International Trade

1.0 Introduction

1.1 Current Industry Background

Founded in 1866 by Henri Nestlé, the group has established themselves as the largest food company in the world based on their revenues. According to the fortune 500 ranking Nestle company ranked 48th where their food brands are ranked 58th. Nestlé’s mission is to be the leading nutritional food provider in the industry enhancing the well being of its customers.

The company operates globally in 70 countries offering diversified products such as

 Dairy products

 Coffee products

 Chocolates

 Nutritional Products

 Mineral Water

 Ice Cream

In fact annually 79% of Nestlé’s Swiss made products are exported globally increasing their profits by 3.7%. On the other hand by being a global company, Nestle builds up its brand image by focusing on sustainable development by creating shared value through its supply chain.

Figure 1.0

Source: Author’s work based on (Nestle: Creating shared value 2010)

Thus by engaging themselves in such measurements Nestle has established its profitability and growth in the long run.

2.0 Parameters of Supply Chain in Nestle

The supply chain process of Nestle includes from sourcing of raw materials from direct and indirect suppliers, manufacturing, distributing and transforming them into products for worldwide consumers.

Figure 2.0 – Supply Chain of Nestle

In order to be the world’s leading Food Company Nestle focuses on innovation and renovation. Therefore, Nestle ensures that they have an efficient supply chain from quality raw materials to fresh and quality products in the market shelves.

2.1 Procurement

As the world’s leading agricultural raw material buyer, Nestle sources its raw materials such as cocoa, milk, coffee, vegetables, sugar, spices, herbs and fruits through direct and indirect channels. In fact Nestle spends nearly CHF 58 – 60 billion a year on core procurements where CHF 20-22.5 billion is spent on ingredients and CHF 8-9 billion is spent on packaging (Annual Report, 2012).

Figure 3.0 – Sourcing of raw materials

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