May 22, 2017, updated May 2017
India is the world’s largest producer of milk, spices, pulses and tea, and its local agriculture is protected through high import barriers. Aware of the need and opportunity to source more raw materials locally, Nestlé India established a dedicated supplier development department in 2005. The team’s objectives were to achieve cost savings by relying less on imports, overcoming quality and food safety issues, and creating a wider, more flexible supply base.
After four years, the team has managed to:
- secure local sources of 12 previously imported raw materials;
- avoid 10 single supplier situations;
- develop over 70 new Indian suppliers able to meet Nestlé’s specifications;
- save CHF 5 million;
- provide technical assistance to suppliers to close safety and quality gaps;
- speed up the building of infrastructure and access to better technology for suppliers.
One successful example of supplier development in India is with suppliers of corn flakes for infant cereals, which need to have a dry-mix quality within specific microbiological limits because they do not undergo any additional processing or heat treatment. The only supplier in Asia approved by Nestlé was a single Indian supplier that had experienced occasional quality issues. The search for alternative suppliers began in 2005, and after an exhaustive series of audits, assessments and laboratory tests, our new supplier, KCL, began commercial production of corn flakes for Nestlé in November 2008.
Supplier development has also given suppliers new opportunities for expanding their reach, including exports to other Nestlé markets. For example, local chicory supplies from Uttar Pradesh are now sent in large quantities to Nestlé South Africa, while exports to Nestlé Europe and Korea are also being explored. By the end of 2009, this highly successful initiative had also been replicated in Bangladesh, Brazil, Indonesia, Iran, Malaysia, Russia and South Africa.
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