Case Study Report On Enterprise System Implementation Of Nestle

The subject organization

Nestle company was founded by Henrik Nestle and is famous as the world’s biggest food and beverage organization. Nestle developed the first milk product in 1867 and entered into a merger with the Anglo-Swiss Condensed milk company (Bishop, 34). Chocolate activity was the first expansion of Nestle company. The introduction of Nescafe followed, which is used as a staple drink by the United States military. The organization entered into a merger with Maggi seasonings and soups company in 1947 and acquired the American food giant and Dyers Company the same year. The entity is founded on basic principles and objectives.

The subject organization

The primary objective of Nestle company is to create value, and Nestle company does not favor short-term profits. Other goals include to create consumer truth and ensure that the highest standards are met in the entire organization. The organization is also focused on the recruitment of people on training and development. It is also focused on maintaining its commitment. Nestle is a large producer of a wide range of commodities. More than 20 categories of milk and pet foods, as well as cereals, are produced by the organization. Nestle strives to closely align the scientific and research and development expertise with consumer benefits, as well as address all current consumer concerns as well as anticipating the future trends in the market. This way, a superior business performance is bound to be experienced.

The problem or difficulty it faced

Nestle, is a giant company in the food and pharmaceutical industry, has set the pace of virtual operations all over the world. Over the years, the organization has allowed every local entity to conduct business according to their preferences without interference. The primary goal was to sustain local conditions and adhere to the acceptable business cultures. To fully support these decentralized strategies, the organization has embraced more than 80 units which run on midrange computers. The observers are thus able to describe its infrastructure as the most sophisticated and capable system.  

However, the organization management discovered that allowing these local differences led to a lot of inefficiencies and extra costs which could momentarily prevent the entity from actually competing in the electronic commerce world. The lack of business processes which are regarded sufficient and the standard was also a major problem. Nestle is working on extending its ERP systems to all its 500 facilities across the world. Once this initiative is completed and launched, the organization will be able to use sales information from retailers for the sake of measuring global efficiency, especially for all its operations.  

ERP integration is a common challenge which faced most organizations while implementing the enterprise resource planning systems (Dopf, 450). The first challenge is knowing which processes and systems need to be integrated and which ones should not. In most cases, it is problematic to know where systems interact, and how the organization can gain competitive advantage without necessarily hindering basic operations. Where there are different divisions in an entity such as in Nestle company, old-fashioned politics get in the way. Decision makers tend to remain confused on the capability of the entire system.

The problem or difficulty it faced

Another challenge faced by the organization is setting the ERP software implementation goals. Well designed and measurable goals are the desire for each profit seeking entity. Without specific goals, implementation of any system is bound to be directionless. Goals need to be defined at the onset of a particular project. The implementation team needs to be well designated at the beginning, and each member’s goals and departmental requirements need t not be shunned. There is a need to work with targets and objectives, which in most cases, are not established or are difficult to apply. The fourth challenge involves customization.  There is a common belief that ERP systems require extensive customization.  

In most cases, organizations don’t end up getting packaged solutions, hence require a framework to be used to build the solution. If decision makers are not well equipped to ask the right questions, projects end up being challenged, and the best way to handle confusions is not discovered. ERP implementation has flexibility problems, which played a significant role a Nestle company. The ERP system which is not relatively flexible may force an organization to change its processes and models to fit into the system. If it gets to this, a lot of process re-engineering gets in the way. Steps needed to complete business tasks and retraining employees need to be embarked on. Short term resistance becomes a challenge, leading to delays.

Nature of the enterprise system that it adopted and the process by which it was selected and implemented

ERP implementation has become a very common nightmare to most organizations (Rome, 156). Most entities are intimidated by the price and negative impacts the entire process may have on their businesses. Nestle company, just like any other profit making entity, is working hard to meet its goals. The main aim is to ensure that external consulting costs don’t lead the body to losses rather than profits. ERP implementation has worked for some organizations and failed in others. Excessive customization is bound to haunt the organization, especially by lengthening project timelines and driving up maintenance costs in the future.

Nestle ensured that in-depth and ongoing training was considered especially before system testing to be sure of its positive results in the long run. Nestle company decided to base its problems as the primary focus especially while choosing the ERP system to adopt. Alternatives were then formulated, and the best selected. A decision was arrived at, and the organization systems were to be changed for the sake of increased effectiveness and maintenance of a competitive edge in the competitive industry.

Difficulties the organization may have faced in adopting the system

Unfortunately, Nestle company did not heed the failures of other organizations. During the implementation process, Nestle company made several mistakes which led to failure and doomed the projects. The important project kicked off with a team of 50 executives and ten information technology professionals. These were assembled to help develop best practices for the organization’s divisions in the United States. The primary goal was to develop practices which will cut across basic organization practices in the entity country. When the implementation was set to begin in 1999, Nestle company was already having problems with acceptance of the system by the employees. This system confused the employees, and they were less willing to assist in straightening the problem and the huge mess which had developed.

Nature of the enterprise system that it adopted and the process by which it was selected and implemented

Employee turnover rates skyrocketed. Technical difficulties also began to emerge, and the Y2K project deadline was not met. The organization and the team completely ignored the integration points (Edwards, 67). This meant that there was no way that different modules would relate to the entity. For example, if a sales person gave a discount to the consumer and keyed it into the system, the portion of accounts receivable in the organization could not be informed about the consumer discount offered. This way, the consumer would pay their bills, but the invoice appeared to be partially settled.  This was a major avenue of inaccuracy and overall inefficiency in the system at Nestle company.  

An assessment of how successful the adoption of the enterprise system was.

Despite the significant bumps in the road for implementation of Nestlé’s ERP system, the results seemed to be paying off. In 2002, Nestle realized a savings of over $325 million. Some of these savings resulted from the improvements regarding supply chain and demand forecasting. The entire process was a success in the organization. The organization was able also to recoup the total sum spent in only two years and has since realized a reduction in inventory levels, tighter inventory control measures and more disciplined approach towards all business processes.

The most important aspect is that the implementation of ERP systems by Nestle Company helped foster a culture of continuous improvement, which is prioritized up to date. Internal opportunities, business to business relations, consumer to business relations and personnel relationships are also considered. The technology departments at Nestle company have the sole responsibility for ensuring that personnel is not only focused on system maintenance, but also for continuous improvements.

Conclusion

Many lessons can be derived from the scenario at Nestle company. It is evident that redesigning work processes without the involvement of people that are expected actually to perform the work is impossible. Another lesson which can be learned is that the implementation of ERP systems should not be forced into organization operations (Jackson, 89). There is a need to study specific project timelines without necessarily imposing new systems into operations. The third aspect is that companies which aim at the implementation of ERP systems need to place a major emphasis on training. This key element is bound to ensure that employees are prepared to embrace the new aspect without much difficulty.  If all these elements are considered, ERP systems will be effective, not only at Nestle Inc., but numerous organizations as a whole.

Dwyer, L., Edwards, D., Mistilis, N., Roman, C., & Scott, N, 2009,  Destination and enterprise management for a tourism future. Tourism Management, 30(1), 63-74.

Lev, B., & Daum, J. H, 2014, The dominance of intangible assets: consequences for enterprise management and corporate reporting. Measuring business excellence, 8(1), 6-17.

Jackson, S, 2012, Chinese enterprise management: reforms in economic perspective (Vol. 41).Walter de Gruyter.

Krenzke, R., Dopf, G., Hirschenberger, S., & Dentzer, R, 2012, U.S. Patent No. 6,338,097.Washington, DC: U.S. Patent and Trademark Office.

Bishop, D. A., & Hoover, K. M, 2016, U.S. Patent No. 6,983,317. Washington, DC: U.S.Patent and Trademark Office.

Rom, A., & Rohde, C, 2016, Enterprise resource planning systems, strategic enterprise management systems and management accounting: A Danish study. Journal ofEnterprise Information Management, 19(1), 50-66.