Nestle ERP Failure PPT

1. ERP FAILURE
OF NESTLE
By,
Anshul Hedaoo

2. ABOUT THE
COMPANY
• Founded by Henry Nestle.
• Headquartered in Vevey, Switzerland
• World’s biggest F&B company.
• Products:
• Milk products
• Baby food products
• Noodles
• Chocolates
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August 5, 2021
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3. PROBLEMS
LARGE NUMBER
OF EMPLOYEES
NO
CENTRALIZATIO
N
INCORRECT
IDENTIFICATION
NOT SCALABLE
2,30,000 employees at 500 facilities in 80 countries.
Each location acted on its own behalf and was free to make
their business decision.
During evaluation it was found that at different locations the
same item is referred with different codes.
9 different general ledgers and 28 different entry points of the
customer.
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4. PROBLEMS
DECENTRALIZED
PURCHASING
SYSTEM
NO VOLUME
ESTIMATION
PRICE
INCONSISTENCY
COMPETITIVE
DISADVANTAGE
Different prices for the same product
Every factory has its own vendor master for purchasing.
After examining it was found that there were 29 different prices
for a product to the same vendor.
More efficient system needed to survive in the global economy.
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5. SOLUTION
ERP
To solve the problems faced, Nestle began its
own ERP project named “BEST” (Business
Excellence through System Technology).
TIME & BUDGET
• To be finished till first quarter of 2003.
• Over $200 million
MODULES
ERP system consisting of 5 modules:
• Purchasing
• Finance
• Sales
• Distribution
• Supply chain
GOALS
• Consolidate operations at different locations.
• Centralize and control data.
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6. MANAGEMENT
MISTAKES
BPR, NOT SOFTWARE
Employees thought it would be a software project rather than a
business process re-organization.
NEW SYSTEM
Inability of the workers to understand the new changes.
INTEGRATION
By rushing, the team failed to integrate the modules properly.
NO SUPPORT
As the employees were left out of planning and development of the
system they were less willing to clear out the mess.
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August 5,
2021
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7. RE-
ASSESSMENT
PROJECT HALT
The project halted for 3 days in June 2000 to re-evaluate the future
of the project.
SOLUTIONS AFTER RE-EVALUATION
• Re-define business developments.
• Shape project timeline according to the needs.
• Communicate with the stakeholders, the project team and
different functional divisions.
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August 5,
2021
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8. RESULTS – ONE BIG
ORGANIZATION!!
• All of Nestle’s USA use a same system.
• Better sales and demand forecast.
• Cost savings by upto $325 million by 2002.
• Standardized training, procedures.
• By end of 2004, 10% of Nestle’s business was
operating with standard procedures, data systems.
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9. LESSONS LEARNED
COMMUNICATION
Not just introducing correct individuals but proper communications
plays a very important role in any project.
TRAINING
It is important that employees receive early and proper training
throughout the project. End-user testing can be very useful.
CAREFUL EVALUATION
It is important to understand and evaluate which business
processes need redesigning. If it is working then don’t fix it.
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August 5,
2021
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COOPERATION
The top priority is first gaining cooperation between the party/key
stakeholders and different divisions, and then carefully changing
business processes.

10. MY SUGGESTIONS
PROPER COMMUNICATION
In any project small or big, project communication is the first thing
that everyone involved in the project should do.
STAKEHOLDERS
It is very important to identify major stakeholders and to consult
with them regarding the major elements of a project.
PROBLEM IDENTIFICATION
It is very important where the problem in the business lies. All the
verticles of the business should be properly evaluated before
taking any major decision.
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August 5,
2021
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The organization should make It very clear that this is not just
some small project but a business process re-organization.
BIG CHANGES

11. SUMMARY
ERP deployment is once-in-a-lifetime opportunity. Every
aspect of the business should be carefully evaluated and
then the decision should be taken weather to implement
an ERP or not.
Nestle learnt a powerful lesson from its SAP-ERP
deployment. But despite the major setbacks and
difficulties the organization learned its mistake and went
on to successfully implement its ERP system.
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12. THANK YOU
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