Nestlé's ERP Odyssey

Even before three of the SAP and the Manugistics modules were rolledout in late 1999, there was rebellion in the ranks. Much of theemployee resistance could be traced to a mistake that dated back tothe project's inception: None of the groups that were going to bedirectly affected by the new processes and systems were represented onthe key stakeholders team. Consequently, Dunn says, "We were alwayssurprising [the heads of sales and the divisions] because we wouldbring something up to the executive steering committee that theyweren't privy to." Dunn calls that her near fatal mistake.

By the beginning of 2000, the rollout had collapsed into chaos. Notonly did workers not understand how to use the new system, they didn'teven understand the new pro-cesses. And the divisional executives, whowere just as confused as their employees - and even angrier - didn't goout of their way to help. Dunn says her help desk calls reached 300 aday. "We were really naive in the respect that these changes had to bemanaged," she admits now.

Nobody wanted to learn the new way of doing things. Morale tumbled.Turnover among the employees who forecast demand for Nestlé productsreached 77 percent; the planners simply were loath or unable toabandon their familiar spreadsheets for the complex models ofManugistics.

A technical problem soon emerged as well. In the rush to beat the Y2Kdeadline, the Best project team had overlooked the integration pointsbetween the modules. All the purchasing departments now used commonnames and systems, and followed a common process, but their system wasnot integrated with the financial, planning or sales groups. Asalesperson, for example, may have given a valuable customer adiscount rate and entered it into the new system, but the accountsreceivable department wouldn't know about it. So when the customerpaid the discounted rate, it would appear to the accounts receivableoperative as though the invoice were only partially paid. In its hasteto unify the company's separate brands, the project team hadessentially replaced divisional silos with process silos.