Value Chain for Nestle
Value Chain for Nestle
1. Inbound logistics, operations and Outbound logistics:
Nestle company purchases the Coffee directly from the individual farmers or from some government agencies since in some countries; the government controls the coffee trade. Farmers usually pick up the cherries by hands, inside each cherry there are two coffee beans. Once harvested, the beans must be separated from the skin, pulp and parchment that surround them. Then the beans will be transported to the factories for further processing and operations. After obtaining the Coffee beans in factories, equipment functions to convert ‘cherries’ into green coffee beans.
The beans have to be dried, usually in the sun but sometimes by using mechanical dryers. Beans are sorted by hands, sieves and machines to remove stones and to remove the damaged or broken beans. After that, by using special machines the coffee beans are roasted and crushed into powder and that is the end of the coffee production process. The coffee is filled in jars and distributed to the market, traders, coffee shops and retailers.
2. Marketing and sales:
Coffee prices are determined day-today by the relationship between the amount of coffee available to be sold (supply) and the amount which people want to buy (demand). If there is more coffee available than people want to buy at current prices, the price will fall, and vice versa.
Nestle company followed “think globally, act locally” marketing strategy. Nescafe’s marketing campaign is global in the sense that the company uses the same symbols worldwide, such as the renowned coffee mug and Nescafe logo. Television advertising and promotions for the customers.
Individual farmers and government agencies are usually the suppliers of the Coffee beans. Intermediaries may be involved in many aspects of the supply chain. They may buy coffee at any stage between coffee cherries and green beans, they may do some of the primary processing, or they may collect together sufficient quantities of coffee from many individual farmers to transport or sell to a processor, another intermediary, or to a dealer. Or Nestle Company can buy the coffee beans directly from the suppliers which is the Firm Value chain. Markets, supermarkets, traders, coffee shops and retailers are the Channel Value chain and finally the product will be delivered to the customers and consumers the Buyer Value chain.
University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 22 November 2016
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