1. Supply Chain of Nescafe in India –
Submitted by :
2. Objective of the study
• The objective of the study is based on the strategy adopted by Nestle India
Ltd. for managing supply chain processes of Nescafe.
The study focuses upon:
Process views of Supply Chain.
Social welfare programs for sustainability of Supply Chain.
Major issues and challenges with coffee supply chain.
• The collection of all producers, suppliers, distributors, retailers and
transportation, information and other logistics providers that are involved
in providing goods to end consumers. A supply chain includes both the
internal and external participants for the firm. - Chow & Heaver (1999)
• Since around 1990, companies across a wide variety of industries have
become increasingly interested in exploring the opportunities for
competitive advantage that can be gained by leveraging the core
competence and innovative capabilities to be found among network of
4. Supply Chain of FMCG Sector in Indian Context
• Proper supply chain management provides capabilities to overcome the
disadvantages of logistic infrastructure in short run while enabling the
businesses to develop competitive advantages in long run.
• Technology in supply chain has been upgraded over time enabling FMCG
firms like Nestle to monitor customer Take-Offs in a better way.
• The agri-business sector’s supply chain, has witnessed significant changes
with increase in investment for cold-chains across the country.
• Warehousing is generally provided by third party which have lack proper
facilities due to lack of investment and infrastructure.
5. Overview of supply chain of coffee Industry
• Coffee is one of the world’s most valuable agricultural commodities and is
widely traded across the globe.
• Corporate firms face challenge of operating global supply chain profitably
and CSR plays important part to ensure it.
• the market and demand for differentiated coffees is still growing. So to
ensure healthy and sustainable producer-buyer relationship, speciality
coffee trade requites short global value chains (GVC)
• The supply chain of coffee is complex and generally involves many
– Government agencies
– Brokers/ Dealers
Apart from entities mentioned above, there exists more of
them between roasters and retailers.
7. Supply chain of Nescafe
Upstream Supply Chain of Nescafe
The NESCAFÉ Plan
• Nestlé launched the NESCAFÉ Plan in India in the year 2012.
• By working closely with Indian coffee farmers for training and
development and ensuring competitive prices, transparency and
traceability, Nestle India Ltd. is seeking to ensure coffee supply chain
• Setting up Coffee demonstration farm.
• Farmers are given high-yielding, disease resistant plantlets suitable for
• Suppliers of coffee bean are mentioned below :
– Trade International Ltd.
– Karnataka Plantation
– Best of Coorg
– Prabhath coffee Works.
• Primary operations that are coffee are carried out by farmers and
smallholders are discussed below.
• Growing : Coffee plant grows best in a humid, warm climate with a
relatively stable temperature around 27ºC all year round.
• Processing : Coffee cherries picked from the plant goes through many
processes to end as the saleable product - the green coffee bean:
– Drying and hulling
– Sorting, grading and packing
• At Nanjangud Factory, four more operations are carried out on coffee
beans before they are ready for being used in production of various coffee
– Blending: Coffee blending is done by experts. Quality and taste of each
and every variety of coffee mix has to be same and as per standards.
– Roasting: Green beans are roasted under controlled environment.
Roasted beans are brown in colour and have characteristic aroma of
– Grinding: Coffee beans are ground to convert coffee in powder form
– Evaporation and spray drying : It is done to eliminate extra moisture
from the grinded coffee beans.
All these steps are carried out by the suppliers according to the desired
standards and requirement of Nestle.
Sourcing of Chicory
• Chicory is an important ingredient for various coffee drinks. (For example,
Nescafe Sunrise has 30% chicory content)
• In 2001 Nestle started developing new areas to cultivate chicory. Support was
given to Paras Spices in 2005 to diversify into chicory roasting and to start
cultivation with local farmers.
• The suppliers were trained on sowing, drying and roasting of chicory.
• Currently Nestle is connected to more than 7500 farmers and 7 suppliers for
procurement of chicory.
• Packaging protects food products from
damage due to external environment and
keeps them safe till consumption by
• Coffee is packaged by Nescafe in attractive
jars and sachet of various sizes.
• Nescafe sources jars and sachet from third
• air tight foiling is done for keeping the
coffee fresh for long time.
• After packaging, labelling of jars is done.
15. Downstream Supply Chain of Nestle India
• Nescafe does not have exclusive downstream supply chain, that is,
Nescafe reaches its consumer in the same way as other products of nestle.
• Nescafe is manufactured at Nanjangud Factory of Nestle India Ltd.
Supply chain is relatively new function at Nestle India. It was formed in 1998.
Supply chain department is divided into 6 sub-functions:
• Category Demand Planner: It is responsible for demand forecasting of
each category of products. Over there are 7 CDP at head office. CDP of
Beverages looks after Nescafe. Demand is forecasted SKU wise for each
• Customer Service and distribution: It looks after key customer accounts
and facilitates distribution operation for them.
• MIS Officer: It is responsible for handling SAP system and coordination
with IT department. Responsibility of MIS officer is generating various
reports and Analytics.
• Distribution Resource Planner: DRP is responsible for allocation of
unskilled labour, Distribution Centre Staffing, DC layout, equipment and
machinery purchase planning.
• Logistics And Budgeting: It is responsible for handling 3PLs.
• Warehouse Manager: It is responsible for maintenance of warehouse
facility. Storage of products as per norms, maintaining FIFO ,
Implementation of stacking rules, Safety standards for staff (Safe by Choice
Order processing and billing for every State DC is done by OMC. OMC
generates orders based upon NORMS. Norms are prepared automatically
based mainly upon sales of every cash distributor.
• OMC-DC-CD co-ordination:- It is ensured by Supply chain management
department. Timely delivery of order after invoicing is critical. It is also
responsible for physical loading stock to vehicles. It replenishes stock
information (logical and automated process).
DC supply stocks to every CD. Timely and exact delivery of ordered stock is
very essential, it is ensured by CSP. CSP (customer service plan) is
planning of next 18 days in advance. Order consignment is delivered at CD
point from DC godown on next day of invoicing.
• Norms: Minimum quantity of stocks which needs to be there at CD pt. on
the day of Invoicing. It is affected by factors such as LY, TY, Sales Plan,
Festival, Season, etc
Generated Order = Norms – physical holding – In-transit
19. Analysis of SCM at Nestle
• Nestle has adopted the policy of “Creating Shared value” (CSV) for
development of Supply chain partners.
• Nestlé India ltd is determined and willing to pay fair price for coffee produce to
farmers as good quality raw material is essential for business.
• Nestle promotes better agricultural practices, support rural development in line
with local priorities, and address supply chain issues from gender inequality to
• The Lean Supply Chain of Nescafe is ensured by NCE.
• Issues and Challenges
– Lead Time management
– Quality Maintenance throughout the SC
– Excess Inventory
21. Finding of the study
• Nescafe supply chain is well coordinated alignment between its supply chain
• Coffee business is thriving because of strong distribution network, through which
Nescafe available in every part of our country.
• But Supply Chain of Nescafe in India is still in developing stages as compared to
that in developed Countries. This is mainly due to lack of investment of other
supply chain partners and poor infrastructure.
• Complexity of managing supply chain partners is increasing.
• Although Creating Shared Values principal is fruitful in long run but it also requires
huge capital investment.
• CSV for coffee is still in initial stages as compared to other businesses of nestle.
• The study is restricted to a particular brand of a company.
• Time was not sufficient to complete the study.
• The study is theoretical and qualitative.