From Bean to Cup: Understanding the Nestle Coffee Supply Chain

The Coffee Supply Chain Participants

Today, a jar of instant coffee can be found in 93 per cent of British homes and increasingly consumers are trying out different types of coffee, such as cappuccino, espresso, mocha and latte. The expanding consumer demand for product choice, quality and value has led to an increase in the coffees being made available to a discerning public. ‘value’ is the way in which the consumer views an organisation’s product in comparison with competitive offerings. So how does coffee get from growing on a tree perhaps 1,000m up a mountainside in Africa, Asia, Central or South America, to a cup of Nescafe in your home, and in millions of homes throughout the world?

This case study explains why Nestlé needs a first class supply chain, with high quality linkages from where the coffee is grown in the field, to the way in which it reaches the consumer. The supply chain is the sequence of activities and processes required to bring a product from its raw state to the finished goods sold to the consumer. For coffee, the chain is often complex, and varies in different countries but typically includes:

Growers – usually working on a very small plot of land of just one or two hectares. Many do some primary processing (drying or hulling) themselves

Intermediaries – 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. There may be as many as five intermediary links in the chain

Processors – individual farmers who have the equipment to process coffee, or a separate processor, or a farmers, co-operative that pools resources to buy the equipment

Government agencies – in some countries the government controls the coffee trade, perhaps by buying the coffee from processors at a fixed price and selling it in auctions for export

Exporters – they buy from co-operatives or auctions and then sell to dealers. Their expert know-ledge of the local area and producers generally enables them to guarantee the quality of the shipment

Q1 Define and compare the different roles and characteristics of a leader and a manager in addressing the huge technological changes happening in the external environment.

Q2 Critically analyses and evaluate the role of a leader and function of a manager using relevant theories and concepts.

Q3 Critically analyse and evaluate the main approaches to operations management and the role that leaders and managers play at functional areas of Nestlé or your chosen organisation.

Q4 Explain the main approaches to operations management and the role that leaders and managers at your chosen organization play.

Q5 Evaluate how leaders and managers at your chosen organisation can help improve the efficiencies of operational management to successfully meet business objectives.

Q6 Explain the importance and value of operations management in achieving the objectives of your organisation