This is one of the largest recalls in the history of Nestlé, and in the rest of the food industry.
We have a long route to market
We have 8 factories in India, 5 of which produce MAGGI Noodles, and 38 distribution centres where we store our products. These are under Nestlé’s direct control. From these distribution centres we sell to 1400 distributors. Once the products are bought by these distributors they are no longer under Nestlé’s direct control. The distributors sell them on to other distributors, or to direct retail. We also sell directly to big chains like Walmart, Reliance, ABL and Big Bazar. We estimate that we are in 3.5 million retail outlets in India. Around half of these 3.5 million outlets are covered by the supply chain through these 1400 distributors, the rest are the result of other routes to market.
We are recalling 27,420 tonnes of MAGGI Noodles
We announced the withdrawal on 5th June, 2015 and the operation was fully operational 2 days later. We estimated that there were 27,420 tonnes of MAGGI Noodles in the factories / distribution centres / distributors / market on 5th June. This is an estimate because although we knew with certainty how much was in our factories and in our distribution centres, the stock which was with customers and retailers and in consumers homes was not under our control, making it difficult to be certain how much had been consumed and how much was stored.
There are three parts to the withdrawal
Step one was blocking the distribution of stock at our own warehouses and distribution centres. This was done immediately.
Step two was blocking orders by our 1400 distributors so that no more stock went into the market. This was done immediately.
Step three is more complicated. It involves getting the stock back from our 1400 distributors, and their distributors, and their customers, and from consumers.
Getting loose packets of MAGGI Noodles back to our distribution centres
CARTONS: We estimate that 40% of the 27,420 tonnes of MAGGI Noodles we are recalling is no longer in cartons, but in packets on the shelves at home or in the retailers. So we need to source 1.4 million cartons to move the packets of MAGGI Noodles back to our facilities. We are buying cartons from all over the country.
TRUCKS: 27,420 tonnes of MAGGI Noodles would fill 2,500 trucks. But there are multiple journeys involved (from the retail outlet to the distributor, from the customer to our distribution centre, from the distribution centre to the incineration plant etc). MAGGI Noodles are sold all over the country so many thousand truck journeys will need to be made to complete the task.
HIGH TEMPERATURE THERMAL DESTRUCTION: The packs of MAGGI Noodles are mixed with fuel and subjected to high temperature thermal destruction in cement kilns. The process has been approved by the Indian government, and the fact that the noodles are being used for fuel reduces the environmental impact. The current capacity is 700 tonnes a day across five facilities, meaning that it will take at least 40 days to destroy 27,420 tonnes.
REFUNDS: There are multiple cash and credit transactions that need to be paid throughout the process as the product changes its hands on its way back to Nestlé India. This adds to the complexity of the situation. Nestlé India’s salesforce is supporting this process. In supply chain there are around 50 people working on it full time, along with others from our customers and other partners. We have also put in place measures to ensure consumers can easily get information on the withdrawal from the company.
The other logistical challenge is that Nestlé India’s supply chain is at the same time continuing to supply customers with our other brands. Usually product flows in one direct from Nestlé India to its customers. Now the system has had to be reconfigured to manage product flowing in both directions – MAGGI Noodles returned to the company while other products are transported to customers
Around 400 million packets of MAGGI Noodles are being destroyed.
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