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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 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.


 


The history of Nestle include 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 tears, 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 acquisitions were Carnation in Los
Angeles (milk products and pet foods) and more recently Rowntree
Mackintosh in York (chocolate and confectionery), Buitoni in Perugia
(pasa) as well as Perrier in France (mineral water).


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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, 200 operating companies, 1 basic research
center and 20 technological development group and more than 231,000
employees the world over.
The company owes its current status to the pioneering spirit inherited
from its founders which continues to inspire it, to its constant search for
new ways of satisfying man¶s mutational needs.
Wherever possible, it sets up factories locally, employees personnel
from the country concerned and relies on indigenous raw materials. Its
agricultural services provide assistance to improve the quality and yield
of the raw materials it uses. Much attention is devoted to professional
training and to the integration of the company in its economics and
social environment.


As a consequence of joint venture arrangement between Nestle S.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 in 1981
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 1990 but was also
critical to the production of several milk-based products in the future.
With the installation of the roller dryer in 1990, 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 1 commenced 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 undertaken 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
Blackcurrent 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 ³slim´ 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 December 1998. 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 Milkpak 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.
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Lahore.
308 ± Upper Mall Lahore
PABX:
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Factories
There are two factories of Nestle Milkpak Ltd. For dairy products.

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The core raw material of Nestle Milkpak is milk. Over the last thirteen
years the company prime concern has been to improve the quality and
volume of milk for UHT processing and for other milk base products. So
the company has twenty-five milk collection centers in Pakistan.

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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 survice in the face of
competition.


 
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Nestle Milk Pak has a small work force as their most of the operations
are automated. They have a very skillful and trained workforce.
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The NM¶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
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NM 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.


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As for as develop speed is concerned NM 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.
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Volume flexibility is one of the competitive priority of NM. 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 rates and
handled. For different set of products different flow strategies can be
implemented.

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NM has adopted the line flow strategy here the system is organized
around the product. In this strategy all products follow linear pattern in
facility. NM 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.

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NM follows 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
old these priorities lead to make to stock strategy.


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The products which are provided by NM are standardized. Therefore
the standardized service strategy also exist in NM Ltd. They have
standardized and consistent quality products.

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"! "this system milk is collected from area of about 72,000

km .
On milk centers price of milk is paid according to percentage of fats. 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. 

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There are Area collection managers, Milk collection Co coordinators

and Milk Collection Supervisors in each Area for collection of specific
amount of Milk in specific time.



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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.
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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)
6- Adulteration test (only on doubt)
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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.

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All the animals have different composition of fats in their milk in
different seasons. Standardize milk according to the recipe milk is given
temperature of 72oC for 15 seconds to reduce bacterias in milk, this
process in called thermization life of milk is increased by this process
and in standardization composition of fats and SNF are standardized.




3
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.

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After 3rd effect Homogenansization is done which uneven composition
of fats and SNF is homogenized 
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In this process there are 5 lateral high pressure nozels 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.

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Lecithinate is sprayed on powder so that it is converted into highly
dissolvable powder. That way Nestle Milk Pak say ³ Nido is instant Milk´
(easily dissolvable in hot ad cold water).
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After all these procuress still powder has 5.5 % moisture in it, Powder is
dried through x- Egran System to reduce moisture level up to 3.1%
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Capacity is the maximum rate of out put 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.
Nestle Milk Pak, Kabir Wala has installed new evaporate, doubling the
Sout put of spray dryer in 1999. Along said the were house capacity at
Kabir Wala to handle increased volumes of finished products was
proportionately increased. They also installed pouch filling machine,
making Kabir Wala factory independent from Sheikhu Pura for filling of
full cream Milk powder.
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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 Argicultrual farms, villages and small
towns. The people o f thess areas have their own
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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 the reputation of having
a milk factory. The suppliers of milk are already oriented with this
location.
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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.
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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.

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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.

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Inventories of packaging material can also be included in WIP
inventories. The packing material is purchase externally. The supplier
of packing material is packages private limited Pakistan.
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There is a separate department in the factory which is responsible for
purchasing the materials and managers its supply.
There is a centralized system of material management. The whole
operations of which are looked after by the operations managers. There
is also a stores officer which also looks after the materials
management.



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The nature of relations maintained with suppliers can affect the quality,
timeliness and price of a firm¶s products and senior. There are two
types of supplier relation competitive orientation.


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there are the suppliers of Milk and on the other hand the suppliers of
packing NM have cooperative relations with both of its suppliers. 


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NM has very cooperative relations with its milk suppliers. NM¶s people
themselves look after the animals of the former who provide them milk
and give them useful tips.
NM provides various facilities to its milk suppliers. NM also provides or
facility to its suppliers. It also provides them consultancy facilities
consultations s provided for improving the milk quality looking after the
health of the animals.
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The progressive farmers are the farmers having lots of animals and
supply milk to NM. These are farmers which wish to further grow. NM
provides them loans for improving their farms and for the purchase of
animals. NM provides medical facilities to the animals. The NM
provides loans to these farmers for expanding their farms. So that the
milk requirements of NM can be filled. In turn the supplier of milk also
cooperate with NM

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The packaging material is supplied to NM by the packages (Pvt) Ltd.
Pak NM have very cooperative orientation with packages and they
cooperate a lot with NM for maintaining high quality of final product.
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*""!"! !8!"4NM use continuous review system.
They have the whole computerized system. How much stock is in the
stone room how much stock has been further put into warehouse and
how much stock has been drawn from the stores? In this way they keep
a continuous control over their inventory. The stores officer not only
maintains records but also makes visits at the warehouses to see the
actual situation of materials. The officer can review the inventory at any
time. Operations manager and the auditing people also check the
inventory and its records so that the risks of loss or manipulation may
be minimized.
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Distribution is the management of the flow of materials from
manufacturer to customer and from ware house to retailers. Involving
the storage and transportation of goods.



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In forward placement finished goods are stored closer to customer .NM
use forward placement as they use to keep the stock of finished goods
in their regional offices and distribution centers. From the distribution
centers the goods are further sent to the retailers.
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In backward placement finished goods are stored at the manufacturing
plant where they keep goods stocked. So in this way they use
backward placement also. So for inventory placement NM uses a mix
of forward placement and backward placement in order to provide
goods to the market on time.
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Distribution plays important role in success and failure of any

organization. The organization may fail, if its distribution networks are
not efficient and unable to provide the necessary items at required
place and at reasonable time.
Distribution system of Nestle is one of major source of competitive
edge over its existing rivals. Nestle has its own distribution networks
equipped with all necessary transportation facilities. They transport
their products at major ten regional sales offices, which are situated at
different cities of Pakistan. These sales office (distribution centers)
have their own vans with sales people who sell and transport goods to
the small retailers. In general Nestle followed following sequence for
distribution of its products.
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For some products, Nestle adopt ³selective strategy´ in which firm
distribute its products on few selective retail outlets while for some
products, Nestle people go for ³extensive strategy´ in which they
distribute their goods on all possible retail outlets.


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For transportation of goods to the regional offices NM has it own vans
and other vehicles. For further distribution to retailer the distributor of
each area uses its own vehicles.
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In quality they want to achieve consistent quality and even to improve it
continuously. In this regard the stress on customer satisfaction,
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Nestle take their customer on top of its hierarchical chart. Its top priority
is to satisfy the customer. They design the product in such a way that
they confirm their speciation, fit for use and give support to the
company image.

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Nestle milk pak involves their employees in making decisions and
changing in organization. They have idea boxes in factories and offices,
employees are encourages to give ideas about improvement.
They conduct weekly meetings and discuss the ideas; good ideas are
rewarded to motivate employee¶s involvement. There are formal
training sessions for employees to train them and enhance their
capabilities. Employees are given rewards and incentives to involve
them more in organization.

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Nestle Milk Pak try to improve the quality of products continuously they
conduct continuous improvement meetings to improvement the quality.
They train the employees for improving quality tools, build team work,
employee involvement and develop sense of operator ownership.

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are aimed at improving quality in general sense. However, TQM often
focuses on benchmarking, product and process design. 
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Benchmarking is a continuous systematic procedure that measures a
firm¶s product and process against industry leaders. As NESTLE is
industry leader in food products, each factory has its benchmark to
improve quality. Nestle Milk Pak Kabirwala takes Nestle Tambula
factory Australia as bench mark, which is the best Nestle factory in all
over the world. Nestle Milk Pak Kabirwala is at 2nd number.
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Nestle Milk Pak design the produce according to the customer¶s
satisfaction and process is designed in such a way to maintain purity
and nutrition¶s of the products.

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Nestle Milk Pak has its own quality standard certification which has
much higher standards as compared to ISO, called Nestle Quality
Standards. Nestle Milk Pak Kabirwala is approved by Nestle Quality
Standards.
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