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How risk facing Nestle Company who is

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How
does the company create value/minimise risks? E.g. supply chain, production,
human capital, marketing, logistic and etc.

Business
risks are significant to the performance of company in terms of financial,
management and so on. As such, climate risk can be considered as one of the
risk for food and beverage companies such as Nestle. Environmental concern is
something important to Nestle as a food and beverage company in which the
surrounding of environment affecting the quality of products. Consumers are
currently concerning not only the tastier and healthier of the products but
they also care about the products towards environment. In other words, the
environment has become part of Nestle and it create some value to the company.

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Climate
change is threatening the food industry in European country because the
unprecedented hazard concerning with the supply of agricultural materials that
necessary for food processing. The emission of carbon dioxide caused the slow
of failed growing in agricultural raw materials. This kind of climate risk facing Nestle Company who
is one of the biggest food and beverage manufacturer in the world. Nevertheless,
they proposed some workable method to solve this problem in order to reduce
their losses. They opt the alternative method in manufacturing process through
the enrichment of energy efficient and apply the cleaner fuels as to reduce the
emission of greenhouse gases. For instance, Nestle located in France replaced
the heavy fuel boilers with the three new boilers made by wood which came from
the sustainably managed forests.

Besides,
they also using the natural refrigerants
rather than Hydrofluorocarbon (HFC) which contains the elements of global
warming. In addition, the elimination of food waste is another method in
preserving the mother earth. Nestle implemented the food waste reduction
throughout the whole value chain from supplier, manufacturing until retailer. Nestle
has set their ultimate goal that tend to be achieve by any food and beverage
company which is becoming the zero waste to landfill by 2020. They believed
that reduction of food waste not only beneficial to greenhouse emission but
also remain the quality of final output. The waste from manufacturing process
can be reprocessed as intermediary products if the quality are fulfilled with
the minimum level. Meanwhile, the waste can also reused for animal provender or
land fodder.

An action
of zero deforestation and food waste reduction has been done by Nestle with the
upstream supply chain which associated with the internal and external supplier
in Europe in order to avoid the food losses and enhance efficiency. As such,
Nestle implement a supply chain
programme that includes thousands of supplier from all products categories
since many years ago. The objective of this programme is to ensure the
sustainability of supply in terms of raw materials. In other words, it is
created to identify the risk of supply. For example, Nestle always get in touch
with the supplier such as farmers to ensure that the supply of dairy materials
are able being supplied to their factories from time to time.

As
consumers are demand to know what ingredients is in the food, how it being
produced, where do it comes from and therefore Nestle currently carry out responsible sourcing in their supply
chain in order to maintain the quality of materials used for production. The compliance
of responsible sourcing is to enable the supply chain being transparency
towards every party includes internal and external people. The function of this
responsible sourcing is whereby Nestle make sure that the raw materials which
focuses on twelve primary classification are able to trace back to origin place
and final destination. This is because these raw materials is the determinants
of Nestle’s business. The main materials in producing Nestle’s products are
cocoa, coffee beans, cereals, hazelnuts, seafood, meats, poultry, eggs, palm
oil, sugar, vanilla and so on (Nestle, 2016).

The other
method to minimize the potential risks in the future is maintain the quality of
raw materials by auditing supplier. This sourcing of raw materials is
significant for the raw materials such as coffee, cocoa and dairy because they
are the main stuff in making products. The auditing
process is focus on the implementation of sourcing guidelines or supplier
code onto suppliers whereby they are able to maintain the minimum condition of
quality. They will not terminate the supplier who failed to follow the
guidelines but assist them to achieve better performance. Not only that, all
the offices and factories of Nestle company are being certified with
international certification such as ISO 9000 AND ISO 14000 as an additional
verification of quality accessing. This certification awards put an effort in
enhancing the branding and customer loyalty towards Nestle’ products (Simon, 2015). This supplier code
required the raw materials consistent with the 12 primary categories. In
addition, Nestle will screening every new suppliers who build business
relationship with them and require the suppliers to sign the code as the main
condition for vendor approval process. The audit process is executed by
verification companies who applying Sedex Members Ethical Trade Audit (SMETA)
or 4 pillars guideline. This audit will also embody optative practice in
business ethics, environmental concern, labour standards, health and safety.
Throughout the vendor approval process, suppliers are required to set up
principled audit as to demonstrate that they are obey to the international
standards and regulations, as well as the minimum requirements that proposed in
Supplier Code of Nestle. This Supplier Code happen across with all categories
in terms of globally. Shortly, auditing programme is create to instruct the
suppliers in complying Supplier Code of Nestle by recognizing which areas the
suppliers are not  yet comply.

A healthy workplace is essential in
improving the quality of life and constituting a brighter future. The healthy
can be mentioned in terms of health and safety of employees. Thus, the
strategic precedence of safety and health roadmap of Nestle are the passion for
nutrition, and health. As such, Nestle developed option for examining the
health risks among the workers and make evaluation on implemented strategy. Subsequently,
Nestle set their goal in providing health education, and early screening programmes
that close related to healthier lifestyle options. The health education will
offer the knowledge about wellness initiatives and encourage them to take care
of their own lifestyle. Nestle advocate a healthy workplace is to encourage
their workers gain more knowledge about healthy lifestyle and guiding them to
improve their own well-being. Hence, health campaigns are held to promote the
advantage of healthier lifestyle. Nestle also exploring a medium that enable
them to report the progress of future which heading to their goal.

Besides
that, Nestle tend to create an organization culture that emphasize on safety
and health (health and safety management).
This culture is aim to reach the objective of zero-related injuries within
their company. This culture is listed in Safety and Health Roadmap that
including the main content such as everyone engaged in the programme, key risks
are manageable, maintain their passion for wellness and nutrition, and
effective management process. This roadmap will leading Nestle in achieving
their objective effectively. In addition, safety roadmap assist the company to
concentrate on existing accomplishment, leverage the best practices and develop
future goals.

Nestle
must create some value in order to gain competitive advantage and provide good
return to shareholders. Meanwhile, these value can be created if the
organization able to explore goods and services that meet consumers’ needs and
wants in developed and developing nations, apply resources efficiently
throughout the whole value chain, and enhance the social and economic
development. By the way, Nestle is emphasize on creating value through three
main areas, typically nutrition, water,
and rural area development. Nestle produces nutritious products that
provide health advantages to consumers and make innovative products that are
more affordable. Next, Nestle using water resources efficiently in
manufacturing process as a way to protect scarce water resources which will
also benefit to other parties in the supply chain. Furthermore, Nestle support
development in agricultural areas as to ensure the raw materials used in
manufacturing process are grown and securing the quality of inputs (Nestle, 2017).

In the
nutshell, creating value can be defined as increase the value for stakeholders.
This value is important in protecting the reputation of company and lighten the
business risks. In other words, value creation is significant towards the long
term achievement and future competitiveness. Hence, the action taken by Nestle
in creating value are through the supply chain, human capital and product
development.

 

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