University of Lima

Faculty of Engineering and Architecture

Industrial Engineering Degree

ANALYSIS OF THE COMPANY NESTLÉ IN

DAIRY LINE AT THE LIMA PLANT

Applied Research Work - Section 810

Daniel Harold Berrocal Ramos

Code 20150144

Andrea Claudia Huaynalaya Aguilar

Code 20172235

Mariano Luis Kazmierski Pinillos

Code 20162167

Jhoel Owaldo Veliz Vliez

Code 20174022

Luis Alejandro Yi Koosau

Code 20174071

Professor

Luis Bedoya Jiménez

Lima - Peru
November 2021

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 ANALYSIS OF THE COMPANY NESTLÉ IN
DAIRY LINE AT THE ATE PLANT

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 TABLE OF CONTENTS

CHAPTER I: INTRODUCTION.................................................................................1

1.1 Company presentation.....................................................................................1

1.2 Products and services offered............................................................3

1.3 Organizational structure.......................................................................................5

1.4 Generic company strategy...........................................................................6

1.5 Productive chain of the company........................................................7

CHAPTER II: COMPETITIVE OPERATIONS PRIORITIES............10

2.1 Reduction in costs

2.2 Mejora de la calidad.............................................................................................10

2.4 Delivery opportunity........................................................................................13

2.5 Customer service.................................................................................................14

CHAPTER III: STRATEGIC OPERATIONAL DECISIONS..............16

3.1 Quality management

3.2 Design of goods and services.................................................................................16

3.3 Process flow strategies...........................................................................17

3.4 Localization and arrangement strategy...............................................................18

3.5 Capacity strategy........................................................................................18

3.6 Organization strategy....................................................................................19

3.7 Human resource strategy.................................................................19

3.8 Supply management....................................................................................20

3.9 Inventory Management...........................................................................................20

3.10 Strategy of programming..................................................................................21

3.11 Strategy for maintenance

3.12 Strategy of security.........................................................................................21

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3.13 Strategy of the environment...............................................................................22

CHAPTER IV: DESCRIPTION OF PLANNING PROCESSES........23

4.1 Overview of the demand planning process...........................23

4.2 Overview of the production planning process........................23

4.3 Overview of the material planning process........................24

CONCLUSIONS.........................................................................................................26

RECOMMENDATIONS...............................................................................................27

REFERENCES............................................................................................................28

ANNEXES........................................................................................................................30

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 INDEX OF FIGURES

Figure 1.1 Dairy Line Products.................................................................3

Figure 1.2 Organizational structure of the company Nestlé..............................................5

Figure 1.3 Supply chain of the company Nestlé.....................................................8

Figure 2.1 Nestlé Quality Management System.......................................................12

Figure 2.2 Procedure for complaint management....................................................15

Figure 4.1 "make to order" scheme.........................................................24

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 CHAPTER I: INTRODUCTION

1.1 Company Presentation

The beginning of the company Nestlé took place in 1866 by Henri Nestlé, a pharmacist.
trained. This begins to experiment with various combinations of flour, milk
of cow, wheat flour, and sugar, because I was trying to create a baby food
alternative. This food was aimed at mothers who did not have the capacity to
breastfeed their babies. The purpose of that was to reduce infant mortality due to lack
of nutrition. Then in 1868, he developed a distinctive brand and the company's logo.
Henri Nestlé. Then in 1905 the company was completely formed by the merger of
Anglo-Swiss Condensed Milk Company in the United States. Then the company began
to manufacture different types of products.

The beginning of Nestlé's arrival in Peru was somewhat different; in 1940, Nestlé
imports its products to Peru (condensed milk, evaporated milk, powdered milk,
chocolate and others). Then in 1940 he opened his first dairy factory in Chiclayo.
Then he inaugurated his second factory in Cajamarca in 1946. Finally, in 1968 he created
its third factory in Peru in Lima located in the Cercado de Lima.

Currently, the company has 1 billion soles in annual sales. Also

It has 447 factories operating in 194 countries and employs 339,000 people.

Nestlé is in the fields of water, beverages, confectionery, dairy, and food for
pets, culinary, coffee, refrigerated, ice creams, and even skincare.
2022)

Mission
The mission is to bring food products to various consumers that
find in high quality, as well as a certain added value at prices
competitive, which remains competitive wherever and however it may be. The company
Nestlé acts with the principle for everyone of 'Good Food, Good Life'. This
means good food, good life. (Nestlé, 2022)

Vision

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The company's vision is to be the world leader in food and to be the most respected.
reliable. The company is always at the forefront of the food industry. (Nestlé,
2022)

Values

The values of the company are executed in 6 fundamental parts.

Next, each of them will be defined:

Quality: Its demand for quality is presented in everything it produces.

company, communication, and processes.
● People: Individuals are the most important asset in the company, plus these
are the ones that provide competitive advantages. The company works in various
teams, workers are valued and rewarded.
● Consumers: These are the reason why the company has to anticipate
continues to meet its various needs.
● Our Brands: These help the growth and profitability of the company; for
This reason is the responsibility of everyone, the care of these.
● Performance: Esta se compromete al desarrollo a largo plazo de la empresa. A
from this, Nestlé continues to have a viable financial investment for the
various long-term shareholders.
Clients: The company values the critical role that customers have; for this reason,
supports the arrival of the company's brands to various consumers. A
From that, the client can meet their needs.

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1.2 Products and services offered

The company Nestlé offers different types of products; that is to say, it provides water, drinks,
confectionery, dairy, pet food, culinary, coffee, refrigerated, ice creams, and
including skincare. However, this research is focused on the sector of
dairy. Next, information will be provided about the 5 brands of products
with the dairy sector offered by the company Nestlé.

Figure 1.1

Dairy Line Products

Note: Dairy, by Nestlé, 2022[Link]

Nestlé condensed milk

This brand exclusively offers condensed milk products with all its creaminess.
what it has and its expert sweetness from the company Nestlé since 1927. This product
provides vitamins A, D, and folic acid. In addition to providing minerals such as calcium,

phosphorus, zinc, and magnesium. This substance has a solid and gooey consistency.

Nestlé the delicacy

This brand offers only spreadable delicacy products with precise flavor and texture.
fill or bathe your favorite desserts. This product provides the human body
vitamin A, C and minerals such as calcium and iron. This substance has a consistency
solid and sweet.

Nestlé cream

This specific brand only offers cream with high contents of

calcium, protein, fatty acids, carbohydrates, vitamin A, B, C. This is found in a
creamy solid state.

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 Anchor

This provides a vitamin supplement that contains a powdered milk blend with
maltodextrin also contains large amounts of calcium, vitamin C, D, and iron.
This product does not require refrigeration and is in a solid state in grams.

Ideal

This brand provides dairy products. These contain iron, calcium, vitamin A,
C and D. This brand has 4 presentations of these products. Below, we
will mention each one of them.

Ideal whole milk (liquid texture)

Ideal creaminess (liquid creamy texture)

Ideal dawn (liquid texture)

Ideal light (liquid texture)

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1.3 Organizational structure

The company Nestlé has a governing body where the president is located,
then the board of directors is found. Afterward, the line body is found where
the position of technician, communication, and administrative is located. After these, it
find the executive address. It is divided into 3 areas; that is, executive assistant
(where is the legal advice, accounting advice, and office cleaning in that order),
communication assistant (where is the web page designer, computing system
and design suppliers) and finally the technicians.

Next, an image will be shown where it will be explained in more detail.

the aforementioned of the organizational structure of Nestlé.

Figure 1.2

Organizational structure of the company Nestlé

Note: By Nestlé, for Nestlé, 2022 ([Link]

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1.4 Generic strategy of the company

Differentiation strategy

In this section, it seeks to demonstrate the difference that the company Nestlé has compared to its ...

competitors. Nestlé carries a wide range of products in the dairy sector.

In addition, being a company that strives for product quality is
recognized for this always has a good customer retention. For example, the
The company Dog Chow (pet food) has a high price compared to its
competition Ricocan Mimaskot, among others, but their client always buys from Dog
Chow, because they know the quality of their product.

Additionally, the company implements a multinational strategy based on its

differentiation of its various products according to the local markets where they are located.
The company adapts very quickly to local needs to enhance its
sales volume. For example, the company Burger King apart from its products
star that offers, this provides new products according to the place of
establishment where you are located. These new products are some of the most
sell the company Burger King by crucially increasing its sales.

Cost leadership strategy

This strategy is crucial to see the indirect and direct expenses of the Nestlé company.
The Nestlé company has many factories around the world and in Peru 3, it saves on costs.
of the transportation of products to their physical stores, as well as the transportation of the raw materials

raw material for manufacturing at the plant. For example, the company Gloria has 5 factories in
Peru effectively reduces its raw material transport costs, and
products. This encourages the company to invest more in the manufacturing of products or
advertising, therefore, increases the sales of the company Gloria.

Also, the company Nestlé has a wide variety of dairy products.

it has in its products some that have a low production cost due to their ease
production or products that use low-cost raw materials. This encourages that the
the customer has a large number of products to choose from with different prices. For
For example, the brand Ecco has instant coffee that has a production process.
simple, reducing the production cost. Furthermore, this is sold at a price
accessible to the customer, but with a good utility for the Ecco brand. Based on this,

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drives the sales of the Ecco brand by crucially reducing its cost of
production.

Focus Strategy

In this part, segmentation is used, which focuses on providing products based on

from the niches where customers are established. Nestlé being a millionaire company
it has the resources and capabilities to provide a product effectively.
For example, the company Alicorp, being a millionaire company, can provide products to
your clients, with supplies that are produced only in certain countries, because they have the
capacity and resources to carry it out. This crucially drives Alicorp's sales.

In addition, the company Nestlé provides products for a niche that are parents of
family and babies. This will ensure that a large percentage of this sector in Peru will buy from them.

your product, because it is a well-known company in Peru. For example, the company
Huggies, which is also aimed at the baby niche. This has 61% of the market.
Peruvian, because it is known throughout Peru. Furthermore, because of the quality that it has.

product; from this, they increase their sales.

1.5 Productive chain of the company

Four phases are considered in the supply chain.

Each of these has more stages within them. Next, more will be mentioned.
detail this 4th phase, as well as a figure for better understanding
of the process.

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Figure 1.3

Supply chain of the company Nestlé

Note: From Nestlé, by Nestlé, 2022 ([Link]

de-supply

Supply Phase
Firstly, there is the supply. This has 5 factors. Next, there is
he will explain each of them.
-Actors: At this point, primary suppliers are considered, as well as the
secondary and tertiary. These are the ones that provide raw materials to the company Nestlé.
Strategies: Nestlé uses a supplier code, with this it applies filters for the
various jobs in the supply area. This also serves to ensure that there is no
very drastic work, as well as not employing minors.
-Storage: Nestlé uses the Just In Time (JIT) method. That is, it reduces costs.
in raw materials, as well as avoiding having products in the warehouse for too long
to prevent it from getting damaged, among others.

Technology: Nestlé uses SAP to plan its resources. In addition, the company uses
RFID for inventory control

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Transport: The company uses different methods to transport the products.
In addition, the company uses a third-party transportation system provided by the company.

ICOLTRANS S.A.A
Manufacturing phase
First of all, there is the supply. This has 5 factors. Next, we
will explain each of them.
-Actors: Positioning in 197 countries and 432 factories.
Strategies: Nestlé not only has a method of producing its dairy products.
This has a mixed production process.
Storage: Use of a specific area for each product to prolong its
useful life
Transport: Moves very carefully in carts to ensure its integrity and
product safety.
Technology: The CPM method is used for controlling advertising materials; as well as the
AS/AR method for a controlled storage system.
Distribution
Actors: Professionals fulfill the purpose that Nestlé products
they reach their designated customers with quality.
Strategy: The primary origin of Nestlé in this phase is the transparency of the
commercial activities.
Storage: Use computer systems like SATO or RFID to meet the
customer needs in the markets.
Transportation: Land transport is used through refrigerated trucks, trailers,
dry trucks, among others.
Technology: Uses SAP to manage financial and human resources.
productive, logistical, accounting, among others.
Reverse logistics
The biodegradable materials from the clients are transported by
a truck goes to a warehouse, then another truck takes it from the warehouse to the company for
the reuse of these materials.

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 CHAPTER II: COMPETITIVE PRIORITIES OF
OPERATIONS

2.1 Cost Reduction

Nestlé maintains a position that focuses on cost reduction,

offering short-term gains, but without weakening their growth prospects,
turning into a sustainable approach, where their priority is to seek a balance
between them. They maintain the viability in all the numerous projects they have
through a constant improvement using various strategies and assuming a system of
accumulation of costs by process, where they are amassed by departments or centers
of costs and where its production is done on a large scale.

One of the strategies employed by the company is constant innovation to

formulate products that respond to health needs with affordable inputs,
as the use of a low-cost staple grain that meets the same basic needs
of babies after weaning. Another strategy, using science and the
technology, its optimization models through the simulation of n
possibilities, executing the best shipping combinations that allow for maximization
the loads given from individual loads in the respective production plants
by means of proper planning, achieving savings in transportation costs and
production. Likewise, Nestlé, having the need to reduce environmental impact, has
achieved a significant decrease in their emissions with greater efficiency in the use of
the resources, promoting their savings during production, processing, storage and
distribution of its products, favoring a decrease in production costs.

2.2 Quality Improvement

Regarding quality, this and safety are non-negotiable elements in

Nestlé, enforcing the specified rules to obtain the various
certifications that exist, which in turn ensures safe products intended to satisfy
the clients and end consumers.
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 Nestlé is in constant improvement in quality, optimizing everything
its critical processes with the aim of ensuring that all its products are of high quality.
quality, taste, and high nutritional value, thus ensuring that they are safe and harmless for their
consumption, starting from the first step in Nestlé's value chain which is the
obtaining high-quality inputs, which is developed through a long search
throughout the entire Peruvian territory, such as the milk collection process, throughout
the dairy radio of Cajamarca, where its continuous supply has been ensured,
consolidating at all times the efficacy and nutritional content of the product.
Likewise, the relationship with agricultural raw material suppliers is very close.
and quality audits of their products are carried out, so that they comply with the
standards allowing them to grow and develop alongside Nestlé.

On the other hand, one of the ways Nestlé measures the quality of its
marks is the test called 60/40+, which allows not only to inspect the profile
food quality of its products, but also cares about ensuring that the
nutritionally enhanced products safeguard the preferences and tastes of
consumer.

Finally, the commitment that Nestlé has to quality and compliance of

this is done through its Quality Management System, which is the platform used to
worldwide level to endorse food security, compliance with standards of
quality and create value for consumers. For a company that shapes its success in the
trust of its consumers, maintaining the quality of the products day by day and
Processes are an inevitable task, and they are also a multiplier effect of trust.
covering the needs of the client that can be maintained over time
regarding nutrition, pleasure, and quality.

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Figure 2.1

Nestlé Quality Management System

Note: From Nestlé, by Nestlé, 2022 ([Link]

2.3 Increase in flexibility

Nestlé during the pandemic felt its impact on its operations,

On one hand, it caused complications in the supply chain of ingredients and materials.
cousins, for which he requested the relevant supply areas to build
supplies inventories and critical points. On the other hand, limitations were generated
logistics and, along with a minimal presence of employees as a consequence of
infections or precautionary measures have prevented it from operating at 100% capacity,
response additional shifts were worked where the levels of improvement were achieved
inventory and normal production levels were achieved, which is quite an accomplishment
important in those times, continued delivering its products satisfying the
demand. Additionally, as a result of COVID-19, there has been an increased demand for
plant-based foods, for this reason Nestlé has invested heavily in
products made from them, so it will soon launch a drink in Peru
Nesquik Go Plant-based milk and a new version of its vegan burger, of the same
in this way, people have also renewed their interest in personal health and weight loss
weight, as the virus particularly affects those with health conditions
pre-existing conditions and overweight, which is why efforts have been made to accelerate innovation and tackle

the challenges with existing local food brands with this approach.

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 In a complementary manner, Nestlé has been able to develop a
area specialized in the creation of shared value, promoting the increase of
resource consumption in order to achieve product flexibility which creates
that adapt to the needs of consumers, for example, Peru is the focus of
domestication of many Andean cereals, such as quinoa, cañihua and the
amaranth, whose high nutritional content has been recognized worldwide, and
for that reason Nestlé has developed products enriched with these cereals that it has
started to spread massively and, along with the potential of brands like
Nesquik, Ecco, and Maggi, the company is achieving that Andean cereals reach
more homes. Regarding market requirements, a list has been developed of
possible products using all available inputs, to easily adapt to these
requirements and accommodating to the different needs.

2.4 Delivery Opportunity

La logística en Nestlé tiene un papel importante para garantizar que productos de

quality reaches their clients and consumers, but due to the circumstances, although the
the company's commitment was to ensure availability, it was difficult to know in
where exactly or on what channels, so the decision was first made for the remodeling and
expansion of its distribution center located in the district of Ate, obtaining a
a total of 19 doors, compared to the old logistics center which had only 9.
In addition, deliveries to consumption places, such as supermarkets, continued
existing, but it was established which product formats were going to be produced more than
others, it is the case of individual products, since the population stopped going out to
the street, their sales dropped, so it was decided to supply them with packages of the
same products. Likewise, e-commerce became a way of
purchase that was heavily promoted, which is why it needs to be strengthened and professionalized, such as for

example of your new line 'Nestlé Store' which allows consumers to have the
products within the first 12 hours of having made the purchase.

Nestlé mainly focuses on the "Modern" channel (supermarkets,

pharmacies, etc.) and the "Traditional" channel, through exclusive distributors. It has
as a central delivery point in the central area of the country, that is, the capital Lima, for
to have the largest number of clients, which is why it also leaned towards establishing its
factories in the same place, also because it facilitated the transport of orders and

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acquire the necessary ingredients fluently. On the other hand, it has an efficiency
operational at the time of delivering their products because they control and cover almost all of the

markets not only in Lima, but throughout Peru, with distribution by

delivery service for wholesale and retail stores within a maximum period of 48
hours in Lima. The company's service has its own transportation fleet for
the delivery service of your products to retail or wholesale customers of
territory, and a fleet of trucks has recently been acquired to expand its system
for distribution. To add, Nestlé has launched a new initiative,
referring to direct distribution from the establishment, that is to say, to dispense with the
wholesalers and retailers, which has increased market penetration and the
availability of products, since in Peru the population is geographically
dispersed.

2.5 Customer service

One of the many things for which Nestlé is recognized is its excellent service to
client, in addition to its excellent quality products, has the need to
count on all the necessary services for the improvement of the company and for any
another type of uncertainties that the consumer or client has with the functions that
offers the same. For this reason, the company has a customer service area, which
it has a telephone and email channel, where they first ask you in what
you can be helped, they will answer queries like what you are interested in knowing and
where their products are located, such as after-sales advisory service
where the customer is helped to exercise their right to an informed choice, promoting
through a healthy diet or training for small businesses such as warehouses; and
also requests or suggestions as well as complaints or claims about some
inconvenience on the Nestlé platform called Speak up, anticipating solutions
so that the experience is the best, achieving to build loyalty with the customer, but
This area is still being improved, as its services are not systematically refreshed.
as consumers are getting updated, which does not speed it up quickly. From the
same way, provides firm spaces for the purchasing process; in other words, when
momento de que un cliente haga uso de cualquier medio de pago electrónico, estos
they meet the inevitable requirements for me to proceed with your purchase without
concerns. Finally, Nestlé has a customer service under its
digital platform, which aims to refine the purchasing procedures of the
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consumers in a faster way, where the state in which it will be visible.
find your order, as well as change the order within the first 24 hours and that
You will be notified by email when your order is on its way.

Figure 2.2

Procedure for claim management

Note: From Nestlé, by Nestlé, 2022 ([Link]

complaints-nestle-for-our-consumers

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 CHAPTER III: STRATEGIC DECISIONS OF
OPERATIONS

3.1 Quality management

One of the fundamental pillars of Nestlé is to provide trust to its consumers in

its brands, products, and services. It is based on 3 main elements for quality:
· Quality Standards: They collect product requirements and are managed
through quality manuals that were defined in each location.
· Continuous Improvement Management Cycle: Enables the guarantee of management
efficient of Quality processes, measure performance and drive the
improvement of our Quality culture.
Process-Based Management System: Covers the entire Value Chain in
the one that each function is responsible for defining and managing the processes that

can impact the Quality and Safety of products, Compliance

Regulatory and Consumer Satisfaction. (Nestlé, 2022)
In addition, Nestlé complies with all laws and internal quality standards. Some
ISO environmental certifications:

ISO 9001:2015 corresponding to quality in the plants.

ISO 14046 which consists of environmental management and water footprint.
● ISO 14001:2015 is responsible for capturing the growing importance of management
environmental during the business processes in companies.
Likewise, Nestlé is linked to certifications of food safety and quality for
the manufacturing of products and packaging through ISO22000 and FSSC certifications
220000

3.2 Design of goods and services

Nestlé employs a focused generic strategy centered on differentiation. Therefore, the area
Production is analyzing reducing salt, sugar, and saturated fats in the

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foods. In addition, more whole grains, fiber, and vegetables are being added,
as essential nutrients. On the other hand, the logistics area proposes to create new and
different types of packaging and containers for different types of products that
Nestlé offers. As is the case with the cans of its NAN brand and also the designs of
the packaging made of cardboard in the case of its cereal brand like Fitness.
Nestlé continúa enfocado en la investigacióncientífica para acelerar sus trabajos de
innovation, quality, and development of improvements in the designs of its products. Nestlé with
the collaboration of CBA Design Paris in charge of the packaging and design work,
the presentation of the Nescafé product was changed to facilitate its use with a flip top.
easy closure in addition to a more affordable body to use. The new image includes a
more modern brand design that follows the trend towards flat design. Patrice Bula, head
Nestlé's marketing says: 'Nescafé is our largest single brand.' (Olochea, 2014)

3.3 Process Flow Strategies

Nestlé uses a batch production system. The strategy is taken into account.
flow of dairy reception processes. The processes will be detailed below
they will need for the production of evaporated milk and the equipment that will be necessary.

Reception of raw materials: collection and reception of fresh milk

Milk cooling
Transportation of milk using isothermal trucks
● Filter press: remove impurities
Storage in tanks
Evaporator: to eliminate bacteria
Homogenizer: agitation for the removal of fat globules
Cooling
Fat content analysis
Canned packaging
Sterilization
Label and packaging
The products directed to the finished goods warehouse at the PT warehouse.
where they are already ready to be distributed.

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3.4 Location and layout strategy

Currently, Nestlé has 443 factories worldwide and operates in 81 countries.

strategy employed by Nestlé regarding the control of its manufacturing plants
it consists of adapting its products and services to its international markets to the culture
of destination.

The goal is to maximize the benefit of the location, from raw materials to
where the products are taken. The most important factors the company is looking for to
finding a good location is the operation space, it is also evaluated if it is feasible
insufficient for all production processes, especially for the area of
machinery that due to its size requires larger facilities for assembly and
test of their equipment.

In 2018, Nestlé invested in a new plant in the Cercado de Lima to open

a new category which is panettones. Currently, an expansion is being evaluated.
distribution area of the Ate headquarters for the dispatches due to the high demand of
productos. (Trigoso, 2021)

3.5 Capacity strategy

At Nestlé, leveling strategy is applied, which helps to have a stock of

security greater than demand, in case there is an increase in demand to thus
achieve the satisfaction of the company without having to rethink the days again
workforce or number of workers. The size of the facilities must match the
plan agregado. Aunque actualmente Nestlé está teniendo problemas para satisfacer la
demand due to logistical problems caused by the reduction of employees due to the
pandemic confinement rules, although recently in an interview, the
the executive responsible said that Nestlé plans to maintain its dividend this year, at

contrast with many companies around the world that have canceled such payments for
retain cash and are focused on meeting short-term demand. (Gretler,
2020

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3.6 Organization Strategy

The organizational design of Nestlé is empirical, as it has been structured

over the years, according to the needs of this organization and aligned with the
requirements established by Nestlé worldwide; that is to say, they have been established
specific managerial positions, leadership roles, and employees, to whom has been assigned
hierarchical commands both horizontal and vertical based on their development and
next steps in the organization. The functional structure of the Lima factories
currently has around 200 collaborators between permanent and temporary staff and is
distribute as follows

The dairy division of Nestlé in Peru is under the management of the manager of the
business unit (BEM), which is responsible for the areas of internal control, sales,
channel category sales development (CCSD), supply chain and marketing.

3.7 Human Resource Strategy

The human resources area aims to carry out the processes of

hiring, promoting an optimal work environment, verifying status and progress
of their employees through training and feedback; encompassing the
previously mentioned can be summarized that this area has the task of promoting
the efficiency and effectiveness of the employees. To achieve this objective, the brand carries out

certain strategies that contribute to employee performance.

The brand at the time of hiring a new employee, after everything

the selection process, conducts ongoing training, receive their roles and subjects
and especially what is expected of them, so to speak, the 'Gold Standard' of a
employee in the position they occupy; in order to evaluate the last point
employees are monitored based on their performance in their area and the
performance in their tasks to make adjustments or congratulations if there are any. A
a clear example, in this aspect could be observed in the company Ernst & Young that
conducts feedback and evaluation tasks for its workers every three months and two
general performance evaluations, one for each accounting cycle.

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 In addition, Nestlé chooses to consider its workers as members.
important for the success of the company, for this reason, the human resources area
is responsible for making employees feel comfortable in their work positions through a
fair compensation, bonuses, private insurance, among other benefits that
they promote a favorable working environment for workers and compliance in itself
of the company's objectives.

The human resources department of Backus, like most companies, is to attract and
retain talented individuals aligned with the company's strategy, likewise,
to ensure the proper and equitable treatment of workers. As described by Backus
In 'Talent', they select, develop, and retain their staff to grow and progress.
together. In addition, they provide opportunities to grow the professional career without the
traditional limits of role, function or location.

3.8 Supply Management

Regarding the company's supply chain strategy, Nestlé chooses to

to have a supply chain managed by a specialized area that is responsible for it
totality from the reception of supplies and raw materials, the production process and the
distribution to points of sale whether wholesale or retail. The main task and the
the difficulty is achieving the satisfaction of all your customers taking into account
that the average lifespan of products is approximately four to six months.
Nestlé focuses on delivering quality products in optimal conditions.
considering this, the company is guided by its own global standard called
"freshness" that monitors the shelf life of products upon delivery. The
the company manages to maintain this focus and proper supply by maintaining a
synchronization and integration in the management of finished product inventories
the demand obtained in the period, this indicates to the area where it should focus
production and distribution at that time.

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3.9 Inventory Management

Nestlé's strategy in inventory management is closely linked to its management of

supply and the synchronized supply chain method used in this
if the company uses a tool that allows for evaluation and collaborates in decision making
of decisions at the time of employing a centralized or decentralized inventory,
this evaluation takes various variables into account such as: operating cost of
the location, dispatches, frequency, routes to the destination, among others. With this
The analysis carried out determines what type of inventory the company should manage.
centralized, which is characterized by more efficient storage control and
organized, rapid order preparation, cost savings, optimal use of spaces
among others. On the other hand, a decentralized inventory is characterized by having a
better coverage, reduces the journey, lower coordination costs, a better relationship
with the client, among others.

3.10 Programming Strategy

Currently, Nestlé has plants located nationally in Lima, Chiclayo.

and Cajamarca. The company distributes the tasks taking into account the facilities
operations of each plant and proceeds with a flow of activities to optimize the
functioning: take the order and determine the means of production to be used and the
person in charge; the optimal sequence for carrying out the tasks; starts with
the tasks; the quality of the products coming out of the chain is checked
production; the distribution of orders is carried out taking into account their priority; and
finally, the option to alter the schedule is maintained if needed for
some extraordinary reason.

3.11 Maintenance Strategy

La estrategia de mantenimiento es una parte fundamental en el correcto funcionamiento

from a production plant, especially one of the magnitude of Nestlé Lima, as
this system ensures that the objectives of the set period can be achieved
keeping the plant's efficiency as high as possible and a greater yield of
invested capital. Nestlé opts for a methodology called "Total Performance"
"Management" which organizes high-quality distributed maintenance for
avoid unexpected detentions and the consequences they generate. This point

21
it is highly linked to the company's cost reduction strategy, this is due to
The scheduling of maintenance, prevention itself generates long-term savings.
and allows for the establishment of reliable production periods.

3.12 Security strategy

Regarding the security strategy, Nestlé has two borders or aspects in the
that is organized, one for the safety of its workers and the other for safety
food of its products.

First of all, the security strategy provided to its workers has

how I approached prevention. Prevention focuses on a health management system
occupational that is imposed in Switzerland for all global headquarters that carry out
employee training to safeguard their physical integrity, signals of
caution, safe procedures among others. As a result of the development of this system,
Nestlé averages 1.3 accidents per million hours worked, it is worth noting that
the indicator shows an optimal value for this type of company. In addition, the company
It has an OHSAS 18001 certification related to industrial safety and health.
occupational.

Secondly, as Nestlé is a company dedicated to the sale of products

food consumption by the population it is essential that standards are met
quality to ensure that the consumption of its products does not cause any type of
repercussion. Besides having a quality system specialized within the factory,
Nestlé Lima has an ISO 22000 certification, a standard related to safety.
globally recognized food.

3.13 Environmental Strategy

The concern for the environment and its preservation is a fundamental part of the
acciones que toma Nestlé. Para la empresa reducir el impacto ambiental es un esfuerzo
constant for each segment of the value chain, with this in mind, it continues
making investments for more efficient resource management and reduction of
production costs; an example of this can be visualized through the program
called Nestlé Continuous Excellence (NCE). Furthermore, focusing more on the
study plant, three million dollars have been invested in treatment plants
wastewater achieving a recycling rate of 70% of the generated waste and a
reduction of its watermark by 75%. In addition, Nestlé has a certification

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ISO 14001 refers to the compliance of an environmental management system correctly.
elaborate.

CHAPTER IV: DESCRIPTION OF THE PROCESSES OF

PLANNING

4.1 General description of the demand planning process

Like any large mass production company, in Nestlé, the logistics area has a
determining role in the proper functioning of the company to ensure that it
continue to offer high-quality products to their consumers. The two great allies
the logistics area would be the commercial area, responsible for forecasting the
demand, and the suppliers, on which the company depends and trusts to offer
high-quality products. After calculating the expected demand, the levels are considered
for inventory to then generate orders for the raw materials. Later on and then
from the production that will later be explained, the supply chain is responsible for
store and subsequently transport the finished product in a timely manner
perfect.

4.2 Overview of the production planning process

Nestlé S.A has a quite complex production planning process.

First, it is worth noting that the company has a mixed production system, as
that, in the dairy sector, has products with very different characteristics. For
to plan the required production, inventory levels must first be analyzed, due to the

23
durable nature of some of the products in the dairy area, the inventories
they could be quite full which would reduce the required production amount; without
however, this is not the case for all products in the dairy line, as another
large portion cannot spend much time in inventory as they have a short time of
expiration. The company adopts and implements the production planning system 'make
to order”. This system is based on producing only what is necessary and no more. Every certain amount of time, the

the company contacts its main distributors (wholesalers and retailers) to

see what the required production will be and thus satisfy the demand. Employ
this technique ensures that products that end up spoiling are not wasted
warehouse and also reduces unnecessary waste, since no more will be produced than what
necessary.

Figure 4.1

Make to order scheme

Note: From 'Make to order,' by Kaizen Chronicles, 2021

([Link]

As shown in figure 4.1, in the 'make to order' system, production

it will depend on the orders placed by consumers or allied distributors to the
company. Then, these will be produced and finally delivered, a task assigned to the
supply chain. A clear and simple example of this method is restaurants.
Traditionally, the kitchen only begins the preparation of food when guests arrive.
the orders. This ensures good quality and products in good condition.

24
4.3 Overview of the material planning process

Once the demand has been calculated by the logistics area with the help of the area
commercial and the orders from consumers or distributors have been received, the
the company proceeds to use the MRP system to know how much should be produced based on
orders and inventories. The required production will dictate the purchase of materials that
It will be the main task of the logistics area. Then, the purchasing department will evaluate.
offers and quality of the different suppliers and in case they comply with the
requirements and quality standards generate the purchase order for the quantity of
required materials. The supplier proceeds to deliver the materials to the warehouse and the
the accounting department ends up recording invoices and making the payment to
suppliers.

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 CONCLUSIONES

One of the essential elements regarding the success of a company is to have

a very organized administrative cost system and knowing how to manage and lead a
meticulous control throughout the entire area of the company, at the same time, having a capacity

adequately of the products that face competitive markets

It is concluded that Nestlé tends to incorporate all the differences of a design.
to introduce a global product in a specific region while respecting
quality and environmental regulations of each region.
The use of technology in the Nestlé company effectively helps to increase the
productivity in various ways. First, it uses the RFIM with can
to maintain good inventory control to know its status and conditions, thus
like the quantity. Secondly, use the CPM and AS/AR software to
to have better control over the advertising provided by the company. With this
a more effective advertising system can be analyzed and produced. Finally,
the company uses SAP to manage financial resources,
humans, productive, logistical, accounting, among others. With this, it increases
crucially the productivity of the company.
In summary of the analyzed data regarding environmental management
as part of Nestlé, it can be stated that there is significant concern about being a
"green" company, a company committed to the preservation of the environment

26
 environment; whether through investments in treatment plants, or management
appropriate use of resources, or a reduction in their carbon footprint, or the amount
of inputs that are recycled; Nestlé bets on a circular economy that benefits
not only to themselves but to the society and community they are part of
stakeholders.

RECOMMENDATIONS

It is recommended to continue investing in innovation such as machinery.

modern as this will depend on the capacity for each process and the
production that supplies at the end of the day.
The company only uses SAP to manage its financial statements.
It is recommended to have backup software in case the SAP tool fails.
it can use the other one and thus avoid errors or changes in the financial statements
that crucially affect the company.
The company places more emphasis on internal customers, but it also has to
Take into account the external clients, because it has to increase the quantity in
your product transportation service through motorized vehicles or other means
of mobilization to make these faster in the arrival of the orders.
Regarding some services that the company uses from another company for its
product shipment via delivery. The staff of this service must have a
better training, as well as there need to be filters so that the people who
they work on the shipments to be ethical and moral with Nestlé's clients.
Regarding the human resources strategy, the area conducts training sessions,
progress evaluations and promotes an efficient work environment, in that
Everything looks perfect. However, I would recommend that the area carry out a task.
27
 additional that focuses on collecting feedback from its employees in the various
positions held around what improvements can be implemented so that
these remain comfortable and can maintain high efficiency.

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ANNEXES

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