ASSIGNMENT 1 (Sem.

I - 18/19)

BKF4812 Process Engineering Management

NAME : NUR ATIQAHFARANI BINTI MOHAMED AZAMAN

ID : KA17269

NESTLE

a) Transformation of operation management for a digital world in line with the Industrial
Revolution 4.0 and the Internet of Things (IoT).

Nestlé is the world‟s leading nutrition, health and wellness company. Nestlé S.A. is a Swiss
multinational nutritional and health-related consumer goods company headquartered in Vevey,
Switzerland. It is the largest food company in the world measured by revenues. Nestlé‟s products
include baby food, bottled water, breakfast cereals, coffee, chocolates, drinks, healthcare nutrition,
sports nutrition, confectionery, culinary and frozen food, dairy products, ice cream, pet foods and
snacks. 29 of Nestlé‟s brands have annual sales of over 1 billion Swiss francs (about $ 1.1 billion),
including Nespresso, Nescafé, KitKat, Smarties, Nesquik, Stouffer‟s, Vittel and Maggi. Nestlé has
around 450 factories, operates in 86 countries, and employs around 328,000 people. It is one of the
main shareholders of L‟Oreal, the world‟s largest cosmetics company.

Industry 4.0 or Industrial Internet of Things (IIoT) is where technologies replaces man power.
Company rely on machines instead of human. For Nestle, the factory in Schwerin packs more than
420,000 coffee pods an hour with the present of technologies. By implementing industry 4.0,
everyone is responsible for the work. In conventional culture, only the quality control team is
responsible for the product quality produced but in industry 4.0, every department must work around
the clock to ensure good quality product is produced for consumer. Industry 4.0 can increase customer
satisfaction and high performance teamwork but if the management have lack of commitment it do
affect the company. Nestle also apply Kaizen which means continuous improvement. If customer is
dissatisfied with the product produce, they will find a solution to fix the problem.

The operations strategy of Nestle is highly contributed by the application of nutrition, health and
wellness strategy. The particular strategy is designed to support the people desiring to have a healthy
lifestyle. The operations are designed by the practical contributions from innovation, which is
continuously driven by the company through the industry-leading research and development. The
entire scenario supports the constant transformation of the food and beverage portfolio of the
enterprise. Apart from that, the research and development activities of Nestle are continuously
focusing on exploring the roles of nutritional therapies for ensuring the improvement to the health and
lifestyle of people (Kanapathy et al. 2016). With the help of these activities, the company is increasing
focusing on creating awareness among the people from different communities for taking more care for
their health and wellbeing aspects. Hence, the operations strategy of Nestle is largely based on
striving to deliver a positive impact on the numerous societies across the world regarding their
activities. In order to achieve the specific aim, Nestle persistently shares various insights regarding the
global nutrition, health and wellness challenges, builds superior partnerships with other major
companies, and engages with the policymakers, key leaders, and stakeholders from the particular
geographical location of company operations.

On the other hand, constant evolution to the operations strategy of Nestle can be witnessed due to
the fundamental influence of the government policies and interventions. Due to such scenario, the
significant modifications to the commitments of the company are observed. For an example, the
company has successfully reduced the quantity of salt, sugar, and saturated fats from its core products
in a mean to remove the portion of trans-fat while meeting the critical preference of the customers
(Kusnierczak 2014). The same scenario applies in the labelling and printing GDAs (Guideline Daily
Amounts) in the product packaging and development stage of Nestle. The identified evolutions
contribute to the betterment of the company operations and making it much more affordable and
transparent towards the global customers.
 b) Digitization of supply chain management

The Supply Chain division ensures that products are planned, produced and delivered to retail
shelves in full, on time, in fresh condition, and without any damage to the packaging. This is achieved
by working with many functions within the Company in a networked and collaborative manner.
Demand Planners work closely with Marketing and Sales to determine market demand. Supply
Planners collaborate with Production and Purchasing to ascertain raw materials availability and
production volumes. Warehouse Operations manages the inventory, and Customer Service and
Distribution ensures that full delivery is made to customers on time.

The professionals who manage the supply chain come from many fields, such as logistics,
business management, statistics and manufacturing. These skill sets are important and essential to
ensuring the supply of the right products to customers and consumers. The top deliverable of the
Supply Chain division is timely availability and speed to market, and a career in this function offers
candidates the opportunity to access an excellent network, as well as challenges, achievements and
recognition.

The supply chain aspect of Nestle is highly driven to establish the great platform supporting
the involvement of collaborative supply chain professionals. The company achieves the original
competitive edge through the effective contributions from the supply chain of the company. With the
combination of the Demand and Supply Planning, Physical Logistics, Planning and Procurement, and
Customer Services, the management and control mechanism is developed by the company in such a
manner to facilitate the development of superior communication with the customers. At the same
time, the supply chain management strategies adopted by the company helps it to offer the products
according to the market needs of the consumers in the right possible times.

More clearly, the Supply Chain Management of Nestle is the combination of art and science
assisting the company to achieve its corporate objectives in superiorly. With the help of the process,
the company identifies the particular need of raw components for producing the products or services
(Zhang and Preechawipat 2012). Apart from that, the company recognizes the manufacturers for
delivering the goods manufactured by the corporation and subsequently offered to the customers. The
key supply chain management activities of Nestle is developed by the useful contributions of the
important parties like suppliers, manufacturers, distributors, retailers, consumers, and producers.

c) Quality management system

Quality Management System is the platform used globally to guarantee food safety, compliance
with quality standards and to create value for consumers. The internal Quality Management System is
audited and verified by independent certification bodies to prove conformity to internal standards,
ISO norms, laws and regulatory requirements.

 QUALITY

Quality is the core competitive priority of nestle. They take quality in two ways.

 High performance design

 Consistent quality
 Availability of its products
 Customer satisfaction
 Continuous improvement
 Quality control
 Employee involvement

 IMPROVING QUALITY THROUGH TQM

Programs for employee involvement and continuous improvement are aimed at improving quality in
general sense. However, TQM often focuses on benchmarking, and product and process design.

 QUALITY CERTIFICATION
Nestle has its own quality standard certification which has much higher standards as compared to
ISO, called NestleQuality Standards. Nestle Kabirwala is approved by Nestle Quality Standards. In
which quality is maintained right from the purchase of raw
material to the distribution of the products to the ultimate consumers.

 Quality of Materials
 Quality of Process
 Distribution
 Continuous improvement
 Customer satisfaction
 Employee involvement

d) Potential issues and challenges in the implementation of companywide digitization.

Potential issues and challenges are Employee Pushback, Lack of Expertise to Lead Digitization
Initiatives, Organizational Structure, Lack of Overall Digitization Strategy and Limited Budget.
Findings concluded that the challenges were very seldom about the availability of technology. Only a
small number reported that current tools and technology were inadequate. The most common issues
faced were due to internal factor.
SIEMENS

a) Transformation of operation management for a digital world in line with the Industrial
Revolution 4.0 and the Internet of Things (IoT).

Siemens PLM Software now offers a holistic automation solution covering all major Industry 4.0
requirements: the Digital Enterprise Software Suite. Manufacturers are better equipped to initiate or
respond to disruptive innovation trends when their processes are fully digitalized. Digitalization
transforms the innovation process into a proactive agent in driving new business opportunities,
enabling manufacturers to weave a “digital thread” through three distinct phases:

1. Ideation, the traditional area of product concept and design

2. Realization, including production planning, production engineering, factory automation and
production execution systems
3. Utilization, the service and support of products in the field and the feedback loop from these
products to the other domains

Siemens PLM Software solutions smoothly connect major parts of the product and production
lifecycle. Powerful product lifecycle management (PLM) software enables the development and
optimization of new products on an entirely virtual basis. In the real manufacturing world, the concept
of Totally Integrated Automation (TIA) ensures the efficient interoperability of all automation
components.

To digitally transform the realization phase, Siemens PLM Software provides a complete
portfolio of solutions for manufacturing operations management (MOM), bridging PLM and
automation domains and enabling customers to implement strategies for the complete digitalization
and integration of their product and production lifecycles.

A comprehensive customer survey on digitalization in Germany.

Survey participants comprised a representative sample of nearly 300 decision-makers from companies
of all sizes and in all industries across Germany. For the first time, participants were asked who was
responsible for digital strategy at their company, what challenges the company was facing in the area
of digitalization and what requirements they anticipated for the future.

Digitalization is primarily viewed as a vehicle for improving processes and efficiency. Survey
participants are also anticipating new business models.
Participants from large companies as well as those from small and medium-sized companies have
similar views: all saw digitalization primarily as entailing data management, the transition from
analog to digital processes and the creation of networks. They expected these developments to
result, above all, in enhanced quality, service and resource efficiency. Every second company was
already leveraging digitalization to develop new business models.

The primary barriers to the further implementation of digitalization are a lack of standardization, a
lack of cost-benefit analyses and concerns about data security.
Nearly 50% of Siemens‟ customers believe there are too few technical standards for integrating and
networking existing and new systems. In addition, a lack of cost-benefit analyses as well as
uncertainties relating to data security issues were among the main barriers to making greater use of
digital technologies and processes. For nearly half of those surveyed, the most important point to be
addressed when driving digitalization was employee involvement and training or continuing
education.

Responsibility for digitalization is usually centrally anchored.

For more than half of the customers surveyed, the responsibility for decisions relating to digital
strategy was centralized. Responsibility did not necessarily lie with the CIO or CTO. Digitalization
was usually a “tone-from-the-top” topic, with senior management or the IT department usually being
responsible for digitalization issues.

b) Digitization of supply chain management

At Supply Chain Management, Siemen aim is to add value for Siemens and its customers.
Actions are consistently based on striving for innovation, productivity, quality and availability.
Together with suppliers, Siemen rely on a competitive and transparent supply chain. In doing so
Siemen act with foresight and responsibility. ”Code of Conduct” is thus based on the principles of the
‟Global Compact‟ of the United Nations and the International Labor Organization. Digital
transformation enables Siemen to use innovative IT applications and tools to make collaboration with
suppliers even faster, simpler and more efficient. These applications cover both the strategic
procurement process (Source-to-Contract) and the entire operational process from placement of the
purchase order to invoice receipt (Purchase-to-Pay).

c) Quality management system

Product quality governs the success of manufacturing companies. Efficient quality management
leads to a sustainable reduction in costs and facilitates the development of first class quality products
with a high degree of customer satisfaction. Siemens Quality Management Software (QMS) solution
enables companies to manage the complexities of planning, control and monitoring of processes and
corporate quality – enabling them to meet the highest quality requirements and ensuring continuous
improvement. Siemens Quality Management solution provides optimal support to meet international
guidelines and standards like ISO 9001, ISO/TS 16949 (Automotive), IAQG 9100 (Aerospace), IRIS
(Railway), FDA 21 CRF Part11 (Food and Drug), GMP/GLP (laboratories, process industries).

Benefits of Quality Management:

• Continuous improvement and innovation
• Improved operational excellence and customer satisfaction
• Prevention of reoccurring defects
• Preventive action instead of reaction
• Reduction of process, quality, defect, and scrap or re-work costs

The Siemens QMS quality management system enables organizations to safeguard compliance,
optimize quality, reduce defect and rework costs and achieve operational excellence by increasing
process stability. The integrated process capabilities (control charts, statistics, quality gates) can detect
production errors to avoid further processing and shipment of nonconforming material.

QMS Professional brings higher integration between processes, global user groups and
manufacturers to suppliers. QMS Professional is a process-oriented, modular system that supports the
closed-loop quality product lifecycle, managing complexities for planning, control and monitoring of
processes and corporate quality. It is a multi-lingual, cross-industry computer-aided quality (CAQ)
solution that supports the ability to fulfill international quality standards including DIN EN ISO 9000,
ITAF 16949:2016, Q101 and VDA 6.1 and others.

d) Potential issues and challenges in the implementation of companywide digitization.

For Siemens customers in Germany, employee integration and training topped the digitalization
agenda: 46% of all respondents cited this as the crucial aspect for driving implementation. Nearly as
many respondents considered economic feasibility studies, and thus increased cost transparency, to be
an important driver of digitalization. Improving data security was often cited as a relevant step toward
implementation. Recent discussions about this issue had sensitized many companies to the need to
take action. 38% of all participants felt that digitalization must be anchored in companies as a process
comprising all phases from analysis and planning to controlling and verifying. Every third participant
was convinced that digitalization must be more firmly embedded in corporate strategy as an essential
condition for its implementation.

In many cases, a lack of economic feasibility studies and a lack of clarity regarding the benefits of
digitalization initiatives are dampening the willingness to make investments. In addition, many
respondents feared that the cost of implementing and operating digitalization solutions would be high
and believed that their own workforces had too little digitalization-related knowhow. Besides these
internal factors within companies, the survey also asked about external barriers. Here, the lack of
technical standards played a particularly strong role: 46% of the respondents saw this deficiency as
one of the primary barriers to relying more heavily on digital technologies. Data security was the
second major issue: for four out of ten respondents, this was the reason for not seeking progress more
aggressively in this area. Every third respondent indicated that they didn‟t rely on digital technologies
more because there was no demand for it from customers or suppliers. In addition, nearly one-third
also pointed out that the discussions within the relevant industry associations were just beginning.
Overall, only one-third of the companies surveyed had already achieved far-reaching implementation
of their digitalization plans. Most assessed the progress of their implementation as significantly lower;
nearly half saw themselves as just beginning.
SONY

a) Transformation of operation management for a digital world in line with the Industrial
Revolution 4.0 and the Internet of Things (IoT).

Sony Corporation‟s operations in the consumer electronics, gaming, entertainment and

financial services markets are guided through proactive productivity approaches in the 10
strategic decision areas of operations management (OM). These 10 strategic decisions pertain to
the main areas of concern to operations managers, with the aim of ensuring a streamlined
business. Sony‟s operations management is based on time-tested approaches that support high
efficiency in these main business areas. As a major player in the global market, the company must
maintain high productivity and operational performance. Considering the dynamism of markets
worldwide, Sony must maintain flexible operations management practices in these strategic
decision areas.

1. Design of Goods and Services. Sony considers how its products are designed for maximum
business benefit. In this strategic decision area, operations managers aim to minimize cost,
maximize quality, support operational sustainability, and optimize human resource utilization.
Sony addresses these considerations through continuous improvement methods. These methods
are intended to optimize all operations in terms of productivity and process efficiency. In addition,
Sony‟s generic strategy of differentiation is applied through operations management approaches
that emphasize optimal profitability alongside sustainability principles in product design. For
example, the company‟s iteration of PlayStation designs aims to capitalize on the production
efficiency and market success of previous designs. In this regard, Sony adequately addresses the
objectives in this strategic decision area of operations management.

2. Process and Capacity Design. Adequacy of production processes, related standards, and
resource allocation is the objective of this strategic decision of operations management. Sony
Corporation addresses this objective through sustainability, which also helps streamline the
business to satisfy market concerns regarding the environmental impact of business operations.
For example, the sustainability of the company‟s production processes helps minimize operational
costs based on the minimization of resource requirements and production waste. In addition,
Sony‟s operations managers apply strategic decisions to maximize capacity utilization in
production facilities, thereby leading to the maximization of productivity per facility.

3. Location Strategy. At Sony, operations management is concerned with distances from

customers, suppliers and resources. The objective in this strategic decision area is to optimize
such distances to minimize operational costs and maximize revenues. In this regard, Sony‟s
marketing mix involves stores in high-traffic areas, such as malls and urban centers. This part of
the marketing mix helps optimize the productivity of the company‟s distribution and sales
operations. Also, Sony‟s e-commerce websites add to the effectiveness of the location strategy.
For example, these websites inform customers about goods and services available at Sony Stores.
Moreover, the company‟s operations managers keep facilities productive through optimal location
relative to the labor market and suppliers. Thus, for this strategic decision area of operations
management, Sony minimizes overall average distances among facilities, resources and markets
to optimize business operations.

4. Layout Design and Strategy. The objective in this strategic decision area is to optimize the
flow of resources, such as human resources, materials and information. For this purpose, Sony
Corporation‟s operations managers monitor requirements for operational capacity, resources, and
inventory. Highly productive flow of resources is achieved through an annual review of layout
designs and strategies. For example, Sony‟s operations management employs expert opinion and
employee feedback to make decisions on current productivity issues linked to layout designs and
strategies.

b) Digitization of supply chain management

In this strategic decision area, operations managers‟ objective is to maintain adequate supply
to support current operations and business growth, especially in high-growth developing
markets. The company fulfil this objective through automation and inclusive support for
suppliers. Automation maximizes the productivity of Sony‟s supply chain management
activities. On the other hand, inclusive support for suppliers ensures suppliers‟ growth and
 operational adequacy along with the company‟s growth. For example, as suppliers grow with
strategic support from Sony, their productive capacity continues to match the company‟s
growing supply needs. These efforts show that Sony reaches out beyond its organization to
fulfil the objectives in this strategic decision area of operations management.

c) Quality management system

Sony has configured its quality management system by defining quality management
mechanisms across all processes, from product planning, development, design and manufacturing
to sales and customer service. This has included defining the roles, responsibilities and authority
of those responsible for product and customer service quality and establishing guidelines.

Based on this quality management system, Sony is implementing measures on an ongoing basis to
improve the quality of its products and services. Examples of such measures are given below. Sony:

 Has appointed the Corporate Executive in charge of Product Quality and has tasked this
person with coordinating efforts to improve product and customer service quality and ensure
timely responses to problems;
 Has appointed Quality Officers within each business unit and has tasked them with promoting
activities to improve product quality and spearheading initiatives to enhance the quality of
products and services in specific business areas under the direction and supervision of the
Corporate Executive in charge of Product Quality and the head of the relevant business unit;
 Has appointed CS Officers to coordinate customer service departments in markets around the
world where Sony products are sold and has tasked them with spearheading a network of
global-level initiatives under the supervision of the Corporate Executive in charge of Product
Quality and the individual in charge of the relevant regional headquarters;
 Has created a framework for promoting business unit- and region-specific initiatives to ensure
Sony's products comply with pertinent laws and regulations;
 Has obtained certification under ISO 9001 for all sites manufacturing electronics products;
 Has formulated mid-term plan and fiscal year targets for the quality of and customer service
related to Sony products, as well as key quality-related indicators for business plans, with the
aim of fulfilling the Sony Pledge of Quality. Business units and regional headquarters
subsequently devised their own fiscal year quality and customer service targets and business
plans, in line with which they continue to promote quality improvement initiatives;
 Has held meetings of top managers of the electronics business to deliberate and decide on key
strategies related to product quality and customer service;
 Has held regular meetings of Quality Officers from business units to evaluate the progress of
quality-oriented business plans, promote initiatives aimed at achieving targets, and debate
specific activities and responses to quality-related issues and common challenges;
 Has held meetings of business unit Quality Officers and regional CS Officers to evaluate the
progress of quality and customer service business plans and promote initiatives aimed at
achieving targets, and to share information on customer service and product quality activities
and common challenges, thereby contributing to global efforts to improve product quality and
customer service;
 Has formulated and administers Sony quality standards applicable to Sony's electronics
products and related customer services, which focus on such criteria as product safety and
performance, labeling and customer services. These standards are updated continuously to
reflect technological advances, changes in applicable legal and regulatory requirements, and
social changes, aiming to ensure Sony's ability to deliver quality and services that exceed the
expectations of customers; and
 Has strengthened rules worldwide to ensure prompt reporting to the Corporate Executive in
charge of Product Quality, when Sony receives information about an incident involving a
Sony product that affects customer safety or has the potential to do so. Based on the reports
received, the Corporate Executive in charge of Product Quality provides the necessary follow-
up and instructs the relevant divisions to investigate the incidents and respond appropriately
 to the customer. Under a similar system, Sony has been addressing software security issues
found in products and managing potential software security issues.

d) Potential issues and challenges in the implementation of companywide digitization.

Digital technologies fundamentally change how companies go to market, what they go to market
with, and how they organise themselves internally. For digital technologies to deliver high impact, the
whole organistion needs to be taken along, and needs to buy into this new way of thinking. Ashok
Vaswani (CEO Barclays UK) commented recently at A.T. Kearney‟s Digital Business Forum in
London, “Everything we do is digital!”

Until this digital mindset is reflected within an organisation, companies won‟t see the full impact
of their digital investments. Barclays was the first bank to launch a banking app. Acceptance was very
low at the start, and only took off after Barclays trained their staff, and explained how the banking app
would deliver value to their customers. Once branch staff could explain how the app works, and saw
value in it, did it become the success it is today. Over and over, reasons why corporations don‟t see
their digital projects delivering high business impact.

It‟s usually because:

i) A lack of understanding that „digital‟ is not just another channel.

ii) Vaguely formulated or unrealistic expectations.

iii) Not putting the customer at the centre of the initiative.

iv) Running the initiative as a standalone project.

v) Not investing time and effort to prepare the whole organisation for this new way of thinking.