Nestle Struggles with Enterprise Systems
PSCM (2006): MIS Course work
Case study: Nestlé Struggles with Enterprise Systems
Nestlé SA (www.nestle.com) is a giant food and pharmaceuticals company that operates virtually all over the world. Headquartered in Vevey, Switzerland, the company had 2004 revenues of $76 billion and more than 253,000 employees at 500 facilities in 80 countries. Best known for its chocolate, coffee (it invented instant coffee), and milk products, Nestlé sells thousands of other items, most of which are adapted to fit local markets and cultures.
Traditionally this huge firm has allowed each local organization to conduct business as it saw fit, taking into account the local conditions and business cultures. To support this decentralized strategy, it has had 80 different information technology units that run nearly 900 IBM AS/400 midrange computers, 15 mainframes, and 200 UNIX systems, enabling observers to describe its infrastructure as a veritable Tower of Babel. Interestingly, despite its size, the company has had no corporate computer center.
However, Nestlé's management has found that allowing these local differences created inefficiencies and extra costs that could prevent the company from competing effectively in electronic commerce. The lack of standard business processes prevented Nestlé from, for example, leveraging its worldwide buying power to obtain lower prices for its raw materials. Even though each factory uses the same global suppliers, each negotiated its own deals and prices.
Several years ago, Nestlé embarked on a program to standardize and coordinate its information systems and business processes. The company initially installed SAP's R/3 enterprise resource planning (ERP) software to integrate material, distribution, and accounting applications in the United States, Europe, and Canada.
Nestlé is working on extending its enterprise systems to all of its facilities to make its 500 facilities act as a single-minded e-business. Once this project is completed
Case study: Nestlé Struggles with Enterprise Systems
Nestlé SA (www.nestle.com) is a giant food and pharmaceuticals company that operates virtually all over the world. Headquartered in Vevey, Switzerland, the company had 2004 revenues of $76 billion and more than 253,000 employees at 500 facilities in 80 countries. Best known for its chocolate, coffee (it invented instant coffee), and milk products, Nestlé sells thousands of other items, most of which are adapted to fit local markets and cultures.
Traditionally this huge firm has allowed each local organization to conduct business as it saw fit, taking into account the local conditions and business cultures. To support this decentralized strategy, it has had 80 different information technology units that run nearly 900 IBM AS/400 midrange computers, 15 mainframes, and 200 UNIX systems, enabling observers to describe its infrastructure as a veritable Tower of Babel. Interestingly, despite its size, the company has had no corporate computer center.
However, Nestlé's management has found that allowing these local differences created inefficiencies and extra costs that could prevent the company from competing effectively in electronic commerce. The lack of standard business processes prevented Nestlé from, for example, leveraging its worldwide buying power to obtain lower prices for its raw materials. Even though each factory uses the same global suppliers, each negotiated its own deals and prices.
Several years ago, Nestlé embarked on a program to standardize and coordinate its information systems and business processes. The company initially installed SAP's R/3 enterprise resource planning (ERP) software to integrate material, distribution, and accounting applications in the United States, Europe, and Canada.
Nestlé is working on extending its enterprise systems to all of its facilities to make its 500 facilities act as a single-minded e-business. Once this project is completed