Impact of Rising Logistics Costs on Supply Chain Transformation at Nestlé : A Qualitative Study of Scotland

Abstract

This thesis examines how the long term rises in logistics costs contribute to transforming the supply chain in a fast moving consumer goods (FMCG) industry that relies heavily on logistics. Based on the operations of Nestle Purina PetCare in Scotland, the research fills a crucial gap in the literature: despite the wide adoption of research on the dynamics of logistics costs, digital transformation, and supply chain resilience, their combined role as coordinated structural change drivers has been under researched, especially at the level of product division in geographically limited contexts.

A single case study design that is qualitative is used, supported by an interpretivist philosophy and inductive approach. Thematically analysed secondary data sources, such as peer reviewed articles, corporate reports (e.g., Nestle sustainability reports), industry analyses, policy documents published since 2020, are analysed using thematic analysis. The conceptual framework incorporates the dynamics of logistics costs, supply chain transformation, digitalisation and theory of resilience.

The thematic analysis of secondary sources suggests four interrelated themes. First, logistics cost escalation is driven by fuel price volatility, labour market constraints, third party logistics dependency, geographic and infrastructure constraints in Scotland, and post pandemic and geopolitical disruptions. Second, these pressures appear to trigger coordinated strategic adjustments in sourcing (towards total landed cost evaluation), distribution network design (consolidation and collaborative logistics), and inventory management (hybrid lean buffer approaches). Third, the transformation responses identified include structural network reconfiguration, supplier diversification, operational flexibility development, and sustainability cobenefits arising from efficiency based improvements. Fourth, digital visibility and predictive analytics function as enabling infrastructure, and resilience capabilities (absorptive, adaptive, recovery, and redesign) appear to be mutually reinforcing outcomes rather than discrete independent goals.

The study contributes an integrative conceptual model of cost driven supply chain transformation, a product division analytical perspective, and an interpretive account of digital resilience interdependence. In practice, it recommends that managers treat logistics cost escalation as a driver of strategic transformation, adopt total landed cost frameworks in sourcing evaluation, and codevelop digital and resilience capabilities as an integrated programme. A key limitation is that the study relies entirely on secondary data, which means the findings represent interpretive analysis based on publicly available sources and cannot confirm internal Nestlé decision making processes without primary interviews or internal documents. Future research should address this through primary and comparative studies.