Project: Distribution Management

Company Name: NESTLE PAKISTAN

Submitted By:
Abeera Butt 11108010
Rabia Khan 11108016
Mishal Javaid 11108017
Ayesha Khalid 11108055
Ahmed Waqas 11108045

Submitted To:
Mr. Umer Mukhtar

Company Name: Nestle juices

History of Nestle juices:
A well-known brand, FROST was introduced in 1986 and has the largest share of the
countrywide market. Positioned as a cold drink and alternate to cola drinks, its strength lies in the
convenience attached to its usage. NESTLE JUICES encouraged by the consumer response to
NESTLE ORANGE JUICE that was launched in 1996, the category of NESTLE juices was
expanded with the introduction of Mango-Orange and Mango flavors in the year 2000. This has
further strengthened the position of Nestle as leader in the value added/premium drinks market.
Consumer response to these new flavors has been very upbeat and is expected to gain further.
Now nestle company have launch following juice brand in Pakistan.
Indulge in the pure pleasures of a healthy life!
Nestle brings you a range of juices that will scintillate your taste-buds and add variety to suit
every moment.
MISSION STATEMENT

Nestle is dedicated to providing the best foods to people

throughout their day, throughout their lives, throughout the
world. With our unique experience of anticipating
consumers' needs and
Creating solutions, Nestle contributes to your well-being and
enhances your quality of life.
Nestle is not only Switzerland's largest industrial company, but it is also the World's Largest
Food Company. The mission statement emphasizes on the fact that Nestle products are available
in nearly every country around the world. Wherever one may live, only Nestle can provide the
best and most reliable food and beverage products to meet his/her needs throughout the day,
throughout the life. Especially, people on the move want to be able to find good food wherever

they are, whatever the time of day. They are often reassured that they will find well-known
brands out of home.
This statement also reflects the image of high quality products that Nestle offers. Nestle
has the advantage that it offers caterers, fast food chains and other restaurants a complete range
of high quality ingredients, base products and meal components, as well as leading consumer
brands such as Nescafe. Quality is the cornerstone of the success of the Nestle Company. Every
day, millions of people all over the world show their trust in the company by choosing Nestle
products. This trust comes from a quality image that has been built up for over a century.
Therefore, the quality of the products ultimately enhances the quality of the consumers life.
In addition, the mission statement declares that Nestle has the ability to anticipate
consumers needs and create solutions. Nestle has proven this ability a number of times by
introducing new products that were required by consumers. Especially, the launch of Nestle Pure
Life in Pakistan proves the accuracy of this fact. In Pakistan, there was a need for safe and
healthy drinking water and Nestle responded to this consumer need by introducing Nestle Pure
Life.
Finally, it is quite evident that the organization has actually implemented its mission
statement in the business practices that it carries out. Also, the mission statement has been an
important guideline for any SBU that the firm has started and this is portrayed by the success that
each SBU of Nestle enjoys.
HOW NESTLE DEFINE MARKETING:
Building customer relationship based on customer value and satisfaction is at the very heart of
modern marketing. The two fold goals of Nestle marketing is to attract new customers by
providing superior value and to keep and grow the current customers by delivering satisfaction.
Nestle defines marketing as:
A social and managerial process whereby individual &
groups obtains good food and good life through creating and
exchanging products and values.

NESTLE BUSINESS PRINCIPALS:

Nestl's business objective is to manufacture and market the Company's products in such
a way as to create value that can be sustained over the long term for shareholders,
employees, consumers, and business partners.

Nestl does not favor short-term profit at the expense of successful long-term business
development.

Nestl recognizes that its consumers have a sincere and legitimate interest in the
behavior, beliefs and actions of the Company behind brands in which they place their
trust and that without its consumers the Company would not exist.

Nestl believes that, as a general rule, legislation is the most effective safeguard of
responsible conduct, although in certain areas, additional guidance to staff in the form of
voluntary business principles is beneficial in order to ensure that the highest standards are
met throughout the organization.

Nestl is conscious of the fact that the success of a corporation is a reflection of the
professionalism, conduct and the responsible attitude of its management and employees.
Therefore recruitment of the right people and ongoing training and development are
crucial.

Nestl continues to maintain its commitment to follow and respect all applicable local
laws in each of its markets.

Types of Nestle juice (SKUs):

Name
Pure Orange

Ml
1000 ml

200 ml

Clear Apple nectar

1000 ml

200ml

Red Grape nectar

1000 ml

200 ml

Pine Apple nectar

1000 ml

200 ml

Mango Orange

1000 ml

200 ml

Chaunsa nectar

1000 ml

200 ml

Guava nectar

1000 ml

200 ml

Mango

1000 ml

200 ml

Primary Activities:

1. Inbound
logistics
5.

2.
Operati
ons
4. Marketing
& sales

3. Outbound
logistics

1. Inbound activities:
Major raw materials of Nestle orange juices are different pulps of orange which they import from
Germany and France. Nestle company get their other raw material from local market in Pakistan.
Nestle juices raw material include ingredients such as fresh fruit, nectar of mango, apple, and
pineapple, orange.
2. Operations:
Process is any part of an organization that takes inputs and transforms them into output of
greater value. Fruit Juice production procedures involved in fruit drinks manufacturing depends
on type of juice unit is going to make. For purpose of this- feasibility, Nestle propose 4% token
juice drink of citrus fruit (Orange), Mango and pineapple.
The type of process that Nestle uses is make-to-stock as it produces standardized products. The
process is multistage as few stages are similar for all juices and few are different.
3. Process Type:
The process for Nestle Juices is continuous flow process as juice, which is liquid, flows through
the production process.
4. Outbound activities:

In Nestle Company the activities that include in outbound logistics are, they establish their sale
and distributive offices in big cities like Karachi, Lahore, Islamabad, Faisalabad, Gujranwala etc.
and also hire suitable distributors on agreed profit margins. Who bought from nestle office of the
city and try to distribute to the each retailers and shop keeper in the city.
5. Services
Company established the customer center in each office in a city. And also given toll free number
as a help line number which means that if customers feel any problem then they can contact
through our help line.

Customer Attitude/Demand Nature

The main concern that the consumers of Nestle Orange juices have regarding the juice is related
to the purity of the juice. The factor and the feature that they are most concerned with is that is
the juice 100% pure and healthy?
The responses of prior studies reveal:

People actually think that fruit juices are not that great for them because of the fructose
(fruit sugar). They think that when this fructose is processed its pure sugar gets
TERRIBLE for their health. So the solution to them is that if they want to have a taste of
orange they should try having an actual orange because the fiber in the pulp skin and

roughage will slow the absorption of the fructose.

Another group of people suggests that instead of having packed juices one should go for
natural ones with pulp and fiber etc. They think that, that is much better for their health.

Only when one is in hurry one should go for processed juices.

Yet another really inflexible lot thinks that juices are made from concentrated stuff which
as per them is not healthy at all. So they should always go for fresh juices regardless of
the fact that they are in a hurry or not. And if they cannot get hold of fresh juices, they

should skip juices altogether.

As per the staff of Nestle, people are getting diverted towards imported drink which
includes orange juices as well. As people are getting more health conscious, they are
willing to spend more on their health and thus are willing to purchase imported juices

regardless of the cost factor. People receive Nestle juices to be better than imported
juices.

SUPPLY CHAIN PROCESS:

CUSTOMER SERVICE IN PRODUCT DISTRIBUTION:

Nestle (JIT-Manufacturing System)

The concept of JIT is to getting the right quantity of goods at the right place and at the right
time.

Raw Material
Reduce space requirements
Continuous improvement
Lower production cost
Increased flexibility
Increased machine utilization
Lower inventory cost

Nestle (Supply Chain Management)

Good supplier relations

Price advantage for materials

RESPONSIBILITY OF SC MANAGER:

To buy raw material as an input.

To use raw material in economical way.
To supply all of the materials to the customers.

CHANEL OF DISTRIBUTION:
Nestle pure life is making full efforts to supply its product to ultimate consumers. For this
purpose the company uses the conventional marketing channels of distribution to supply the
product. In this method company supply the product to whole seller who respond it to retailers
who supply to ultimate user.
In this method Nestle feel little consumption of time because retailers cannot directly approach
up to the company.
The company also uses the vertical marketing system in which retailers also take supply from
directly company resources without contact with whole sellers.
Vertical Marketing System
Pur Life Water

Conventional Marketing System

Pure Life Water

Whole Seller

Whole Seller

Retailers

Retailers
.

Consumers

Consumers
SEGMENTATION:

Nestle has divided the whole Pakistan in to three zones:

Northern Zone
Central Zone
Southern Zone

Major Products of Nestle distributed by RS&F

MilkPak
Nestle pure-life
Cerelac
Nescafe
Nido
Everyday

Distribution Plan of Multan

There are 24 distributors and many sub-distributors of Nestle working in Pakistan.
Two Biggest Distributors:

CHAWALA Group (Karachi)

PND Group (Multan)

CHAWALA group
Chawla Group is the biggest distributor of Nestle in Pakistan. But our main purpose is to discuss
the distribution plan of Multan. And PND Group is situated in Multan which is the second
biggest distributor of Nestle in Pakistan.

PND Group
This distributor is second biggest distributor of Nestle in Pakistan. Nestle company does not
provide any incentive or discount in product to distributor but company provide discounts to
customers. The owner of PND Group is Khawaja Salahu-d-din. He is not only the distributor of
Nestle but also the distributor of Uni-Lever Ltd.
Total target given by the company in the last year Dec-2010 to PND was 60Million.
Now commission includes all expenses bear by the Distributor. Nestle Company does not
provide any extra expenses.
PND MULTAN-OVERVIEW

Total Area Radius

Towns

68(Harappa to Sadiqabad)

Total employees

200

Five Districts

Total Shops

225km

(Vehari, M.garh, DG Khan, Layyah, Khanewal)

9832

Nestle Covered Shops

NPL Shops (2009)

3380

NPL Shops (2010)

4110

Target Shops 2010

4300

Sub-Distributors

30

Combine Vans

26

Three Wheelers

23

NPL Exclusive Vans

01

NPL Exclusive Order Booker

01

Combine Sales Men

32

7880

There are three departments that are working in PND group:

1. RS&F distributors handle food and beverages in Multan city.
2. PND (Pak National Distributor) handles all small towns and cities from Harappa to
Sadiqabad.
3. Masood & Co. provides the services to all professional institutions like universities,
banks and hospitals.

RS&F Distribution House

(Priority products achievement for 3rd qtr 2010)

Brand

3rdqtr (2009)

3rd qtr (2010)

Growth

Nido

28.5%

33.7%

18%

Everyday

58.3%

80.6%

38%

Cerelac

21.8%

32.1%

48%

Noodles

5.2%

6.9%

33%

Nescafe

2.5%

3.0%

25%

Yogurt

32.3%

43%

33%

RS&F Distribution House

(Share in region)
RS&F which is working in Multan it has 31% shares in overall region which is cover by

RS&F; 31%

PND-C

PND

M&CO; 9%

PND-C; 32%

M&CO

RS&F

PND; 28%

RS&F Distribution Hierarchy:

In RS&F distribution there is single distribution manager which control the whole distribution,
under the distribution manager two supervisors is working who directly control the performance

of rest of the employee working in the distribution which includes storekeeper, salesmen, order
booker, supply men.
Their hierarchy is given blow:

S D
u t
po
er u
re
v
iK
se
oeoe
rp e
e
r

i
s
r

t
i

bb

o
n
M
n

a
a

g
r

Distribution Manager

Supervisor

Supply Men

Store Keepers

Sales Men\Delivery Men

11

Key accounts & large groceries (o.b)

Key accounts & large groceries (s-m)

Chilled dairy (s-m)

Order Bookers (liquid)

Order Bookers (powder)

Whole Sale (o.b)

RS&F Distribution House:

(Powder and Liquid Share) In RS&F distribution there are 48% liquid and 52% powder
products of nestle company .Which are distributed in Multan region .

Liquid

Powder

Powder; 52%
Liquid; 48%
RS&F Distribution House: (Brand wise Share)
There are 7 products of Nestle which generate the 100% of group sale these include;
MILK PAK

35%

EVERYDAY

22%

CERELAC

15%

NIDO

11%

JUICES

11%

YOGURT

5%

NESCAFE

1%

5% 1%
MILK PAK11%
EVERYDAY

11%
15%
JUICES

YOGURT

CERELAC
35%

NIDO

22%

NESCAFE

Distribution channel:
Path or 'pipeline' through which goods and services flow in one direction (from vendor to the
consumer), and the payments generated by them flow in the opposite direction (from consumer
to the vendor). A distribution channel can be as short as being direct from the vendor to the
consumer or may include several inter-connected (usually independent but mutually dependent)
intermediaries such as wholesalers, distributors, agents, retailers. Each intermediary receives the
item at one pricing point and moves it to the next higher pricing point until it reaches the final
buyer.

Distribution Channel of RS&F:

According to distribution manager of RS&F distribution they have distributed the Multan region
into four categories. Which includes?

Key accounts
o Large groceries

Whole-Sellers

Retailers

Key Accounts:
Key accounts are the permanent buyers of RS&F distribution. They have the highest sale
turnover among all the categories. Targets are given to the key accounts per month. On achieving
these targets different rewards are given to the key accounts. 13 shops are include in key
accounts like food festivals, Shangri-La cuisine etc.
Large Groceries:
Large groceries are the second largest sale provider to RS&F distribution. It includes 20 shops
like NN Bakers, Mehboob Bakers, and Prince Departmental Store etc.
Whole-Sellers:
There are 90 whole seller which also generate a great part of sale of nestle products.
Liquid related product whole sellers are 50 and Powder & Food related product whole sellers are
40
Retailers:
3118 shops are under the retailers and PND also does not provide products on credit to them.
RS&F are providing services Two Distribution Channel from January 2011
Medical Stores

50 shops

Potential Buyers

150 shops

Types of Distribution
There are two types of distribution that PND does.

Handling Distribution

Distribution

Handling Distribution:
PND group provide products to sub-distributors that is called handling distribution.
Distribution:
It is that distribution that provides products directly to customers.

Order booking methods

RS&F distribution in Multan fallow two types of order booking methods

Pre-order booking
Spot selling

Pre-order booking:
In pre- order booking the order booker visit the market one day before the delivery and the very
next day delivery is dispatch. On order booker usually cover 50 shops a day. And the next day a
van make the delivery to those shops. One van covers the one order booker.
Spot Selling:
In spot selling the salesmen take the products with them in the distribution van and provide the
products to the shopkeeper without any preorder mostly nestle pure life and yogurt are sold in
this method.

Transportation Plan
Total Vans & Workers Working in Multan City
For Powder:
Territories

Vans

Delivery Men

Order Booker

For Liquid:
Territories

Vans

Delivery Men

Order Booker

Factories in Pakistan
There are two factories that are making products of Nestle. They are located in Sheikh-uPura (near Lahore) and the second one is in Kabir-Wala (near Multan). These factories provide
products to PND Group.
Sale of PND
Sale of PND group for last month was Rs.60million
Avg. sale / month 2009
Avg. sale 2010

=280 tons
=359 tons

Commission policies of Nestle:

The Nestle provided 5% commission to distributor and it is fix called fixed margin
Credit policies of Nestle:
PND group provide credit to large grocery and key accounts with maximum amount of Rs.100,
000/= with a limit of 7 days.
Provide Refrigerator:
They Provide Refrigerator to customer whose sale is. Rs\= 60,000 per month for liquid.

OBJECTIVES OF NESTLES DISTRIBUTION CENTERS OR WAREHOUSES:

There are three main objectives of Nestls distribution centers.

Meeting the targets

Distribution at Right time
At Right place

Storage at warehouses:
Milk is very perishable item; therefore it is required very effective storage conditions at
warehouses to preserve milk in its real condition.
For this Nestle warehouses contains very suitable temperature atmosphere, temperature should
not increase from 38 degree Celsius in order to keep preserve milk in its fresh condition.
Inventory management at warehouse:
Because of its perishable nature, the inventory management of Nestle milkpak is done on the
FIFO (First in first out) basis.
Capacity of trucks:
Nestle milkpak has trucks which have the following capacity. The data is on the basis of cartons
per truck.
Size of item

No. Of cartons

1 liter

1092

250 ml

1815

1.5 liter

1040

500 ml

1750

COMMUNICATION & ADVERTISING STRATEGY:

Advertisement is a tool to introduce the product in the market. To increase sales and build an
image in the mind of consumer company advertise their product in different ways, as for as
Nestle pure life is concerned company use:
Television
Radio
News Paper
Bill Board
Hoarding etc.
Some time company also makes free sampling, held stalls at different programs like Health
Mela.
Pure Life's communication strategy is weak as they follow emotional black mailing. In
advertising they show emotional feelings to their customers.
Problems of distribution face by Distributor:
Following are the major problems face by nestle in their distribution.

Cost of working capital is increasing have not enough fund to spend on distribution

through which cause a hurdle to expand the distribution ground.

Law and order problem is affecting very badly the distribution process like strikes etc
Infrastructure problems like bad roads, are also affecting the smooth distribution,
Economically instability.
Govt. policies are instable which also affect the distribution policies of nestle.
All expenses are bearded by distributor.

Solution to the problems

The problem could be overcome by increasing the working capital.

Nestle co. should provide some expenses to their distributors.
Law and order situation should be very strong.
Economic conditions should be stable.
Security guards should be provided for each van.

Conclusion:
After studying and discussing the distribution of Nestle. We come to the conclusion that
distribution of PND group is very strong compare to their competitors. They are providing the

products of nestle in each and every place which they have targeted. We can easily find Nestle
from any shop. But we have also found some weakness related to distribution. No extra benefits
are providing to the employees exclude salary thats why they are demotivated. And they do not
provide any credit to retailers or whole sellers. If they provide credit their sale may be increases.