Project PlanBy Tom Steinert-Threlkeld | Posted 2006-01-20 Email Print
More than five years ago, the world's largest food maker set out to standardize how it operates around the world. GLOBE, or the Global Business Excellence program, is aimed at getting far-flung operations to use a single system to predict demand, purchase: Finalized; Schedule: Not So Much">
Ironically, the GLOBE initiative would be launched in earnest on a date that would have the most historic significance in the U.S.
It was July 4, 2000. Independence Day, in America.
But Johnson wasn't concerned about fireworks; he had his own explosive issues to deal with. A team that included Johnson, Gouin, a hand-picked group of 12 senior Nestlé executives from varying backgrounds-including marketing, production and finance-and advisers from SAP and PricewaterhouseCoopers had two weeks to figure out whether the GLOBE project could meet its baseline goal of getting 70% of the company onto a standard set of software-enforced best practices by the end of 2003.
Nestlé "laid down the law: standardize everything," Hafner says. "The plan did not allow for any deviation."
Changing the date or scope was a risky proposition. The board's target date-December 2003-had already been published in a company newsletter. But this was no small undertaking. Besides being unable to unify its 14 SAP systems, it had taken the confederacy nearly six years in the late 1980s and early '90s just to agree on a companywide e-mail system.
And this project was orders of magnitude more involved and complex. Instead of just 14 countries, it would affect 200. Instead of just one business process-text communication-it would touch every aspect of every daily routine. Change would come in gobs, not small steps.
Using benchmarks they could glean from competitors such as Unilever and Danone, and assistance from PricewaterhouseCoopers consultants and SAP's own deployment experts, Johnson and Gouin soon came to a conclusion they had largely expected going in: This project would take more people, more money and more time than the board had anticipated. Instead of measuring workers in the hundreds and Swiss francs in the hundreds of millions, as originally expected, the team projected that 3,500 people would be involved in GLOBE at its peak. And the cost would reach 3 billion Swiss francs-about $2.4 billion.
The money required was possibly the easiest "surprise" to sell. In effect, Gouin figured the company would have to spend 4 billion francs, or about $3.2 billion, if it continued to let each country choose and manage its own systems over the next five years. By contrast, even with the costs of changing processes and putting in place new software and data centers, GLOBE would be cheaper. All up-front and operating costs could be kept to 3 billion francs with GLOBE, a savings of about $800 million.
Besides recommending a multibillion-dollar spend, Johnson and Gouin were also saying that at the project's peak, 3,500 people would be working on rolling out GLOBE's processes and systems. And, oh, by the way, if you commit to spending all that money and putting all those staff and contractors to work, you'll have to push back your expectations of when you can have results.
The new target: Putting the "majority of the company's key markets" onto the GLOBE system by the end of 2005, not 2003.
Brabeck, according to Johnson, "was not that shocked." And Corti "probably knew" it would be costly. But the rest of the executive board was surprised, he says.
Of course, the board had a surprise for Johnson in turn.
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