ERP Implementation at

Nestle

Agenda
O Benefits of ERP in F&B Industry
O About Nestle
O Need for Implementation
O ERP Project Planning
O General Implementation of ERP
O Implementation in Nestle
O Results
O Conclusion

Benefits of ERP in F&B

O Keeping Inventory lean
O Operate more efficiently
O Improve inventory turnover
O Improve quality control
O Compliance management
O Traceability of product
O Improve order fulfilment and accuracy

O Making smarter buying decisions with reduced costs

O Streamline product receiving
O Improve account accuracy and management

About Nestle
O Multinational food and beverage company from 1905
O Presence in 194 countries and headquartered in Switzerland
O Largest In revenues , $ 92.6 billion
O Nestle USA, a subsidiary of the Swiss conglomerate formed in early

1990s
O Employees: 16,000 and Revenues: $ 8 billion
O Major brands: Alpo, Coffee-Mate, Nescafe, Swee Tarts and Tasters

Choice
O Year 1997: Leveraging IT to build competitiveness and reduce cost

inefficiencies

Need for ERP implementation

O In 1991, Nestl USA reorganized itself and different

brands were brought under the parent American control

O Each division was still free to make its own decisions
O Joe Weller, CEO - Nestl USA, wanted to integrate the

company
O Common systems would facilitate data sharing among

subsidiaries & enable group buying

O Problems in the current system were identified 29

different pries to procure vanilla

ERP Project Planning

O BEST: "business excellence through systems technology."
O Three- to five-year plan with estimated cost of $200 million.
O More

than

software

change

business

process

reorganization
O Project team of 50 top business executives and 10 senior

information systems professionals developed Best Practices

O Smaller technical team - to set up a common data structure
O Plan completed by March 1998

Supply
Chain
Module
(Manugistic
s)

Distribution
Module SAP

Sales
Module SAP

Nestl
e USA
-ERP

Purchasing
Module
-SAP

Financial
Module SAP

Implementation in Nestle
July 1998
Development of the modules began
1999 - Employees acceptance
Employees did not understand how to use the new system and did not
understand the new work processes they were being forced to adopt
June 2000 - Technical difficulties
In the rush to beat the Y2K deadline the project team had overlooked the
integration points between the modules.
2001 New Blueprint
Designing a new blue print that would overcome the technical difficulties

2002 - Savings were identified

2003 Last roll out happened in first quarter of 2003

Results
By
By 2002,
2002, Nestle
Nestle USA
USA realized
realized a
a savings
savings of
of $325
$325
million
Mostly
in
the
area
of
supply
chain
million Mostly in the area of supply chain
improvements
improvements
With
With SAP,
SAP, databases
databases and
and business
business processes
processes
lead
to
trustworthy
demand
forecasts
lead to trustworthy demand forecasts for
for the
the
various
various Nestle
Nestle products
products
Nestle
Nestle USA
USA has
has come
come together
together as
as one
one
organization.
Simplify
operating
procedures
organization. Simplify operating procedures and
and
allow
allow for
for the
the centralization
centralization of
of functions
functions
Employees
Employees responsibility
responsibility is
is to
to stay
stay focused
focused on
on
continuous
improvement
rather
than
simply
continuous improvement rather than simply
trying
trying to
to maintain
maintain existing
existing systems
systems


Conclusion
Breakdowns occur in spite of prior planning
Software Implementation is more about Change management
Important learning from Nestle USA ERP implementation

Involve right individual from the beginning of the process.

Plans must be flexible enough to change mid-stream to overcome

obstacles that appear during the project

ERP implementations combine disparate data sources, re-engineer

processes, and involve large numbers of users and locations.

The difference between success and failure is an organizations

ability to rally and work together during difficult times to reach an

end goal.

Queries??