Project Costs

By Tom Steinert-Threlkeld  |  Posted 2006-01-20 Print this article 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

: Capped; Project Schedule: Changed Again">
To stay under the 1.9% cap, the third GLOBE rollout plan would call for 80% of the company to be on GLOBE by the end of 2006.

This central benchmark would have a side benefit: It produced a local benchmark as well. Each country would have to keep its technology spending, even during the rollout, to less than 1.9% of its sales. Which ensured that costs would not go out of control and profits-which determine bonuses and other benefits-would be protected as well.

As 2002 turned into 2003, the cap served its purpose. In Europe, Asia and elsewhere, all rollouts spent less than 1.9% of sales on software, hardware, training and operations. Even as 2005 came to a close, Johnson noted that no rollout had burst through the ceiling.

By the fall of 2005, almost 25% of Nestlé was running on the GLOBE templates. And Johnson was confident that, indeed, 80% of the company would operate on the new standardized processes by the end of 2006.

At the end of September 2005, 15 countries were in the middle of rolling out GLOBE methods of conducting business. Just like his mid-2000 prediction, 3,500 people were at work deploying GLOBE templates and practices.

At GLOBE's technology center in Vevey, 250 Nestlé engineers and managers worked in sparse cubicles in a former warehouse, developing and adjusting the information systems that would enforce the company's revamped processes. Another 200 contractors joined them. In each rollout, 100 business and technology executives managed the deployment, or 1,500 all told, at the time.

Another 1,500 worked in the three regional GLOBE data centers, one for each major zone: the Americas, Europe and Asia-Oceania-Africa.

Of course, that was five years into a project that was supposed to be largely completed two years earlier. And getting to 3,500 hadn't seemed like a layup in October 2001, when Johnson offered, seriously or as a stunt, to give up his job to any taker.

Back then, he had each country appoint a GLOBE manager, to ensure buy-in and create a network of managers around the world who could consult with each other on challenges they faced and solutions they'd found. Of course, that wasn't part of the pitch. "What exactly they were going to do wasn't so clear at the time," Johnson says. But it was a start.

He also created a steering committee in Vevey. These were senior Vevey-based executives, from finance, marketing, production and human resources, as well as a vice president from each zone. The VPs would act as the ears and agents of the zone chiefs, such as Garrett and Olofsson.

Together, they would establish schedules for rollouts and manage the rollout teams. They would oversee the collapse of 100 data centers into just three regional centers, plus the fourth in Vevey. This would cut down on duplicative operations, and reduce staff and overhead. Yet it would make each region a part of the GLOBE infrastructure, responsible for its upkeep; each zone would manage and maintain its own data center. The Vevey center would maintain the templates, best-practices libraries and central functions.

But when they got started, they didn't even have a basic way to know if they were doing well in whatever they were supposed to be doing. There was no criterion for success.

Story Guide:

Nestlé Cooks Up A Global Supply Chain

  • One Supply Chain, 127,000 Products
  • Signed: Global Project Manager; Undefined: The Project
  • Project Plan: Finalized; Schedule: Not So Much
  • Drafting a Project Team of Business-Unit All-Stars
  • Standardizing IT: No So Tough; Standardizing Managers: Not So Easy
  • Project Costs: Capped; Project Schedule: Changed Again
  • Rollout: Fix it as You Go; Goal: Customer Can't Feel the Pain
  • SAP Project: Global; Computing Resources: Limited
  • Nestlé By the Numbers
    Player Roster: Who's Who Among Nestlé Project Planners
    Roadblock: Regional Managers
    Hurdles Overcome: Deploying a Common Global System
    Base Technologies: Nestlé
    SAP: Not Pretty, But It Did the Job

    Next page: Rollout: Fix it as You Go; Goal: Customer Can't Feel the Pain

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    Tom was editor-in-chief of Interactive Week, from 1995 to 2000, leading a team that created the Internet industry's first newspaper and won numerous awards for the publication. He also has been an award-winning technology journalist for the Dallas Morning News and Fort Worth Star-Telegram. He is a graduate of the Harvard Business School and the University of Missouri School of Journalism.

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