Consumers have benefitted from Nestlé’s leadership in quality food products for 150 years. In 1866 Nestlé’s history began as the Anglo-Swiss Condensed Milk Company offering consumers a safe long-life alternative to fresh milk. The following year Henri Nestlé developed a breakthrough infant food to tackle high mortality rates for infants who could not be breastfed. Canned milk products imported from Europe first hit Canadian shelves in 1887. Manufacturing in Canada began in 1918 and four years later the company was incorporated as Nestlé’s Food Company of Canada Limited. Today the company has approximately 3,500 employees in over 20 manufacturing, sales, and distribution sites across Canada, with annual sales in 2014 of approximately $2.3 billion.
Nestlé is a global company that sells its products in 189 countries, so it should come as no surprise when Nestlé Canada’s Senior Vice President, Supply Chain Operations Greg Christopher states that, “Supply Chain plays an important integration role in of our company. We connect experts and disciplines across the company, whether it be sales, marketing, or finance. We try to connect the dots to have one holistic point of view of the Consumer Value Chain, and steward the end-to-end from consumer demand to consumer consumption.”
To accomplish its goals, Nestlé has been on a journey to a lean enterprise and one that prioritizes the development of its people. The company has implemented a program of Nestlé Continuous Excellence (NCE) that aims for the organization to become Lean in all functions of the company. This culture of NCE is driven by its staff and has proliferated throughout the organization with the support of senior management and its implementation allows everyone globally to operate in a common improvement language. Staff are empowered to correct problems, as a way of life. Reliable and accurate information sharing with customers and suppliers is also an important component of the success of this program, and as the largest single user of SAP in the world, Nestlé in Canada has a progressive Decision Support strategy,
There are many challenges to running a global company and Nestlé is not immune to these challenges. Some of those faced include:
- Reliability of movement is extremely important as Nestlé Canada produces many products directly in Canada, but also relies on imports for half of what they sell. Any interruptions could have serious implications for their supply chain.
- Ensuring the highest standards for its ingredients and products and accomplishing this through responsible sourcing audits with all partners to ensure traceability as appropriate from farm to fork.
- Predicting and managing consumer demand is very important especially with a lean operation.
- Canadian dollar fluctuations are top-of-mind and are always a consideration in Nestlé’s global strategies.
- Consumer demand for fresh products and the retailers drive for On Shelf Availability (OSA).
A recent change in consumer behaviour has also presented supply chain challenges, “People are buying smaller amounts more often, where in the past they bought larger amounts less frequently,” says Christopher. “We have to produce and move in the same manner, but we’re not designed globally to do that.” Christopher acknowledges that adapting global infrastructure to manufacturing and moving smaller amounts in a manner that is still efficient and sustainable is a tough challenge.
In addition to developing its people to build capabilities, Nestlé also works closely with its partners through supplier integration strategies to achieve excellence. Recently, Nestlé worked with CP Rail to find ways to remove costs from their system, rather than transfer costs. By educating CP Rail about Nestlé’s business model and challenges, and Nestlé learning more about what CP Rail valued and needed, the two organizations were able to find ways to improve accuracy, service levels, reliability, and reduce costs for both partners. As a result, in 2016 Nestlé’s dwell measure (the amount of time a container is idle) is tracking 6.7% ahead of CP’s top customers. This is a dramatic improvement from 2014, when Nestlé dwell was 56% higher than the average CP Intermodal Customer.
To simplify business relationships, Nestlé collaborates with customers to review processes to ensure safe products are on shelf to meet consumer demand. The team hosts annual development days with Loblaws to learn how lean methods can remove waste, and implemented On Shelf Availability, with several customers including Metro, to be sure everyone is focused on getting products from the store warehouse to the shop floor.
Nestlé is certain that being a global leader brings not only a duty to operate responsibly, but also an opportunity to create long-term positive value for society. This positive impact is created through its operations and products - from the farmers who supply the ingredients, to their employees, consumers and the communities where they operate. This what Nestlé calls Creating Shared Value (CSV).
As part of this CSV approach, the company initiated a project, the Nestlé Cocoa Plan which aims to improve the lives of cocoa farmers and the quality of their products. It’s not commonly known that most cocoa is grown on small family farms with no more than 10 acres. As part of their Cocoa Plan, Nestlé is investing $120 million over 10 years to help these farmers. Since 2009 they trained 82,000 cocoa farmers in the areas of good agricultural practices, farm management, social and environmental issues. By the end of 2016 they will have built 40 schools in the farming communities, and by 2020 they will have distributed 12 million higher-yielding, disease-resistant cocoa plants. This project has yielded great success thus far and Christopher reports that, “today, 100% of the cocoa used by Nestlé in Canada in its Toronto factory comes from the Cocoa Plan.”
Nestlé Canada builds on its strengths via the global Youth Initiative. By 2018, the company will offer more than 5,000 young Canadians the opportunity to develop professional skills, increase employability and expand their network. The Supply Chain team in Canada offers internships for university students, and more than 50% return to Nestlé upon graduation.
Supply Chain at Nestlé drives functional excellence while supporting the total company transformation, resulting in success across the organization.