Operation management is about the efficient and effective organization of operation regardless of whether a physical product is involved or not. The operation is the portion of a business, which is focused towards the conversion of inputs into the necessary output with the essential level of quality (Cooke, 2012). Management is the procedure, which organizes and converts numerous resources that are utilized in the operations of the company in a measured way according to the organization policies. Operation management is very important for every organization as it is concerned with the transformation of input into output (Mahadevan, 2015). This report is also about the operation strategies of Nestle, which will highlight the major operations and strategies used by the company for converting the input into output. Along with this, the report will talk about the target market of the company and its key processes in the business.
Nestle is the largest company of food and beverages in the world. They have around 2000 brands and their business operations are conducted in 189 countries all over the world. It is a Swiss transnational company with headquarter in Switzerland. The company majorly deals in the products like breakfast cereals, baby foods, dairy products, and ice creams; all these products have gained a new position in history with the arrival of extraordinary market leader that thought in proposing taste and richness to the whole world (Nestle, 2018). Nestle is the leading company for wellness, health, and nutrition for 140 years with the mission of Good Food, Good Life (Nestle, 2018). Henri Nestle established the company in 1866 and today it possesses 447 well-appointed factories and operations in around all the countries of the world. Nestle is one of the shareholders of L’Oreal (Success Story, 2018).
I am working in Nestle as the operation department head and responsible for all the current and upcoming business procedures of the department. My major concentration in the operation department is to observe the successful execution of the company’s projects. I am accountable for by operation team that is comprised of talented, experienced, and skilled employees or members. Having big responsibility of whole operation department, I have to manage both workers as well as raw material. Management of purchasing, inventory, and supplies is key to the job. In order to be fair with my job I adhere to all the guidelines and rules implemented in the organization, moreover, I encourage my team members to follow the same.
Contribution of Department
The Nestlé’s Operation department is working towards managing all the resources of the company very effectively for this they are putting their efforts in the measurement of the effect of micro and macro environment factor that influence the business operations in short and long run. The tools that our operation department is making use of to measure the effect of these factors are SWOT analysis for internal factors and Pestle for external factors. The department also looks for attaining the best employees to achieve the goals of the company for this they are cooperating with the human resource department (Monster for employees, 2018). The human resource department is supporting the operating department in planning the development programs and training of the staff. In the department meeting, all the members are called to present their views and updates regarding work and for innovative ideas of serving customers (Total Job, 2018).
Different consumers have diverse necessities and it is very difficult to satisfy every customer by handling them at the same level (McDonald, 2012). Market segmentation refers to identifying the portion of the market, which is not the same like other players in the market. Segmentation offers the direction to the company to fulfill their customers need (Haseeb, 2016).
Bases for Segmentation
The operations of Nestle can be offered as per the market category based on the characteristics of the customer.
Nature: The Nestle has divided its marketplace for Nescafe ICE depending on the geographic climate: cold and warm hot.
Nescafe Ice: It is a coffee, which can be consumed by ice. In the warm season consumers, prepare Nescafe Ice with chilled, cold, or normal water by mixing ice to carry freshness in their mood and body (Bhasin, 2017).
Nestlé Company divided its area of the market for its key offerings depending on the generation. For the items like Lectogen, Koko Krunch, Cerelac, Nido, Nestle Company has segmented the area for the children of diverse age and newborn baby.
Nido
Nido is nourishing milk particularly made for 2 years onwards children. It comprises Vitamin D and 25 minerals that help kids and children to grow.
Cerelac
Cerelac is also a product of Nestle for the new aged baby. It involves a mixture of rice and milk for the babies who are less than one year. It provides complete nutrition to the baby in the form of food.
Koko Krunch and Nesquick
Both of them are chocolate milk for kids. Koko Krunch and Nesquick involve required growth nutrition for children. It tastes sweet and tasty and comprises minerals, vitamins, and proteins.
Lactogen
Nestle in Singapore brought cream milk powder in the nation. It provides required nutrition to the babies. Lactogen 1 is only for a child who is between the age of 3 to 6 months and lactogen 3 is for those kids that are below 1 year of age.
Nestle has also divided its market depending on the earnings of the consumers in an appropriate manner.
The offering of Nestle is segmented depending on the occupation of the user such as:
Nescafe Classic
Nescafe classic is the product for those who perform their hard and busy job and need more freshness. This product is available for both female and male who desire for extra caffeine (Nestle, 2017).
Personality and Lifestyle: Nestle Company offers KIT KAT for those people who love to have chocolate. Nescafe 3 in 1 is only for those consumers who have a hectic schedule and does not possess enough time. This product helps them in saving their precious time because in this all the items such as coffee, milk, and sugar are mixed (Chaitanya, 2016).
Benefits
Depending on the benefits, Nestle Company has divided its market in an appropriate manner; therefore, they have offered Cerelac in the market for those consumer markets who ask for maximum profit from the product. Cerelac involves high nutrition for kids within the age of 1 year. Besides this, it involves the most important ingredients that are milk and rice. On the other side, Cerelac involves minerals, vitamins, and every key nutritious ingredient for babies (Nestle, 2018).
Market segmentation helps companies in grabbing the available market opportunities. In this, companies identify the target market by measuring the different types of segments and determining the most profitable quantity segments, it will target (Wedel and Kamakura, 2012).
Nestle has evaluated various kinds of segments based on their size, growth, and structural attractiveness. According to this Nestle decided their resources and objectives and introduced various operations in the Singapore market (EDIE, 2013).
Nestle majorly distributes their target segment due to possessing exclusive wants and requirements of the customers. It has identified its target market based on two policies of market coverage:
Nestle has selected the differentiated marketing, in which it offers diverse products for different segments depending on their occupation, climate, and ages.
Nesquick and Koko Krunch- these products are offered by Nestle for those who love to have a real chocolate taste.
Nescafe ice- Nescafe ice is a cold coffee for the consumers in the warm and hot weather.
Nescafe 3 in 1- It is a type of Coffee for the consumers who have a busy schedule and does not have much time to prepare coffee.
Concentrated marketing has helped Nestle Company in attaining a good and strong position in the market due to its good understanding of the requirements of the consumer. In the niche market, Company offers good products and possess a strong reputation in the market. Nestle provides Lactogen 1 which is a nutritious milk powder for babies between the age of 3 to 7 months and lactogen 3 for those babies between the age of 7 to 12 months. Besides this, the company also provide baby nutrition Cerelac for more than 12 months baby.
Nestle Company reaches the touch point of the customers very easily by making product people, channel, service, and image differentiation. It makes strategies more efficiently and effectively in comparison to its competitors in the extremely competitive food handling market. Moreover, Nestle offers varied range of products with high quality at high price.
Product Differentiation- Nestle Company carries various items for its target consumers such as they offer 25 kinds of minerals for children in Nido. Moreover, it also offers Lactogen 1 and 3, and Cereals for the babies who are newly born.
Today, many doctors recommend all these products for kids to their parents and guardians for maximum and great nutrition. Nescafe is one of the offerings, which is available in 4 categories. Nestle also has a product i.e. Maggi comprising Maggi instant. Maggie 2 minutes involves different vitamins, nutrition, and minerals.
Channel Differentiation- Nestle provides their service to the customers by their talented and experienced transportation and salesperson in the market, such that their product offering can be availed easily by the customers.
The Nestlé’s operation strategy is extremely contributed by the use of wellness, nutrition, and health strategy. Different strategies are created in order to assist people who want to possess a healthy lifestyle. The operations of the company are created by the real assistance from an invention that regularly comes from the research and development in the industry. The complete scenario assists the regular alteration of the portfolio of beverages and food of the firm. Besides this, the activities of R&D of Nestle Company are unceasingly concentrating on discovering the roles of nourishing treatments for confirming the development to the lifestyle and health of societies (Kanapathy, Yee and Zailani, 2016).
This reflects that the company make use of the transformation process while performing the operations which is one of the models of operation management. Transformation process is defined as the process in which the company transform the input into output by adding the value in the products. Nestle company transform the raw material, resources and other by adding the value by developing and moulding outputs according to the needs of the customers. The input transmission includes land, building, labour, and raw material, which get converted into the output transmission that is good and services offered by Nestle. The input includes milk, fruit, vegetables, cereals, potatoes, coffee, and cocoa. The company for manufacturing the final products uses all these inputs. Among all the inputs transmission, labour is considered as one of the effective input with the help of which Nestle is able to meet the needs of customers. This leads to the rise in the satisfaction of customers towards the Nestle Company.
With the support of these actions and activities, Nestle is regularly directing on increasing alertness among different market from diverse societies for taking care for their wellbeing and health phases. Henceforth, the Nestlé’s strategy of operations is mainly dependent on delivering an optimistic influence on different societies in the whole world in terms of their activities. To attain the precise aim, Nestle determinedly shares numerous visions in relation to global wellness, health, and nutrition challenges make greater partnerships with key companies and involve with the makers of the policy, shareholders, and key leaders from the specific geographical location of the operations of the company.
An order qualifier is the characteristics of the products or service that are must in an order. On the other hand, order winning is the characteristics of the product that will meet the needs of the customers. It is must for the company to satisfy the needs of the customers for which they should be aware of the order wining and order qualifying criteria. The below given is the description of same: –
Order qualifying criteria
Order winning criteria
Principle operation task that is required to be followed by the company to satisfy the criteria include the use of the effective tools which include maintaining the quality of the products which include the use of total quality management tool (Goetsch and Davis, 2014). This tool helps in maintaining the quality of the products. Along with this, the easy availability of the products will be possible with the effective supply chain and distribution networks of the company. According to the reputation and brand value of the company the quantity of the products are good which helps in managing the value for money (Hugos, 2018).
Nestle company need to follow the process strategies and producer that ensure that strategies are carried out effectively. Firstly, they need to offer the effective training to the operation manager who manages all the operations that are present in the organisation. Secondly, the manager of the company should ensure that the tools and model of the operations management are effectively implemented within the organisation.
The Roadmap of Nestlé is planned for creating alignment for their people behind a interconnected strategic priorities that increase the chances of successfully completing operations. These operations ask from the people of the company a mixture of long-term motivation required to form future and short-run business actions, offering the essential level of performance (Nestle, 2018).
There are diverse operation objectives such as cost, flexibility, dependability, speed, and quality, which are reflected by the business based on the customer requirement and hereafter consequence in conquering the competitive edge for the business.
The operations of Nestle are offering dependability to the organization by performing all the operations on time. The company’s operations are dependent as Nestle offer its services on time to the customers by having a strong network of distribution that involves experience intermediaries in the market.
The cost of the Nestle products is dependent on the product quality. It can be seen the market that the products of the competitors are cheap as compared to Nestle products of the same category. For instance, the price of Maggi is high as compared to Yippee and Wai-Wai noodles (MBA Skool, 2018).
The purpose of Nestle is to offer the best quality and healthy products to its customers by spreading the awareness of living a healthy lifestyle. Due to this purpose, the company is offering a diverse range of products for all the age groups present in the target market. This is hard for the company to manage the quality of the wide range of products that is offered by them. For managing the quality, the company make use of the six sigma theory of operation management. Six Sigma is operation management approach that is used by the Nestle for the continuous improvement and for eliminating defects that are present in the process of Nestle. This elimination of the defects will help the company in ensuring the effective quality at low cost (McClay, 2017). Moreover, in order to maintain good quality company has implemented various measures for all the products manufactured by the company.
The operations of Nestle are capable to alter or change as per the demand of the customers in the market, which shows that they have a flexible advantage. The company’s operations allow product and service flexibility, as they possess the skills to introduce new service and product in the market.
The operations of Nestle are offering the company an advantage of speed by performing operations and delivery of the products faster. Most of the revenues and sales of the company are earned from European countries, which is around 90% of overall sales. Normally, they follow an FMCG distribution channel, which is fast and involves breaking the bulk concept in which the bulk products are sent from the factory to C&F. This shows that the company make use of the Inventory management model for their operations. Inventory management model of operation management include the flow of goods from the manufacturer to the warehouse and from the facilities to the point where the company sell the products.
Some other Operation objectives of Nestle are:
The service and product design objective of Nestle is dependent on the satisfactory operation of the resources and reducing the wastes in the complete lifespan of the company’s merchandise. In this aspect, it is very important to discuss that the company leverages gradually on the combination of appropriate R&D for preserving sustainability in the process of designing of product. Head of Nestlé’s sustainability for the department of research and development suggests that the company focuses majorly on making an effective design for its offerings because it believes that the procedure works as the key aspect in the protection of the natural environment (Roulin, 2013).
The main goal of Nestle is of adapting the specific process of the wrapper of the products for confirming the decrease in the hurdles faced by the consumers of every age group. The precise method could be identified in the company’s operations in its division of Thailand. Nestle Company is the first initiator in the industry of beverages and food to apply the individual approach in the department of wrapping of its products following the knowledge associated with the difficulties confronted by the environment. In the Nestlé’s division of Thailand, it had presented the comprehensive design with the purpose to pursue expansion in the procedure of product designing and to confirm the requirements of the society are contented adequately (Rongwiriyaphanich, 2014).
Regular enhancement is essential for a business to grip the foremost place in the recognized marketplace and flourish to react as per the requirements of the customers in the market. Enhancing the goods of the business by upholding invention in the procedures is the essential goal for the Nestle, as the policies are the center part of the operations of the company for over 150 years. The business has now become the world’s biggest private food and nutrition research group by its internal existence in the main nations, comprising Thailand’s operational hubs (Jannat, 2015).
The Nestlé’s supply chain aspect is determined to create the excessive platform supporting the participation of cooperative professionals in the supply chain. The business attains the unique competitive edge by the actual assistance from the company’s supply chain. With the mixture of the Supply and Demand Planning, Customer Services, procurement and planning, and Physical Logistics, the control and management mechanism is created by the business in a way to enable the communication with the consumers. Similarly, the strategies of supply chain management embraced by the organization assist it in offering the products as per the wants of the customers in the market at the appropriate time.
More specifically, the Nestlé’s Supply Chain Management is the mixture of science and art supporting the business to attain its corporate objectives in haughtily. With the support of the procedure, the business recognizes the specific requirements of the raw mechanisms for manufacturing the services or products (Zhang and Preechawipat, 2012). Besides this, Nestle identifies the manufacturers for transporting the goods produced by the company and afterward provided to the consumer. The main activities of Nestlé’s supply chain management are established by the valuable assistance of the significant parties such as producers, vendors, suppliers, distributors, producers, and consumers. The procedure could be emphasized successfully with an applicable diagram below.
The Nestlé’s operations are dedicated to upholding safety and quality in the procedure of production for confirming the health and safe usage offered to the customers. From the last several years, safety and quality for the customers are the central purposes for the creation of main policies intended by the business for handling quality. The similar notion relates to the whole company’s range from the products of beverages and food to the services and systems (Cullen and Parboteeah, 2013).
Quality Policy of Nestle
From the above analysis, it has been observed that the Nestlé’s food and beverages products focus on the target audience of famous towns in the whole world, whereas offering an inadequate focus to the rural zones. Hence, the business must think about creating diverse sorts of goods to aim the rural markets all around the world. This flexibility of the company reflects the use of the Reconfigurable manufacturing systems which is theory of operation management. Reconfigurable manufacturing systems are the production systems which are designed with the motive to incorporate accelerated the change in the components which include hardware and software with the change in structure (McClay, 2017). The implementation of this system will allows the Nestle Company to adjust effectively to the capacity to which they can continue the production and function effectively in response to market changes. Thus, the Nestle is suggested to make use of Reconfigurable manufacturing system in their operation management. Along with this, the company should make tough network of distribution and justifiable procedure to realize the recognized aim of spreading the awareness of healthy and nutritious lifestyle across the globe.
Conclusion
Different products of Nestle Company have now become popular among communities over some time. The Company’s efforts to be the forerunner in the industry of food and beverage are subsidized by the fame of these goods to the recognized market and their trades to the cumulative number of consumers. From the above examination, it can be said that the company’s achievement is flourished by the existence of a well-organized network of distribution and the properly distinct operational strategy. Besides this, the products of the company are created to offer well-being and health benefits to the customers regardless of their physical condition or age. The complete report assists in recognizing the taste, availability, and quality are the three important factors that Nestle offers and focus while managing its operations.
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