Sustainable Logistics and Supply Chain Management - Nestle Company - Case Study Example

Sustainable Logistics and Supply Chain Management University Student Id Course Date Introduction The purpose of this essay is to explore the sustainability issues in food manufacturing organizations. The effects of the sustainability issues on the supply chain operations in the organizations are analyzed in the essay. There are some issues that food manufacturing organizations have been facing in the industry which affect operations in supply chain management. Nestle is being used in the process of exploring the sustainability issues facing the food manufacturing corporations. The sustainability issues have been affecting the operations of organizations as they determine the relationship between the company and the key shareholders. Companies operating in the food industry are affected by the legal requirements that are aimed at ensure that the companies embrace sustainability in their operations (Dentoni and Peterson, 2011). Organizations need to make sure that they have adopted strategies in their operations to make sure that they consider the interests of the stakeholders. The key stakeholders in the company expect companies in the food manufacturing industry to adopt supply chain management strategies that are sustainable. The commitment of food manufacturing company to ensure quality, tastier and healthier food choices is important in achieving competitive advantages. Sustainability issues facing food manufacturing organizations. The changes in Consumer Demands: in the food manufacturing industry many sustainability issues are faced because of changes in taste and preferences. Currently, the consumer products from companies are mostly required to focus on consumer needs. This is because the demand of consumers always fluctuates from time to time. For instance, the preferences of consumers have changed greatly in the current years since their demand has shifted towards sustainable and also healthier options. In addition, the manufacturing success of a company is usually related closely to their capabilities of introducing various new products. Also, the demand of consumers can still fluctuate cyclically due to the volatility of the economy (Piercy and Lane, 2009). Moreover, the profitability of a given organization in an industry in most cases depends on how the firms are effective in addressing any changes in the consumer demands. Shrinking of the Operating Margins: many firms have been venturing into the industry resulting in high level of competition. As a result of the global competition, the majority of the companies have undergone several challenges in meeting the price points. Therefore, this global competition results into more pressure which forces the manufacturers to make sure that they deliver products which are of high quality and also look for innovative methods so as to reduce the manufacturing costs (Tajima, 2007). Besides, companies are also required to put into consideration the fluctuation factors which include the prices of oils and their impacts on the costs of transportation or even petrochemicals that are used for agrochemical purpose. Regulatory and compliance pressures: The regulatory environment in the entire is becoming dynamic. Consequently, companies are greatly experiencing a lot of challenges in the mitigation of the operational risks as well as the non-conformances of the management. Moreover, due to the creation of the additional pressures on the manufacturers, they tend to depend mostly on the supplier network in responding to the shrinking operating margins (Dentoni and Peterson, 2011). Therefore, all companies are usually required to comply with the international regulations. Globalizing Economy: One of the ways in which the companies can reduce the manufacturing costs is through the leverage of the supplier network in the entire world. However, the reduction of the manufacturing costs is usually accompanied by several risks that are associated with the compliance of the international regulations and also the safety of the products. For instance, the act of the Food Safety Modernization which was established in the year 2011 mainly concentrated on the upstream visibility (Dentoni and Peterson, 2011). However, even though this act will result in important changes in the food processing industry of the United States, the companies are preparing on how to comply with the international regulations. Also, various sub-verticals which include tobacco usually encounter globalization challenges especially the counterfeited products. Data Granularity: As a result of the compliance of the companies to the international regulations becoming stricter, thus the traceability functionalities is still becoming more pertinent as compared to the past (Alvarez, Pilbeam, and Wilding, 2010). Therefore, the companies which produce consumer products usually require a strong data granularity to reduce the operational risks and also respond properly to the need of providing quality products. Effects of the sustainability issues on the supply chain operations The sustainability issues that are facing supply chain operations among food manufacturing organizations like Nestle. For example, data analysis of food supply chains by manufacturers is enhanced by digital technology and globalization. This information is obtained to comprehend the market and the competitive aspects of it. The data helps an organization to gain insights by applying algorithms, statistics tools, optimizations, and simulations. It is categorized into levels; descriptive used to identify opportunities and problems via existing processes, predictive used to discover explanatory (Dentoni and Peterson, 2011). This is usually aimed at predicting the future trends accurately and finally prescriptive that aids determine and evaluate alternative decisions designed to improve business performance. The Nestle Company is actively managing its commitments to the social, economic and also the environmental sustainability which is required by the organization to maintain its growth. Therefore, the company is involving itself in training as well as educating its employee staff and also investing largely on the technology which results in low environmental effect (Dahan et al., 2010). However, so as the Nestle Company to create shared value, it is usually required to comply with the standards of the business practices such as the international codes, business conduct, and also the principles of the corporate business among the others. Moreover, the creation of the shared value simply means the way conducting business as well as establishing a connection between the business and the community as a whole. The sustainability issues affect the production in the food manufacturing organizations. For example, the Nestle Company is mostly focused on making sure that, there is the responsible production of the raw materials by understanding how they are produced as well as the source from which they are obtained. Moreover, both the consumers and the stakeholders are also searching for the necessary information concerning the originality of the ingredients that are used by the company and also the transparency of its supply chain. However, the supply chains of the Nestle Company are always complicated in terms of the geography hence its progress tends to be slow (Alvarez, Pilbeam, and Wilding, 2010). Therefore, the improvement initiatives, as well as the training materials for the company, should be tailored to meet the requirements of the local markets. Also, since all the consumers are always eager to understand the originality of the food products which they consume, in response to this the company has launched a mapping program for its supply chain. The crisis of water in the entire world is becoming a great threat to the food security since the largest portion of the fresh water mostly utilized in the agricultural sector. Moreover, because there is the possibility of a rise in water demand by the year 2030, water scarcity will be greatly experienced; thus the Nestle Company is very much focused on addressing the crisis (Dahan, et al., 2010). So far, the company has already achieved great improvements in the water efficiency. However, looking for new opportunities always needs a lot of creativity as well as a pioneering approach that is used by the company. Also, the Nestle Company works directly with several farmers who usually benefit from the company technologies in making the agricultural processes to utilize little water. The Nestle Company have laid out clear principles to make it comply with the government laws as well as the international regulations. Also, the company usually recognizes and also respects the human rights. For instance, in the year 2013, the Nestle Company established a Rural Development Framework comprised of detailed indicators for the human rights in its supply chain. However, this is quite a challenging area which usually needs a balance between the aspect of transparency and the confidentiality in the process of identifying real issues. Some of the challenges which the company face are; the integration of respect for the human rights in the supply chain and also rolling out the approach of the human rights (Porter and Kramer, 2011). Importantly, the Nestle Company is the first multinational firm which made a public report concerning the assessment of the Human Rights Impact. Approximately 168 million children in different parts of the world are usually forced to provide labor in various working organizations. Therefore, a long-term and also effective solution for the issue of child labor needs the approach of multi-stakeholder which comprises of the industry, Non-Governmental offices, and also the government. Therefore, the ambition of the Nestle Company is to prevent as well as eliminate all the kinds of child labor in its supply chain (Peters, Hofstetter, and Hoffmann, 2011). Also, the company also acts according to the recommendations of the Fair Labor Association which addresses the issue of child labor. The Nestle Company has the responsibility of promoting its products in various ways which foster a balanced consumption of its product. Moreover, the company always makes sure that all its products are advertised in a responsible manner by following detailed policies as well as the principles of advertisement. Also, the company has signed various pledges related to the marketing of foods for the children in more than 50 nations (Dahan, et al., 2010). The Nestle Company always perceive the aspect of consumer privacy as one of the human rights, and therefore the company is much committed to safeguarding the personal data of the consumers and also for the employees. Moreover, the main significant approach which is usually used by the company is the internal privacy policy. Also, the company is making use of technology in protecting personal data for the consumers. Sustainability issues have affected the strategies taken in the process of managing the supplies in the food manufacturing organizations. Market statistics about different transitions of supply and demand of manufactured foods highly helps manufacturers to have insight on how to maintain the supply chain. Maintaining efforts are long-term investments aimed at creating strategic resources of manufacturers. Using the data in sustainable efforts results in strategic gain in maneuvering in a competitive market. Predicting customers turn up has also been made possible by making use of the big data to sustain supply chains (Gold, Hahn, and Seuring, 2013). Continuous application and full implementation of environmental, financial, and social aspects need to be done to increase benefits reaped. Strategic and organizational capabilities of manufacturers change due to aligning decision-making the process to big data hence effecting on sustainability efforts of supply chain management. Appropriate consideration of supply chains helps develop strategies that are aimed at addressing any relevant problems. Analyzing data of the market trends and having well-built knowledge about it has aided in making fruitful supply chains decisions. The aspect of understanding trends of data of supply chain aids address challenges that may affect the supply of food. Some of the challenges are inflating fuel costs, delayed transport or shipments, inefficiencies, accidents and continuously increasing expectations of customers on products to be manufactured hence potentially harming efficiency of supply chains. With the knowledge of the information maintenance of the same is strategized (Crane, et al., 2014). The data is used to widely get solutions of problems associated with inventory, logistics, and procurement. It also helps in making production, design services processes, and intelligence employed in the manufacturing of a certain product. Application of well-analyzed data of market aids evading stock outs and sustains high fill frequencies which enable more accurate sales projection. Recommendations The food manufacturing organizations need to manage risks in the supply chain that affect operations of companies. In this case, they are events of small probability but can occur abruptly hence causing negative effects to the entire system of supply. Some of this potential risks related to supply chain are cash, information, and materials risks. They need to understand sources of risks for chains of supply which are based on; process, control, supply, demand and environmental. Environmental risks are external uncertainties as a result of natural, social, and political matters. On the same case terrorist attacks, accidents, and labor strikes can highly disrupt supply chains. Disruptions affect operations; however, much time is taken to restore affected system if precautions and earlier preparations are made. For sustainability of supply chains to be possible risks need to be predicted and averted (Peters, Hofstetter and Hoffmann, 2011). The management of risks in supply chain management is a significant tool which can be effectively used to get solutions related to supply chain and operational risks. Manufacturers need to apply big data in risk and management of operations in the manufacturing cycle. Use of traditional enterprise resource planning and internet systems has helped in solving out some risks and reducing transaction time, redundancy, and information inaccuracy. They need to be aware that big data not only predict and averts risks but also builds innovative resources that provide sustainability and strategic advantage. The food manufacturing firm needs to ensure that they are innovative in supply chain operations. Innovation across the wholes supply chain promotes long-term sustainability for survival, profit, and powerful fit in that changing environment. Manufacturing of food needs the big data analysis that aids facilitate sustainability as a result of resource innovation. Sustainability entails meeting firm’s financial, social, and environmental needs. Firms need to constantly innovate their resources so as to have a better fit of the business environment and strategic advantage. Also, knowledge management encompasses putting together, assimilating, and applying knowledge of previous experience for competitive advantage (Kramer and Porter, 2011). This aspect also influences innovations in transporting, material use, sourcing, manufacturing, and design of the product finally there is need to explore innovations of big data in the supply chain to create sustainability knowledge base. Conclusion Sustainability in the supply chain management has great significance in the process of managing operations in the food manufacturing organizations. Manufacturers of food need to integrate big data and sustainability to their manufacturing and to supply aspects so as to avail the firm and strategic benefits. There is also a great need to keep track of the large volume of date so as to gain repeated insights into the environmental, social, and economic sustainability of supply chain. Simulation of this data highly aids in predicting natural disasters that may affect supply chains such as tsunami and seismic hazards some data like deforestation, melting glaciers and extreme weather via terrestrial monitoring gadget, weather radar, and satellite images are used to assign specific causality and study whole world climate. Another data that is very useful to get an insight of supply chain is health and welfare ones. They help in identifying areas that are highly affected certain disease hence getting to know how to address the supply of required commodities. However, sustainability of supply chain is made possible by comprehending potential disruption of the operations of the food manufacturing organizations. References Alvarez, G., Pilbeam, C. and Wilding, R., 2010. Nestlé Nespresso AAA sustainable quality program: an investigation into the governance dynamics in a multi-stakeholder supply chain network. Supply Chain Management: An International Journal, 15(2), pp.165-182. Crane, A., Palazzo, G., Spence, L.J. and Matten, D., 2014. Contesting the value of “creating shared value”. California management review, 56(2), pp.130-153. Dahan, N.M., Doh, J.P., Oetzel, J. and Yaziji, M., 2010. Corporate-NGO collaboration: Co-creating new business models for developing markets. Long range planning, 43(2), pp.326-342. Dentoni, D. and Peterson, H.C., 2011. Multi-stakeholder sustainability alliances in agri-food chains: A framework for multi-disciplinary research. International Food and Agribusiness Management Review, 14(5), pp.83-108. 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