Internship Report on Supply Chain of

Nestlé Bangladesh
 Overview Of the
Supply Chain Function of Nestle Bangladesh

Submitted to:
Mr.Ariful Ghani
Lecturer
BRAC Business School (BBS)

Submitted by:
Tahmid Masud Zaman
ID: 13204077
BRAC Business School

Date of submission: 12/12/2017

 Letter of Transmittal

December 7, 2017

Ariful Ghani
Lecturer
BRAC Business School

Subject: Submission of Internship Report on Nestlé Bangladesh

Dear Sir,

As per the requirement of the esteemed course Bus 400, I have successfully completed my
Internship tenure in Nestlé Bangladesh. As to this, I crafted my Internship report regarding
the Overview of the Supply Chain Function Of Nestle Bangladesh.

It was an extremely interesting and challenging journey to experience and view the phases of
practical work practices that are conducted in such multinational organizations. A handful of
real-world illustrations aided me to enrich my competencies and experiences. It is really a
great honour of your co-operations and collaborations that actually helped me extensively
throughout my entire write up. I am certainly very thankful for all your support and
inspiration without which it was not at all possible for me to proceed.

Lastly, I would be really gratified once again if you could kindly share your judicious advice
of my exertion.

Sincerely yours,

Tahmid Masud Zaman

ID: 13204077

BRAC Business School (BBS)

i
 Acknowledgement

This is for the successful completion of this report, I am really very thankful to all the
individuals who helped me thoroughly in prescribing their esteem knowledge. Firstly I
express my warm gratitude to my advisor Mr. Ariful Ghani who co-operated me immensely
in every phase of my Internship tenure. He supported me to work with greater flexibility and
provided enough relaxing atmosphere to complete the report.

In addition I am really very grateful to Nestlé S&IM (Service & Indirect Material) team of
Supply Chain for their endless co-operation and help. Each individual shared their pool of
knowledge to provide enough enriched write up for my Internship Report. Furthermore I am
obliged to my line manager Ms. Mahmuda Afra who for her continual collaboration,
assistance and guidance that led me to have a very insightful write-up. This report is not only
for the purpose of my Internship completion rather it will also be used to present to the
authority of Nestlé Bangladesh which, I believe, will bring about enough significant value in
the relevant field. I am really gratified to all the individuals – my team, co-workers,
colleagues, friends, teachers and especially my line manager and advisor who infinite support
dragged me to present an excellent intuitive report.

ii
 Executive Summary

One of the leading Nutrition, Health and Wellness company, Nestle, strives to serve its
customers with the best quality products. Thus, its story of excellence is not limited to
product sales solely, rather it also concentrates in providing brilliance consistently for every
group of stakeholders. Being a part of Nestlé S.A, Nestlé Bangladesh also shares the similar
vision of continuous excellence and growing together concept. It focuses not only to nourish
its employees, distributors, retailers and other stakeholders but also to nurture its respective
vendors’ businesses also.

Accordingly, its internal structure is designed in an organized and systematic manner so that
stakeholders can contribute efficiently. An open platform is created by the internal
organizational culture where every member are allowed to exhibit their extraordinary views
and opinions that ultimately help Nestlé Bangladesh to be competitive at all of its operational
phases. Thus the description of the internal department, mainly Supply Chain, gives a well-
defined picture through this report that explains the process and also showcases the inner
relation and operational procedure.

Thus, the objective of the report basically demonstrates NBL and its specific Supply Chain
department along with the key roles, duties and responsibilities of an intern of that particular
department.

iii
 Table of Contents

1 Overview of Nestlé ............................................................................................................. 1

1.1 About Nestlé global:.................................................................................................... 2
1.2 Globally recognized Brands of Nestlé: ....................................................................... 2
1.3 Nestlé’s history and its evolution: ............................................................................. 4
1.4 Celebration of 150 years: ............................................................................................ 7
1.5 Nestlé Bangladesh (NBL): .......................................................................................... 8
1.6 Product Range of Nestlé Bangladesh: ......................................................................... 9
2 Nestlé Supply Chain ........................................................................................................... 10
2.1 About Supply chain: .................................................................................................... 11
2.2 Primary objective of Supply Chain: ............................................................................ 12
2.3 About Nestlé Supply Chain: ........................................................................................ 13
2.4 Organogram for Nestlé Bangladesh Supply Chain Function: ..................................... 14
2.5 Demand & Supply Planning (D&SP): ........................................................................ 15
2.6 Customer Service & Distribution (CS&D): ................................................................ 16
2.7 Procurement: ............................................................................................................... 17
2.7.1 Raw Material:....................................................................................................... 17
2.7.2 Packaging Material: ............................................................................................. 17
2.7.3 Service & Indirect Material (S&IM): .................................................................. 18
2.7.4 Inbound Logistics.............................................................................................. . 22
3 Key Responsibilities ......................................................................................................... 24
3.1 Roles, duties and responsibilities: ............................................................................. 25
3.2 Preparing & Circulating RFQ: .......................................................................... ........ 25
3.3 Enlisting new vendors: .............................................................................................. 26
3.4 Comparative Statement (CS):................................................................................... . 27
3.5 OrganizingDocumentation: ....................................................................................... 28
3.6 PO handover and ensuring delivery: ......................................................................... 29

4 Achievement ..................................................................................................................... 30
4.1 Business Partners’ Meet 2016 ................................................................................... 31
5 Findings…………………………………………………………………………32
6 Reccomendation............................................................................................................. . 33
5.1 Conclusion ................................................................................................................. 34
1 Overview of Nestlé

1
1.1 About Nestlé global:

Nestlé is the world’s leading Nutrition, Health and Wellness Company that boost and enrich
lives with science-based health and nutritional solutions for almost all ages of people, in
every stages of life. The company sells its products in almost 197 countries, having 436
factories positioned in 86 countries and overall it employs over 335,000 people globally, with
its headquarters that is located in Vevey, Switzerland. This Swiss corporation often ends up
being known as the “multinationals among multinationals” because it ended up acquiring a
global sales of CHF 88.8 billion in 2015 and again proves itself to be the world’s leading
Nutrition, Health and Wellness Company. Nestlé is a public limited company which has more
than 250,000 shareholders, enabling no single shareholder holding more than 3% of the stock
and around one third tend to be Swiss. It is the worldwide leader in various product
categories like soluble coffee, infant nutrition, bottled water, condensed and evaporated milk,
ice cream, chocolate, malt drinks as well as culinary. The shareholder value of Nestle is
upsurged by means of sustainable, efficient and profitable long-term growth.

1.2 Globally recognized Brands of Nestlé:

Nestle manages a wide array of brands, including almost every type of food and beverage
categories. To serve consumers by providing the tastier and healthier commodities that they
can enjoy upon at every stage, every occasion of their lives is their utmost motive. A very
noticeable and interesting fact is that, Nestlé manages around more than 2000 brands to best
serve its consumers’ need, demand and expectations. However, some of them can be
demonstrated in Fig: 01 where Nestlé’s product categories and the corresponding brand
extensions against can be pointed out.

2
 Exhibit: 01 – Brands of Nestlé

There are also certain brands that are identified as “Billionaire Brands” by Nestle. The title
was received by them as 70% of Nestlé’s total food and beverages arise from certain
particulars that generate over CHF 1 billion, each, in sales. These brands can be exhibited in
Fig: 02.

Exhibit: 02 – Billionaire brands of Nestlé

3
1.3 Nestlé’s history and its evolution:

Henri Nestlé (10 August 1814 – 7 July 1890), was a pharmacist’s assistant from where he
became the founder of the world’s leading nutrition, health and wellness company. The story
began in 1867 when Henri Nestlé, a 53 year old entrepreneur, came up with an infant formula
(Nestlé’s Milk Food) and marketed the product in the small Swiss town of Vevey. The
business flourished after 1905 when it merged with the Anglo-Swiss Condensed Milk Co.,
founded in 1866 in Cham, Switzerland and turned to be a great successful company.
Basically, Henri Nestlé recognized a necessity in society and thus applied the latest scientific
discoveries to combat the furious infant mortality occurring at that time.

Exhibit: 03 - Henri Nestlé

The highlighted pioneering years in Nestlé’s history (Nestle Global):

1. 1866 – 1905:

o 1867 – Henri Nestlé launches ‘Farine Lactée’ (flour with milk) in Vevey, Switzerland
that actually was targeted for the infants who cannot be breastfed. Since then the
iconic logo of ‘Nest’ was used.
o 1904 – For the very first time Nestlé started selling chocolate, where Henri Nestlé
played a key vital role for the development of chocolate from 1875.
o 1905 - Nestlé and Anglo-Swiss merged and formed Nestlé & Anglo-Swiss Milk
Company who previously was rivals.

4
2. 1914 – 1938:
o 1934 – The world favourite malt chocolate drink Milo was first launched in Australia
and was exported to other concerned markets after its success.
o 1938 – Nescafé was launched as ‘powdered extract of pure coffee’ and can be
prepared by adding simple hot water.

3. 1940 – 1957:
o 1947 - Nestlé & Anglo-Swiss merges with Alimentana, founder company of Maggi
soups, bouillons and seasonings developed by Julius Maggi, which was renamed as
Nestlé Alimentana.
o 1948 & 1957 - US Nestlé Alimentana came up with Nestea that shared the
manufacturing method that can be served both hot or cold. Also, Nesquik was
launched in US and turned out to be the top seller brand. Besides, in 1957 under the
brand name of Maggi canned ravioli was marketed and it immense success drove
Nestlé to launch more canned foods.

4. 1960 – 1980:
o In 1960, increased number of household buying freezers caused Nestlé to acquire
German brand Heudebert-Gervais to exploit such growth, and added Swiss brand
Frisco in 1962.
o In 1976 Nestlé took over US frozen food company Stouffer Corporation and
canned food producer. Interestingly, in order to diversify their product lines and
categories Nestlé took a minority stake in global cosmetics brand L’Oréal in 1974.

5. 1981 – 2005:
o 1981 - Nestlé included Carnation and Coffee-Mate and also pet food brand Friskies in its
product portfolio.
o In 1986 Nespresso came across with the intention of a perfect coffee cup similar to
barrista. Accordingly in 1988world renowned brands like KitKat, After Eight and
Smarties joined Nestlé’s line of brands.
o 1991 – A joint venture with General Mills, cereal partners worldwide, was created to
manufacture and market breakfast cereals globally. Also, with Coca-Cola Nestlé
established a joint venture to produce and market Nestea and also to create beverage
partners worldwide.

5
 o In 1992 it bought France’s Perrier group and accordingly in 1993 separate water
business was formed naming Nestlé Sources International and renamed as Nestlé
Waters in 2002.
o 2001 is the year where Nestlé concentrated in pet food business by acquiring an US
company Ralston Purina and intended to be the market leader in pet care naming
Nestlé Purina Petcare. Accordingly, Nestlé expanding its ice cream business and
bought the licensing right to premium producer Häagen-Dazs in the US and Canada
and also acquired Mövenpick and Dreyer’s Grand Ice Cream.

6. 2006 – Present:
o In 2007 Nestlé acquired Novartis Medical Nutrition along with buying baby food
company Gerber and Swiss mineral waters concern Sources Minérales Henniez.
o Wyeth Nutrition was acquired for USD 11.9 billion to strengthen and its position in
infant nutrition in 2012. In addition, the oldest surviving Swiss chocolate brand was
launched as a super-premium global chocolate naming Cailler.

6
1.4 Celebration of 150 years:

Nestlé’s history and success stories contain a varied range of activities and excellent
performances that drove the brand to move towards brilliance. It was successfully and
effectively able to complete a whole 150 years through magnificent performance since its
inception till now, that is 2017. Therefore, across the globe ‘150 years of Good Food, Good
Life’ is celebrated.

Exhibit: 04 – 150 years of Nestle

The celebration was more of a great focus in its origin landmark Vevey, Switzerland. To
deliver acknowledgment to consumers and all related stakeholders for their incessant loyalty
and trust, especially to the employees for their effort, hard work, commitment and
determination to Nestlé was the main motto of the festivities. Few initiatives include, like, in
honouring Henri Nestlé a commemorative stamp in Swiss Post started selling which includes
his portrait and signature. Preparation for publishing a history book naming ‘Nestlé – The
Leading Nutrition, Health and Wellness Company’ is going on and it will include historical
material covering the last century especially on the last ten years. In addition, Nestlé’s Art
Collection, which includes the work of major artists of the 20th Century, will be available at a
new exhibition at the Jenisch Museum in Vevey. Thus, certain interactive and seemingly
interesting initiatives are being adopted by keeping the celebration of Nestlé’s ‘150 years of
Good Food, Good Life’ at centre and focus.
Nestlé Bangladesh (NBL) also initiated many projects. For the 150 years’ celebration keeping
this joyous event in the center, for example, a new 150 years logo was launched and is used
every products of Nestlé and all NBL employees were awarded with special gift pack
hamper. In addition, new ID cards with this celebrating logo was distributed for all internal
employees and staffs. There are also many considerable projects taken over for making event
more joyous.

7
1.5 Nestlé Bangladesh (NBL):

The first commercial production was started by Nestle Bangladesh (NBL) in 1994.
Accordingly in 1998, Nestle S.A owned Nestle Bangladesh as a fully owned subsidiary. The
only factory is located in Sreepur (55 km North of Dhaka), Gazipur, which focuses on
producing, infant cereals, noodles, seasoning and also repacks soup, milk, infant nutrition
products and powdered beverages. Nestlé is one of the strongly positioned organizations in
Bangladesh at present. Through the policy of constant innovation, concentrating on its core
competencies, the company is constantly growing and its commitment towards high quality
food for the people of Bangladesh.

One of Nestle Bangladesh’s aspirations is to be recognized as the leading Nutrition Health &
Wellness (NHW) Company in Bangladesh. It looks to generate sustainable, profitable growth
and continuously improve results to become a billion CHF company.

8
1.6 Product Range of Nestlé Bangladesh:

Category Products

Baby Foods BABY&ME Maternal Nutrition Supplement

CERELAC Stage1
CERELAC Stage2
CERELAC Stage3
CERELAC Stage4

Beverages COFFEEMATE
NESCAFE
FRUITA VITALS
MILO
NESTEA
NIDO FORTICHOCO

Breakfast Cereal NESTLE KOKO CRUNCH

NESTLE CORN FLAKES

Nutrition NAN
LACTOGEN
NIDO 1+
NIDO 2+
NIDO 3+

Dairy NIDO FORTIFIED

NESTLE EVERYDAY

Culinary MAGGI NOODLES

MAGGI SOUP
SHAD E MAGIC

9
2 Nestlé Supply Chain

10
2.1 About Supply chain:

Supply chain management (SCM) is the system of people, organization, activities,

technology, information and resources combined together to transfer a particular product or
service from manufacturer to customer. It basically transforms the natural resources, raw
materials and components into finished products and delivers it to final consumers. Supply
chain is mainly a dynamic process that involves the constant flow of information, product and
funds within different stages of an organization and also with other organizations. It is a
chain of process that ensures steady flow of products or services moving from suppliers to
manufacturers to distributors to retailers and lastly to end consumers. Supply chain, within its
array of networks, include not only manufacturer and supplier but also engrosses warehouses,
transporters, retailers and sometimes customers also.
Supply chain management in every business is crucial as, an optimized SCM chain will
enable a cost minimization along with fast production process. It is such a network that
allows companies to produce and accordingly distribute through this particular framework.
SCM is based on mainly two core ideas, first being the fact that normally every product that
do reaches to its end consumers represents the collective effort of multiple organizations, and
these firms are jointly refer as the supply chain. However, the second fact is that most
organizations, for a long time, paid attention to those activities that actually occurred within
their territory. On the contrary, few companies understood this entire chain and as to that the
result was disjointed and ineffective supply chain.

The Global Supply Chain Forum identified eight key processes that make up the core of
supply chain management (Croxton, Dastugue, & Lambert, 2001, p. 14):
• Customer Relationship Management
• Customer Service Management
• Demand Management
• Order Fulfillment
• Manufacturing Flow Management
• Procurement
• Product Development and Commercialization
• Returns.

11
The Supply Chain Management Program integrates topics from manufacturing operations,
purchasing, transportation, and physical distribution into a unified program. Successful
supply- chain management, then, coordinates and integrates all of these activities into a
seamless process (Zigiaris, January 2000). SCM, therefore, falls under the active
management to exploit customer value and also to achieve sustainable competitive
advantage. Thus, it covers all the activities ranging from development of product, sourcing,
production, logistics and also includes the information system and other related works needed
to coordinate and manage these actions effectively. In simpler terms, SCM deals about what
to manufacture and process in-house along with the roles that supplier and buyers play within
each other’s business decision and operational activities.

Exhibit: 05 – Components of SCM

In general, SCM comprises of five parties to complete its value chain that is used to create
value of products right from its manufacturing till its delivery to the hand of final end
consumers. In order to complete the entire process (the chain) the sixth important aspect is
the customer to whom actually all the initiatives are targeted. However, these components
include:

 Manufacturer  Logistics
 Distributor/reseller  Retailer
 Supplier  Custom

12
Primary objective of Supply Chain:
Like other business activities’ goals, the basic core goal of supply chain is ultimately to
ensure that the manufactured products or services reach safely and in sound condition to
target customers’ hands and also to satisfy them. In addition to this, another important motto
it shares is the profit it can generate for the organization. Hence the ultimate motive is o
maximize the overall value it creates within its chain. Thus, the greater is the profit extent the
more successful the supply chain is.

The prime goal of any supply chain is to ensure its manufactured product or service is
produced and distributed-

At the right quantities

To the right locations
At the right time
Satisfying service level requirements while minimizing overall system-wide costs

2.2 About Nestlé Supply Chain:

Supply chain is the heart of Nestlé as Nestle is the leading nutrition, health and wellness
company. Thus, even though it has a sophisticated chain, Nestle keeps customers at the center
with the motto being the leader in supply chain in its industry. Hence, every component of
the supply chain exerts heavily on strong interpersonal relationships with other related areas
that formulates a community of people who are very co-operative. It creates such a team that
shares strong ethos where each individual makes their best way to aid each other deliver.
Thus, no exaggeration is contained to explain that its aptitude to manage such a huge
sophisticated process in a timely and effective manner is where Nestlé’s actual success relies.

13
2.3 Organogram for Supply Chain Function Nestlé Bangladesh:

Fig: 06 – Organogram for Nestlé Bangladesh Supply Chain Function

The supply chain function of Nestlé Bangladesh is basically divided into three distinct
departments:
1. Demand & Supply Planning (D&SP)
2. Procurement
3. Customer Service & Distribution (CS&D)

From these departments onwards, there are six more sections which are:
1. D&SP - Category Planners
2. Procurement - Raw Material, Packaging Materials, Service & Indirect Material
(S&IM)
3. CS&D - Customer Service (HO) and Distribution Centre

14
2.4 Demand & Supply Planning (D&SP):

This department mainly focuses on the planning of demand and supply of Nestlé’s products’
range by properly executing and utilizing resources, budget and time. Thus, it deals with
many sophisticated stages for creating the approximate demand charts at national level, in
basis of which supply is decided and accordingly production is executed.
This section basically does the national Consensus Demand Planning (CDP) and National
Supply Planning, for each product, for eighteen months period. To associate their findings
with actual production, they do share their activities with factory supply chain and production
department on weekly basis. The team of D&SP also deals with Material Requirement
Planning (MRP) for the imported raw and packaging material to be used. Maintaining Inter
Market Supply Planning (IMSP) with related Nestlé inter-market subsidiaries and also
ensures regular participation and facilitation of Monthly Business Planning (MBP) that are
related with other internal stakeholders like finance, brand, sales, etc.
Monthly Sales Review (MSR) is regularly checked every month and meeting is organized
with sales department for planning the eighteen months period’s forecasted demand. To
identify any lag in budget, meeting with finance department is also initiated naming Monthly
Gap Review (MGR). By this meeting it is checked that whether the associated budget will fix
with the forecasted demand and supply planning.
After all these, the D&SP team organizes the Monthly Forecast Review (MFR) with all other
department directors to finalize the Consensus Demand Planning (CDP) that came through
MSR and MGR meetings. In addition D&SP also arranges a monthly based meeting naming
Monthly Operational Review (MOR) with all department directors and also factory head to
identify that if there is any operational issue present while implementing the forecasted
figures. The D&SP team ensures the maximum freshness possible for Nestlé’s products by
enhancing that right product is available at right time to right location to best serve the target
consumer. The ultimate motive of this team is not only to utilize but also to optimize the
inventory of raw and packaging material and also finished goods.

15
2.5 Customer Service & Distribution (CS&D):

The CS&D department deals with primary sales of Nestlé with its distributors. Nestlé divides
Bangladesh into 6 regions to sale its products, known as sales region, and in addition appoints
109 distributors around the country. These regions are:
1. Dhaka North
2. Dhaka South
3. Chittagong
4. Bogra
5. Khulna
6. Sylhet
However, sales are categorized into three categories:
1. Primary sales – products that are sent to distributors throughout the year.
2. Secondary sales – products sent from distributors to assigned outlet.
3. Tertiary sales – products sent from outlet to the target consumers.

Customer Service involves with primary sales only. For each of Nestlé’s products monthly
target is set and for that there is CDP (Consensus Demand Planning). Customer service
ensures that monthly CDP is properly handed over to all distributors.
There is a norm present for each product for the distributor coverage, that is, they cannot
keep any particular product over the norm. This distribution norm is managed by Customer
Service by assessing current stock and new stock as per order. The use of the well-known
software SAP is used to carry out all the procedures of this section smoothly. Nestlé
Bangladesh shares a policy – “at first they take the payment and then deliver product”.
Customer Service also maintains shipment planning and also truckload plan to ensure the
extent of product to be carried out.

16
2.6 Procurement:

The procurement department comprise of four distinctive category naming – Raw

Material, Packaging Material, Service & Indirect Material (S&IM) and Inbound Logistics.
Thus, the functions of each of these sections can be precisely discussed as follows:

2.6.1 Raw Material:

The vital activity of raw material section is to receive raw material requirement for Nestlé’s
products for a horizon of 1-2 years period and procure supplies based on lead time and
quantity. They manage both the imported and local raw materials. They do follow SAP for
collecting orders generated by Purchase Requisition (PR) for raw materials from D&SP.
Accordingly they also creates Purchase Order (PO) to confirm the ordering quantity, as per
accepted lead time, for the enlisted suppliers. For imported materials, in return for PO
Proforma Invoice (PI) is received that includes, description of goods, price, quantity, bank
details of supplier, shipment date, invoice number, etc. Accordingly, LC is opened against
authorized bank and is forwarded to suppliers. Necessary shipping documents including
Commercial Invoice, Packing List, Certificate of Origin, Shipping Documents, etc are also
collected for further processing requirement in port. This team deals with all the activities
related with raw materials from the scratch.

2.6.2 Packaging Material:

The packaging material also is a vital part of Nestlé supply chain as packaging is the utmost
important material needed to preserve Nestlé’s products. Thus ensuring its quality and
standard is of a great vital issue as it keeps the proper balance of nutrition and health
characteristics. Due to this, compared to other competitive brands, Nestlé Bangladesh is more
concern and careful about selecting right vendors for its packaging materials. For packaging,
seven distinct categories are used:

1. Flexi laminate – for noodles packs

2. Case Corrugated – for shipping carton
3. Solid Board – for Cerelac, Nido

17
 4. Metal tin – for Nido
5. Rigid Plastic – for spoon given in Nido
6. Adhesive – for gluing
7. Flexible accessories – for tapes.

Based on requirement, appropriate packaging material is utilized to help preserve the

nutritional balance and also freshness of the products as Nestlé offers all edible products in
Bangladesh.

2.6.3 Service & Indirect Material (S&IM):

The Service & Indirect Material (S&IM) team basically deals with the requirement of all the
indirect materials and services required for smooth flow of Nestlé Bangladesh’s operations. It
procures all the indirect items and services needed in head office, factory and distribution
center. The functions of supply chain are spread in 10 specific categories. They are:

01. Advertising:
02. Marketing & Sales:
03. Point of Sales Assets (POS)
04. Utilities, Environment & Facility Management
05. Fixed Assets, Equipment. & MRO
06. Administration & HR Services
07. Other Professional Services
08. Contract Manufacturing
9. Logistics
10. IS/IT & Telecommunication

18
2.6.3.1 Organogram for S&IM:

Exhibit: 07 – Organogram for Service & Indirect Material (S&IM)

The 10 components of S&IM is split among five category buyers who are responsible either
individually or combined. The role of these category buyers are defined in two specific terms
naming category Strategic Buyer (SB) and category Operational Buyer (OB).
The head of all the five buyers is the Manager of S&IM and accordingly the Senior Manager
is the head of all raw material, packaging material and S&IM teams. At the top is the Head of
Department (HOD) or the director of Supply Chain who is a member of Management
Committee (MANCOM).

19
2.6.3.2 Strategic Buyer & Operational Buyer:

Strategic Buyer Operational Buyer

A Strategic Buyer is a purchasing employee An Operational Buyer is an employee who is

who, either independently or with input from authorized by his/her manager to order goods
cross-regional or cross-functional sourcing and/or services from external vendors on
teams, defines a spend category strategy that behalf of Nestlé.
specifies: An Operational Buyer can belong to any
Nestlé's approach towards the supply department within Nestlé.
market for a given spend category;
Nestlé's approach towards the internal
users of a given spend category. Operational Buyer Responsibilities:
The Operational Buyer has the responsibility
Based on the defined spend category strategy, to assure delivery of goods and services to the
the Strategic Buyer initiates and maintains all internal user:
supplier relationship management activities.
on the requested date;
at the requested place;
in the requested quantity and quality;
Strategic Buyer Responsibilities:
with all the required documents;
Reduction of total cost of ownership
preceded by all the requested
through:
• Fact-based negotiation confirmations and acknowledgements.
with suppliers
• Leveraging of spend on Operational Buyers should, as much as
regional / global level possible, create purchase orders that reference
• Specification and a contract negotiated by a Strategic Buyer. In
supplier reduction case of repetitive purchases from a vendor,
• Challenging usage patterns they should inform a Strategic Buyer if a
• Improving supply contract with that vendor is not in place.
processes Reduction of supply risk
Increasing supply flexibility
Leveraging supplier’s know-how to
improve Nestlé products and processes
Leveraging spend category
knowledge of operational buyers and
internal users, through cross regional /
cross-functional sourcing teams.
2.6.3.3 Workflow of S&IM:

o Purchase Requisition (PR) is received by category buyers that follows a system

generated number
o Based on the requirement, vendors are short selected
o Request for Quotation (RFQ) is then accordingly circulated with a due deadline
o Suppliers submit their quotation
o The quotation received is further analyzed and based on the scope available a revised
final offer is asked
o To further evaluate the final quotation, a comparative statement (CS) is prepared that
includes a summary of the entire supplier’s bidding price along with necessary
information related to delivery. It also includes a short summary that defines
everything from the beginning.
o Based on the CS, the lowest bidder gets the order. However, for Nestlé it not always
the situation that the lowest quoted price gets the deal it is also based upon the
potentiality of the vendor, their capability to align with Nestlé’s requirement and their
field of expertise.
o Finally, again a system generated Purchase Order (PO) is received by the specific
buyer who hands over the PO to the final short selected vendor confirming the deal.
o In response, the supplier acknowledges the receipt of PO and a timely delivery is
ensured again.
o Buyer, on specific intervals, makes regular follow up and after final delivery supplier
needs to submit proper documentation to head office.
o After final assessment of those given documents finance department settles down the
payment.
o This entire process is also maintained in a common shared file among the category
buyers, which includes every step of this procedure. That particular file needs to be
filled out with specific date and description and an average evaluation phase is
assigned there to calculate the HIT or MISS target for every order.

21
2.6.4 Inbound Logistics

Another section of NBL supply chain is the Inbound Logistics that actually deals with all the
related tasks after final shipment documentations are received from Raw Materials section.
The role of Inbound Logistics team is to release imported goods from Chittagong port or
Dhaka Airport or Benapol port. The mainly settles the duty payment to government and after
the goods are released they also ensures the transportation from port to factory. Their roles
can be precisely defined as follows:

  Ensuring Supply: 
Inbound logistics basically ensure supply of products that are imported and also
confirms its transportation to factory. NBL usually imports Raw Materials and
Finished goods and Inbound Logistics takes care of importing the required item at
right time and at right place. Thus its operations lie with monitoring and following up

the imported items so that a constant supply is ensured without any breakdown.


  Customs clearance: 
Another vital role of Inbound logistics is to take care of custom clearance and import
duties as per compliance, ensuring proper commercial value, duty and taxes with H.S.
Code (Harmonized Coding System). It facilitates all customs activity getting the

important materials within a specified lead time.


  Sea -Transport: 
For imported materials to be shipped through sea, Inbound logistics need to dispatch
country of origin, invoices, packing lists, other related import document for the goods
to be released in a timely manner. This team deals with shipping agents who ensure

transportation of goods from one country to another.


  Inland Transport: 
Inbound logistics maintain inland transport services carrying the goods from different

ports to warehouse.

22
 
Legal activity:
Inbound logistics also accomplish legal activities such as resolving disputes at
customs for any variations of imported goods’ documents. It settles all disputes as per
import Policy order, Valuation rules, Customs Act and NBR (National Board of

 Revenue).
 
Claim Settlement:
Furthermore, inbound logistics facilitates insurance claims of imported goods if any
damages occur. It also carries insurance as act retrieved all imported damaged
shipments and also any other damage shipment. These all occurs as per Insurance

norms defined for each and every condition.

23
3 Key Responsibilities

24
3.1 Roles, duties and responsibilities:

I am assigned in the Service & Indirect Material (S&IM) section of Procurement Department,
Supply Chain Function of Nestlé Bangladesh. Thus I deal with various aspect of the
workflow explained in earlier section. Accordingly my area of concentration goes below:

3.2 Preparing & Circulating RFQ:

Once my line manager receives the Purchase Requisition (PR), who is a category strategic
buyer, she forwards me the entire detailing of requisition and the list of suppliers with whom
to communicate for this purpose. Based on the requisition, I prepare the Request for
Quotation (RFQ) first. There is a fixed format and accordingly I need to need to ensure
certain inputs and also put the appropriate information. Thus the RFQ must contain:
o Nestlé logo
o Nestlé head office address
o RFQ Reference number
o Date – the day the RFQ will be circulated
o Item name – the name of the required products or service
o Specification - it contains all the detailing that comes to clarify the
requirement properly like model numbers, features, etc
o Quantity
o Payment terms: Nestlé shares a declaration about its Payment terms.
o Price – the price clause defines that “Price mentioned in the quotation should
be inclusive of Material cost and delivery cost and it should be shown as
single unit price. No break up is allowed for unit price and delivery cost.
VAT amount should be mentioned separately in the quotation”.
o Delivery time and place – by when Nestlé Bangladesh (NBL) requires
delivery and where to deliver – to head office, factory or distribution centre
o Offer validity, warranty and last date of quotation submission
o Bill submission – as NBL do not deal with cash so after delivery the supplier
is required to submit the following copies:
 
Bill Invoice
  
Copy of Purchase Order
 
Delivery Challan

25
  
VAT Challan

If any of these is not submitted, it is then considered as incomplete and

payment is not proceed unless the proper authentic document is received.
o Once the RFQ is complete, it is signed by the strategic buyer and a space is
kept blank for the receiver which also gives space for sign and seal.

Ensuring all these information properly RFQ is circulated to enlisted vendors or suppliers.
Sometimes, as part of RFQ there is also Bill of Quantity (BOQ) which shares the list of items
required, if requirement if for higher category and quantity. The RFQ is a one page document
and along with a formal e-mail it is transferred.

3.3 Enlisting new vendors:

However, it is not always the case that RFQ is forwarded only to enlisted suppliers there
is also chances that new suppliers are also approached along with the existing one. If any
new party receives the confirmation or gets the PO then that particular vendor needs to be
enlisted first that takes few working days to get included in NBL’s internal system or
vendor database. Thus the enlistment procedure also includes certain documentations that
need to be filled out to make sure that the particular supplier is aligned in accordance to
the codes and requirements of Nestlé. This includes:

1. Application for enlistment on letter head pad

2. Valid Trade License
3. Certificate of Incorporation (if limited company)
4. Introduction letter from bank
5. TIN certificate
6. VAT registration certificate
7. Partnership Deed/Memorandum
8. Photograph of Proprietor
9. Major client list
10. Nestlé Supplier Code – a code, that defines all the dos and does that a Nestlé
supplier can follow and also defines the activities that needs to be prohibited, duly
signed and sealed by the owner or any individual from equivalent post.

26
After all these documentations are submitted properly, a particular vendor enlistment form is
to be filled out by me which contains the registered name of the supplier, address, contact
details, bank details and other payment information. Then the form needs to be signed by six
individuals – Data Provider (my line manager), business approver, system analyst, requester,
VM data entry – Procurement and VM data entry – Accounts payable. Once the form is duly
signed, it then gets the approval to get included into system and vendor database. Therefore,
any deal cannot be initiated unless vendors get enlisted first.

3.4 Comparative Statement (CS):

After floating RFQ to selected vendors, quotation is received and I also need to keep the track
that it is received within the given deadline. Then based on further scope, I usually do further
negotiation to provide us a final revised offer. Thus, taking both the offers into consideration
as Initial Offer and Final Offer a Comparative Statement (CS), also refers as purchase
approval, needs to be made. The CS contains:

1. Date of Statement
2. Purchase approval - the name of the item or service that will be purchased
3. Purchase Requisition (PR) number
4. Description of goods containing all detailing and quantity
5. In separate columns the offers provided by each vendor is represented in a
landscape view so that the entire document fits in one page and can easily be
differentiated and learned about.
6. A comment section – It also includes the summary of the entire negotiation right
from floating of RFQ to final selection of vendor. This précised summary should not
only clearly explain the entire scenario only but also shows reasoning regarding why
the deal is closed against the selected vendor. It is not always the case that a selection
is made only because of lowest quotation rather the supplier should be potential
enough in aligning with Nestlé codes and ethics and also demonstrate enough
expertise in its field of operation.
7. Decision – this section is a line that dictates the name of the supplier on behalf of
whom the order is closed.

27
 8. Lastly it contains space for sign for three individuals – Strategic Buyer, Manager –
S&IM, Senior Procurement Manager. Thus the document needs to be signed to get the
purchase approval. Once it is approved, the concern buyer is responsible to create
Purchase Order (PO) in the system that automatically generates a PO number and a
three page copy including all the information of the dealing.

3.5 Organizing Documentation:

The CS cannot be signed off unless it is ready with the bunch that shares all the related
documents that witnesses the entire dealing procedure. This includes:

1. Document regarding requirement

2. RFQ and RFQ Issue Document
3. Initial Quotations along with all the related communications
4. Final Quotations along with all the related communications
5. Regret Letter – if any vendor regrets to quote
7. Decision Supporting Document – any communication that was exchanged
with the prospective users or department regarding Procurement Decision or
regarding any alteration or variation from their given requisition. Also
feedback from approvers is also attached with this documentation.
8. Purchase Approval or CS
9. Purchase Document

Following this pattern the entire bunch of document is prepared. The significance of this
booklet is that while taking approval from the manager and senior manager the entire scenario
needs to be explained verbally and it is matched against this document. Once they are
satisfied with the process and related negotiation they do give approval. This document is
later preserved as while auditing if the audit committee finds any discrepancy they do then
use this as a matter of evidence, followed by a certain PR and PO number, to identify the
actual scenario.

28
3.6 PO handover and ensuring delivery:

Right from floating RFQ till the successful delivery within due time requires a continuous
interaction, communication and follow up with the vendors to learn about the current state.
Being the S&IM intern, I need to maintain this on interval or sometimes regular basis.
However, once the approval is done, concern strategic buyer creates PO in the system and
then the final copy is then handed over to the selected vendor and delivery time span is also
ensured. Accordingly, I constantly need to follow up regarding delivery unless they do
dispatch the goods or services within due time. Once the suppliers deliver, I also need to
update a shared excel file that contains the PR number and name of the PR of all the
concerned category buyers. This file mainly describes the time horizon taken for converting a
PR to PO. For every phase or stage, including negotiation, there is a lead time given and if
any of this is not within that lead period, a remark column puts a MISS and if done within
due time then a HIT. In this way every stage, right from PR to PO, needs to be updated with
proper due date and description.

29
4 Achievement

30
4.1 Business Partners’ Meet 2016

Nestlé Bangladesh recently organized “Business Partners’ Meet 2017” program. The Services
and Indirect Materials Procurement team arranged for a half-day long interactive session for
their key suppliers on November 15th2017 at the Head Office in Tejgaon, Dhaka. The event
was focused on the aspects and importance of responsible sourcing, and highlighted how
such practices can be beneficial for both parties and ensure a sustainable partnership in the
future. Representatives of the organizations across multiple categories were introduced to
how Nestlé is geared towards mutual development, and how Nestlé’s growth can translate to
growth for their businesses as well. The program also covered different aspects of Safety,
Health and Environment practices for business partners of different categories and shed light
on the undertaking they have all provided to abide by the Nestlé Supplier Code. In addition to
that, the Procurement Process, which covered Quality Assurance, KPIs, and the Vendor
Payment Process, was discussed and the issues faced by various vendors were brought up by
them in discussion and were clarified by the concerned people.
Thus, for being a part of this very successful event I was awarded with the “Nestlé
GreatNes Card”. Along with my team members, I was also assigned with many vital task and
responsibilities for the great completion of the event. Through this program, I gained significant
amount of competencies in organizing corporate events. My learning was from every single step
from the scratch and I observed a great team synergy that derived us toward more precision and
increased collaboration in every phase of preparation. The outcome was really fruitful as the
ultimate motive of the event was achieved. Overall I acquired a lifetime experience that will aid
my strongly in my upcoming future prospects.

31
5 Findings

 Nestle Bangladesh Supply Chain is one of the best Supply Chain department of
Bangladesh. As most of the raw materials are import based the overall process in
supply chain is much complex and lengthier. This is why along with the product
development function and Marketing function Supply Chain should strive to explore
local sourcing options more.
 Food and Beverage business in Bangladesh is becoming very competitive day by day.
Price is becoming the most important determinant for consumers. Considering this the
high price product offerings are becoming so risky to survive. In order to raise
Marginal Contribution (MC) of product and also to charge an affordable price the
sourcing strategy need to be reviewed by searching for local suppliers and developing
them to meet Nestle standard.
 Nestle Supply Chain always emphasizes to make Nestle a Lean organization. As
already shared in the report Lean means no wastage (money, time or anything). For
Nestle Bangladesh Supply Chain department this is a continuous Journey to be Lean.

32
6 Recommendation

 Local Supplier Development: Nestle Bangladesh need to develop local suppliers of our
country to gain benefit in longer period of time. For this they should teach the local raw
materials suppliers about the cultivation methods. Now-a-days in terms of quality
products and materials our local companies are also doing well. Especially for Milk
Powder, Spices or Oil items they can develop local supplier. This will save huge amount
of money and time for Nestle and also will be beneficial for our country too.
 Import Lead time reduction: At present most of the raw materials are imported and for
most of them the lead time (Order to Factory arrival time) is very high. Average lead time
is 2 months to 4 months. Here Nestle Bangladesh need to reduce lead time by negotiation
with international suppliers or Nestle inters market subsidiaries.
 Regional Distribution coverage: Nestle Bangladesh need to set up some regional
distribution warehouses at least in the major Divisions like Chittagong, Khulna and
Barisal so it will be beneficial for quick product supply in the political unrest situations.
 Setting more alternate Supplier: Setting more alternative suppliers will help during the
crisis period especially when one supplier failed to supply materials on time, they can
quickly get the materials from another supplier.

33
7 Conclusion

34
7 Conclusion

Nestlé is one of the Leading Nutrition, Health and Wellness Company that focuses on the
core factor of benefiting and satisfying its consumers by serving the best quality products.
Thus its operations do not focus only for internal gains and growth rather it moves with the
vision of benefiting every other stakeholder involved with it. Nestlé Bangladesh always
shares the view of growing together where it supports not only its internal members but also
the external ones to flourish with good growth degrees. In Nestlé Bangladesh, every
employee and staff is considered to be a part of the Nestlé family where they work as a team
sharing the similar objective of ensuring continuous excellence. Like all other departments,
Supply Chain possesses the most structured and mannered systems so that its members can
operate with great efficiency.
This particular report gives an overall view of my internship journey I completed within the
stated time period. The key roles, duties and responsibilities I followed are well defined here
with proper detailing. I gained a handful of great new experiences that escalated by core
competencies to new heights. I am more of interested, right now, to explore further potential
opportunities in the Supply Chain sectors. Thus, all such skills I gathered from NBL actually
changed my perception towards this supply chain field which grew more curiosity within me
to work for this sector, undoubtedly.

35
6 Supplementary Part
6.1 Bibliography

1. (n.d.). Retrieved 12 2, 2016, from Nestle

Global: http://www.nestle.com/aboutus/history
2. Croxton, K. L., Dastugue, S. J., & Lambert, D. M. (2001). The Supply Chain
Management. The International Journal of Logistics Management , 12 (2).
3. Zigiaris, S. (January 2000). Supply Chain Management. Innoregio Project.