Nestlé's Enterprise Resource Planning (ERP) Odyssey

By Ben Worthen

PAGE 2

Regardless of the project’s exact ROI, the lessons learned are real. The primary lesson Dunn says she has taken away from the project is this: No major software implementation is really about the software. It’s about change management. "If you weren’t concerned with how the business ran, you could probably [install the ERP software] in 18 to 24 months," she says. Then "you would probably be in the unemployment line in 19 to 25 months."

Nestlé learned the hard way that an enterprisewide rollout involves much more than simply installing software. "When you move to SAP, you are changing the way people work," Dunn says. "You are challenging their principles, their beliefs and the way they have done things for many, many years."

The Problem: 29 Brands of Vanilla

Vanilla may be the world’s least exciting ingredient?the word is even a synonym for bland. But that wasn’t the case at Nestlé USA, where vanilla represented a piquant plethora of inefficiencies and missed opportunities.

Before 1991, Nestlé was simply a collection of independently operating brands, such as Stouffer’s and Carnation, owned by the Swiss-based parent. In 1991, the brands were unified and reorganized into Nestlé USA. Even so, the new company continued to function more like a holding corporation than a single entity. Divisions still had geographically dispersed headquarters and were free to make their own business decisions, although they now reported to corporate Nestlé USA executives in Glendale rather than in Vevey, Switzerland. The new company was trying to introduce economies of scale and common practices, but years of autonomous operation proved an almost insurmountable hurdle.

In 1997, a team examining the various systems across the company found, among many other troubling redundancies, that Nestlé USA’s brands were paying 29 different prices for vanilla?to the same vendor. "Every plant would buy vanilla from the vendor, and the vendor would just get whatever it thought it could get," Dunn says. "And the reason we couldn’t even check is because every division and every factory got to name vanilla whatever they wanted to. So you could call it 1234, and it might have a whole specification behind it, and I might call it 7778. We had no way of comparing."

While the American brands were willing to go about their business as autonomous companies?headaches be damned?the Swiss parent knew that similar problems would continue. In 1991, the same year that Nestlé USA was created, Dunn, then associate director for application systems of Stouffer’s Hotels, one of the many Nestlé brands, went to Switzerland to help implement a common methodology for Nestlé projects worldwide. In 1995, she was promoted to assistant vice president of technology and standards for Nestlé SA, where she came up with technology standards for every Nestlé company to follow. Dunn figured that common systems across the Nestlé empire would create savings through group buying power and facilitate data sharing between subsidiaries.


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