ERP Helps Nestle Achieve Success-ERP帮助雀巢取得成功

ERP Helps Nestle Achieve Success-ERP帮助雀巢取得成功

来源:www.liuxuelunwen.org作者:caribany发布时间:2014-04-15 17:55

ERP Helps Nestle Achieve Success




Abstract  摘要
ERP (Enterprise Resource Planning) System is a management platform providing decisions by systematic managing ideas on the base of information technology. ERP System has become the operating system for modern enterprise since it combines with information technology and advanced managing idea. It meets the requirements of effectively distributing resources and maximizing the fortune. This paper outline: analyze Nestlé’s strategy position in dairy product industry by five forces model, management strategy, and some problem in the process of implement ERP.
 Contents  目录
I.introduction to the report  报告的引言
context  正文
1. Analyze Nestlé’s strategy position in dairy product industry  分析雀巢在乳品行业的战略定位
2. From dividing power to concentration of power   从分权到集权
3. Enterprise Resource Planning System  企业资源规划系统
4. ERP implementation project  ERP实施项目
III.Conclusion  结论
References  参考文献
 I. Introduction  引言
The target of ERP is concentrate information and management in aspects of market programmed, advisement strategy, price strategy, service, sales, promotion, and forecast. Actually information system provides more support for decision making, but decision making is people's subjective consciousness and activities. With the development of information system, traditional structure decision-making support system has not already satisfied need, and the system will provide more intelligentize service.
 ERP is new conception under market environment; it embodies a range of revolutions of management method and idea. ERP uses leap produce type to carry out global market promotion strategy and concentrate market promotion. At the same time it makes use of new technology opening and engineering design management module, let enterprise located in enterprise network under new market environment. Information system makes enterprise got information quickly and decision exactly.
 II. Context  正文
 The annual gross sales of nestle company is near about 47,700,000,000 U.S. dollars. About 95% sales come from food. So the nestle group company is the biggest food manufactory. It is also one of the biggest multination companies in the world. The most famous products of nestle are chocolate sticks and instant coffee. It owns abundant product series suit for local market and culture. Currently, nestle company has more than 400 factories in 60 countries of the world. The produce and sale of total product is completed by 200 departments. 98% of nestle sales comes from abroad, is called "most internationalize of multinational group"(Turbit, 2005).
 This paper outline: analyze Nestlé’s strategy position in dairy product industry by five forces model, management strategy, and some problem in the process of implement ERP.
Analyze Nestlé’s strategy position in dairy product industry
 Five forces model putted forward by Porter. It is a kind of effective tool for analyzes enterprises competition of the same industry. Five forces of this model include the threat of substitute products, the threat of the entry of new competitors, the intensity of competitive rivalry, the bargaining power of customers, and the bargaining power of suppliers.Industry attraction is key factor of enterprise profit ability. Competitive strategy is the source of competitive law of enterprise’s industry attraction. Any industry of international and domestic, no matter producer or service provider, all law of competitive will be embodied by these five competitive forces (Deck, 2001). Therefore, Porter’s five forces model is a analyze tool when an enterprise makes competitive strategy. These five forces will decide how industry profit power is. For example, the bargaining power of supplierswill influence original materials cost and other cost; the intensity of competitive rivalry will influence price and competitive cost; the threat of the entry of new competitorswill restrict price, and invest for recovery incursion. If the enterprise can influence industry competitive advantage in the aspect of five forces, then enterprise will improve industry attraction by the root, thus change industry competitive law can help the enterprise gain the final success. We can easily get to undersstand with the help of following table.
 Except for purchasing power and currency turmoil and other factors after the deduction, the revenue of Nestle in 2007 rose 7.4% than 2006. This is the year that the company 's revenue target overcome more than 5% to 6% consecutively.Workers from Nestle's Maggi brand also disclosed that they planned to increased 17 percent, to 12.20 Swiss francs per share, shareholders dividends from the previous year's 10.40 Swiss francs per share, at last year's board.Nestle Group stated that the company's net income in 2007 rose 16% than the year 2006 , to 10.65 billion Swiss francs, or about 27.81 Swiss francs per share, exceeding 10.2 billion Swiss francs Average forecasted by analysts. In addition, the Nestle Group's annual sales income in 2007 had grown by 9.2 percent than the growth in 2006, reaching 107.6 billion Swiss francs.
 The figures embodied that, the Nestle Group have received good havest by carrying out strategies correctly.
 In the industry of dairy Products, new competitor is influenced by scope economy, products differentiation, sales branch channel, and anticipate revenge. The scope economy of dairy products industry mainly means stock and produce. Original milk price has big influence for cost of dairy products enterprise. Nestle company controlled abundant milk resource of good quality and low price. Therefore, the intense competition of milk source takes big obstruction for the new entrant. Scope economy of the stock raised entry barrier. In the aspects of produce, milk farm use product line can takes professional management and lower total cost of transport. Nestle group owns advanced milk cow-farming technology, automatic facility, and global milk intelligence factory. The scope economy which produces aspect makes nestle group acquire big income. The good brand is main choice object of consumer. Because good brand takes good quality, so the customers build up definite loyalty. Thus the new competitor will face special risk. Once they enter failure, they will lose capital. Some magnate of dairy products, like nestle, their sales branch channels have been perfected. For the new competitors, they want to get sales branch channels, not only need human resource, material resources, and financial resources. They still need accumulation of experience. These factors will be a wall for the new competitors(Davis, 1999).
Soya-bean milk is main substitute product for dairy products industry. For the consumer that allergic to milk, soybean milk is better choice. On the other side, price of milk is higher than soybean products. Actual substitute products take some forces to milk industry, but it is still small(Sood, 2002). The supplier product is main input in the dairy products industry. The supplier don’t need competitive with other substitute products. Otherwise, the supplier group can still performance realistic intimidate of forward integration, so the bargaining power of supplier will be increased. The direct behavior is some country’s milk-cow price rise continually, original milk price as well as higher. In the supermarket, have various brands of dairy products. This is not only providing abundant information for customers, and still make the customer conversion cost lower. Therefore, the bargaining power of customer is stronger.
 2. From dividing power to concentration of power
The principle of original dividing power weakens effective of cost control plan. But dividing power is reasonable. The nest company has many manufactories in the world, and the operating revenue of above 98% comes from an international market. The company think that this is satisfactory to the different taste of market in everyplace. The style is the best way for close with native consumer. In addition, after purchased company, the nest is generally depending on original leadership. It is for preventing conflict in the process of integration.
 However, dividing power takes big power to division company manager in different countries. The cost is not controlled. Division manager of nestle group is in charge of material purchasing, new product opening, produce, acquiring company, and capital investment. This is conductive to promotion of nestle, because of division manager saw local market exactly. But from aspects of cost control and management efficiency, it takes some disadvantages to company. An interior research shows every candy and ice-cream manufactory ordered original sugar by oneself. If each factory buys same kind of product from same supplier, the supplier gives different price for each manufactory. For example, Nestle American Company gives more than 20 prices for same supplier when it purchases vanilla. As a result headquarters of Nestle can't follow purchase cost of original materials.
For solving this problem, leadership of Nestle Company integrated management power of each country manufactory to region level, and unify management of same kind of produce give to "strategic business section". At the same time, the logistics management is tightened. Nestle company CEO Peter Brabeck said: We have already taken leave of dividing power federation that constituted by independence market. We are becoming a global company which dividing power in decision-making aspect, because we believe any consumer isn't a global consumer. We think only have native consumer, but in the logistic aspect, we have already became more globalization. This is a big change in our companies management.According to new dividing power principle, the funds allocate, develops, brand management, core talented person management etc., they are controlled by the headquarters. But the product development, market expand and advertise, these management power still reserve in the local manager
Anyway, whatever dividing power or concentration, a competitive enterprise requires that every member must obey the rules and do their best to serve the enterprise. Because only if everyone has done good jopb, can the whole enterprise achive success finally. As an international enterpaise, Nestle own many manufactories all over the world. This leads to the difficulties of concentration of power. As a result, dividing power becomes the best choice for the big Nestle Group. In this, holding a conference or meeting usually is very necessary for the leaders from all the different places to share their experiences of managing the Branch conmpany in different place. Through discussing together, they can find what are the problems and what’s the best methods to them. It is also helpful for going ahead together, which can assure the quality of the Nestle products effectively. The follwing is the statement of the Nestle chairman, from which we can find a good business Nestle is dealing with, although it faces many paoblems. Sduch as, from dividing power to concentration of power.
The famous Nestle announced that sales reached 45.4 billion pounds in the first eight months of this year, which has achieved an increase by 9.1%, compared with the same period last year. In addition to acquisitions, price growth and the impact of currency fluctuations, the actual growth rate is 4.6%. The Chairman Peter Brabeck-Letmathe of Nestle said the strong growth in their sales momentum has continued into 2006's third quarter. We are still in the face of price increases of raw materials and fuel. But generally speaking, I am satisfied with the company's sales of organic dairy products. Organic milk, ice cream sales has grown by 5.4 percent, this rate is to remove the acquisition of the growth.
 In addition, following given a diagram which indicates the relationship among the leaders of the Nestle Group.
 The chairman of Nestle
The General manager
the the the
branch branch … branch
manager manager manager
 From the diagram, we can find that the chairman lied on the top of all the people, that is, who is the concentration of power and holds the direction of the whole group. On the other hand, there are many branch managers who own dividing power. Only when all of them devote themselves to the enterprise ,can the whole group get progress. And their relationship is just like a Christmas tree, they are tied together closely. So from dividing power to the concentration of power, each step makes sense.
 3. Enterprise Resource Planning System
 ERP System can be defined from three facets: managing idea, software, managing system.
ERP System is a systematic standard for enterprise management proposed by Garter Group Inc. The nature of ERP is the managing idea towards supply chain developing from MRP II(Manufacturing Resources Planning).
ERP System is the software with the soul of ERP managing idea. It takes client server, RDS, technology towards object, 4GL, net communication, etc. into practice.
ERP System is the enterprise resources managing system integrating enterprise managing idea, operating flow, basic data, resources, hardware and software, etc. The execution of ERP is a key process but usually is neglected by the enterprise. The successful application of ERP must be guided under scientific methods. The typical execution for ERP consists of 5 stages: 
Work in prophase
This is a very important phase influencing the result of the project but always neglected. In this stage, the top leaders and the members of the ERP project must be taught with the principles and ideas of ERP. They are required to evaluate the current managing flow of the enterprise and diagnose the problems. The selection of the software is also the key issue in this stage. The demand of the enterprise must match well the function and idea of the software. Especially the software usually can’t meet all the special requirements of the company, in this situation, appropriate supplement should be conducted. It is indispensable to learn the environment of the execution, the situation of a country and the special requirements of the business. The environment acts as the base of flow and function, meanwhile the selection of ERP must comply with “localization” and “customization”.
Preparation of execution
In this stage, the static data and parameters needed should be set up. They are input before the running of the ERP System. A great deal of work should be done to analyze the information of finance, demand, technics, repertory, etc. in order to confirm the data and parameters.
The organization of the ERP System should be established since it is a systematic engineering. From top to bottom, the three-level organization can be leaders, executing group and operating group.
Simulation and customization
After primarily mastering the software, simulation is operated in order to solve the actual problem. Since the test and simulation will expose the problem of the system, it is necessary to enact working norms and regulations in reaction.
Switching operation
You must select the corresponding steps according to the condition of the enterprise. Modules can be carried into execution at one time, or one or two executed in advance. In this stage, all clients must use the terminal at their own posts.
 New system operation
After the application of the new system, the execution is far to complete but shift to the stage of performance estimation and support. This is because that you need summarize the result of the execution as well as complete a self-evaluation. The further direction of the work is enacted. You should be aware that with the development of the competition, new demands will emerge and the improvement for the ERP System must be conducted to face the challenge.
 Finally, the 5 stages of ERP execution are closely associated. It is unwise to enter the next stage when the current work is not well done. Moreover, the training of software, programmer, simulation and operation, customization, etc. must be carried through the execution. Personnel must make full sense of the software and hardware of the ERP System in order to ensure its smooth application.
4. ERP implementation project
 In 1997, the Nestle American Company started to implement ERP project under SAP helping. This ERP project code name is BEST (Business Excellence through Systems Technology). Project implementation time is 6 years, and cost of budget is near about 210,000,000 U.S. dollars. From a long-term point of view, the ERP system may bring interests for Nestle Company. But in a short- term, the situation isn't optimistic. This project tries to execute centralization management. It will touch from originally scatter type of company culture, so the risk is very big.
Development work begins from July, 1998. Three SAP modules and one Manugistics module are requested to complete before 2000. Although company makes a schedule in advance, but because of some code modifications and computer thousand years problem, at while of the rush complete mission, and then appeared a great deal of new problem. A most thorny problem of them is treachery mind in the different stratum. Employee's treachery mind came from an importance mistake when project opening: primary benefit group have no some members which direct influenced by new system and business processing. So some results always make the leadership of sale department and other sections dissatisfied, because of they have no materiality of relation with this kind of change.
 At the beginning of 2000, the project implementation sinks into confusion. The worker doesn't know how to use new system, even don't know what new work processing is. No one wants to study the new way of business operation. The company's morale is very low. The flow rate of employee who predicts a product need flows is 77%. And plan maker doesn't wish and can't also abandon a familiar electronics form, but change direction complicated Manugistcis module. At the time that complaints increase, the ERP implement appeared stagnation and retreat.
At this moment the project appeared a technique problem again. In order to resolving for thousand year’s problem, time of insect problem is very urgent. Those peoples who responsible push revolution faced very big pressure. The project ignored integration point between two modules. They don't know how to co-operate work in each section. Although all purchase sections use code, system and process in general. Their systems have no concentrated with finance department, plan department and sale department. For example, sale personnel may have already offered a discount for a big customer. When sales input this result to new system, but the financial receive personnel don't know this information. After that customer press the discount rate payment, the financial receiver thinks this customer just pays one part of amount, there is also debt. The original brand management is a kind of chaos management style. And the process of integration is very hurried. Project group ignored integration in push process.
 At the end of 2000, the project has grounded. After discussion, all members of project group think revolution need to restart. Company analyzes need of business, and then makes a finish date. In the mean time the project group got two conclusions: first make sure project get support of each section manager. Second ensure all employees know time, reason and style of this kind of change(Worthen, 2002).
III. Conclution  结论
On the first period of nestle company implement ERP, nestle company executive leadership makes a hasty decision. They decide final complete ERP in 2000, but ignore some organization benefit that influenced by new operation process. As a result users reject ERP; company's employees have no morale, and the rate of employee flow rise. On the second period, nestle company leadership decide to pause ERP project implementation on June 2006, and abandon time in advance. They investigate user's reflection for revolution. The leadership of nestle company get a conclusion about ERP: very important soft implementation is not related with software-self. The five aspects as following must be paid more attention:
Don’t set up a deadline. First company analyze department must estimate need of project and investigate users’ reflect conditions, and then determine time of complete project.  
Company must renew estimate of budget on time. In the long process of project implement, often happen unexpected something. In a certain term complete an expected target is a good implement style for entire project. Company leadership should often check up on work of implement. It will decrease risk of project implementation.  
ERP is not related with software. Actually implement a new software system is very easy, but the part of most difficult is how to let people accept new business processing system.  
No one like to change processing of conversant, particularly when company can't make sure future. Company should keep a opening communicate channel in the process of implementation. It will take convenience on first exhibition. It can also check degree of users support.
Remember an integrated point in the process of implementation. It is not only simple to install new system. You need to make sure each section can communicate and co-operate each other. .
IV. References  参考文献
Davis, J. (1999, February). Netflix builds business by pushing ERP envelope. InfoWorld, 21(5), 52. Retrieved August 14, 2006 from ABI/INFORM Global database. (Document ID: 38684826).14, 2006, from ABI/INFORM Global database. (Document ID: 74682063).
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Songini, M. L. (2005, September). King County Ready To Restart ERP Effort. Computerworld,39(36), 14. Retrieved August 14, 2006, from ABI/INFORM Global database. (DocumentID: 895559261).
Sood, B. (2002) An ERP and a steely resolution. Network Magazine. Retrieved August 14, 2006from
Enterprise Resource Planning 10
Turbit, N. (2005, June 27) ERP Implementation - The Traps. The PROJECT PERFECT White Paper Collection. Retrieved August 14, 2006 from
Williams, S. (2002, September). His Side of the mattress. CIO, 15(23), 38-40. Retrieved August 14, 2006, from ABI/INFORM Global database. (Document ID: 180882711).
Worthen, B. (2002, May). Nestle's ERP Odyssey. CIO, 15(15), 62-70. Retrieved August 12, 2006, from ABI/INFORM Global database. (Document ID: 120992055).
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