Nestlé's ERP Odyssey

By October 1997, a team of 50 top business executives and 10 senior ITprofessionals had been assembled to implement the SAP project. Theteam's goal was to come up with a set of best practices that wouldbecome common work procedures for every Nestlé division. All thedivisional functions - manufacturing, purchasing, accounting andsales - would have to give up their old approaches and accept the newpan-Nestlé way.

On the technical side, a smaller team spent 18 months examining everybit of item data in each division in order to implement a commonstructure across the company. From now on, vanilla would be code 1234in every division. The SAP system would be customized around theuniform business processes. In the case of the supply chain, the teamdecided not to use SAP because the ERP company's supply chain module,Ad-vanced Planner and Optimizer or APO, was brand-new and thereforerisky. Instead, Nestlé turned to Manugistics - at that time an SAPpartner. Manugistics' supply chain module followed all the SAPstandards and could easily be integrated.

By March 1998 the key stakeholders had a plan in place. Nestlé wouldimplement five SAP modules - purchasing, financials, sales anddistribution, accounts payable and accounts receivable - and theManugistics' supply chain module. Each would be deployed across everyNestlé division. For instance, the purchasing group for confectionswould follow the same best practices and data as the purchasing groupfor beverages.

Development work began in July 1998. The deadline for four of themodules was Y2K. The new systems would have to double as code fixesand be in place for the millennial change. Nestlé USA made thedeadline. But its haste created almost as many problems as it solved.

The Process: Nestlé's Crunch