ERP and Change Management at Nestlé – case study analysis
Read the case study and answer the questions:
A year after signing a $200 million contract with SAP and more than $80 million for consulting services and maintenance, HSBC securities in London, downgraded their recommendation on Nestlé SA stock. Although the Enterprise Resource Planning (ERP) project will probably provide long-term benefits, the concern was what short-term effect the project will have on the company. Nestlé Company’s goal is to build a business as the world’s leading nutrition, health, and wellness company. The company was founded in 1867 when Henri Nestlé developed the first milk food for infants and saved the life of a neighbor’s child. Nestlé is headquartered in Vevey, Switzerland with offices worldwide. Aside from chocolate and confectionaries, the company is widely known byits major brands,whichinclude
In the early 1990s, Nestlé was a decentralized company where each of its brands, such as Carnation® and Friskies®, operated independently. The brands were unified and reorganized under Nestlé USA, but the divisions still had geographically dispersed headquarters and made their own business decisions autonomously. More- over, a team charged with examining the various systems and processes throughout the company found many problematic redundancies. For example, Nestlé USA brands were paying twenty-nine different prices for vanilla to the same vendor. Jeri Dunn, vice president and CIO of Nestlé USA, said “Every plant would buy vanilla from the vendor, and the vendor would just get whatever it thought it could get. And the reason we couldn’t check is because every division and every factory got to name vanilla whatever it wanted to. So you could call it 1234, and it might have a whole specification behind it, and I might call it 7778. We had no way of comparing.” Dunn and her team recommended technology standards and common systems for each brand to follow that would pro- vide for cost savings and group buying power. Dunn then went to Switzerland to facilitate the implementation of a common methodology for Nestlé projects worldwide, but when she returned stateside two years later as a CIO she found that only a few of her recommendations were being followed. As Dunn recalls, “My team could name the standards, but the implementation rollout was at the whim of the businesses.”
Dunn’s return to the states followed USA chair- man and CEO Joe Weller’s vision for uniting all of the individual brands into one tightly integrated company. Reflecting on the company’s condition, Dunn said “I don’t think they knew how ugly it was. We had nine different general ledgers and twenty-eight points of customer entry. We had multiple purchasing systems. We had no clue how much volume we were doing with a particular vendor because every factory set up their oven vendor masters and purchased on their own.” Dunn and a group of managers from finance, supply chain, distribution, and purchasing formed a key stakeholder team to study what Nestlé did right and what could be improved upon. They were given about two hours to present their findings to Joe Weller and other top executives, but the meeting ended up taking the whole day.
The blueprint from the stakeholder team included SAP as a cornerstone project that would take three to five years to implement. As Dunn points out, “We made it very clear that this would be a business process reorganization and that you couldn’t do it without changing the way you did business. There was going to be pain involved. It was going to be slow process, and this was not a software project.” Unfortunately, senior management did not take the key stakeholder team’s recommendation to heart, nor did they understand the pain it would create. As Dunn said, “They still thought it was just about software.”
In October, a team of fifty senior business managers and ten senior IT managers formed a team to carry out the SAP implementation. The team was responsible for defining a set of common processes for every division. More specifically, each divisional function, such as purchasing, manufacturing, inventory, accounting, and sales, would have to give up their old ways and start doing things the new Nestlé way. Another team spent eighteen months reviewing each piece of data in all the divisions in order to come up with a common data design across the entire business. For example, vanilla would now be coded as 1234 in every division so that the SAP system could be customized with uniform business processes and data. However, the team decided against using SAP’s supply-chain module, Advanced Planner and Optimizer (APO), because it was recently released and therefore viewed as too risky. Instead, the team recommended a supply-chain module called Manugisticsthat was developed by an SAP partner.
By March, the team had a project plan in place where Nestlé would implement five SAP modules: purchasing, financials, sales and distribution, accounts payable and receivable, and the Manugistics supply-chain module across every Nestlé division. Implementation began in July with a deadline of approximately eighteen months. The deadline was met, but just as many problems were created as were solved. Before all of the modules were rolled out, there was a great deal employee resistance. It appears that the problem was that none of the groups affected by the new system and processes were represented on the key stakeholder team. Dunn recalls her near fatal mistake. “We were always surprising [the heads of sales and the divisions] because we would bring something up to the executive steering committee that they weren’t privy to.” By the time of the expected rollout, the project had collapsed into chaos. Workers did not understand how to use the new system or the new processes. The divisional managers were just as confused as their employees and probably even a bit angrier. Dunn’s help desk took 300 calls a day, and she admits “We were really naive in the respect that these changes had to be managed.” Subsequently, morale deteriorated and nobody took an interest in doing things a new way. Turnover reached a new high of 77 percent. Supply-chain planners were unable and unwilling to abandon their familiar spread- sheets in favor of the complex Manugistics system.
Other technical problems began to arise due to the rush to make the project’s deadline. Integration points between modules were overlooked. For example, although the purchasing departments now used common data conventions and followed the same processes, their systems could not integrate with the financial or sales groups. The project was stopped in June. A co-project man- ager was reassigned and Dunn was given full responsibility. In October, Dunn invited nineteen key stakeholders and business managers to a three-day offsite retreat. While the retreat started off as a gripe session, the members eventually made the decision that the project would have to be started over. The project team had lost sight of the big picture of how the various components would fit together. It was decided that the project would begin again with defining the business requirements before trying to fit the business into a mold that had to be completed by a predetermined deadline. Perhaps more importantly, they concluded that they required support from key divisional managers and that better communication was needed to tell all the employees when changes were taking place, when, why, and how. By the following April, the project team had a well-defined plan to follow. By May, Tom James was hired as director of process change and was responsible for acting as a liaison between the project team and the various divisions. James was shocked by the still poor relationships between the project team and divisions, so he and Dunn began meeting face to face with the division managers and started conducting regular surveys better to understand how the employees were affected by the new systems and how they were coping with the changes. One difference was Dunn and the project team would act on what they found. For example, a rollout of a new co-manufacturing package was delayed six months because feedback from the users suggested that they would not be prepared to make the process changes in time. Although this project took much longer than expected, Dunn is not ashamed of the schedule overrun or the numerous dead ends. She believes that slow and steady wins the race, and that the project has already achieved a significant return on investment, especially in terms of better demand forecasting. “The old process involved a sales guy giving a number to the demand planner, who says ‘Those guys don’t know what the hell they are talking about; I’m going to give them this number.’ The demand planner turned the number to factory, and factory said demand planner doesn’t know what the hell he’s talking about. Then the factory changes that number again.” Now, SAP provides common databases and processes that allow for demand forecasts to be more accurate.
Since all of Nestlé USA is using the same data, it can forecast down to the distribution center level. Sub- sequently, inventory levels and redistribution expenses can be reduced. The company reports that improvements in the supply chain alone have accounted for a major piece of the $325 million Nestlé has saved by implementing SAP. Dunn reflects that if she had to do it over again, she would focus on changing the business processes, get- ting universal buy-in, and then and only then installing SAP. As she said, “If you try to do it with a system first, you will have an installation, not an implementation. And there is a big difference between installing software and implementing a solution.”
1. What could Nestlé have done better in implementing SAP?
2. What did it do right?
3. What would have been the value of having a change management plan from the beginning?
4. The primary lesson that Dunn says she gained from this project is “No major software implementation is really about the software. It’s about change management.” Do you agree with her statement?
In: Operations Management
Case 2 Jackson Manufacturing Company - Dominika Wojdat, vice
president of operations at Jackson Manufacturing Company, has just
received a request for quote ( RFQ ) from DeKalb Electric Supply
for 400 units per week of a motor armature. The components are
standard and either easy to work into the existing production
schedule or readily available from established suppliers on a JIT (
just-in-time ) basis. But, there is some difference in assembly.
Ms. Wojdat has identified eight tasks that Jackson must perform to
assemble the armature. Seven of these tasks are very similar to the
ones performed by Jackson in the past ; therefore, the average time
and resulting labor standard of those tasks is known. The eighth
task, an overload test , requires performing a task that is very
different from any performed previously, however, Dominika has
asked you to conduct a time study on the task to determine the
standard time. Then an estimate may be made of the cost to assemble
the armature. This information, combined with other cost data, will
allow the firm to put together the information needed for the RFQ
.
To determine a standard time for the task, an employee from an
existing assembly station was trained in the new assembly process.
Once proficient, the employee was then asked to perform the task 17
times so a standard could be determined. The actual times observed
were as follows ( in minutes ) :
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
2.05 1.92 2.01 1.89 1.77 1.80 1.86 1.83 1.93 1.96 1.95 2.05 1.79
1.82 1.85 1.85 1.99
The worker had a 115% performance rating. The task may be performed
in a sitting position at a well-designed ergonomic workstation in
an air-conditioned facility. Although the armature itself weights
10.5 pounds, there is a carrier that holds it so the operator need
only rotate the armature. But, the detail work remains high :”
therefore, the fatigue allowance will be 8%. The company has an
established personal allowance of 6%. Delay should be very low.
Previous studies of delay in this department average 2%. This
standard is to use the same figure.
The workday is 7.5 hours, but operators are paid for 8 hours at an
average of $12.50 per hour.
Questions
In your report to Ms. Wojdat , you realize you will want to address
several factors :
a) how large should the sample be for a statistically accurate
standard ( at ,
say, the 99.73 % confidence level and accuracy of 5% ? )
b) is the sample size adequate ?
c) how many units should be produced at this workstation per day
?
d) what is the cost per unit for this task in direct labor cost
?
In: Operations Management
Think about and identify several internal and several external environmental factors that affect marketers’ choices across the 4Ps+1 (think about that first section of the marketing plan). Discuss how specific internal and/or external factors can influence what products or services companies sell to customers, and discuss how specific internal and/or external factors can influence effective strategies using the other marketing mix elements.
In: Operations Management
Could the Federal Government dictate equal rights for women without an Amendment to the Constitution? In a multitude of articles and internet blogs it seems to be very challenging when dealing with the actions of an administrative agency. How successfully normally are these challenges?
In: Operations Management
Q1. ( 50 marks) please match word count to get a thumbs up
a. What is franchising? (150 words)
b. Analyze some industries in Dubai where franchising is expected to grow ( 220 word)
c. Why is pricing important for small businesses? ( 160 word)
In: Operations Management
Dissuss on the process of an effective human resource planning includes 3 factors: what positions the firm will have to fill, how to fill them and to identify/address the gaps between the employer’s workforce today, and its projected workforce needs.
Analyse those of 3 factors in detailed and find the solutions to improve the process.
In: Operations Management
In: Operations Management
Laws contain consequences for when they are broken (e.g. fines, imprisonment) while policies outlines principles of action for an organization. If you design an ethics policy for your organization and include consequences for violation of the policy, does the policy then become a law rather than a policy? Why or why not?
In 150 words
In: Operations Management
Q1. Answer the following questions in detail with examples as
applicable:
a) What is different HR Structural Alternatives and how
effectiveness and
optimization in People Management relates to core activities of
HR?
b) Discuss the complexity of outsourcing process and how to manage
it for
organizational efficiency.
c) Describe the latest trends in Human Resource information systems
and technology
considerations.
d) Outline how HR can assure that communication can be used as an
effective tool
towards delivering messages and exchanging organizational
information
In: Operations Management
Part 1: Human Resource Planning
Discuss the development of an effective human resource planning
process. Be sure to identify the major players and their functions,
components of the process, and suggestions to improve the
process.
Part 2: Compensation and Rewards
Differentiate among direct financial compensation, indirect
financial compensation, and non-financial rewards. Be sure to
include specific examples of each.
In: Operations Management
Just Briefly discuss this Management topics.
a. Managing Change, change process
b. Internal external forces of managing change, why people resist
to change
c. Explain Clan water metaphor- Unfreezing, change and
refreezing
d. Advantages and disadvantages of Global team
In: Operations Management
Could you please summarize this article
An Uber sticker above one for its ride-hailing rival Lyft. Even if a ruling like California’s eventually forces such companies to change their business model, that moment could be far off.CreditRichard Vogel/Associated Press
By Noam Scheiber
In a ruling with potentially sweeping consequences for the so-called gig economy, the California Supreme Court on Monday made it much more difficult for companies to classify workers as independent contractors rather than employees.
The decision could eventually require companies like Uber, many of which are based in California, to follow minimum-wage and overtime laws and to pay workers’ compensation and unemployment insurance and payroll taxes, potentially upending their business models.
Industry executives have estimated that classifying drivers and other gig workers as employees tends to cost 20 to 30 percent more than classifying them as contractors. It also brings benefits that can offset these costs, though, like the ability to control schedules and the manner of work.
“It’s a massive thing — definitely a game-changer that will force everyone to take a fresh look at the whole issue,” said Richard Meneghello, a co-chairman of the gig-economy practice group at the management-side law firm Fisher Phillips.
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The court essentially scrapped the existing test for determining employee status, which was used to assess the degree of control over the worker. That test hinged on roughly 10 factors, like the amount of supervision and whether the worker could be fired without cause.
In its place, the court erected a much simpler “ABC” test that is applied in Massachusetts and New Jersey. Under that test, the worker is considered an employee if he or she performs a job that is part of the “usual course” of the company’s business.
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By way of an example, the court said a plumber hired by a store to fix a bathroom leak would not reasonably be considered an employee of that store. But seamstresses sewing at home using materials provided by a clothing manufacturer would probably be considered employees.
In addition, a company must show that it does not control and direct the worker, and that the worker is truly an independent business operator, not just classified that way unilaterally.
While companies like Uber have had some success arguing that they don’t exert sufficient control over drivers to be considered employers, it would be hard to assert that drivers are performing a task that isn’t a standard feature of their business.
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In a recent case involving the restaurant ordering and delivery service GrubHub, for example, a California judge found that food delivery was a regular part of the company’s business in Los Angeles, where the plaintiff worked, potentially satisfying the ABC test. But she ruled in favor of the company, concluding that it did not exert sufficient control over the worker to be considered an employer.
Shannon Liss-Riordan, the attorney for the plaintiff in that case, said she would seek reconsideration in light of the new ruling.
GrubHub said in a statement that it was aware of Monday’s ruling but could not comment because of the appeals process in the case, other than to say it “will continue to ensure delivery partners can take advantage of the flexibility they value from working with our company.”
Uber declined to comment.
The case on which the court ruled Monday was brought by delivery drivers at a company called Dynamex, who had been considered employees before 2004, when the company changed the relationship to a contracting arrangement.
Were the courts to find that workers at companies like GrubHub and Uber, as now constituted, were employees rather than contractors, the companies could respond in several ways. They could simply make their workers employees rather than contactors.
Alternatively, ride-hailing companies like Uber might choose to rein in their operations, providing a more limited platform in which drivers and passengers can negotiate prices and the terms of the service.
Even if Uber and the like are eventually forced to change their business model, however, that moment could be far off. Uber drivers typically sign an arbitration agreement stating that any disputes must be brought individually and outside the court system. While the United States Supreme Court recently heard a challenge to such agreements, it is widely expected to uphold them.
In: Operations Management
Q2. Express your view with theoretical explanation for the
following:
a) Why organizations must consider CSR (Corporate Social
Responsibility) as a
strategic alternative? Apply the triple bottom line concept to an
organization of
your choice and analyze the strategic intent of the selected
organization by using
the CSR sux stage process.
b) How Employee Engagement can directly influence the
organizational performance?
What value does Employee Engagement brings for the Employees as
well as the
Employer?
c) Explain with examples how pay variations and broad banding can
we be effectively
used as a total rewards external and internal key driver.
In: Operations Management
Part 1: This week, the journal will focus on your personal growth and development strategy. Review section 5.7, Formulating Organizational and Personal Strategy with the Strategy Diamond in the text and develop your own Strategy Diamond. Include the final list of your personal goals and objectives as well as the work you did to arrive at them. Part 1 should be a minimum of 300 words.
Part 2: Also, we want to check in with peer assessment. In class and in the world of business, your communication and feedback skills are important to develop. How do you feel about the feedback you received last week? What about the feedback you gave? How will you improve feedback you give this week? Part 2 should be a minimum of 200 words
In: Operations Management
What is the relevance of the outer game and the inner game on your leadership behavior? What points of leverage and strategies are given for increasing motivation and employee satisfaction? What variables affect motivation and satisfaction? Why?
In: Operations Management