An Analysis of Nestle's Erp Odyssey

Enterprise resource Planning (ERP) is any integrated cross-functional software that reengineers manufacturing, distribution, finance, human resources and other basic business processes of a company to improve its efficiency, agility and profitability.1 On an initial view, an ERP system appears to be the cure for any company’s issues. The installation of such a system offers an organization the opportunity to re-structure their procedures, to coordinate branches’ systems in other geographic locations, unify information and inspire employees via granting them permission to company information. Now these chances exist at heightened costs financially. There are also implementation horrors and labor issues with which must be dealt with. A stellar example of a company that has dealt with all of these is Nestle. Nestle SA is a world renowned multi-billion dollar profit earning company headquartered in Switzerland. Historically, each of its branches in different nations were allowed to operate as they please, as long as they adapted to their host country’s business culture. Upon performing an internal check, management realized that the multitude of companies on foreign shores were immensely costly and severely inefficient particularly in the United States of America. This deficiency in standard commercial processes hindered Nestle from boosting productivity. Behind this discovery lay the reasons for inefficiency. The first was that Nestlé couldn 't leverage its global purchasing power for the raw materials used in its products, even though each production plant used the same worldwide suppliers. This occurred because each company not only negotiated its own purchases and its own prices, but also made their own business decisions. The essence of this problem, stemmed from the autonomous decision making of the companies. For the resource vanilla, there existed

References: 1 Introduction to Information Systems by O’Brien and Marakas Fourteenth Edition Definition of Enterprise Resource Planning definition page 520 2 The handout: Nestle’s ERP Odyssey 3 http://www.informationweek.com/792/nestle.htm