IMPROVING SUPPLY CHAIN PERFORMANCE OF FAST MOVING CONSUMER GOODS (FMCG)

Abstract

In recent years companies are facing highly competitive environment and pressure to reduce cost in logistics, ware housing, distribution and customer service is even stronger. Now one of the major challenges for FMCG Company is to optimize the supply chain in order to improve efficiency and effectiveness of businesses which can be developed through the alignment of operational processes and competencies, partners, functions, resources, and systems involved. Nestle is a multinational packaged food company having it’s headquarter in Vevey, Switzerland. Nestlé has a wide range of products across a number of markets including bottled water, other beverages, ice cream, chocolate, coffee, infant foods, healthcare nutrition, frozen and refrigerated foods, confectionery and pet food. Nestle has 456 factories in 84 countries with 280,000 employees working around the world. In the bottled water market of Pakistan share of Nestle is about 59% and other major competitors are Aquafina, Kinley and Sufi. Manufacturing facilities of Nestle Pakistan are situated in Islamabad, Shiekupura and Karachi. The research was carried out to identify the potential cost reduction areas of Islamabad factory by applying supply chain models and performance improvement metrics. The global presence, famous water brand and strong channel of distribution of Nestle products all over Pakistan were key strengths of Nestle waters. The longer lead time of product release, improper design of vehicles, high rate of bottle damages during logistics, unnecessary warehouses of company and distributor were key areas to improve. Pakistan is the fast growing market of bottled water so it’s a great opportunity to explore new markets, reduce lead time and increase the capacity utilization. In this study, focus was to add value in the whole bottled water supply chain by adopting lean supply chain, Just-in-time inventory and by challenging distribution cost. In bulk bottled water business, supply chain management had been a major component of competitive strategy to enhance organizational productivity and profitability. The strategies were developed by using the current literature and applying supply chain models that would stimulate the performance of bottled water supply chain.