INDIVIDUAL ASSIGNMENT 293441 (1)

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SEMESTER 1 SESSION 2025/2026 (A251) BJTHK 3123 STRATEGIC MANAGEMENT IN TECHNOLOGY (C)

INDIVIDUAL ASSIGNMENT THE IMPACT OF BLOCKCHAIN TECHNOLOGY TOWARDS NESTLÉ

PREPARED FOR : DR. SALMAH BINTI OMAR

PREPARED BY :

NAME

MATRIC NUMBER

NOR ATIRAH NAJWA BINTI MOHD JAHAR

293441

SUBMISSION DATE : 25th NOVEMBER 2025

1.0 INTRODUCTION​ 2.0 PROBLEMS AND ISSUES RELATED TO NESTLE PERFORMANCE​ 2.1 Rising Operating Costs and Economic Inefficiency​ 2.2 Control Food Quality and Safety Issues​ 2.3 Supply Chain Inefficiencies and Lack of Transparency​ 2.4 Increasing Sustainability Pressures​ 3.0 THE IMPACTS OF BLOCKCHAIN TECHNOLOGY ON NESTLE PERFORMANCE​ 3.1 Advantages​ 3.1.1 Reduction of Administrative and Transaction Costs​ 3.1.2 Quality Data Record cannot be Modified​ 3.1.3 Increased Transparency and Traceability Supply Chain​ 3.1.4 Sustainability and Compliance Verification​ 3.2 Disadvantage​ 3.2.1 High Capital Expenditure (CAPEX) and Operations​ 3.2.2 Input Data Availability and Quality Issues​ 3.2.3 Legacy System Integration Difficulties​ 3.2.4 High Energy Consumption​ 4.0 RECOMMENDATION​ 4.1 Implementing Pilot Project​ 4.2 Investing Capital in Digital Infrastructure and Training​ 4.3 Integrating Blockchain with IoT and AI​ 5.0 CONCLUSION​

3 4 4 4 4 5 5 5 5 5 6 6 6 6 6 7 7 7 7 8 8 8

1.0 INTRODUCTION

Recently, increasingly sophisticated and challenging technological advances have created a major change in the global business landscape. Every company has had to find ways to think about effective business operations, supply chain structures, and strategic decisions that will be implemented in the long term. Among the various technologies that exist and emerge in this era, blockchain technology has received widespread attention because it has many advantages that can have a positive impact on a business. Among the capabilities of this technology is that blockchain can guarantee transparency of information that is private and ensures security and decentralisation of data. Blockchain is a sophisticated technological tool known as a distributed ledger with the advantages of being tamper-proof and safe to use. It can also provide security by nature, which allows this technology to be widely adopted in all things and is almost the same as the use of internet technology.

Basically, this blockchain technology is applied by a group of people to record transactions in a ledger system. With the use of this technology, when used in a written or published way, no one or anything else can easily change and manipulate the data. This blockchain technology has emerged as an innovation that has the potential to revolutionise various industries.

In 2006, blockchain technology gained considerable public attention from all angles with the introduction of the cryptocurrency Bitcoin, S, S. (2024). This technology was created specifically to support cryptocurrencies, which has led to its applications spreading beyond digital money. Now, new technological tools such as blockchain are becoming increasingly popular in global industries that are used to focus on product manufacturing, transportation of goods, healthcare, and food and beverage production. For the global food and beverage industry, such as Nestlé, blockchain is one of the transformative tools that can control long-standing challenges such as supply chain inefficiencies, food and beverage safety effectiveness, and sustainability expectations from consumers. Stakeholders such as suppliers, retailers, distributors, and regulators are important agencies in the food industry that are also involved in facing complex logistics. In this regard, a transparent system such as blockchain technology is adopted to ensure accountability and reliability in operations can be increased.

Nestlé operates a large portfolio of well-known brands, suppliers and global distribution networks, as well as ingredients used. Nestlé is the largest company in the food and beverage industry and has a loyal customer base. Nestlé is always sensitive to the implementation of supply chain operations improvements as a result of increasing consumer demand for product authenticity and environmental practices. To improve the efficiency of these products and strengthen Nestlé's reputation, the technological tool that can solve this is Blockchain technology to ensure that every problem and challenge that affects the company's potential can be overcome in the future. Therefore, this blockchain technology is used to assess the impact of blockchain technology on economic, environmental and social dimensions.

2.0 PROBLEMS AND ISSUES RELATED TO NESTLE PERFORMANCE Although Nestlé is known as a global leader, Nestlé has also faced various operational problems and challenges that can impact the company's economic performance, social responsibility and environment. The problems that arise need to be addressed effectively to ensure the company continues to thrive in the food and beverage industry.

2.1 Rising Operating Costs and Economic Inefficiency Nestlé is also facing a major problem where the company has to bear high operating costs in procurement due to its global operations. Nestlé needs to finance the cost of product production in terms of logistics for the delivery and collection of raw materials, quality control of its products and the cost of complying with food safety regulations. Failure to control real-time systems can lead to uncertain spending costs as well as the existence of waste and delays in materials. In this regard, this problem is also closely related to external factors where there is an immediate increase in the cost of major raw materials, namely cocoa, coffee beans and oats. High global inflation also causes an increase in production operating costs. In addition, operating costs also increased due to the increase in service tax in Malaysia, causing an increase in operating costs in the Nestlé company.

2.2 Control Food Quality and Safety Issues Nestlé Company refers to a strict Quality Management System to control any issues that occur related to food quality and safety. Nestlé places great emphasis on product quality and implements controls starting from the raw material source level to the final process. This control is done to ensure compliance with the correct standards to avoid contaminated raw materials and receiving low-quality materials. However, through these controls, Nestlé Company also receives issues that are closely related to the control of food quality and safety issues. This can affect the reputation of the Nestlé brand and affect the overall performance of the company. In the past few years, Nestlé has experienced major problems with product recalls due to contamination, packaging issues and misrepresentation of ingredients in Nestlé products. This has resulted in inventory losses and increased logistics costs for restocking, thus affecting the company's profits. In addition, food safety incidents can immediately erode consumer confidence. This has led to a decline in product sales in the market. Therefore, to control the processing steps according to good quality for food, companies need to have and implement Good Manufacturing Practices (GMP) and Hazard Analysis and Critical Control Points (HACCP) systems that have been recognised internationally.

2.3 Supply Chain Inefficiencies and Lack of Transparency Nestlé, a company that operates globally and has thousands of suppliers, also experiences a major problem in the product production process, namely supply chain inefficiency.

Although the logistics system is large because it involves the global market, supply chain inefficiency arises as a result of weak transportation systems and suboptimal warehousing processes. This often happens in developing markets where the use of logistics is very challenging and required for the process of obtaining raw materials and delivering finished products. Apart from that, the existence of transparency issues in the supply chain is the difficulty of tracking the source of materials transparently, which can result in Nestlé being

exposed to criticism from stakeholders and can affect the ethics and reputation of the company.

2.4 Increasing Sustainability Pressures Investors, consumers and environmental regulators are demanding responsible sourcing from Nestlé, causing the company to face sustainability pressure. This pressure is based on two main categories, namely carbon footprint and plastic packaging waste management.

Nestlé, known as the world's largest food and beverage manufacturer, is often the focus of public criticism of environmental issues, where packaging waste is a target due to environmental pollution. In this regard, Nestlé needs to use recyclable packaging, which forces the company to invest heavily in implementing research and development systems.

The pressure on sustainability, where reducing carbon emissions to achieve the net zero carbon target also requires large operating costs and immediate technological modifications.

Failure to achieve sustainability can have an impact on the company, such as affecting the company's reputation and also attracting the attention of regulators.

3.0 THE IMPACTS OF BLOCKCHAIN TECHNOLOGY ON NESTLE PERFORMANCE 3.1 Advantages 3.1.1 Reduction of Administrative and Transaction Costs Blockchain technology can reduce administrative and transaction costs in Nestlé's operations. This is done through the use of smart contracts that can help make agreements automatically. The sophistication of this tool can reduce costs because the company does not need to finance or obtain other tools for transaction processes and so on. It can also help reduce the need for manual intervention in the process of document disposal and verification of intermediaries. Nestlé can save costs, especially administrative labour costs and manufacturing time, which contributes to reducing operating costs. This can also have a positive impact where transaction efficiency in the entire supply chain will increase.

3.1.2 Quality Data Record cannot be Modified The impact of using blockchain technology can help Nestlé record food quality data such as processing date, raw material content used, storage temperature and test results obtained in the form of a digital ledger and cannot be modified. This can also prevent any modification of data records and manipulation of the data that has been recorded and can guarantee the integrity of the data as a result of the use of blockchain. With this transparent data, Nestlé and regulators can confirm that food quality standards have followed the regulatory steps in the supply chain. This technology helps Nestlé protect the reputation of its product brand and can quickly detect food quality and safety issues.

3.1.3 Increased Transparency and Traceability Supply Chain Blockchain technology can also help Nestlé companies address supply chain concerns and the sustainability of Nestlé products. This can be proven when this technology can track the raw materials used by Nestlé products. Every step in the supply chain starting from input to the output process and sent to the store, blockchain technology will record the product as a series of data points that are permanent and cannot be changed by anyone because they have been recorded by this technology. With the use of blockchain technology, it can increase transparency, where every raw material used in the product can be quickly traced when a problem arises related to product quality. In addition, blockchain can also detect and reduce the time to find out about quality problems during supply recalls because this tool can quickly detect the cause of every quality problem that occurs. This traceability and transparency can prove that Nestlé companies can provide ethical and sustainable products to suppliers, consumers and investors. Among them is raw material farming that is free from deforestation and public criticism related to the issue of child labour on supplier farms.

3.1.4 Sustainability and Compliance Verification The powerful component of blockchain technology, also known as smart contracts, can help manage sustainability pressures and strengthen Nestlé’s sustainability commitments. The necessary conditions should be met by Nestlé when using the technology to ensure that the programmable code can automatically execute the agreement. In the context of the supply chain, this component can verify the supplier’s compliance with sustainability standards where, when payments are made only to farmers or raw material suppliers, the data entered can be traced back to the fact that the product was produced through agricultural practices without the use of prohibited substances. The self-verification process using this smart contract tool can reassure consumers and investors that Nestlé’s sustainability commitments comply with operating rules. By using this component in blockchain technology, it can strengthen the company’s reputation and manage public pressure.

3.2 Disadvantage 3.2.1 High Capital Expenditure (CAPEX) and Operations The major disadvantage for the Nestlé company in using a blockchain system in the company is that it has a negative impact because this technology tool can cause increased operating costs. This can be proven by the fact that the Nestlé company needs to invest a considerable amount of capital to create a new information technology infrastructure, as well as sophisticated software licences to help support the digital ledger that has been provided.

In this regard, the use of blockchain technology tools requires capital because significant costs such as network fees will be incurred for the verification of each data entry as well as large data storage for all transaction records. Therefore, although this blockchain system is simple, it requires capital for expenditure for long-term efficiency.

3.2.2 Input Data Availability and Quality Issues The negative impact that blockchain technology will have on existing issues is that it depends on the integrity of the data entered at the initial stage of the supply chain. The applicable principle, such as "Garbage In, Garbage Out", is needed because blockchain

technology only stores data that is given to it and entered. If it happens to temperature reading data and unclear regulatory compliance certificates falsified by suppliers, blockchain does not work properly and is meaningless. Therefore, this technology does not provide a great guarantee of data transparency and does not provide a solution to the root cause of food quality problems that come from lack of supervision. Nestlé companies need to invest in appointing strict audits for data verification to guarantee the food quality and food safety of these products.

3.2.3 Legacy System Integration Difficulties The use of blockchain technology resulting in supply chain inefficiencies is closely related to the fact that this technology takes a long time. This can be proven through Nestlé’s legacy systems that use old technology that impact the use of blockchain because the old technology may not be compatible with the blockchain architecture. To ensure that data flows smoothly and accurately with blockchain technology, many integration efforts are required and require expensive and complex costs. In addition, delays in this integration can result in operational disruptions where transaction processes will be inconsistent. The challenges of using this tool can also cause the realisation of blockchain benefits to be slow and put pressure on supply chain performance.

3.2.4 High Energy Consumption The use of blockchain technology on the company's performance has a significant impact due to the high energy consumption. Nestlé's goal is to achieve net zero carbon, but the use of this technology has a negative impact, as the PoW-based blockchain network that requires computer power to verify transactions can lead to an increase in the carbon footprint of Nestlé's IT operations. The impact of this carbon footprint can worsen the situation by putting pressure on sustainability and creating conversations from environmentally conscious consumers.

4.0 RECOMMENDATION 4.1 Implementing Pilot Project Nestlé needs to implement a pilot project to address issues that arise within the company to see the effectiveness of using blockchain technology in solving the problems that occur.

Blockchain technology should be tested on products that have a history of concerns about safety, product quality and traceability. Among the products involved are coffee, dairy products, palm oil, cocoa and baby food. These products have a history of being often associated with pollution issues and non-compliance with environmental standards. The use of blockchain technology for Nestlé products that are categorised as critical is to ensure that the origin of raw materials can be monitored, record the movement of products from consumers in real time and be able to verify standard certification. With blockchain technology, it can help all these problems effectively and efficiently. The pilot project that was implemented was able to help Nestlé test the effectiveness of blockchain on a small scale before using it on a large scale for the supply chain. Through the feedback received, Nestlé was able to evaluate the effectiveness of the blockchain technology approach in terms of

tracking speed, data accuracy and user satisfaction. This technology can also help identify challenges such as employee training and system integration. As a result of the implementation of the project, Nestlé was able to use this technology in its company for all products to increase accuracy before releasing a product to consumers.

4.2 Investing Capital in Digital Infrastructure and Training Nestlé needs to invest in developing digital infrastructure and provide training to employees across the supply chain to ensure effective adoption of blockchain technology. The transition from old technology to new technology requires a deeper understanding of how users will collect data, enter data into the blockchain, and verify correct records. In addition, employees in quality, information technology (IT), and logistics departments need to be given regular training so that employees can adapt to the new technology system without disrupting productivity. By providing strong support to employees, Nestlé believes that blockchain can visualise the entire supply chain and make it easier for Nestlé to obtain records and access them transparently.

4.3 Integrating Blockchain with IoT and AI The high-impact technology integration can help Nestlé obtain data accuracy and monitor sustainability through internet of things technology and artificial intelligence. As a result of this combination, it can help the industry to overcome problems efficiently and sustainably.

This integration can help IoT sensors be installed in various parts of the supply chain to make it easier for Nestlé to access and obtain information easily as a result of remote monitoring. These sensors can help Nestlé monitor the level of pollution in each factory and automatically know the use of raw materials. In this regard, AI technology is also used to analyse data patterns that have been recorded in the blockchain tool. This tool can make it easier for Nestlé to track the reduction of food waste and optimise inventory.

5.0 CONCLUSION Blockchain technology helps in solving problems that arise in the Nestlé company, including issues faced such as economic, social and environmental ones. This technology proves to the Nestlé company the effectiveness of its tools in helping the company to gain transparency over products, increase accountability, strengthen the company's reputation through transparency and reduce inefficiencies in operations. In this regard, the effectiveness of the use of blockchain technology tools also helps in increasing Nestlé's commitment to consumer trust as a result of a system of transparency, sustainability and ethical sourcing. In the food and beverage industry, an important element needs to be emphasised to ensure that production companies are advanced and accepted by consumers: trust needs to be given transparently to the products offered. This can make success in the food and beverage industry sustainable and successful in the long term.

The implementation of blockchain technology in Nestlé companies brings various challenges that need to be accepted, such as high operating costs to finance blockchain and the need for suppliers; however, these concerns can be addressed through training programmes that have been implemented, use at scale according to the established regulations and strategic

partnerships, and integration with other digital tools. The benefits obtained from the use of this technology tool in Nestlé companies are that it can reduce the risk of fraud, and food safety and quality are improving. Environmental sustainability is improving, and supplier accountability is improving. In this regard, to ensure the healthy competitiveness of Nestlé companies in the future, Nestlé needs to make this blockchain technology a tool that can change the reputation for the better and can increase profits in the Nestlé food industry.

In conclusion, Nestlé companies need to use newly created technologies such as blockchain to assist in the operational processes and production of Nestlé products in the global market.

This technology can also be a catalyst in the digital transformation strategy in the long term and help Nestlé companies in facing problems of transparency, supply chain and so on. By adopting blockchain technology as an important tool that must be in the food and beverage production industry, the company can increase the trust of the Nestlé brand, reduce operational risks and strengthen the reputation of Nestlé companies globally for future generations.

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