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Case B: Nestlé

66020 Mariana Daniel (50%) 66967 David Mendes (50%)

1. Conceptual Model

Group B22

– David Mendes (50%) 1. Conceptual Model Group B22 2. Scenario Analysis Before the core changes

2. Scenario Analysis

Before the core changes implemented by the Nestlé firm, the business processes of each local organization were independent and each organization was run independently from the others, taking into account the local conditions and business cultures. To change that, Nestle decided to standardize and coordinate the whole company’s information systems and business processes. During this change of paradigm, Nestlé made some changes in their business processes and created some new ones like:

Using SAP (Enterprise Resource planning software) to integrate Nestlé’s model business process in purchasing, financials, sales and distribution.

SAP was also used to extend the software to the Web. The employees, by following the universal model existent in Nestlé and present in their personal page in the Web, made sure that all do the same job in the same way.

After some inability by the company level workers using Manugistics supply- chain module, the company adopted SAP supply-chain software. This software associated with the other modules permitted to join sales information from retailers on a global basis to reduce overstocking and spoilage caused by having products sit around too long in the shelves.

The business processes standardized by SAP that are followed by the entire company are supported by a Transaction Processing System (TPS) considering that TPS is responsible for keeping track of elementary activities and transactions of the organization like sales, material flow, receipts, etc. The SAP supported by TPS allowed Nestlé to reduce costs in the long term and enhance group buying, by using common systems throughout the global firm.

Case B: Nestlé

3. Motivation and Objectives

Group B22

The decentralized strategy that Nestlé originally had in each of their local organizations, generated extra costs and inefficiency for the company, just like:

multiple purchasing systems (each one with different prices), lack of information about certain products, lack of standard business processes, etc.

Those local differences generated by that strategy prevented Nestlé to achieve one of his motivations: to compete effectively in the E-commerce. To surpass these problems, Nestlé focused on one objective: to standardize and coordinate the information systems (IS) and business processes (BP) of the entire company, in order to integrate the information of the company and to make Nestlé act as a single-minded business.

There were a conjunction of management, organization, and technology factors that contributed to achieve that objective. Those were:

Technology: To support the union of the information systems and of the business processes, Nestlé implemented an enterprise resource planning (ERP) software called SAP to integrate material, distribution and accounting applications in the US, Europe and Canada. They also created 5 computer centers to run ERP software.

Management: The vice-president and Chief Information Officer (CIO), Jeri Dunn was responsible for integrate the present technology into the firm’s business strategy; she created a team to study the company’s strengths and weaknesses and used that as a foundation to reorganize the way Nestlé does the business processes alongside their organizations.

Organization: Nestlé had established a project team of 50 top business executives and 10 senior information systems professionals. They developed a set of best practices to become common work procedures for manufacturing, purchasing, accountant and sales. A smaller technical team was responsible to examine all data for every item in all divisions and set up a common data structure for the whole company.

4. Impact

Positive: A long-term program to standardize and coordinate its information systems

and business processes (the ‘Best’ project ) via SAP, an ERP technological software. - Creation of a common data structure for the whole company that allows the optimization of the resources of the company.

- Development of a set of best practices that became common work procedures for manufacturing, purchasing, accounting and sales;

- Being capable of competing effectively in the world of Electronic commerce.

Negative: The original decentralization of the company brought some issues in the beginning when trying to implement the new business processes; nobody wanted to learn the new processes (the lower-level workers didn’t understand how to use the new system, and project help desk received an absurd amount of calls every day) - -During the 1 st implementation of the project, in the rush to be done in time, the team had failed to integrate the various modules (ex: the purchasing departments weren’t integrated with financial and sales software).