Professional Documents
Culture Documents
Submitted By:
Tom Jacob
Executive Summary
As any tool maker will tell you, it’s not the tool; it’s how you use it.... (An African Proverb)
Nestlé, the global market leader in Food & Beverage should make
optimal use of the vast amounts of data & information it possess by making informed decisions which
will help them to maintain their competitive edge. Facilitation of information & knowledge flow though
out the company will equip Nestlé to reap benefits from its sheer magnitude of operations. Accruing an
ES will enable Nestlé to do so.
To sum up, Nestlé should realise that the tool is not as important
as the people who uses it. The mindset of the people will determine if the tool is used correctly or not.
So let us start by changing the mind sets first.
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Contents
Introduction........................................................................................ 4
Data, Information & Knowledge Management.................................. 4
Data Sources & Management........................................................ 4
Information Sources & Management............................................ 5
Knowledge Sources & Management.............................................. 5
Core Processes & Higher Level Information Needs....................... 5
Implementation of Enterprise System............................................... 6
T.E.L.O.S. Analysis.......................................................................... 6
Methodologies............................................................................... 7
Managing Implementation................................................................. 7
Managing Change............................................................................... 8
Recommendations & Conclusion....................................................... 8
Reference........................................................................................... 9
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Introduction
Like water, this rising tide of data can be viewed as an abundant, vital and necessary resource. With
enough preparation, we should be able to tap into that reservoir - and ride the wave - by utilizing
new ways to channel raw data into meaningful information. That information, in turn, can then
become the knowledge that leads to wisdom. (Les Albertha 1995)
Nestlé, the largest Food & Beverage Company in the world, have
an estimated 8,500 brands, manufactures around 10,000 different products in nearly 500 factories in 83
countries and employs some 250,000 people. The company markets its products in 130 countries across
the world, with annual revenue of more than £71 billion in 2007. This report, which gives
recommendations on implementing an ES, analyse how an ERP system will improve their current
processes & practices. It also looks at the issues that might occur while implementing an ES
The planned ERP system will help Nestlé by improving the flow of
information in both its typical and cross functional activities. E.g.: Research Department will be able to
access marketing data to improve the product. ES can also be used to standardize the procedures across
the departments & countries. E.g.: Nestlé will be able to standardise its training systems all round the
globe. Thus, ES will add value at the core processes.
1) Technical Feasibility
Nestlé should make sure that it has the necessary technology to
make good use of an ES. As these systems are custom made, Nestlé should check if it can
integrate all the all its functions in to the ES. It should see if the existing hardware should be
changed or can be modified to the new system
2) Economic Feasibility
Nestlé should ask questions like is ES cost-effective? Do the
benefits outweigh costs? Cost Benefit Analysis is an important tool which checks the
practicability of projects. Nestlé should use methods like ‘Net Present Value’, ‘Payback period’,
and ‘Internal Rate of Return’ to do a CBA of implementing an ES.
‘Payback Period’ refers to the period of time required to recover the original investment. It can be
used to compare similar projects; in our case different ERP Systems. We can calculate Payback
Period by using a simple formula
Payback Period = Years x Original Investment / Total cash received
‘Net Present Value’ or NPV is a method for using the time value of money to assess the viability
of long-term projects. It measures the cash flow in present value terms. NPV sees if an investment
or project can add to the value of the company.
NPV=I0 + (I1/1+r) + (I2/(1+r)2+....(In/(1+r)n)
I = Income n = Year r = Discounted Rate
‘Internal Rate of Return’ is the annual rate at which the project is estimated to pay back the
investment. It is a metric used to decide if an investment should be made. It is shown as a
percentage and is the true interest yield expected from an investment.
The accuracy of CBA depends on the figures used. If similar project figures are not available
Nestlé will struggle to work out the accuracy of CBA. Another problem is that CBA cannot
measure the intangible benefits of the project.
3) Legal Feasibility
As Nestlé is a global organization, it should be made sure that the
new system doesn’t break any local regulations. E.g.: Different countries follow different
accounting practices. Nestlé should also understand the ‘terms and conditions of sale’ of the new
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system so that it can manage the system accordingly. It should also negotiate for extended after-
sales support.
4) Operations Feasibility
The current operating procedures of Nestlé will be subject to
change while implementing an ES. Decision making procedures will also be subject to change as
the new ERP System will implement de-facto standards in Nestlé. It is also important that the new
ES should support the process designs used by Nestlé (Harwood 2002).
5) Scheduling Feasibility
Nestlé should prioritise when it comes to scheduling the ERP
System. During the implementation of the ES, there will some departments which will ‘go-live’
early than others which might cause problems. This should be planned for and employees should
be made aware of this. It can also go for the ‘Big Bang’ approach, which is a high risk strategy.
Methodologies:
2) Modular Approach
The new ES is phased-in to the company in this approach. They are
often integrated division by division in to the company. Here the new ES will run alongside with
the legacy systems for a period of time. This is a low risk strategy as the switch over happens
gradually (O’Leary 2000).
Managing Implementation
While implementing the ES, care should be taken to focus on
people as well as the technical aspects. The ERP System will compel the employees of Nestlé to change
their work culture by forcing them to collaborate with various departments, obtain new skill sets and take
on new responsibilities (Shanks, Seddon, & Willcocks 2003). E.g.: New reporting procedures & protocols
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implemented by the ES. This will lead to insecurity, hesitation and fear in some employees which will
reflect as ‘resistance to change’.
Managing Change
Change management is one of the most crucial tasks Nestlé should
engage in if it intends to successfully implement the ERP System. It is a continuing process required
throughout ERP implementation. Change management include understanding the implementation
objectives, identifying potential problems E.g.: employee readiness and developing strategies to counter it
(Cameron & Green 2004). Employees should be made aware that for all the technical marvel of an ERP
System, post- implementation business should be customer oriented.
this and initiate a clear strategy from the very beginning. This might include training, counselling and
communicating about the ES. Nestlé should realise that a perfect synergy of its people and systems should
be the ultimate implementing goal of such a system, which in turn will facilitate better customer service.
Reference
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