CASE STUDY ANALYSIS – NESTLE

COMPANY

Introduction
As the technology world has changed dramatically over the years, it has become more necessary for
organizations to keep up with the latest developments. For a long time, many businesses have relied
on human labor in their manufacturing operations. It is the most advantageous moment for
businesses to embark on a digital transformation journey. When companies utilize digital methods of
production and adoption of procedures, the products become more attractive and accurate for the
benefit of their customers, which increase their value. Organizations may benefit from digital
transformation by reorganizing their organizational structures. The internet market is steadily
growing and being embraced by a large number of people, resulting in a surplus market (Dieringer,
2004). Organizations that change their ways of doing things quickly will be better positioned to adapt
to a changing market and, as a result, will achieve greater levels of success in the long run. Simply
put, digital transformation is quickly increasing the performance of your business when it comes to
reaching the appropriate market for the goods you produce. It alters the way leaders see their
organization's vision, and it enhances it by enhancing the customer experience, developing new
business models, and assembling more automated operations of the processes and operations of
the processes.

INTRODUCTION TO NESTLE

Nestlé is the world's biggest food and drinks business. Its sales in millions were 89,630.00 in 2008,
employing approximately 276,000 people worldwide. They aim to create excellent, nutritious, and
delicious meals made up of essential ingredients. These characteristics make Nestlé a unique
company that benefits from providing goods that satisfy all consumers. Following the skimming of
the Fortune 500 list of businesses, several selections were made by well-known firms except for
Nestlé Corporation. Since Nestlé's goods are nutritious and healthful and at the same time extremely
delicious, it seems that they are interested in doing the project for this well-known company (Ben,
2014).
According to Nestlé founder Henri Nestlé, Nestlé's goal is "to impact positively the social context in
which we act as responsible business citizens, taking due account of environmental standards and
societal ambitions that enhance the quality of life." In addition, Nestlé's mission and principles
should make Nestlé a prominent and competitive Nutrition, Health and Wellness Company that
offers better shareholder value by being a favorite corporate citizen, preferred employer, favorite
provider of preferred goods."

Over the years, Nestlé has established and maintains a solid reputation for the food industry. We
believe Nestlé is on the brand insistence stage. This implies that customers insist on the goods of
Nestlé, which is seen as an enormous benefit for the business. The legal position of Nestlé is a
company that comprises shareholders (Aalladice, 2017). Nestlé's headquarters are in Switzerland;
CEO is Peter Brabeck-Letmathe. According to the Global 500, the equity of the shareholders is
$46,006.2 million. The Executive Board represents the shareholder in the management of the
company.

Nestlé works with the manufacture of goods and thus manufacturing is its kind of company. Nestlé
manufactures a very similar set of goods. Its goods are manufactured similarly, with roughly
comparable pricing, which constitutes a fantastic product range. They make milk and chocolate,
water, food for babies, coffee, etc. Since Nestlé is a big company, they manufacture enormous
quantities. We know that, when a product is produced in big quantities, its manufacturing costs are
lower than those produced in small quantities (Delina, 2012). This means that these reduced
production costs enable Nestlé to put on the market its goods at affordable prices which directly
benefit customers. Moreover, they utilize a manufacturing program that incorporates green
technology that saves energy and doesn't pollute the air that helps customers.

DOES THE PAYBACK COME FROM - IT SAVINGS, SAVINGS ELSEWHERE

IN THE BUSINESS, HIGHER SALES, SOMETHING ELSE

Despite certain difficulties encountered during the installation of Nestle USA's ERP system, the
investment seems to be paying off. Nestle USA claimed to have saved more than $325 million as of
2002, claiming to have already achieved savings of this magnitude. The majority of these savings
came from improvements in the supply chain, particularly in demand forecasting and forecasting. An
example of the previous method was a sales representative providing a number to the demand
planner, who responded by saying, "Those people don't know what the heck they're talking about;
I'm going to give them this figure." The demand planner hands [that figure] on to the manufacturer,
which response by claiming that the demand planner has no idea what he's talking about. The
manufacturer then updates the serial number once again. Having SAP in place allows Nestle to make
more accurate demand predictions for its different goods because of the same databases and
business processes. Furthermore, since all of Nestle USA is utilizing the same data, Nestle can predict
down to the level of the distribution center in real-time (Vuksic, 2014).

Additionally, Nestle USA has gained the ability to work as a cohesive one, in addition to achieving
financial savings. Due to standardized databases, the issue of 29 distinct brands of vanilla has been
resolved, and each manufacturer now refers to vanilla in the same way when speaking about vanilla.
Moreover, they make use of standard processes that streamline operating operations and allow for
the consolidation of tasks such as the development of training protocols. It is no longer necessary to
tailor training to the specific requirements of each factory (Ciecierski, 2015). Because all locations
follow the same processes, it is only necessary to provide training materials once for all locations.
Furthermore, any Nestle USA employee may transfer to another plant without having to learn or
adapt to the new location's procedures.

Similarly, Nestle UK achieved comparable results with their ERP installation. In just two years, they
were able to recover the money they had invested in the system. Furthermore, Nestle UK has seen
lower inventory levels, better inventory management, and a more disciplined approach to business
operations, similar to their American counterpart. However, the ERP installation at Nestle UK had
the most significant impact on the development of a culture of continuous improvement. The
objectives for improvement are clear: first, capitalize on internal possibilities; second, improve
business-to-business relationships; and third, improve business-to-consumer relationships. After
implementing the ERP system, they recruited a process development manager, which demonstrates
their commitment to this philosophy. As the only link between the business and the Information
Technology department, this individual's only job is to ensure that staff remains focused on
continual improvement rather than just attempting to maintain current systems.

HOW TO GET THE INDIVIDUAL COUNTRIES TO TAKE PART AND BE

INVOLVED IN THE PROJECT?
Jeri Dunn, vice-president, and CEO of Nestlé USA, the US business worth $8.1 billion, is in danger of
being all too aware of it. In 1997 the firm headquartered in Glendale, Calif., started an SAP project
called Best (business excellence through systems technology). When it finishes, Best will have settled
for six years and over 200 million dollars (the same amount its global parent intends to spend). Dunn
now says at the end of the tunnel she sees the light. In the first quarter of 2003, the final rollouts will
take place. However, the implementation was full of dead ends and expensive errors. It is a
cautionary story, which teaches not just its Swiss parent but every Fortune 1000 firm that aims at
implementing company-wide software.

A few months after Nestlé US President and CEO Joe Weller created One Nestlé's phrase, Dunn's
appearance in spring 1997 reflected his aim of merging the different brands into a closely connected
business. In June, Dunn joined the financial, supply chain, distribution, and buying leaders to create a
key stakeholder committee to examine the right and wrong things in the business. When the time
arrived, Weller and other senior Nestlé executives were originally assigned a little over 2 hours to
deliver their results (Colvin, 2019).

The team rejected the deadline. "I told them that in the first 15 minutes they either throw me out or
canceled the rest of the day or we had a fantastic conversation," recalls Dick Ramage, supply chain
vice president and team member of Nestlé USA. "It took them an hour, but the rest of the day they
canceled."

"I don't believe they understood how odd," Dunn adds, referring to the state of the business. "We
had nine general ledgers and 28 client input points. We have many buying methods. We didn't know
how much we were doing with a specific salesman since each plant set up its vendor masters and
bought them on its own."

The stakeholder team soon provided Weller with an outline of significant changes in three to five
years. While an SAP package is the cornerstone of the proposal, Dunn said, "We made it very
obvious that it would be a restructuring of the business process and you could not accomplish this
without altering your method of doing business. It would entail suffering, it would be a long process,
and it was not a software project."

Despite this warning, it would become clear later that neither Weller nor the key players truly
appreciated the extent to which the best project changed the Nestlé business operations or the
amount of suffering it caused. "They still believed it was software," adds Dunn.

By October 1997, the SAP project consisted of a team of 50 top management and 10 senior IT
specialists. The team aimed to develop a collection of best practices that would become standard
work methods for each division of Nestlé (Elmonem et al , 2016). All of the division's production,
buying, accounting, and sales departments must abandon their previous methods and choose the
new Pan-Nestlé route.
On the technological side, a smaller team has spent 18 months analyzing each piece of data in each
department to create a consistent framework across the business. Vanilla would be code 1234 in
each division from now on. The SAP system would be tailored to consistent business operations. The
team chose not to utilize SAP on the supply chain since the supply chain module of the ERP business,
Advanced Planner and Optimizer or APO, was brand-new and thus hazardous. Rather, Nestlé went to
an SAP partner at that time. The supply chain module of Manugistics complied with all SAP
requirements and may be readily incorporated.

The main players had a strategy in place by March 1998. Would Nestlé deploy five SAP modules:
procurement, finance, sales and distribution, payable accounts, and debitable accounts? And the
supply chain module of Manugistics. Each would be implemented throughout each division of
Nestlé. For example, the buying group would use the same best practices and data as the purchasing
group for drinks.

Work on the development started in July 1998. The time limit for four modules was Y2K. The new
systems must be duplicated as code patches and in place for the change of the millennium. The
deadline was set by Nestlé USA. But his hurry caused almost as many issues as he resolved.

HOW DO YOU AVOID THE "KISS OF DEATH" WHICH WOULD SURELY

BE BESTOWED IN AN "IT PROJECT DRIVEN FROM THE CENTRE"
In the years before SAP, it is important to recognize that every company in every nation was under
its guidance and operated as an autonomous entity. The SAP system enabled the business to
enhance its operations via integration; nevertheless, the company was already operating efficiently
and successfully before the implementation of SAP. They would simply be required to submit an
annual report to HQ detailing their activities and spending.

The various nations would be required to abandon their traditional ways of doing things under the
terms of the Globe project. The most effective strategy for dealing with the task is to promote the
concept of becoming a model of business excellence. There must be a mention of the fact that the
project will bring about a common characteristic of the company and that it will also spread from
inside the organization, resulting in benefits to others (Gargeya, 2005). It would involve ensuring that
workers do not lose their jobs, but rather take on a more significant position in the organization. A
stalemate technical and standards team for information technology existed, which was very weak,
which made it difficult for the business to flow and, as a result, impossible to make choices based on
their recommendations. The SAP will mandate the adoption of template-based design from the
center where IT was handled, resulting in turmoil and a shift in the company's cultural way of doing
things, among other things. To improve the IT relationship and reduce the likelihood of chaos, the
company should educate the current IT staff on how to manage the new system's functioning. To
maintain employee engagement, it is necessary to provide them with a more powerful or
supervisory position.

Many businesses may try to "save money" by doing everything on an overtime basis, regardless of
whether or not the company has the necessary capabilities in-house, thus increasing individual
workloads by as much as 150 percent. This technique has the potential to be the "kiss of death" for
the program. This is a mistake that we see repeated over and over again in ERP installations. The
financial and emotional toll of what seems to be a never-ending cycle of extension reschedules, and
delays in implementations takes its toll on everyone involved (Lima, 2017). Many people get
depleted after putting in significant hours over an extended period. Resistance to change and a lack
of support the absence of a change management strategy as part of a program's design may make it
difficult for the program to be successful. Resistance to change is often induced by a variety of
factors.

 A failure to provide a compelling argument for change

 In the absence of apparent top-level support and commitment, there is a risk of failure.
 Inadequacies in information and communication
 Lack of participation by those who are in charge of working with the new procedures is
another issue.
 The attitude of arrogance A lack of end-user buy-in is often caused by a failure to engage
them in the project from the beginning, thus denying them the ability to write and own the
new system and procedures.

Miscalculation of the amount of time and effort required Another reason for ERP installation failure
is a miscalculation of the amount of work and time required to complete the project successfully.
Companies who approach the selection, assessment, and deployment of an ERP system in the same
way they would treat the purchase of a washing machine are destined to fail. A misalignment
between application software and business processes One of the most common reasons for ERP
installation failure is a misalignment between the application software and the business processes of
the organization.
CONCLUSION
Organizations benefit from SAP's ability to save money. Otherwise, it necessitates a significant
financial investment from the business throughout the implementation phase. In addition to
changing the viewpoint of IT and IS, the ERP also affects the whole operation of a company. It
supports the IT and IS department, which is having a difficult time accepting the many changes that
have taken place. A company that embraces the installation of SAP reaps numerous advantages in
the long run, including the ability to save millions of dollars in lost revenue.

REFERENCES

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