It is possible to describe a transportation system as the mix of components and their interactions that generates the demand for travel within a specific region as well as the supply of transportation services to meet the demands of travellers in that area (Hugos, 2018). On the other hand, in addition to procurement management, the source-to-settle procedure is also known as the source-to-pay process. Among its responsibilities related to appraisal, selection, and formation of formal contractual agreements, procurement management helps the company to maintain supplier relationships through continuation in the supply chain (Mena, Christopher and van Hoek, 2014). On the other hand, procurement is a complicated profession that encompasses a wide range of interconnected tasks. Supplies are transported to enterprises, customers and government officials. Distribution management, transportation, and warehousing are all involved. This report will assess how well transportation and distribution management meets the company’s objectives with the help of an example of Nestle Corporation.

About Company

Nestle is a leading food manufacturing corporation that produces many household products which are exported to many countries with the help of its global supply chain network and procurement policy. With the help of its supply chain, the company is serving customers in countries like Singapore, Australia, India, Hong Kong, African countries, South America, and the Middle East (Nestle, 2021). This organization is getting success not only in its local market but also in the global market due to its effective procurement policy and effective supply chain network.

Supply Chain Management and Procurement Strategy

As per the analysis of the case study, below is the analysis of company’s logistic policy that is explained:

Nestlé’s Logistics Strategy

As per the shipping and distribution methods of the company, it can be stated that this strategy focuses on eco-friendly behaviour that is effective in:

• Optimisation of distribution channels and network design: This strategy is developed by Nestle to increase the role of the distribution channel of the company in its operation process.
• Investigating alternative forms of transport such as electric trucks and less hazardous fuels;
• Increasing environmental and safety awareness of suppliers, drivers, and retailers to ensure the achievement of the organization’s goals in the upcoming year;

Nestle is focusing on lowering energy use and moving to renewable energy sources in warehouses. A final investment in new transportation and distribution systems such as electric trucks improve efficiency and reduces environmental impact (Nestle, 2019). To improve the company’s performance, the transport and logistics manager of the company has a responsibility to reduce the trips of empty trucks, maximise the use of vehicles, and periodically reviews the strategic distribution network to find the best ways to reduce the cost of supply chain and increase the department’s performance. From the analysis of this, it can be stated that the optimization of route planning is a continuation plan for the company to improve not only the role of its fleet operations but also earn profits by making changes in the supply chain patterns of the company. Further, Nestle is also using short-sea freight or rail to increase its reach in the market under low supply costs that could not be achieved through the use of a road-based transportation system (Gallagher, 2009). Likewise, Nestle has focused on the transitioning from fossil fuels to natural gas-based trucks that helped the company to reduce transportation’s environmental impact on the societies and environment (Dunn, 2019).

The organisation has developed ways to work together with customers and suppliers to prevent empty vehicles on the road following deliveries. To gather raw materials from Craigavon and Dungannon in Northern Ireland, one truck is dispatched to Wisbech in Cambridgeshire. The same truck gathers completed goods and delivers them to Warwickshire distribution centres (Hams Hall). Alternatively, the van is loaded with things to be delivered to homes and workplaces. The whole procedure ensures that travels are efficient and that truck capacity is utilized.

Nestle’s Incoterms

The Nestle Corporation utilises the Free Onboard Vessel to transport their goods. As a hybrid, the seller must get the products to port, clear them for export, AND ensure that they are loaded aboard the buyer’s ship. The buyer accepts danger after the items pass the vessel’s railing. FOB Long Beach, for example, means the seller delivers the goods, pays the port fees, and sees them loaded aboard the ship moored at Long Beach (McKenzie, 2019). Nestle supplies its goods to be approved for transit or export, then loaded onto the buyer’s vessel. Once the items are loaded, all risks and expenses are shifted to the customer.

Management of Carrier Relations with Business

Maximizing vehicle capacity

Empty or low-load delivery trucks are expensive and inefficient. The firm continually tries to maximise vehicle capacity. No matter how much a container or vehicle can carry, the company is committed to improving over net VFR by 10% and 13,006MT of CO2 per year and utilisation of vehicle by 9% (Nestle, 2021).

“No car leaves empty” is one technique to reduce transportation emissions. Logistics management has improved route and load planning, incorporating both incoming and outgoing trucks to maximize backhauling (Dani, 2021). When required, the corporation shares transportation infrastructure with partners including retailers, manufacturers, and suppliers.

By the end of 2018, Nestle expects to have a uniform monitoring system with the help of optical and radar satellites in place to measure vehicle efficiency for monitoring its palm oil supply chains (Nestlé, 2019).

Reduces emissions and costs by eliminating empty vehicles

Nestle works with customers and suppliers to maximize delivery truck use. The method ensures that the trucks do not return empty. For this, the company has installed SAP-M based transport control system that effectively allows detecting transportation circuits and ensures the maximum utilization of the transportation system (Nestle, 2019). Hence, this system helps the company to optimize truck and container use. 

Routing Optimization

Nestle’s largest fleet is in America. The firm delivers water and frozen goods to retailers, business places and homes of customers. Therefore, it uses the strategy to analyse the route of the transportation to always try to achieve the neutrality of carbon by reducing the total distance of the transportation (Kapadia, 2020). Further, this article states that the company has achieved carbon neutrality with the help of a combination of route optimization, fleet conversion, replacement of some trucks through the help of redesigned racks, carbon offset projects, rail, renewable energy, and carbon offset projects.

Conclusion

The paper defined the transport and distribution of Nestle as the conveyance of goods to related enterprises, government officials and customers in the market. Transportation, distribution management, and warehousing are all involved in the organization that included transport managers, planners, carriers and trained staff. The transportation and distribution system of Nestle had proven to be efficient and successful for the company as the company has engaged in many programmes and initiatives to enhance its transportation standards by lowering CO2 emissions, lowering costs of operation, and increasing the efficiency of the transportation system of the company. Nestle has refined its transportation and distribution systems only for saving costs and reducing the emission of vehicles, optimising route planning and improving distribution networks.

References

Dani, S. 2021. Food Supply Chain Management and Logistics: Understanding the Challenges of Production, Operation and Sustainability in the Food Industry. Kogan Page Publishers.

Dunn, K. 2019. Nestlé, World’s Largest Food Supplier, Aims to Eliminate All Greenhouse Gas Emissions By 2050. [Online] Available at: https://fortune.com/2019/09/12/nestle-net-zero-emissions-greenhouse-gases/ (Accessed: 15 January, 2022)

Gallagher, T. 2009. Nestlé Selects GT Nexus for Ocean Freight. [Online] Available at: https://www.joc.com/economy-watch/nestl%C3%A9-selects-gt-nexus-ocean-freight_20090324.html (Accessed: 15 January, 2022)

Hugos, M. 2018. Essentials of Supply Chain Management. John Wiley & Sons.

Kapadia, S. 2020. Nestlé beverage delivery arm reaches carbon neutrality. [Online] Available at: https://www.supplychaindive.com/news/nestle-beverage-delivery-readyrefresh-carbon-neutrality/570496/ (Accessed: 15 January, 2022)

McKenzie, B. 2019. Procurement contracts and INCOTERMS; How to ensure your supply contracts are not INCO-mpatible with INCOTERMS. [Online] Available at: https://www.lexology.com/library/detail.aspx?g=4d25c17b-fc34-4b7a-8154-21a6aa78aafb (Accessed: 15 January, 2022)

Mena, C., Christopher, M. and van Hoek, R. 2014. Leading Procurement Strategy: Driving Value Through the Supply Chain. Kogan Page Publishers.

Nestlé 2019. Nestlé expands efforts in forest monitoring with public radar technology. [Online] Available at: https://www.nestle.com/media/news/nestle-expands-efforts-forest-monitoring-public-radar-technology (Accessed: 15 January, 2022)

Nestle 2019. Our Fleet of Vehicles. [Online] Available at: https://www.nestle-watersna.com/planet/sustainable-operations/our-fleet (Accessed: 15 January, 2022)

Nestle. 2021. Transport and distribution. [Online] Available at: https://www.nestle.in/csv/planet/transport (Accessed: 15 January, 2022)

Vierjahn, I. 2019. Nestlé and SAP: Partners in Business, Friends in Transformation, Experts in Innovation. [Online] Available at: https://news.sap.com/2019/11/nestle-sap-business-transformation-innovation/ (Accessed: 15 January, 2022)