Nestle Tries for an All-for-One Global Strategy
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Part Four Building and Managing Systems
Nestlé Tries for an All-for- One Global Strategy
CASE STUDY
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estlé is the largest food and beverage company in the world. Headquartered in Vevey, Switzerland, the company has annual revenues in excess of $70 billion and nearly 250,000 employees at 500 facilities in 200 countries. Best known for its chocolate, coffee (it invented instant coffee), and milk products, Nestlé sells hundreds of thousands of other items, most of which are adapted to fit local markets and cultures. Traditionally, this huge firm 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 had 80 different information technology units that ran 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. However, Nestlé’s management 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 used 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 then extended its enterprise systems strategy to all of its facilities to make them act as a single-minded e-business. Once this project is completed, Nestlé will able to use sales information from retailers on a global basis to measure the effectiveness of its
Part Four Building and Managing Systems
Nestlé Tries for an All-for- One Global Strategy
CASE STUDY
N
estlé is the largest food and beverage company in the world. Headquartered in Vevey, Switzerland, the company has annual revenues in excess of $70 billion and nearly 250,000 employees at 500 facilities in 200 countries. Best known for its chocolate, coffee (it invented instant coffee), and milk products, Nestlé sells hundreds of thousands of other items, most of which are adapted to fit local markets and cultures. Traditionally, this huge firm 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 had 80 different information technology units that ran 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. However, Nestlé’s management 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 used 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 then extended its enterprise systems strategy to all of its facilities to make them act as a single-minded e-business. Once this project is completed, Nestlé will able to use sales information from retailers on a global basis to measure the effectiveness of its