210 million fans. It's an inspiring way to quickly and efficiently gather customer responses. To receive a high response level, the company posts around 1,500 new items per day across their online platforms! When it comes to supply chain analysis, having an intimate knowledge of what your customers want from your products is imperative in running a successful operation.

2. Focusing on Responsible Sourcing

During the supply chain analysis of Nestlé, it's immediately clear that responsible sourcing is a huge concern for the company. With 700,000 farmers working for Nestlé, the Swiss company puts a strong emphasis on acting respectfully toward the many families and agricultural communities who are dependent upon them. Consequently, Nestlé goes to great lengths to track their food product's origins, thus ensuring that they're compiling with ethical practices. This honorable attitude gains Nestlé loyalty from both their suppliers and their consumers.

3. Acquisition for Better Product Diversity

With over 2,000 unique brands and 10,000 products on the market, Nestlé certainly has its fingers in a lot of pies. Much of the company's supply chain relies on acquisition, as they're consistently bringing new companies into their fold. This wave of buyouts happened after the Berlin Wall fell in 1989, opening up the European and Chinese markets.

Nestlé's first major acquisition was Ralston Purina Company, a popular pet food maker, in 2001. They followed this purchase up with Dreyer's, Movenpick, Jenny Craig, and Gerber over the following years. Nestlé commitment to investing in other companies allows them to continuously put new, exciting products on the market. Plus, by buying former competitors, they're eliminating any threats and gaining access to these companies' suppliers in the process.

4. Transforming Into a Zero-Waste Company

After a media backlash in 2010 against Nestlé's environmental practices, the company moved quickly to revamp its policies. Their first change was implementing a "no deforestation" policy, in response to Greenpeace's allegations over Nestlé's methods for gathering palm oil. The company's current priority is to eliminate waste in their upstream supply chain. By 2020, Nestlé has committed to becoming fully zero-waste-to-landfill, according to Pascal Gréverath, Nestlé's Head of Environmental Sustainability. Through these practices, the company is invested in improving its supply chain's efficiency. It's clear that Nestlé will save itself money in the long run, since no amount of food will be wasted.

Overall, supply chain analysis shows that Nestlé's business model has a lot to offer all companies. Whether you're a fledgling start-up or a long-standing cooperation, this Swiss conglomerate displays the true importance of market research, responsible sourcing, product diversity, and going waste-free. After all, Nestlé didn't reach a $247 billion net worth by accident.

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