Nestle Company Purchasing Management

1.0 Introduction of report structure

This report has been conducted as purchasing management strategy to further break down and analyze the concept that has been applied to company Nestle. This report basically discussed about three major interlinking matters which are purchasing management, supplier selection requirement and related issue from internal or external that encountered by company Nestle. Start from introducing the company background as well as ways which been used by company Nestle to select its supplier, followed by information and communication technology(ICT) that company Nestle uses to strengthen their internal system to distribute huge supplies to globally worldwide and identify the strategy to reduce and control cost wastage. Lastly will be conclusion for this report.

1.1 Introduction of Company Goals

The main marketing objective of Company Nestle aims is to be compatible to overall goals of the organization. There are few aims in order to meet overall organization goals are like;

• To keep their phase consistently in order to meet international standards of the external environmental system.
• To establish mutual relationship with government policies, consumers as well as its business partners.
• To balance business movements of the organization by measuring the factors of costs and benefits.
• To build the reputation of organization by applying solid business practices.
• To being environmental friendly by minimizing natural resources wastages.

Company Nestle is providing many diverse beverage products as well as food products in the market such as cereals, bottled water, coffee, chilled and frozen foods, healthcare nutrition, baby foods, chocolate & confectionery, dairy, drinks, ice-cream and pet foods. (Nestle, 2016)

Nestle company has established the relationship with the numbers of more than 165,000 suppliers and 695,000 individual farmers worldwide. Along with setting the non-negotiable minimum requirements which are the Nestle Supplier Code and Appendix for its suppliers, employees, agency and sub-contractors to be stand-by respectively at all time when conducting business. There are few competitors out in market which are Keurig, NiegeriaBrewry,Heinz, Starbucks, BakerHostetler, etc and also companies like Hershey, Cadbury, Unilever has brought a intensive competition with specific similar product line to Nestle company.

2.0 Suppliers Selection Criteria and Issues

2.1 Purchasing goal and needs

The overall objective of Nestle company such as phasing themselves in order to meet international standards, establish mutual relationship with consumers and business partners, measure and balance business activities, build up a strong benchmark products and being environmental friendly. From there the purchasing goal of Nestle company have to develop appropriate and effective purchasing strategies accordingly in order to tie up with overall organization goals. There are a few purchasing strategies that applied by Nestle company to deal with its suppliers have given below such as:

2.2 Nestle company supplier code of conduct[pic 1]

The supplier code of conduct which applied by Nestle company are human rights, safety and health, environmental sustainability, business integrity and some other additional standards. Nestle company expect its supplier to respect all human rights, including labor rights throughout the business activities. As for safety and health, Nestle company expects the operating and management system of it supplier can provides its employees with good workplace environment to prevent work-related injuries and illness. In order to meet environmental sustainability, Nestle company requires its supplier to comply with all applicable legal environmental requirements and demonstrate consistent improvement of environmental performance. Lastly, all applicable ethical trade laws and regulations in the countries where raw materials are sourced, produced and incorporated into Nestle product must be complied by supplier in order to conduct business with Nestle company (Nestle, 2013).  

2.3 Nestle company supplier selection method

[pic 2]The methods which Nestle company use to select its supplier are always seeking for continuous improvement, transparency while conducting business, supplier accountability & support, verification, shared value, stakeholder engagement and be able to report as well as communicating (Nestle, 2013).Nestle company choose it supplier based on the basic requirements which is the code of conduct, followed by their own supplier selection method.

2.4 Nestle company supplier's issues, scandals and recall

in 1970s, one of the Nestle product line which is infant formula has been boycotted. Nestle claims that the infant formula is actually targeting new mothers in the global south on the expensive formula. Once women starts to switch from breastfeeding to Nestle infant formula, found that child would not be able to change back to breastfeeding. This infant formula actually exposed babies to increase health risk (Andrei, 2015).

in 2012, Nestle has being accused by Fair Labor association with violating its own labor code. Among many chocolate companies, Nestle has being pointed out by using child labor in cocoa plantations. Child slaves thoroughly reduce the labor prices for chocolate production, a company like Nestle choose to ignore slaves in their supply chains (France-Presse, 2015).

One of the Nestle supplier has caught up to recall horsemeat in Italy, Spain and France. Horse DNA test has been conducted and test result revealed more than 1% horse DNA has found in 2 products (Tostevin, 2013).

2.5 Nestle company supplier evaluation, rank and ranking

Nestle company has its own world-class  Audit Group to assess the internal and external supplier control systems. They help to provide better operational efficiency of process and facilitate application of the best practices throughout the business. From there, Nestle can easily rank their supplier base on the audit results (Nestle, Nestle, N.D).