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    Enterprise Resource Planning - Nestle

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    Lin Retez
    Nestlé is a large multinational food and beverage company based in Switzerland. In the late 1990s, Nestlé USA implemented an ERP system from SAP over six years to integrate its various brands and divisions. The initial implementation faced resistance and chaos due to a lack of involvement from management and employees. A change in project management in 2000 focused on improving integration, employee involvement, and testing based on feedback. This led to a successful implementation where Nestlé realized significant cost savings from improved demand forecasting and reduced inventory through a common database and business processes. The experience showed that successful ERP implementation requires changing how people work, not just installing new software.

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    Enterprise Resource Planning - Nestle

    Uploaded by

    Lin Retez
    640 views17 pages
    Nestlé is a large multinational food and beverage company based in Switzerland. In the late 1990s, Nestlé USA implemented an ERP system from SAP over six years to integrate its various brands and divisions. The initial implementation faced resistance and chaos due to a lack of involvement from management and employees. A change in project management in 2000 focused on improving integration, employee involvement, and testing based on feedback. This led to a successful implementation where Nestlé realized significant cost savings from improved demand forecasting and reduced inventory through a common database and business processes. The experience showed that successful ERP implementation requires changing how people work, not just installing new software.

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    Management Information System

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    Enterprise Resource Planning_Nestle

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    Nestlé is a large multinational food and beverage company based in Switzerland. In the late 1990s, Nestlé USA implemented an ERP system from SAP over six years to integrate its various brands and divisions. The initial implementation faced resistance and chaos due to a lack of involvement from management and employees. A change in project management in 2000 focused on improving integration, employee involvement, and testing based on feedback. This led to a successful implementation where Nestlé realized significant cost savings from improved demand forecasting and reduced inventory through a common database and business processes. The experience showed that successful ERP implementation requires changing how people work, not just installing new software.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    640 views17 pages

    Enterprise Resource Planning - Nestle

    Uploaded by

    Lin Retez
    Nestlé is a large multinational food and beverage company based in Switzerland. In the late 1990s, Nestlé USA implemented an ERP system from SAP over six years to integrate its various brands and divisions. The initial implementation faced resistance and chaos due to a lack of involvement from management and employees. A change in project management in 2000 focused on improving integration, employee involvement, and testing based on feedback. This led to a successful implementation where Nestlé realized significant cost savings from improved demand forecasting and reduced inventory through a common database and business processes. The experience showed that successful ERP implementation requires changing how people work, not just installing new software.

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    © All Rights Reserved
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    ERP IMPLEMENTATION

    COMPANY BACKGROUND

    • Swiss transnational food and drink company


    • Vevy, Vaud, Switzerland
    • Formed by two separate Swiss enterprises: Anglo-
    Swiss Milk Company and Farine Lactee Henri Nestlé.
    • 447 factories, operates in 194 countries, and employs
    around 339,000 people.
    • Largest food company in the world
    -revenues and other metrics, 2014
    `
    Twenty-nine of Nestle brands have annual sales
    of over CHF1 billion
    Nespresso, Nescafe, Kit Kat, Smarties,
    Nesquik, Stouffer’s, Vittel, and Maggi.
    Mark Schneider Company Background
    CEO
    2
    Nestlé USA implemented ERP system in 1997
    scheduled to run over the course of six years
    ending in the first quarter of 2003
    - BEST (Business Excellence
    through Systems Technology)
    -budgeted $200 million and
    would implement 5SAP modules: purchasing,
    financials, sales and distribution, accounts
    payable, and accounts receivable.

    “Transforming the separate brands


    into one highly integrated company”
    “One Nestlé”
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    NESTLÉ Trading Worldwide
    Sales: USD 51,112 million

    YEAR 2001
    Worldwide Sales: USD 51,112 million
    Trading Profit: USD 5,766 million
    Net Profit: USD 3,617 million
    Factories: in 85 Countries
    Real Internal Growth: 4.4 %-US operations account
    for nearly 20% of worldwide sales for Nestlé

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    ERP at NESTLE USA
    FAILURE AND
    SUCCESS CASE

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    NESTLE COMPANY SITUATION

    • Initially, Nestlé was a collection of independently operating brands, however in 1991,


    the brands were unified and reorganized into Nestlé USA

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    SAP Proposal –
    One Nestlé,
    Under SAP (1997)

    • One Nestlé was to reflect the goal of transforming the separate brands
    into one highly integrated company with a set of best practices that
    would become common work procedures for every Nestlé division (all
    divisions would give up their old approaches and accept the new One
    Nestlé way)
    • Data was an important factor to be complied from each division in order to implement a common
    structure across the company.
    • SAP system would be customized around uniform business processes

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    NESTLE USA
    A Case of FAILURE and SUCCESFUL ERP
    • In 2000, Nestlé SA signed a 280 million US dollars
    contract with SAP to install an ERP system for its global
    enterprise
    • The Switzerland-based consumer goods giant intends
    to use the SAP system to help centralize a
    conglomerate that owns 200 operating companies and
    subsidiaries in 80 countries

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    ERP IMPLEMENTATION PROBLEMS
    • Initial SAP would include 5 modules:
    Purchasing Sales and distribution
    Accounts payable and accounts receivable
    Financial Supply chain
    • Each would be deployed across every Nestlé division.
    • BEST ((Business Excellence through Systems Technology)

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    ERP IMPLEMENTATION PROBLEMS Cont.

    • Process installation was faced with resistance at all levels and chaos
    was diffused across the company.
    • The problem was the lack of involvement of direct supervisory levels.
    • Employees’ acceptance of the system: The workers could not
    understand the system and the new processes -lack of proper training
    and expertise-.
    • Divisional executive. No one was interested anymore to know how the
    new processes will function (turnover among employees reached 77%)
    • Technical difficulties between the modules:
    The modules were uniform across divisions but were not
    integrated between themselves.
    Example: A salesperson giving a valuable customer a discount rate and entering into the new
    system will not be identified by the accounts receivable department.

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    CHANGE OF PROJECT MANAGEMENT IN 2000
    • Working on integration points and improving system based
    on initial feedback and internal testing (employees feedback)
    • Decision made was to start all over and re-visit all new
    processes starting with the business requirements rather
    than trying to fit the project into the desired shape;
    • This time supervisory levels and management involvement
    was key
    • Employees involvement and feedback was also a determining
    factor in processes development.
    • To date, SAP system has allowed Nestlé to reduce inventory
    and save on supply chain cost; time and money saved was an
    advantage

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    ERP IMPLEMENTATION SUCCESS

    • Nestlé has already achieved significant ROI with the largest chunk of
    savings from better demand forecasting.
    • "The old process involved a sales guy giving a number to the demand planner who turns the
    number over to factory, and the factory not convinced with the number would change it….

    • With SAP in place, common databases and business processes lead


    to more trustworthy demand forecasts for the various Nestlé
    products.
    • Nestlé is using the same data, it can forecast down to the
    distribution center level allowing the company to reduce inventory
    and the redistribution expenses.
    • Savings are estimated to be in the order of 325 million US Dollars
    per year through SAP Lesson learnt:
    • “there is a big difference between installing software and
    implementing a solution”

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    LESSON LEARNED

    “There is a big difference


    between installing software
    and implementing a solution”
    - Dunn, CIO
    Enterprise wide resource planning involves much more than simply
    installing software, it is more changing the way people work (planning
    and implementation)
    NESTLE USA

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    SOURCES

    1. Worthen, Ben, “ Nestlé's ERP Odyssey”, May 15, 2002


    Issue of CIO Magazine.
    2. https://www.cio.com/article/2440821/enterprise-
    resource-planning/nestl--s-enterprise-resource-
    planning--erp--odyssey.html?page=2, retrieved July
    20, 2018

    3. http://www.ir.nestle.com/home-
    frameset.asp?largeur=1024, retrieved July 20, 2018

    4. Derek D., ERP Nestle, 2004

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    ThankYou

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