TABLE OF CONTENTS

Introduction Production Management

Functions of Production Management & Production Cycle

factors affecting a production management

Introduction of Nestle

Vision Statement

Mission Statement

Nestle Objective

Findings

RECOMENDATIONS

CONCLUTION
PRODUCTION MANAGEMENT

What is Production Management?

Production:

The word production is described in various dictionaries as the act of

producing, manufacturing, creation of an artistic work, a literacy
production, and a presentation – as of a play or other artistic performance.

The word production implies to us for all practical purposes as Creation

of a Utility or Services.

Management:

The word management is described in the various dictionaries as

managing or handling, control, direction, administrative skill, act or art of
managing, to conduct the working of.

The word management implies to us for all practical purposes as Art of

Managing.

In short production management is The Art of Managing the Production.

It basically concerns itself with the conversion of inputs into outputs.
INTRODUCTIONTO PRODUCTION MANAGEMENT

In any production function 3 basic factors will be there

Input >>>> Transformation >>>> Output

A series of sequential activities and operations, which are indispensable

in transforming material from a given form to a desired form, indicates
production.

Is it necessary to study the subject of Production Management even if

one is not interested in manufacturing business or activities?

We now understand that the subject or word “PRODUCTION” is not

restricted to only manufacturing activities as normally will be visualized.
End products may be finished components or consumer products,
completed paper work or documentations, serviced customers or serviced
patients. In short it must be some kind of value added products so that
outputs are worth more than just the sum of individual inputs.

According to Peter Drucker “Production is not the application of tools to

materials but is the application of logic to work.”

Obviously we all may be falling in any one of the categories and involved
in the production function. Hence it is very vital and important to know
all aspects of this management science with proper depth and detail and
empower us with the skills of production management to emerge as a
versatile and efficient manager.
Production and operations management concerns itself with the
conversion or transformation of inputs into outputs using physical
resources so as to provide the desired utility/utilities – of form, place,
possession or state or combination thereof – to the customer while
meeting the objectives of effectiveness, adaptability or customer
satisfaction & efficiency.

Almost all business firms perform two basic functions – Production and
Marketing.

PRODUCTION: Providing Products and Services

MARKETING: Promotion, Sale & Distribution

Of course there may be and would be a number of situations in either

marketing or personnel or other management functions, which can be
classified, or sub classified under production/operations management.

For example:

1. Physical distribution of items to the customer

2. Arrangement of collection of marketing information
3. Selection and recruitments process
4. The paper from and conversion of the accounting information in an
accounts office
5. The paper flow and conversion of data into information usable by
the judge in a court of law etc can all be put under the banner of
production and operations management.
Conversion here is subtle unlike in manufacturing where it is obvious.In
cases 1 & 2 conversion is in terms of place and possession characteristics
of the products.

In case 3 conversions is in terms of receiving personnel services

In cases 4 & 5 it is the conversion of state characteristics.

This conversion are effected by physical resources (added with other

resources such as information)

Let us analyze three basic factors or elements associated with the

subject of production management in more detail.

INPUT CONVERSION OUTPUT

RAW MATERIALS MANUFACTURING PHYSICAL

(Solid, Liquid or (Such as Car, TV,

Gas, semi finished Freeze, finished
or finished products or assembled
components, components)
equipments etc.).

PAPER WORK
Books, Legal
(Literature, legal, agreements, Balance
Processing or
documentations, Sheets or
Compiling of Data
financial
Project reports
information or data
sheets etc.)

CUSTOMERS

(Requiring services (Serviced Customers)

such as transport,
Services such as
hotel, maintenance Delivery of
airlines, railways,
etc.) Services
hotels, banks
(Repair &
Maintenance
services, transport
PATIENTS services)

(Requiring medical
services) MEDICAL (Rehabilitated
SERVICES Patients)

(Treating and Medical services

rehabilitating
patients)

3-M

Men, Material
Outputs can be in
& Machinery Using physical
form, state,
resources, single or
possession, place,
multi - dimensional
time, physical
processes
products, or
availability of services
or combination
thereof.

All production systems should be directed to achieve following output:

EFFECTIVENESS + CUSTOMER SATISFATION + EFFICIENCY

FACTORS AFFECTING A PRODUCTION

MANAGEMENT

Current external environment factors of competition, supply and demand,

trade unions, banks or financial institutions, government.
 External Internal Environment
Environment
1. Strengths & Weaknesses
1. Ethical, social & cultural 2. History & Culture
change 3. The Business
2. Technologies
3. Economic Changes

Conversion Or
Transformation

(Business Systems)

Inputs to the System Outputs to the System

Management
1. Capital
2. Skills 1. Profit
3. Raw Materials 2. Cash Flow
4. Labour 3. Added Value
5. Power
Workers

Job Security, Higher Pay, Job

Satisfaction

Feedback

Effectiveness and economy while engineering the production can be

stated as manufacturing the requisite quantity of product, of required
quality in tune with the predetermined parameters at the required time by
the best and most economical method.
VIRTUES DESIRED

 Sincere meaningful persistent scientific & goal oriented efforts

 Information of-planning, system of collecting, correcting &
compiling of comprehensive data
 This will require thorough knowledge, systematic vision and great
deal of involvement.

BUSINESS
SYSTEMS

(Two Basic
Functions)

Production Marketing

A production system must be designed in the context of overall corporate

effectiveness, for even the most efficient business system is virtually
useless if there is no market for its output.

AIM OF A PRODUCTION SYSTEM

 Practically Tailored to Suit
Oriented Objective of the
Company

OBTAIN OVERALL CORPORATE EFFECTIVENESS

Maintain Stability &

Growth

Optimality in Fulfillment of
Multiple Objectives with
prioritization of objectives

To be Viewed in terms of
Short Term & Long Term
Horizons

Combat Uncertain
Eventualities

Not Be only Profitable

and/or Efficient but also
necessarily satisfy many
Customers

Ability to Adapt

 External environment
factors of competitors
  Supply & Demand
 Trade Unions
 Banks/financial
institutions
 Government

PRODUCTION SYSTEM

POLICY

The overall specification of production system must commence at policy

stage by determining company’s aims in market terms within the
corporate strategy.
PLANNING

To achieve this objectives tool employed is production planning. The

future can not be for seen, It can only be gust mated and therefore for
obtaining objectives effectively, economically and efficiently the best
course of action among the available alternatives is chosen and all the
pros and cons, strengths and weaknesses of available means are weighed
and then the course of action is determined this is termed as planning
phase. A good planning will ensure systematic procedure, improved
methodology, control at appropriate and strategic location to achieve and
attain desired efficiency.

PRODUCTION FUNCTIONS

Once company has formulated the policy and plans the next logical step
is to go for production. Production Management subject deals in detail
about various production functions, which we will deal in detail in
subsequent chapters.

Inter relationship of production management with other

areas of management:

A Marketing

 Identifying customer requirements

 Product Life Cycle
 Distribution
 Product
 Price
  Customer Feedback on Products

B Finance

 The Operation Budget

 Break Even Point Analysis
 Working Capitol
 Provision of finance for improvements
 Provision of info. on general condition of firm

C Accounting

 Cost Data
 Special Reports
 Data Processing Services

D Industrial Engineering

 Methods
 Work Measurement Information
 Plant Layout & Material Handling Info.

E Procurement (Materials Management)

 Determination of Items to be Purchased

 Delivery Schedules
 Updating info. On new products, materials and process
 Inventory planning & Control
F Personnel
 Recruitment, hiring and firing of people
 Training
 Labour relations
 Motivation to workers & Safety factors.
G Research & Development

 For ideas concerning new products, process and new tools

for production

TYPES OF PRODUCTION SYSTEMS

Intermittent Continuous

Job Batch Mass Process

Production is an organizational function, which is responsible for the

management process intended to convert a set of inputs into a
predetermined set of outputs in the form of goods and services in
accordance with the objective assigned to the management.

The function of production management is putting together inputs of

men, capital, information & energy and transforming them into products
and services in the quantity, quality, time and location that will best meet
the organizational objectives.
It is as simple as to convert resources inputs into end outputs.

Complexity of production function is best studied by developing a

conceptual framework, which more precisely and effectively ties together
all the functional efforts, contributions, and knowledge with a common
goal. This is called “System Concept”

If a system is considered as complex a change in one variable within

system will affect many variables of the system. Thus in a production
system, a change in production rate may affect inventories hours worked
per week, overtime hours, facilities, layout and so on.

JOB TYPE PRODUCTION SYSTEM:

 Job production is the manufacture of a single complete unit by an

operator or a group of operators.
 Goods are produced according to definite customer requirements
 Manufacturing status depends on the receipt of specific items
 There is no assurance of continued demand
 This type of production is intermittent in nature

Job Production has following specific characteristics:

  Resources in a job shop are general rather than specialized
 Basic materials with different specifications can be used in many
different jobs
 Equipments should be adoptable to different users/customers
 The skills of employees/operators would be wide enough to enable
them to work on any job

Limitations of Job Production are:

 Since each job is distinct in nature hence machines are general

purpose and may not be economical or efficient
 Machines need to be set up very frequently to suit needs of variety
of jobs. This may result in loss of production time
 Job execution location many times may be out of manufacturing
unit
 As the resources such as manpower, process machine tools are
employed on varieties of non standard jobs it may not be used
economically
 Productive techniques like work study, value analysis etc. may not
be possible to be introduced

Examples: Bridge building, ship building, installing a capital plant in

factories.

BATCH TYPE PRODUCTION SYSTEM:

In the batch production the work on any production is divided into
operations, it means that the work content of each unit is broken into a
number of operations not necessarily of equal work content, and the
operators are again divided into groups. The first group will then
complete the first operations of all the units, passing the batch as a whole
on the next group and so on until the manufacture is complete on that
operation.

Salient features of Batch Production are as hereunder:

 Some degree of specialization of labour is possible.

 Capital investment is low
 The planning required to ensure freedom from idle and waste time
is considerable.
 The planning of resources can be done sufficiently and adequately,
however possibility of underutilization of certain machines and
man power cannot be ruled out
 Cost minimisation is one of the criteria for considering the size of a
batch
 The production control department can derive greatest benefits

Example: Pharmaceutical production.

MASS PRODUCTION SYSTEM:

This type is adopted when one or a few standard products are to be
manufactured on large scale. In this system demand for the product is
continuous and ongoing. As demand pattern is known well in advance all
the resources can be planned very well.

Salient features of Mass Production are as hereunder:

 Planning for optimum utilization of resources can be ensured.

 A product wise layout and balance production line can be designed
 Semiskilled or even unskilled labour can be utilized; very small
numbers of skilled workers are required.
 High output rating automatic machines can be utilized.
 Maintenance or breakdown must be attended most efficiently and
promptly otherwise it may result into heavy loss of production
 There is lot of scope for introducing productive techniques to
increase productivity.
 Product quality can be better controlled in this system.

Example: Various Electrical appliances, Electronic components, Dry

battery cells. Etc.

PROCESS PRODUCTION:

This system is an extended form of mass production in which

manufacturing is carried on continuously through a uniform sequence of
operations.

Salient features of Process Production are as hereunder:

 Process production calls for the setting up of highly sophisticated
automatic machines as far as possible
 In this system usually one principal raw material is transferred in to
several products at different stages of the operations.

Example: Petroleum Refining, Heavy Chemicals etc.

Comparison of various production types Vs Production Capacity &

Flexibility

We can observe that Job Type will offer highest production flexibilities
however production volumes will be lower.

Where as process Type will offer minimum or no flexibilities and

generate very high volumes.

Functions of Production Management & Production Cycle:

The functions of production management were limited and also simple in

the earlier days where production was conducted on a low scale using
very simple methods and techniques and products manufactured were
very simple.

With the progress of time new technologies have developed resulting into
advance products with large volume being produced. This has necessarily
increased the importance of the production management at the same time
added responsibilities.

Classification of decision areas:

Production and operations management functions can broadly be divided

into the following four areas:

1. Technology selection & Management

2. Capacity Management
3. Scheduling/Timing/Time Allocation
4. System Maintenance

Some of the basic functions of the production management

are as follows:
1. Design and development of production process
2. Production planning and control
3. Implementation of plan and related activities to produce the desired
output
4. Administration and co-ordination of the activities of various
components and departments responsible for producing the
necessary goods and services.
5. Monitoring and controlling of men, machineries and materials.
6. Developing system of monitoring through feed back
7. Comparing results and
8. Taking corrective actions.
In short production cycle can be defined as

Planning – Operations – Control.

1.Planning

3.Control 2.Operations
1. PLANNING:

Effectiveness and economy while engineering the production can be

studied as manufacturing the required quantity of a product of required
quality in tune with the required time by the best and economical method.

To realize this objective the tool employed is known as production

planning.

While designing the corporate planning control system it is indeed needed

to chart out both the long range and short time plans programme,
procedure and policies using all the insight, foresight and experience at
disposal. It should take care of feelings, objectives, risks, assumptions; it
should be planned keeping in mind the kind of business (Like seasonal or
otherwise). It should utilize inputs of information from market and
economy, in short, utilize all information and input at your disposal.
2. OPERATIONS:

The second phase is operations. The production plan set the standard. The
actions are performed in tune with these pre-set details in this phase.

Scope of Production (Operation) Functions

Quality Process Capacity Inventory Work force

 QUALITY: it is an important operations responsibility, which

requires total organizational support. Quality decisions must ensure
that quality is built into the product in all stages of production.
 PROCESS: these decisions determine the physical process or facility
utilized to produce the product. The decisions include type of
equipment and technology, process flows, layout of facilities etc.
 CAPACITY: capacity decisions are aimed at providing the right
amount of capacity of the right place, at the right time. In short run,
available capacity must be allocated to specific tasks and jobs in
operations b scheduling people, equipment and facilities. Long run
capacities are determined by the size of the physical facilities, which
are built.
 INVENTORY: these decisions determine what to order, how much to
order and when to order. Inventory control systems are used to
manage materials from purchasing, raw materials through semi-
finished products or work in process to finished products.
 WORK FORCE: people who make the product are ultimate to any
production system without which nothing will be produced. Hence
this is area of very crucial decisions. It includes selection, hiring,
firing, supervision, training, and above all compensation. Managing
work force in a creative productive and humane way is key task for
operation.

3. CONTROL:

It is always desirable to compare where we are standing at present and

where we want to go and accordingly corrective action can be initiated to
bridge the gap

STAGES OF PRODUCTION:

1. Market research: it probes the market in attempt to ascertain the need

for a new product
2. Design for a prototype is prepared based on technical research and
information
3. Design work to start to produce as basic unit.
4. Development work to start to develop a designed product

Control
 Monitoring performance through feedback

Comparing results with pre-set targets

Corrective actions

5. Prototype production done to evaluate the product design, prepare,

catalogues etc.,

getting market feed back, experimenting and testing.

6. Pre-production: during this stage all the components of product as

nearly as designed are produced under as much as possible. Actual
factory conditions using the tools, equipments, raw materials, which
ultimately are to be used on the production, line.

These samples are very critically tested with micro accuracies for type
tests and performances. Some of them are sent to customers for field
trials and feedbacks and criticisms.

7. Manufacturing: the product after all the above steps and after all the
corrections are frozen for design and other parameters and then put
into full production,

Initially a predetermined build up of finished product is manufactured

to ensure and take care of contingence, rejection etc. This is a
confidence building stage for all concerned.

Marketing can simultaneously start of the initial orders

The goods then leave for the warehouse and become the responsibility
of the sales organization.

Even after all the above steps and pre-production stage all bugs are not
ironed out and it is advisable to plan for initially low level to have the
damage control within manageable limits.

PRODUCT & PROCESS DESIGN:

Designing is the most important & crucial stage of production system.

Many companies have a separate Design & Development department.
Services of Industrial Designers are being taken for the development
of product & process designs. This is a pre-requisite stage before
initiating the production

Design indicates the determination of size, shape, standard and pattern

of the products to be produced. It also includes functional parameters
and technical specifications.

Functional designs are transformed to product design so as to make

manufacturing easy and feasible. Product designs are further
integrated to process designs to establish production systems.

Computers have proved to be boon to the designing industry and CAD

(Computer Aided Designs) and other specially developed soft wares
are available to help the product designers and drafts men. It not only
helps in efficiency of designing but also for better accuracies and
selection of best designs apart from storing and retrieving of the
drawings.

DESIGN

PRODUCT DESIGN PROCESS DESIGN

PRODUCT DESIGN:

PRODUCT DESIGN

FUNCTIONAL AESTHETI TECHNICAL PACKAGING

C & &
PRODUCTIO MARKETIN
N G
Factors to be considered in designing of the product:

1. Product should be fashion leader and not fashion follower.

2. It should utilize as far as possible standard parts and aim at

simplifications and diversification of the product.

3. It should be attractive enough to draw the attention of the

customers and have utility, cost effectiveness & salient USP
(Unique Selling Points).

4. Introduction of New Models at regular interval helps in expanding

customer base and establishing better Brand equity and good will
for the company. Normally it is seen that products are designed by
adoption of concepts from leaders in the industries, however large
industries have their own R & D departments and do huge
investments to be innovative and industry leader.

5. Selection and optimizing of varieties & models of products to

support the marketing and yet remaining economic in production is
a challenge to be met by the production management. It is a
corporate decision and involves discussions with marketing,
finance, procurement & engineering departments. It takes care of
factors like product life cycle and break-even point analysis.
STEPS INVOLVED IN PRODUCT DESIGN:

1 Visualization of need for the product in consultancy with the

marketing department and market research done. Marketing
department makes and submits a brief on the product to be
designed to the design department.

2 Preparation of schematic drawings and aesthetic design and

design’s portfolios prepared to take corporate feedback and
approvals.

3 Preparations of engineering drawings, technical specifications,

short listing of components and preparing of bill of inventories
with cost projections and other details. Preparations for proto
type designs.

4 Reviewing the design in relation to Cost analysis, value

analysis, maintenance and reparability. Improvements,
corrections and freezing of the designs.

5 Design & development of tools, jigs, fixtures and other

production accessories and preparations of drawings and
specifications etc for the same.
6 Preparation of PERT (Programme Evaluation & Review
Techniques) charts and CPM (Critical Path Method) charts also
known as network analysis are drawn to have overall control on
the product development work.

7 Designing of packaging and marketing portfolios and literature

etc. to start simultaneously with other developments.

8 Final cost studies and pricing carried out in consultancy with

the procurement and costing departments.

PROCESS DESIGN:

While product design concerns itself with the Design & Development
of the product, Process Designs defines the steps and processes in
sequential order, detailing all the inputs and specifications of tools,
machines, operations and/or processes to produce the desired product
with the shortest possible route and best of engineering practices so as
to meet the objects of quality, quantity and economy in the defined
time frame.

It also ensures best possible layout for the machines, material and men
power to achieve highest degree of efficiency in the production
process with the least degree of rejections and wastages of material,
 labour and time. Thus ensuring optimum utilization of production
capacities.

Process design is the most important step of the production system and
requires best of the engineering expertise, knowledge and
management. It must take care of all the marketing needs including
short term and long term corporate goals and visions of the company.

Total capital exposure and layout of facilities have direct relativity

with the process design. Thorough study and knowledge of latest
technological developments in the field is a prerequisite to process
design.

In nutshell adoption of a particular process design is the most

important and crucial decision of the production management.

PLANT LOCATION & LAYOUT

Plant:

The Physical means of production such as buildings, machineries, dies

tools, jigs fixtures, service machineries and/or workshop equipments
erected and equipped at a given location for the purpose of converting the
raw materials to finished goods using men, machineries and materials is
called plant.

The economy of operations, effectiveness and efficiency of production is

directly attributed to the type of plant and its location. In other words the
optimum utilization of the available resources and capitol employed is in
direct proportion with the right decision of plant location and layout.
Location:

Location may be defined as a particular area/site/place selected for setting

up of a manufacturing/production unit or plant.

Biggest question that needs to be answered before one sets up the

production plant is where should our main operations be based?

Once the manufacturing plant is erected it is a long-term commitment on

the capacity created. Capacity not only in terms of the machinery and
equipments but also in terms of arrangements and development for the
resources such as raw material suppliers, labour force, market and
distribution channels, conveyance and transport arrangements and
adjustments with the environments.

Once a decision is taken in favor of a particular location, then the

organization has to live for a long time with the prospects and problems
of that location in regards to the raw materials, labour, other resources
and market etc.

Thus selection of site and location of the plant has to be done with
considerable thought, taking into account the various aspects leading to
the end profitability of the enterprise. The ideal location for the plant will
be one where lowest cost and maximization of profitability is possible.

To help in selection of the best and most ideal location for the plant
number of factors needs to be analysed. They can broadly be grouped into
two areas, Primary and Secondary factors.
FACTORS TO BE CONSIDERED FOR THE SELECTION
OF PLANT LOCATION:
The factors connected with the location needs careful consideration at the
time of establishing plant or/and at the time of adding new plants to
substantiate/expanding the existing production and/or to add new
products/diversify the activities, and/or shifting of the plant from one
location to another due to one or other reasons.

PRIMARY FACTORS:
 Market
 Raw Materials
 Labour Availability
 Transportation
 Fuel & Power

SECONDARY FACTORS:

 Climate
 Water Supply and infra structure development
 Legislation/ Government and Local authorities’ industrial policies
 Political factors
  Socio-economic factors
 Emotional factors
 Law and order situation
 Availability or Expiry of the lease arrangements
 Financial Aids availability
 Banking facilities
 Geographic Locations like Urban, Rural, City, suburb etc.
 Draught prone, Seismic Zones or other climatic hazards.
 Developing Zones/Industrial Zones
 Proximity of Ports, Airports, Railway Stations or Highways.
 Topography & Contour of the land
 Government’s incentive Schemes etc.
 Availability of land for future expansions.
 Existence of auxiliary industries.
 Facility of technical research
 Religious & Vastu Shashtra Principles
 Economics of the land and financial aspects.

Steps in selection of the location:

 For International operations-Selection of country of operations

 Region- State or province
 Locality – City or suburb
 Exact Site for the plant.
Introduction

THE NESTLE STORY

Nestle S.A. the present Switzerland based international food group,

originally consisted of two companies and two products: Henri Nestle and
his baby food in Vevey, and the Anglo-Swiss Condensed Milk company
and its condensed Milk Company and its condensed milk in Cham, both
in Switzerland. In 1866 the Page Brothers form the United States set up a
new industry in Cham, making condensed milk from a raw material that
was available in abundance in the region. In 1867 Henri Nestle a chemist
in Vevey, created a milk and cereal based food for babies. The companies
competed vigorously until 1905, when they merged and became the
starting point of the present food group.

DYNAMIC EXPANSION

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).

Nestle which does 98% of its business outside Switzerland, also has
interests in non-food sectors, in cosmetics (a large share holding in
L’Oreal) and ophthalmic products (acquisition of Alcon laboratories Inc.)
while continuing to give priority to food products.

NESTLE TODAY

Nestle is now the world’s largest food company. It is present on five

continents, has an annual turnover 70 billion Swiss francs, runs 522
factories in 81 countries, 200operating companies, 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.

Nestle Milkpak Ltd.

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 “slim” format. MILO RTD and UHT Cream were also shifted
over to this new format. A flexible confectionery line for the manufacture
of a wide range of high and low boiled sweets and toffees was
commissioned, with TOFFO and two variants of SOOTHERS – Menthol
Eucalyptus and Honey Lemon, being the maiden products. Nestle
Milkpak also contracted to supply dairy mixes to McDonald’s, for its
popular soft serves and milk shakes. And to top it all, the most prestigious
project, NESTLE PURE LIFE was also commissioned in 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.
ESTABLISHMENT OF NESTLE MILKPAK,
KABIRWALA FACTORY
In 1986 Milkpak Ltd. acquired the services of Kabirwala Dairy Ltd. For
co packing of UHT milk under the brand name MILKPAK. Nestle
Milkpak acquired KDL in 1990 as a subsidiary and began installation on
a MAGGI NOODLES plant in 1991. this production line became
operational in 1992 with two flavors: Chicken and Masala. This second
milk powder plant was commissioned in September 1996. the plant
produces NIDO, GLORIA and skim milk powder. The UHT line was
discontinued in June 1996 and the same year witnessed the launching of
the MAGGI YAKHNI line with 3 flavors: Chicken, Masala and Chatpata.

With the merger of this factory with Nestle Milkpak in April 1997,
Kabirwala Factory, as it is now called, is a fully owned unit of Nestle
Milkpak Ltd.

In February 1999 the newly installed evaporator came on stream in

Kabirwala Factory, doubling the output of the spray dryer. Alongside, the
warehouse capacity at Kabirwala to handle the increased volumes of
finished products was proportionately increased. 1999 also saw the
installation of a pouch-filling machine, making Kabirwala Factory
independent from Sheikhupura for the filling of full cream milk powder.
CORPORATE STRUCTURE

Head Office

The registered and corporate office of Nestle Milkpak Ltd. is in Lahore.

308 – Upper Mall Lahore

PABX: 5757082-95

Fax: 5711820

Factories

There are two factories of Nestle Milkpak Ltd. For dairy products.

Sheikhupura:
29th km, Lahore - Sheikhupura Road,
Sheikhupura, Punjab, Pakistan.
Kabirwala:
Khanewal – Kabirwala Road, Kabirwala
District Khanewal, Punjab, Pakistan.
There are two plants for Mineral Water situated in:
Islamabad :
Karachi:

REGIONAL OFFICES

Company has ten regional sales offices in following cities of Pakistan:

 Karachi

 Hyderabad
  Sukkhar

 Lahore

 Multan

 Faisalabad

 Gujanwala

 Quetta

 Islamabad

 Peshawar

MILK COLLECTION CENTERS

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.
 DIVISIONS OF NESTLE MILKPAK LTD.

Production Division Marketing Division Milk Collection Division

Quality Assurance. Depet Customer Relation Department Agricultural Services
Brand Wise Production Distribution Department Department
Departments Research & Development Logistic Department
Packaging Department Department

HR Division Finance Division

Personnel Department Treasury Department
Accounts Department
Role of Nestle Milkpak Ltd. in Industry

Nestle Milkpak Ltd. is the market leader in food and beverage industry.
They are producing high quality well known brands. There no is such
competitor that can compete Nestle Milkpak Ltd. in its total product mix.
There are a few local competitors of the company in different product
item. These competitors are:

Rafhan:

Rafhan is competing Nestle in infant and follow up cereals.

Shezan and Bambino:

Shezan and Bambino are competing Nestle Milkpak’s local brand

“Frost”.

CDL and Adar-e-kisan:

These two competitors are competing in milk and milk powder products.

In spite of this competition, Nestle Milkpak Ltd. is enjoying about 70-

75% market share in Pakistan.

Selected Products
In order to satisfy the prime objective of this report, we have selected
following to product lines of Nestle Milkpak Ltd.

1. Condensed Milk

Mission

“Wherever you live, only Nestle can provide the best and most relevant
food and beverage products to meet your needs throughout your day,
throughout your life. The Nestle Network icon will take you on the
journey of discovery through our world of food.”
OBJECTIVES OF NESTLE MILKPAK LTD.

Nestle Milkpak believes in following objectives:

The major objective of the company is to sell high quality, innovative and
superior products which satisfy needs and wants of consumers.
Nestle not maximize profit through high market share but use maximize
customer’s satisfaction. Nestle earn profit through satisfaction of
consumer.
The health of consumer and employees is at primary priorities. To ensure
consumer’s health, Nestle provide quality products and for employee
health. Nestle provide the pollution free environment and provide the
medical facilities.
Nestle establish policies, programs and practices to conduct operation in
an environmentally sound manner.
Nestle operate to achieve highest standard of ethical conduct, which
acquire company’s activities and relationship world-wide in each business
sector.
Nestle aim to deal only with reputable suppliers who willing to apply
Nestle Quality Standard.
Nestle has been committed to environmentally sound business practices
throughout the world.
CORPORATE STRATEGY

Corporate strategy defines the direction of the organization over the long
term and determines the goals that must be achieved for the firm to be
successful.

EXTERNAL ENVIRONMENT

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.

CORE COMPETENCIES

Nestle Milk Pak has the following core competencies.

WORK FORCE

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

FACILITIES

The 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.
SYSTEM AND TECHNOLOGY

NM is an organization which heavily depends upon new systems and

technologies to excel in the market. The organization is well equipped
with new developed systems and technologies especially n their
operations.

COMPETITIVE PRIORITIES

Following are the competitive priorities of NM.

i. Consistent quality

ii. Development speed

iii. Volume flexibility

QUALITY

Quality is the cone competitive priority of NM. They take quality in two
ways. High performance design and consistent quality.

CONSISTENT QUALITY

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.

DEVELOPMENT SPEED

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.

VOLUME FLEXIBILITY

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 dropped. So they can
adjust their volume of production according to their requirements.

FLOW STRATEGY

Flow strategy is one of the primary element of operations strategy. Based

on competitive priorities a flow strategy is selected. It specifies has the
operations system to be organized and handled. For different set of
products different flow strategies can be implemented.

LINE FLOW STRATEGY

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.

STRATEGIES BASED ON FLOW

Following are the flow based strategies adopted by NM.

 MAKE TO STOCK STRATEGY

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.

STANDARDIZED SERVICE STRATEGY

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.

PRODUCTION PROCESS

Milk Collection & Reception Storing Standardization De-Creaming

Cooling Spray Drying Evaporation Pasteurization

Packing
PRODUCTION PROCESS

MILK COLLECTION

Milk collection system of Nestle Milk Pak is excellent. According to this

system milk is collected from area of about 72,000 km .

Village Milk centers 2273

Sub centers 583

Main Centers 23

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 4 oC. Nestle purchase milk directly few frames, there is no middle
man.

Collection Areas are in all over Punjab Nestle Milk Pak divide the areas
in following Categories:

A. Sahiwal, Burewala, Okara etc.

B. Pindi Bhattian, Chaniot, Sarghoda

C. Kabir Wala, Mian Channu, Shorkot, Kahane wal, Kachah Khu

D. Bahawalpur , Bahawalnagar, Chistian, Ahmadpur

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.
RECEPTION

From milk collection centers milk is collected and delivered to factory

daily seal of tankers are properly decided. Receiving capacity of milk is
60,000 liters. At reception following tests are performed before storing
milk to assure the quality of milk.

1- Alcohol precipitation test

2- Clot an boiling

3- Fat (5.8% - 6%)

4- SNF (Solid non fat) (8.5-8.9)

5- PH test (6.8 – 6.9)

6- Adulteration test (only on doubt)

Up to reception temp of milk is about 8-10 oC, there is no rejection on

temperature basis.

Trollers are not preferred to stay more than 1.75 Hrs. in factory so that
they can in time collect milk for next day.

STORING OF MILK

Milk is stored in storage tanks called Silos. The capacity to store milk is
596 tons.

There are 5 Silos of100 tons each,

2 Silos of 10 tons each,

1 Silo of 70 tons.
Milk can be stored for 36 Hours in Silos.

STANDARDIZATION

All the animals have different composition of fats in their milk in

different seasons. Standardize milk according to the recipe milk is given
temperature of 72 oC 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.

DECREAMING

In this process dirt particles, SNF and cream is separated, milk is given
temp of 60 oC and 60,000 rpm in de-creamer. So that dirt particles cream
can be separated. Cream is send to butter section. Dirt is drained after 30
seconds milk is send for further processes.

PASTEURIZATION

In This Process milk is heated at 92 oC for 5 seconds to remove

remaining bacterias.

Milk powder process activities

After pasterization milk to treated for canveersion into powder, following

activities are performed to milk:

Evaporation

(a) Low heat treatment

Milk is heated at high pressure of 889 milli bar so that it start boiling at
about 70 oC .

(b) 4-effect falling film

Milk is evaporated in 4 effect system. Milk is evaporated about 56%,
62%, 67% and 75% after 1st 2nd 3rd and 4th effect respectively. After 3rd
effect Homogenansization is done which uneven composition of fats and
SNF is homogenized

Spray drying

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 320 oC hot air is thrown on milk, it is very quick
process in which powder settle in base and moisture evaporate in forms of
vapors.

Central lecithination:

Lecithinate is sprayed on powder so that it is converted into highly

dissolvable powder. That way Nestle Milk Pak say “ Nido is instant
Milk” (easily dissolvable in hot ad cold water).

Drying

After all these procuress still powder has 5.5 % moisture in it, Powder is
dried through x- Egran System to reduce moisture level up to 3.1%

Cooling

After drying there is a cooling process, in which powder is cooled before

storing.

Storing of powder
Powder is stored in bins there are 40 bins , with capacity of --------each.

Packing

Milk is packed in different packing according to the weight required,

form tote tilting station from bins.

Capacity

Capacity is the maximum rate of 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.

Capacity for receiving milk is 60,000 Liter/Hours.

Milk is stored in storage tanks called Silos. The capacity to store milk is
596 tons.

Capacity planning is duty of top management and it is long term. In flush

season when milk is abundantly available they utilize capacity 100% as
cleaning time is just 4 hours daily and 20 hours of working. Installed
capacity is NIDO plant is 560 tons, it produces 4 tons / Hours & in 20
working hrs it can produce 80 tons per day. In summer when availability
of milk is lower they have their annual shut down (June). They have
training session for employees and vacations in that time. There are
certain standards for labor utilization. Efficiency of employees is
calculated daily.

LOCATION

Facility location is the process of determining a geographic site for a

firm’s operations.

Nestle Pack has located one of its factories at Kabirwala.

REASONS FOR SELECTING THIS LOCATION

PROXIMITY TO SUPPLIERS AND RESOURCES

This factory has been located in this area because here the supply of milk
is more than the requirement of the local area. This factory location is
immensely surrounded by Argicultrual farms, villages and small towns.
The people o f thess areas have their own

Animals and the feudals of the region have their own live stock farms.
So there is abundant milk available.

Furthermore, by locating one factor y at Sheikhupura and the other at

Kabirwala the Nestl MilkPak can cover the geographic area of milk
collection very well, especially the area of whole Punjab.

REPUTATION OF THE LOCATION

Placing of the factory at Kabirwala is also advantageous in this way that
at the current place there was actually the factory in the name of
Kabirwala Dairies Ltd. (KDL). So the place has the reputation of
having a milk factory. The suppliers of milk are already oriented with
this location.

PROXIMITY TO NATIONAL HIGHWAY

Kabirwala factory is quite closer to National Highways so the

transportation of Raw Material and Finished Goods is also easier.

In the end we can say that the most important and critical factor for
locating the facility at this place is the availability of the milk in this area.

SUPPLY CHAIN MANAGEMENT

Supply Chain |Management seeks to synchronize a firms fun ctions and

those of its suppliers to match the flow of materials , services and
information with customer demand. A basic purpose of supply Chain
management is to control inventory by managing the flows of materials.

TYPES OF INVENTORIES

Following types of inventories are kept by Nestle Milkpak Kabirwala:

RAW MATERIALS

Raw Material inventory of Nestle MilkPak consists of milk. Their Raw

Material is kept in Silos. Silos are the big tanks, which are used to store
the milk. Inventories of their raw materials cannot be maintained in bulk
quality and for a longer period of time.
The factory can store the milk up to 596000 liters. They have five silos
for storing the milk all have different capacities. The milk can remain
there for the period of 36 hours without loosing quality.

WORK IN PROCESS INVENTORIES

Work in process inventories are not to huge. Whatever they put into
production they stop production after its completion if there is no unusual
break down.

The unpacked goods inventory can be considered as the WIP inventory.

The condensed milk is stored in Bins. Bins are the big boxes in which the
milk powder is stored before packing it.

Then through an automatic plant the milk is packed. The butter is stored
in huge tubs. From where that is packed through the automatic.

FINISHED GOODS INVENTORY

Inventories of packaging material can also be included in WIP

inventories. The packing material is purchase externally. The supplier of
packing material is packages private limited Pakistan.

Nestle Milk Pak maintains huge amounts of F.G. inventories. There is a

huge warehouse within the factory. In the warehouse they store the
finished goods.

Especially when the availability of milk is high then the L.M. is produced
and stock in this warehouse and the same is released when the Milk
availability is lesser and the production is also low.

Normally it’s the FG inventory the NM has RM & WIP inventories not
that huge.
MATERIALS MANAGEMENT

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.

SUPPLIER RELATIONS

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.

COOPERATIVE ORIENTATION.

Nm’S SUPPLIERS RELATIONS

NM follows the cooperative orientation. They have very friendly and

cooperative relations with their supplier’s one hand and there are the
suppliers of Milk and on the other hand the suppliers of packing NM have
cooperative relations with both of its suppliers.

RELATION WITH MILK SUPPLIERS

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.

PROGRESSIVE FARMERS

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

PACKAGING MATERIAL SUPPLIERS

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.

Sole sourcing P is the only supplier who provides are the packing
material. So NM use sole sourcing.

So NM has very cooperative orientation with its suppliers.

INVENTORY CONTROL SYSTEMS

For controlling inventory the NM use Continuous Review

Continuous Review
NM 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.

DISTRIBUTION

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.

PLACEMENT OF FINISHED GOODS INVENTORY

The fundamentals decision is where to stock an inventory of finished

goods there can be two alternates.

i. Forward Placement

ii. Backward placement.

FORWARD PLACEMENT

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.
BACKWARD PLACEMENT

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.

DISTRIBUTION STRATEGIES OF NESTLE MILK PAK LTD.

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.

Company Distribution Center Retailers Customers

This figure indicates Nestle never sell directly is ultimate customers but
follow above sequence.
In general, Nestle has following two distribution strategies:

Selective distribution strategy

Extensive distribution strategy

For some products, Nestle adopt “selective strategy” in which firm

distribute its products on few selective retail outlets while for some
products, Nestle people go for “extensive strategy” in which they
distribute their goods on all possible retail outlets.

SELECTION OF TRANSPORTATION MODE

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.

For the milk collection the NM has their own tankers, which are made of
special material to maintain the quality of milk.

FORE CASTING

Fore cast is a prediction of future events used for planning purposes.

Forecasts are needed to aid in determining what presences are needed,

scheduling existing resources and acquiring additional resources.
Accurate for casts allow schedules to use machine capacity efficiently,
reduce productions times and cut inventories. Forecasts are needed to
anticipate changes in prices or costs or prepare for new laws or
regulations, competitors, resource shortage or technologies.
Forecasting methods may be based on mathematical models using
historical data available, qualitative methods drawing on managerial
experience or a combination of both.

Nestle Milk Pak forecast the demand of products on annually basis with
mutual understanding between planning and selling departments on the
basis of historical data and sales forecast estimates. They conduct
monthly meetings and fine tune the forecast on monthly basis. As in
summer when availability of milk is scarce and demand is high, they have
stock in winter to meet this demand. They produce more in peak season
(Jan, Feb, and March) to meet the demand of lean seasons (June, July,
August).

AGGREGATE PLANNING

Aggregate plan is a statement of production rates, work force levels, and

inventory holdings based on customer requirements and capacity
limitations.

PRODUCTION PLAN

A manufacturing firm aggregate plan is called as the production plan

which generally focuses on inventory holdings and production rates.

NM has its production plan which is generally developed by the planning

department.

AGGREGATION

NM aggregate their plan on the basis of total milk collection, total milk
requirements, total production etc.
TIME

The planning horizons of NM are of two types one is the long term
planning horizon which covers the period of ten years. The other is the
shorter planning horizon normally or one year.

LONG TERM PLANNING HORIZON

In long term planning horizon NM plans for about ten years. They plan
how much production capacity to be achieved. How much production
rates will be required what will be the customer demand how will they
collect the milk. From where they will collect the milk. How many
number of animals would be there is a particular area and from there how
much milk we will be collecting. They got all the information and plan
for a longer period of time.

SHORTER PLANNING HORIZON

In shorter planning horizon they plan usually for one year and then
further decompose that in seasonal plan. How much to produce in a year.
How much milk to be collected in one year what is the deficiency or
surplus. How much inventories we will be holding. This yearly plan is
further divided into four quarters. Targets are set for each quarter and the
efforts are made to achieve the targets.

QUALITY

Quality has no proper definition its vary from person to person. In general
sense quality may be defined as meeting or exceeding the expectations of
customers.

In general business’s success depends on the accuracy of its perception of

customer’s expectations and its ability to bridge the gaps between those
expectations and operating abilities. Good quality can also pay off in
high profits. High quality products and services can be priced higher then
comparable low quality once. And yields a greater return for the same
sales dollars. Poor quality erodes firm’s ability to compete in market
place and increase the costs of producing the product or service.

Nestle Milk Pak has quality as its top competitive priorities along with
availability of its products all over.

In quality they want to achieve consistent quality and even to improve it

continuously. In this regard the stress on customer satisfaction,
continuous improvement and employee involvement.

There is strict quality control by computerized system in control room,

quality of product are assured at each stage.

Customer satisfaction

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.

Employee involvement

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.

Continuous improvement

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.

Improving quality through TQM

Programs for employee involvement and continuous improvement are

aimed at improving quality in general sense. However, TQM often
focuses on benchmarking, product and process design.

BENCHMARKING

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.

PRODUCT & PROCESS DESIGN

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.

QUALITY CERTIFICATION

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.

In which quality is maintained right from the purchase of raw material to

the distribution of the products to the ultimate consumers.

Quality of Materials

Quality of Process

Distribution

Continuous improvement

Customer satisfaction

Employee involvement
DETAILS OF PRODUCTION PROCESS

Milk Collection

Milk Collection system of Industry is excellent. According to this system

the companies’ trucks reach 140000 milkmen and collect milk daily. The
milkmen provide milk on contract basis. Prices of milk vary in case of
self-collection and contract basis. On milk center price of milks is paid at
Rs. 5.80 per liter at 6% Fats. If the quality of fat is less than required 6%
then price will be paid less proportionately.

Percentage of FAT in Various Kinds of Milk.

Buffalo 6% Fat

Cow 3.5%

Goat 3%

Sheep 6%

Human 3.5%

At milk collection centers, Gerber Test in done for the determination of

Fat. Companies are bounded to maintain 3.5% Fats under pure Food
Laws. It is legal requirement throughout the world.

FINDINGS FROM SALES

According to Nestlé company sales, the higher sales are powdered and
liquid beverages with 18,204 sales. The products with high demanded
which are Milo, Nescafé, and Nestea. The lower sales are mineral water
at 6,526 sales. The sales of milk and Ice cream are 16,406. The products
are Nestlé NIDO, Nestlé Coffee-mate, Nestlé Ice cream and Dreyer's.
Nutrition and healthcare products have an average of sales compare to the
higher sales with the sales of 9,744. Nutrition and healthcare products is
such as, Nestlé Nutrition, Nestlé NAN, and Nestlé Gerber. In addition,
prepared dishes and cooking aids are like Maggi, Hot pockets, and Lean
cuisine with 13,933 sales. The confectionary products like Kit Kat, Milo
choco bar and Nestlé Crunch with the sales of 9,065. The PetCare
products have the sales of 9,764. For example products like Purina,
Friskies and Dog Chow. The total sales of all Nestlé products are 83,642
in 2011 year. The sales of 2011 have decrease 9,373 of sales from 2010.

CONCLUSION
The problems faced the consumer in Nestlé Company Product is mainly
on their nutritional. From our internet research we realise that many
people complains about the nutrition.

The first problem is nutrition for elderly, we notice that it is a large extent
by a person diet and also their nutrition consumption. By taking an
improper nutrition and unbalanced nutria diet can increase the risks to
have disease. Secondly, Children obesity caused mainly because their
consuming to much chocolate and confectionary, taking a lots of
chocolate cause them to have disease in early ages. Lastly, in our research
we realise that Nestle is producing less energy drinks.

RECOMMENDATION
Based on our research, we will like to recommend to Nestlé to produce
more products that are suitable for older people such as protein milk and
cereal with necessary nutrition where every older people can make it as
their daily use and also they should produce some organic product to
whom are very health conscious so it can be a healthy snack. Since
children obesity is increasing, Nestlé can produce a chocolate bar with
less sugar so that obesity will not increase. Moreover, Nestlé should
produce more energy drink that is suitable for all ranges such as students
and people that is active in their daily life.
iBIBLIOGRAPHY

 RESEARCH iMETHODLOGY i i(C.R. iKothari)

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 S.N.T.I. iand iT.M.D.C. iLIBRARY
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