About Nestle

Nestle international

Ever since Nestlé was established, we have been committed to nurturing people worldwide. Today, as the world's leading Food and Beverages Company, and leaders in health and wellness, we try to cater to all your family's nutritional needs, no matter where in the world you live.

Our story begins in 1867, when Henri Nestlé developed a baby formula that saved a child's life and marked the beginning of Nestlé's decades-old commitment to nutrition.In the 140 years since then, we have expanded around the world and developed a range of products designed to suit every taste, need and cultural preference. Our distinctive seal is recognised everywhere as a guarantee of quality and healthfulness.Nutrition, quality and convenience remain the keystones of our products and even as we confront the new century's challenges, we feel it is our duty to adapt to the changing needs of our consumers.Our responsibility does not simply lie in perfecting the products we develop at our R&D centres spanning four continents, but the role our products play in making lives better - both for our consumers and for communities in the countries we serve. Thus, along with old favorites such as KITKAT chocolates and NESCAFÉ, the world's most popular coffee, we keep introducing new, exciting options worldwide.Understanding that people in every country have different tastes and needs, we have developed a range of food and lifestyle products. In India consumers enjoy healthy and convenient MAGGI Noodles Atta Noodles, in Pakistan you can find NESTLÉ Raita and in China, flavoured water is strengthened with Prebio1; dietary fibre and traditional Chinese ingredients such as Aloe Vera and Chrysanthemum.Our popularity has come not just from acquisition and corporate expansion, but also from a care for the ever-evolving needs of customers at every point in their lives.

Nestle Pakistan

Nestlé has been serving Pakistani consumers since 1988, when our parent company, the Switzerland-based Nestlé SA, first acquired a share in Milkpack Ltd.Today we are fully integrated in Pakistani life, and are recognized as producers of safe, nutritious and tasty food, and leaders in developing and uplifting the communities in which we operate.We at Nestlé Pakistan ensure that our products are made available to consumers wherever in the country they might be. Convenience is at the heart of the Nestlé philosophy, and our aim is to bring products to people's doorstepsIn line with our parent company's global philosophy, we are proud of our commitment to excellence in product safety, quality, and value. Our products cater to human needs, and we are active in the communities we serve.From spreading awareness about nutrition and wellness to digging wells in the Thar desert and succouring earthquake victims, we are committed to serving our country and its people.The consumer's voice is key to Nestlé Pakistan's vision and working. Whether you live in the remotest village or the metropolis of Karachi, our consumer services team stands ready to listen to your concerns and provide answers about our products and guidance on matters of health and wellness

Mission statement

“We are above all, a human company providing a response to individual human needs throughout the world.”

Objective

“Making our customers winners by constantly exceeding their expectation.”

Strategy-Nestlé Roadmap to Good Food, Good LifeNestlé’s objectives are to be recognized as the world leader in Nutrition, Health and Wellness, trusted by all its stakeholders, and to be the reference for financial performance in its industry.

We believe that leadership is not just about size; it is also about behaviour. Trust, too, is about behaviour; and we recognise that trust is earned only over a long period of time by consistently delivering on our promises. These objectives and behaviours are encapsulated in the simple phrase, “Good Food, Good Life”, a phrase that sums up our corporate ambition.

Nestle is intended to create alignment for our people behind a cohesive set of strategic priorities that will accelerate the achievement of our objectives. These objectives demand from our people a blend of long-term inspiration needed to build for the future and short-term entrepreneurial actions, delivering the necessary level of performance.

Competitive advantages

Unmatched product and brand portfolioUnmatched R&D capabilityUnmatched geographic presencePeople, culture, values and attitude

True competitive advantage comes from a combination of hard-to-copy advantages throughout the value chain, built up over decades.

There are inherent links between great products and strong R&D, between the broadest geographic presence and an entrepreneurial spirit, between great people and strong values.

Growth drivers

Nutrition, Health and WellnessEmerging markets and PPPOut-of-home leadershipPremiumisation

These four areas provide particularly exciting prospects for growth. They are applicable across all our categories and around the world.

Everything we do is driven by our Nutrition, Health and Wellness agenda, Good Food, Good Life, which seeks to offer consumers products with the best nutritional profile in their categories

Operational pillars

Innovation &RenovationWherever, howeverConsumer communicationOperational efficiency.

Nestlé must excel at each of these four inter-related core competences. They drive product development, renewal and quality, operational performance, interactive relationships with consumers and other stakeholders and differentiation from our competitors. If we excel in these areas we will be consumer-centric, we will accelerate our performance in all key areas.

We are seeking to achieve leadership and earn that trust by satisfying the expectations of consumers, whose daily choices drive our performance, of shareholders, of the communities in which we operate and of society as a whole. We believe that it is only possible to create long- term sustainable value for our shareholders if our behaviour, strategies and operations are also creating value for the communities where we operate, for our business partners and, of course, for our consumers. We call this “Creating Shared Value”.We are investing for the future to ensure the financial and environmental sustainability of our actions and operations: in capacity, in technologies, in capabilities, in people, in brands, in R&D. Our aim is to meet today’s needs without compromising the ability of future generations to meet their needs, and to do so in a way which will ensure profitable growth year after year and a high level of returns for our shareholders and society at large over the long-term

Types of product manufacturedNestle divdes its product in 14 ways:

1. Baby food: cerelac, gerber, graduates, natures, nestum.2. Bottle water: pure life, perrier, Poland spring, s.pellegrino.3. Cereals: chocapic, cini minis, cookie crisp, fitness, nesquik.4. Chocolates & Confectionery: aero, butter finger, crunch, kitkat, orion.5. Coffee: Nescafe, nescafe3in 1, Nescafe cappuccino, Nescafe classic, Nescafe

decaff.6. Culinary, chilled & frozen food: buitoni, herta, hot pockets, lean cuisine,

Maggie, stouffer’s.7. Dairy: carnation, coffe mate, nido,8. Drinks: juicy juice, milo, nestea.9. Food service: chef, chef mate, lean cussine, magi, milo, minor’s.10.Healthcare nutrition: boost, nutren junior, peptamin, resource.11.Icecream: dreyers, haagen dazz, movenpick, extreme.12.Petcare: alpo, bakers complete, baneful, cat chow, dog chow.13.Sports nutrician: power bar.14.Weight management: jenny craig.

Branches in PakistanNestle has branches in the following major cities:

1. Lahore 2. Islamabad3. Karachi4. Faisalabad5. Sheikhupura (factory)

Nestle is a customer and profit oriented organization rather than system and strategy oriented. The mechanics of generating profits are low cost production and high price sales.

DepartmentsNestle has different divisions. There are four departments in the nestle confectionary that are as follows:

1. CCST department: is a supporting department for both sales

and marketing departments. It provides a linkage to both departments by connecting them in case of any demand from other department

2. Marketing department: is responsible for all sort of activities

including the promotion, advertising and tools used for generating demand. The marketing department is also responsible for arranging stalls and functions for the promotional and official reasons respectively. These stalls are conducted in different places so the more people become aware of the importance of products that ensure quality. These stall activities remain active for around 4-5 days. Thus, in a month 4-5 stalls are managed. After a stall activity finishes, the person who conducted the stall activity has to report to their seniors about the response they received from the public and the number of new customers they have been able to attract during their stall activity.

3. Sales department: is responsible for carrying out the sales of

nestle confectionary covering the whole of Lahore. To conduct the sales efficiently and effectively, there are some territories that has been assigned some areas of Lahore. The area manager administer these territories.Monthly, the area sales manager are assigned with the targets by the upper management. This helps in creating competiton among the territories. Like some territories covers these areas respectively.

Interior Lahore, upper mall. Gulberg, cantt, cavalary. Defense Model town, township, garden town, johar town, rehmanpur

and thokar niaz baig.These four terrioties are further covered with a total of 20 routes, each covering a specified area of Lahore on daily basis.Every day, the nestle delivery van drop confectionary products. There are three people who go for the sales. They are:

Driver DSR Loader

For carrying out the trasactions easily, the DSR provided with the handbook. The hand book keeps records of the data of the retailer. All this data is stored in the system thus, keeping the system updated.

At the start of the month, the target for the sales of the confectionary is set and all the distributions have to achieve that target by the end of the month that helps in increasing the productivity. The sales target varies with the season. For example in winters, the sale for confectionary products are more as compared to summers. Also the monsoon season affects the sales of candies and chocolates.

When it is the end of the month, all the distributions submit in their reports to the sales and distribution manager that contains the percentage of the target achieved including the quantity sold by each route.

4. Distributor: for carrying out daily working, some internally hired or

external sources are acting as a distributor for nestle in Lahore. The distributor has various responsibilities or duties that asr as follows:

Eleet management: Procurement of vechicles. Installation of hood on distribution vechicles Paint of hood and its maintenance. Maintenance of vechicle in good condition.

Delivery team: Short listening of DSR’s for hiring. Supervise DSR orientation and training. Daily supervison of DSR performance. Ensure DSR’s working as per company direction.

Customer service Delivery at customer premises on schedule day and

routing time. Ensuring delivery on special request forwarded by

customer services. Attending all delivery related complaints in time.

Ware housing: Procure a warehouse as per nestle standard. Ensure all nestle quality standards(fifo, nqs,QSM etc) Maintain a clean environment. Minimizing store loses.

Accounting: Maintain audit accounts of the business. Provide in time reports to nestle management. Make claims as per company guidelines and verify data. Ensure efficient operations.

General: Adhere and act on allpolicies/decisions by nestle

management. Close liaison with sales management for target

achievement.

DSR

Loader

National Sales Manager

Zonal Sales Manager

Regional Sales Manager

Customer Service ManagerArea Manager System Support ExecutiveEvent Management

Customer Service OfficerTerritory Incharge

Sales Associates

System support officers

Event Management officer Chiller Technician

Loader

Organizational flow chart

Financial overviewNestlé Group reports its Sales and Results both by Management Responsibility and Geographic Area as well as by Product Groups. The content of this section relates to figures published in nestles 2009 Management Report and Financial Statements.

ZONES, WATERS, NUTRITION

The operating segment format - by management responsibility and geographic area (Zones, Waters & Other) - represents the Group’s management structure. There are 7 primary segments.

Zone Europe

Zone Americas

Zone AOA (Asia, Oceania and Africa)

Nestlé Waters

Nestlé Nutrition

Other Food and Beverages

PharmacyThe Group manages its Food and Beverages business through three geographic Zones and globally for Nestlé Waters, Nestlé Nutrition and Other Food and Beverages (includes Nestlé Professional). The Group's pharmaceuticals activities are also managed on a worldwide basis and are presented separately from Food and Beverages.

PRODUCT GROUPS

The products segment format - by product group - is divided into six product groups (segments), which are:

Beverages

Milk products, Nutrition and Ice Cream

Prepared dishes and cooking aids

Confectionery

PetCare

Pharmaceutical products

Nestle Insight: Business PrinciplesGuidelines

At Nestle, we try to take the mentality and customs of individual countries into account, but there are some general guidelines that we apply everywhere. Those include:

A positive attitude toward work A pragmatic, realistic approach to doing business An open-minded approach to the world A minimal number of systems and written guidelines A personal style of management An atmosphere of mutual trust An avoidance of showing off, windy rhetoric and hypocritical remarks An emphasis on practical experience and on the setting of good examples.

Principles

People first

Employees, people and products are more important at Nestle than systems. Systems and methods, while necessary and valuable in running a complex organization, should remain managerial and operational aids but should not become ends in themselves. It is a question of priorities. A strong orientation toward human beings, employees and executives is a decisive, if not the decisive, component of long-term success.

Quality products

Our focus is on products. The ultimate justification for a company is its ability to offer products that are appealing because of their quality, convenience, variety and price -- products that can stand their ground even in the face of fierce competition.

Long-term view

Nestle makes clear a distinction between strategy and tactics. It gives priority to the long-range view. Long-term thinking defuses many of the conflicts and contentions among groups -- this applies to employment conditions and relations with employees as well as to the conflicts and opposing interests of the trade and the industry. Of course, our ability to focus on long-term considerations is only possible if the company is successful in the struggle for short-term survival. This is why Nestle strives to maintain a satisfactory level of profits every year.

Decentralization

Switzerland is home to Nestlé’s Swiss subsidiary, its international headquarters and the registered office of Nestlé’s holding company, but Nestle does not regard its Swiss headquarters as the center of the universe. Decentralization is a basic principle of Nestle. Our policy is to adapt as much as possible to regional circumstances, mentalities and situations. By decentralizing operational responsibility, we create strength and flexibility and are able to make decisions that are better attuned to specific situations in a given country. Policies and decisions concerning personnel, marketing and products are largely determined locally. This policy creates stronger motivation for Nestlé’s executives and employees and a greater sense of identification with Nestlé’s business. It is not Nestlé’s policy to generate most of its sales in Switzerland, supplemented by a few satellite subsidiaries abroad. Nestle strives to be an "insider" in every country in which it operates, not an "outsider."

Uniformity

A very important concern at Nestlé has to do with uniformity: how consistent Nestlé’s principles, policies, rules of conduct and strategies should be, and to what extent they should differ depending on the country, subsidiary, region, branch or group of products. In general, Nestle tries to limit the uniformity of its policy to a requisite minimum. This minimum is then systematically enforced, unless there are compelling reasons in a given market that justify deviation from policy.

Diversification

Nestle does not want to become either a conglomerate or a portfolio manager. Nestle wants to operate only those businesses about which it has some special knowledge and expertise. Nestle is a global company, not a conglomerate hodgepodge. We regard acquisitions and efforts at diversification as logical ways to supplement our business, but only in the context of a carefully considered corporate marketing policy.

Flexibility and simplicity

The public's sense of the power and size of a corporation is often inaccurate, for a company's power is limited by a host of factors including legislation, competition, regulatory bodies and publicity. From a business point of view, it is desirable for a firm to achieve the size best suited to a specific industry or mode of production. To be competitive internationally and make significant investments in research and technology, a larger company has an advantage. From a strictly organizational point of view, flexible, simple structures work best and excessively large units should be avoided whenever possible. In both respects Nestle has a natural advantage: Although it is a big company, it is spread out over many countries and each of Nestle's factories has its own management and responsibility.

Research and development

Nestle is probably unique in the food industry in having an integrated research and development program that engages in applied and basic research in the fields of human physiology, health, nutrition and raw materials. Our research and development program gives us the capacity to create new types of products that we cannot even imagine today, especially in the critical area where preventive medicine and food products overlap. In addition, as concern for the environment grows, research will play an important role in overcoming environmental problems. For Nestle, this is particularly important in packaging. Concern for the effects of packaging on the environment is forcing us to look for new solutions and to consider their interaction with our biological product -- food.

Foresight

At present, the world faces daunting questions about its ability to provide enough wholesome food for everyone. Malnutrition and poor eating habits are still serious problems in many developing countries. By 2100, the world's population will double. Will it be possible to feed a world with so many inhabitants? At Nestle, the big picture is all about feeding the world and providing food and nutrition for an ever-growing population. Our response to this situation is to intensify research, strive for innovations and improve quality.

The Nestle Policy on the Environment

Nestle respects the environment and is committed to environmentally sound business practices throughout the world, thus taking into account the need to preserve natural resources and save energy.

This commitment is put into practice by considering local legal requirements as a minimum standard. If these do not exist, our internal rules, adjusted to local conditions, apply. Research and Development and new investments include an evaluation to ensure environmentally appropriate products, packaging and processes.

Management and personnel within the Nestle organization worldwide are encouraged to help resolve environmental problems within their own sphere of influence.

In order to achieve this, the Nestle Group, while maintaining its commitment to supply the consumer with products and services of high quality and safety, will continue to apply a series of general principles. Within the Group, relevant decisions take protection of the environment into account in the following areas:

Research and development

The Nestle research and development centers have two main tasks: to create new products and manufacturing processes and to improve those that already exist. These centers play a key role in product safety and quality and also have their role in conserving resources and protecting the environment. Environmental concerns

are an integral part of any development process to ensure that our future commercial operations meet the desired criteria.

The Nestle Research Center provides the scientific support needed to prevent and solve environmental problems arising in the development groups as well as manufacturing. In addition, studies are carried out to find new ways of using industrial residues to create value added by products. This will reduce total emissions and effluents.

The Nestle development centers prepare environmental impact studies for new products and manufacturing processes. These cover all aspects, from raw materials, through processing, to the final packed product. These analyses provide additional elements for use in deciding whether to commercialize a new product, or to introduce a new or modified process.

Handling of raw materials

The Nestle Group is in principle not directly involved in primary production of raw materials and other food ingredients. In general we use locally available raw materials and purchase them either directly from producers or through existing trade channels.

Raw materials have to meet clearly established quality criteria and are checked for possible contaminants including environmental contaminants. Our purchasing specifications comply not only with legal requirements but go further to ensure highest safety and wholesomeness of our products.

Whenever possible we give preference to those goods for which environmental aspects have been taken into consideration. In those cases where the required agricultural raw materials are not available locally, but the natural production conditions exist, we encourage local production and provide assistance for cultivation and dairy farm management.

We support plant growing and livestock husbandry methods which:

preserve and improve natural soil productivity and economize and protect water resources

allow the lowest, most appropriate and safe use of agro-chemicals use the least energy.

Packaging

Manufacturing comprises all unit operations necessary to transform perishable raw materials into finished products, with the aim to make them safe and convenient for the consumers. The manufacturing activities of the Nestle Group:

respect natural resources by efficient use of raw materials and energy minimize waste generation and emissions ensure environmentally safe disposal of all waste which cannot be recycled.

Regular assessments of processing practices are carried out. These assessments include:

evaluation of individual plant performance with regard to operations which have an impact on the environment

definition of targets for improvement review of plant compliance with local government regulations, company

environmental standards, as well as results achieved in comparison with targets for improvement

full investigation of incidents which may affect the environment.

Information on developments in environmental protection technology and practices is disseminated as required to ensure that all plants are using the most effective environmental practices for their type of processing. This applies also for copackers.

Marketing and distribution

Marketing is based on the principle of satisfying consumer needs. This is the foundation also for the environmental marketing approach of Nestle.

Environmental product claims in advertising, promotional material and on packaging are in accordance with legal requirements, based on solid scientific evidence and used in a serious and reasonable manner.

Our aim is to minimize wastage in communication, publicity and promotional material, in particular through more precise targeting of marketing activities.

Consumer promotions and merchandising material such as consumer offers, in store promotions, display material, leaflets, printed matter, etc. take environmental aspects into account.

This means due consideration of environmental impact in selecting both materials and printing methods.

In distribution, energy efficient and pollution controlled methods are encouraged wherever possible.

Information, communication and education

Nestle's policy is designed to provide correct and coherent information on the activities of the Group.

Activities related to the environment benefit from the same treatment and their communication is secured through all currently available means inside and outside the Group.

It is furthermore Nestle's duty to create awareness, to train and motivate employees on their personal responsibility with regard to the protection of the environment.

Legislation and regulations

It is the policy of the Nestle Group to strictly comply with all laws and regulations relevant to our activities. We participate in discussions on food legislation and regulations between international organizations, government representatives, industry, the scientific world and consumer associations. We also apply this policy to environment related matters.

In doing so, we cooperate with legislators through local industry associations in order to promote laws and regulations in the field of environment which are reasonable, rational, realistic, applicable and enforceable. We oppose unjustified bans and any other discriminatory measures.

We favor the harmonization of food regulations in order to remove existing trade barriers and to avoid the creation of new ones. This applies also to environmental

issues. We favor the exchange of information, of experience and of knowledge between the various interested parties.

Thanks to all these synergies, we can contribute to valuable discussions and be recognized as an active partner in helping authorities to formulate comprehensive strategies in the field of the environment.

All the elements of The Nestle Policy on the Environment are part of the technical assistance process which provides for a permanent transfer of knowhow and technology from the Central Service Company (NESTEC) to all Nestle subsidiaries in the world.

Nestlé AUDITS

Nestlé, or any person entrusted by Nestlé, shall be authorized to perform audits at the Vendor’s, in the Vendor's premises. The person shall be granted unrestricted access to premises concerning the manufacture or handling of the materials under consideration and commit to confidentiality. The audit may include checking the required hygienic practices and the quality and food safety system efficiency, compliance with local regulations, vendor's or outsourced laboratory and the reliability of analytical results.

Nestlé shall be authorized to consult the HACCP study files, quality monitoring plans and all quality records relevant to the material sold to Nestlé, including material, line and environment control records. The Vendor shall evaluate his own suppliers to ensure that they fulfill the relevant hygiene practices. However, Nestlé reserves the right to audit the Vendor’s suppliers to check that the materials they provide meet requirements specified in the Purchasing contract. In certain circumstances, the Vendor will cooperate with Nestlé to facilitate a visit or audits of his own suppliers. Nestlé reserves the right to share internally the outcome of the audits carried out at vendor facilities.

GENERAL REQUIREMENTS FOR MATERIALS

The materials sold to Nestlé must be fit for human consumption, authentic and produced without adulteration.

The Vendor must meet the requirements for the technical characteristics of the material as described in the specification issued by Nestlé. The specification is to be read in conjunction with the document "MRES", which gives further requirements that are largely specific to the country of destination or common to a whole group of materials.

CHANGES IN MATERIAL CHARACTERISTICS

• The Vendor must contact Nestlé and get a written agreement for delivery to Nestlé in case the material characteristics deviate from the agreed specifications.

• The Vendor is expected to recommend improvements or a permanent material specification change in cases where change in design, composition, processing, location, reliability, specification or other conditions can impact the material quality and the food safety parameters.

RELIGIOUS REQUIREMENTS

Where required, the Vendor must comply with the defined dietary requirements (such as religious requirements for Halal or Kosher foods). For certification of Halal- or Kosher sensitive products or ingredients, the Vendor must engage a credible Halal / Kosher body.

The supplier must also ensure that the certification is done according to the requirements of Halal / Kosher. Packaging materials must be verified for the absence of hidden ingredients.

CERTIFICATE REQUIREMENTS

The Vendor must be able to provide certificates based on Nestlé requirements.

Typically, the following certificate types are requested by Nestlé:

- Certificate of Analysis: Analytical results of the testing that is carried out on the material batch/lot before delivery to Nestlé. The tests are typically related to the quality and/or performance of the material. They confirm that a specific delivery has the agreed analytical values.

- Certificate of Compliance (packaging materials only): It typically states that the material complies with all relevant local regulatory requirements of the country(ies) where the Nestlé finished product will be sold.

- Religious Certification: Issued by the relevant religious authorities/organization, it states that the raw material is manufactured under the given conditions defined by the religious authorities/organization. This is typically related to Kosher and Halal.

- Certificate of Origin/Source: This is generally issued by the government (in some cases, it can also be the vendor) and states the origin of the material.

- Certificate of Export: usually issued by the government. It allows goods to be exported (generally required by the importing country).

It typically states that the manufacturing facility is regulated and inspected by a food authority (e.g. FDA).

- Other locally or regionally applicable certificates such as MSDS (Material Safety data Sheet), Declaration On Genetically Modified Organisms (GMO) can be requested.

The type, content and frequency of certificate issuance is specified in the MRES document.

The Vendor is expected to comply with these requirements.

PACKAGING - STORAGE - SHELF LIFE

Nestlé has the following general requirements for the packaging of the delivered material(s):

• The material must be packed in suitable, clean and sound containers with no loose or detachable closures or other potential foreign matter hazards. The packaging must conform to the relevant legal requirements for materials in contact with food.

• All packaging materials used for the storage of foodstuffs must be free from taint or our and must not taint the materials that they contain.

• Each packaging unit must be permanently and legibly identified in compliance with agreed Nestlé requirements. The minimum requirements from a quality and food safety perspective include material description or trade name, batch or lot number, producer and / or distributor, shelf life and expiry date. In case specific storage or handling conditions apply, they should be included as well.

In addition, the Vendor must comply with any additional requirements for packaging and/or labeling as specified in the Nestlé purchasing specifications and in MRES.

The Vendor must communicate the necessary information for storage conditions to Nestlé.

All storage locations used by the Vendor must be clean, free from infestation, and maintained at a temperature and humidity appropriate for the material. The material must be adequately protected against water or other damages during the storage period.

The Vendor must communicate to Nestlé the guaranteed shelf life of the delivered materials and, where required, comply with the Nestlé minimum remaining shelf life requirements at the time of delivery to Nestlé.

TRANSPORT - DELIVERY

The Vendor must ensure that, during shipment:

- The material will not suffer undue quality deterioration while being traded.

- The physical logistics will not cause damages to the material.

The Vendor must follow the first expiry-first out (FEFO) principle.

The Vendor shall ship the minimum number possible of batches of the same material per purchase order. The number of containers, including information on the individual shipping units, should accompany every delivery. The information should be sent in electronic format whenever possible, before the delivery with a reference to the specific purchase order. A formal agreement (contract) is mandatory between Nestlé and transport companies.

Subcontracted transport companies cannot be used without prior Nestlé authorization. The carrier selected for delivery of the materials shall be suitable for food use, be clean in order to prevent possible contamination, and shall protect against deterioration. Tankers used must be designated for food use only. Cleaning procedures and details of the type or nature of other foods carried by the tankers must be provided as requested. Tanker cleaning locations can be subject to assessment where required.

ALTERNATIVE SITES, SUB-CONTRACTING

The Vendor must inform Nestlé of the eventuality of producing the materials in one or more alternative sites. These alternative sites must also be approved by Nestlé before the materials can be sourced from them. If the Vendor is not the manufacturer of the material (example: trade materials), then the Vendor shall ensure that the principles outlined in this document are applied and allow Nestlé to check their application at the manufacturer's premises. The Vendor cannot subcontract all or part of the material production to a third party without Nestlé's prior agreement. In the case of a subcontracting or trade contract, the Vendor shall remain entirely responsible for the provision of the materials to Nestlé. Therefore, the Vendor shall make sure that the subcontractor meets all the

requirements as laid out in the present document and in the purchasing contract. The Vendor shall allow Nestlé to audit/visit the subcontractor's plant.

II. REGULATORY COMPLIANCE

The Vendor must have adequate tools and procedures must be in place for ensuring full compliance with regulations and consumer expectations of materials delivered to Nestlé in the country of manufacture and, where required, in the country of sale of the Nestlé finished products.

III. QUALITY AND FOOD SAFETY SYSTEM

QUALITY AND FOOD SAFETY MANAGEMENT SYSTEM

The Vendor is must:

• establish and maintain a documented quality and food safety management system that covers the manufacture and supply of the material(s) under consideration,

• have a clearly defined quality function within its organization,

• properly train all personnel who might affect material quality/food safety in their functions.

The Quality and food safety systems must comply with the provisions of the local legislation and/or with Nestlé requirements.

Compliance with quality system certification standards is accepted by Nestlé in case it is for industry-recognized, Nestlé-accepted standards and when issued by Nestlé-accepted Certification Bodies. For purposes of assessment and approval, Nestlé reserves the right to request the complete report.

Changes to the status of the systems impacting the material and related services delivered to Nestlé, including extensions or reductions in the scope of approval, third party and/or regulatory approvals that are either gained or withdrawn must all be communicated to Nestlé.

In case materials other than for human consumption are manufactured, filled or packed on the vendor's site, the human / not human activities must be strictly separated (either by physical or by cleaning means).

The reference for the food safety system detailed requirements is the Nestlé Food Safety Management System.

HACCP (raw materials only)

Nestlé expects that, for the material(s) under consideration, the Vendor has a system in place for identification as described in the ISO22000 standard or an equivalent thereof.

QUALITY ASSURANCE

• Vendors must apply consistent and appropriate quality checks on their materials to ensure their conformity with the requirements as described in the material Purchasing Specification and Material Requirements.

• As outlined in the Nestlé specification, the material characteristics may be subject to inspections to allow the release of each batch. Where requested and agreed, a Certificate of analysis (COA) must be provided before or at each delivery for every batch included in the delivery.

• The Vendor must establish a control plan (including a sampling plan) in order to ensure conformity with the defined material characteristics. The records related to these controls must be kept and made available to Nestlé upon request. The plan must be updated annually according to new issues/priorities that shall include regulatory developments (issued and pending), previous surveillance results, trend analysis and/or new conditions.

• The Vendor shall validate his control methods in relation to the official methods (international reference or equivalent), or other methods as defined by Nestlé.

RELEASE

The Vendor must have a documented release system in place for the active release of incoming materials, rework, work in process (where applicable) and finished materials. It must include a procedure for the appropriate handling of potentially unsafe materials to ensure that they are not released until they have been evaluated. The release decision must be documented for each lot / batch of the respective material. Responsibilities for the release decision must lie with dedicated and adequately trained personnel.

HANDLING OF NON-CONFORMITY

Vendor must:

• have a documented procedure in place for handling non-conforming materials.

• define a contact person that will be in charge of resolving non-conforming material issues and communication with Nestlé.

Nestlé reserves the right to reject upon reception or during use any material that does not conform with the requirements in the relevant documents and to return or destroy it at the risk and expense of the vendor.

In case of rejection of delivered materials or of unreleased production at the Vendor's site, the Vendor agrees to handle such materials in such a way that they will not be delivered a second time, either to the original Nestlé site or to another one. In certain cases, Nestlé will destroy the non-conforming or rejected goods.

In case a fault is found with the material, Nestlé also expects the Vendor to conduct a root cause analysis in order to define a corrective action plan to prevent the problem from reoccurring or, where agreed, to accept Nestlé’s proposed corrective action plan.

BUSINESS CONTINUITY PLAN, EMERGENCY PREPAREDNESS

The Vendor must have a documented business continuity / disaster recovery plan addressing both recovery of production capacity, product recall / withdrawal, and continuity of service. Clearly defined responsibilities must be in place within the Vendor organization and contact person(s) for issues and emergencies communicated to Nestlé.

LABORATORIES

Vendor laboratories carrying out analyses must comply with local regulatory requirements or requirements defined by local authorities for this purpose.

Where requested by Nestlé, the Vendor agrees that his own laboratory, or the external laboratory providing services to the Vendor, will participate in laboratory proficiency tests organized by Nestlé. Furthermore, the Vendor agrees to initiate corrective action in case of unsatisfactory results. The intellectual property rights for this document.

IV. PREREQUISITE PROGRAMS, GOOD MANUFACTURING PRACTICES,

OPERATIONAL QUALITY

GOOD MANUFACTURING PRACTICES, PREREQUISITES

The Vendor's pre-requisite programs must cover the following elements, in compliance with applicable regulations, industry standards and Nestlé-specific requirements for the material(s) under consideration:

- construction and layout of buildings, premises

- utilities (air, water, energy)

- waste disposal

- equipment suitability, cleaning and maintenance

- calibration

- management of purchased materials (vendor approval, material approval for use, control of incoming materials)

- measures for the prevention of cross-contamination, zoning

- cleaning and sanitation

- pest control

- personnel hygiene and employee facilities

- rework

- warehousing (handling, storage and delivery, transport)

- food defense, bio-vigilance and bioterrorism

- training and education

- traceability and recall procedures

ALLERGENS (raw materials only)

• The Vendor must have a procedure in place to evaluate the allergen cross-contact risks and implement control procedures throughout the process, storage and transport operations.

• The Vendor will be asked to complete the Nestlé Major Allergen Declaration form, and must inform Nestlé each time there is a change in his raw materials, processes or product portfolio which impacts the allergen information provided. In certain cases, the Vendor will be required to work with Nestlé on appropriate control measures.

NET CONTENT

The Vendor must have a net content control system in place that is compliant with regulations of the country of manufacture and, where required, the country of sale of the material(s) under consideration

CALIBRATION

The Vendor must have a calibration and verification procedure for all equipment and instruments used in the production process that were identified as critical for elimination or reduction of key food safety hazards, release criteria and monitoring activities for the material(s) under consideration.

TRACEABILITY AND RECALL PROCEDURES,

The Vendor must have a system in place covering all steps involved in the production of the material(s) under consideration to be able to trace:

• the manufacturing and processing records,

• the results of quality controls performed,

• the origin of the ingredients used

In addition, the Vendor must be able to identify:

• the method and date of transport,

• the company that was responsible for the transport,

• all the locations where the material was stored, with the dates of storage.

The information must be made available for every batch of the material(s) delivered to Nestlé within 4 hours of the request and must be kept on file for a minimum of 5 years. If the legislation of the country of destination requires a longer period, this will prevail. The Vendor must conduct regular traceability exercises.

MANAGEMENT OF PURCHASED MATERIALS

The Vendor must have a process in place ensuring full approval of its vendors, including information about the origin and manufacturing location of the ingredients used for producing the materials supplied to Nestlé, or of any other materials that could compromise the quality and food safety of the materials supplied to Nestlé. An incoming materials control system must be defined and executed.