SAP Project

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

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The amount of data that Canada would have to store also would be streamlined. Each of its grocery store, discount chain, and other retail customers in that country would be slotted into one of six customer groups. Uniform sets of data on trade promotions would be kept in each of those categories. Hewing to form would keep down the size of files.

But it hasn't been easy, even with country managers and SAP staff working on the problem. Even as late as Sept. 16, 2005, Canadian managers were meeting face-to-face with Gouin and Johnson in Vevey to wrestle with details on how to track and manage the trade promotions.

In India, changing over in mid-2005 was complicated by the fact that not only was Nestlé overhauling all of its business processes, but it didn't know what some of the key financial processes would have to be. At the same time it was converting to the GLOBE system, India was changing its tax structure, in all 29 states and six territories. Each would get to choose whether and how to implement a fee on the production and sale of products, known as a value-added tax. Meeting a May go-live date involved intestinal fortitude, Rolland says. Up until the last minute, the country's managers didn't know what would happen. That almost meant pulling the plug on the launch.

And the world over, managers learned that the smallest hitch in standardized systems means that product can get stopped in its tracks.

In Indochina, for instance, pallets get loaded with 48 cases of liquids or powders, then moved out. If a worker fails to manually check off that the right cases have been loaded on a particular pallet, all dispatching stops are held up until the pallet is checked. "A few small errors can cause a lot of problems," says Graham Campbell, the market head.

Even now, Johnson is not happy with the state of reports that are being generated for heads of factories and country managers. Summary reports on everything from raw material usage to labor spending are marred by delays and data that "is not that great." For now, Johnson is content with capturing exactly what materials are flowing through factories and making sure they are coded properly, so one type of sugar does not appear around the world as 12 different types.

But he wants reports that can quickly aggregate information from multiple plants worldwide, for faster response to sales trends. Now, at times, he has to settle for factory production reports being completed overnight and available at 9 a.m. each day for review.

Johnson would like to see the system available 24/7, with each screen of information coming up instantly. Even now, however, this is proving to be a "tuning challenge."

By September 2005, though, Nestlé had its rollouts pretty much in gear, and could handle one major go-live every month.

GLOBE has already taught Nestlé how to operate as a truly global company. Hafner points out that managers from the water businesses initially rejected the idea of collecting, managing and disseminating data in the same way as their counterparts in chocolate and coffee.

"Some managers figured that if they were able to produce all of the water or all of the chocolate they needed for their market locally, that should be enough," he says. "But the idea was to get Nestlé's vast empire to think, order and execute as one rather than a collection of disparate companies."

This could mean that a particular manufacturing plant in a particular manager's region might be asked to produce double or triple the amount of coffee it had in the past. Or it might mean that particular plant would be shuttered.

So, while the company did away with data centers for individual countries, each one does now have a data manager. The task: Make sure the information that goes into GLOBE's data centers is accurate and complete.

If Nestlé can indeed achieve its original three goals-standardized processes, data and systems-it figures its country managers can concentrate more on what really matters: serving customers.

"If a market drops or a market takes off, you want to respond," says Bob Belshaw, the chief operating officer of Insight, a supply chain consulting firm.

The overall effect on the company is still being quantified. Only 30% of its business ran on GLOBE processes by the end of 2005. The goal by the end of this year: 80%.

But 100% perfection will never be possible, Johnson says, if speed is also part of the equation. "With speed comes a tolerance for a lack of perfection," he says. "And that is a very important point. Because Nestlé [tends to be] quite perfect on things. And this tolerance that, OK, I'll take 80% today versus 100% five years from now, is a challenge.

"Hey, it's not all going to work perfectly," he says, just before he embarks across a side street in Vevey to tackle the Canadian trade promotions problem.

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: Nestlé By the Numbers

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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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