Objectives, Knowledge Management, ERP System And Management Issues Faced By Nestle
Objectives and aims of Nestle
- Nestle is a Switzerland based organization, which is the largest food and beverage company in the world
- The organization was founded by Henri Nestle in the year 1866 (“www.nestle.com”, 2018)
- The products include coffee, tea, baby food, confectionery, frozen food, snacks, pet food and several others
- Nestle merged with the Anglo- Swiss Condensed Milk Company in the year 1905
Nestle was established by Henri Nestle in the year 1866 as a food and beverage company. Nestle has become one of the largest food and beverage company in the world and has maintained its goodwill since ages. The company strives to provide superior quality food and beverages to its customers, which is safe and has proper nutrition. This has made the organization the best branded manufacturer of food and beverages. The company has always strived to develop sustainably and provide benefits to all the stakeholders associated with the organization.
- To foster trust among the customers
- To create value
- To ensure that the organization meets high standards
- To recruit right employees and provide appropriate training to them
- To fulfill its commitments by aligning the research and development with the benefits of the customers
- To strengthen organizational leadership in the market
- To fulfill the present demands of the customers and anticipate their future needs (“www.nestle.com”, 2018)
Nestle aims at providing better quality food and beverages to its customers. It has been successful in achieving its objectives and has become one of the most trusted worldwide brands. It aims at ensuring that its products create value for the employees, shareholders, customers, business partners and the other stakeholders involved. Nestle emphasizes upon abiding all the local laws of the countries in which it operates. It aims at becoming more decentralized within its current framework. The company also aims at ensuring team work within the organization and fostering a positive organizational culture wherein there is proper flow of communication.
The slide 4 mentions knowledge management and e- commerce practices in Nestle.
- Knowledge management involves identifying the skills and knowledge of the organizational members and using the knowledge in the organizational activities (Martinez, 2018)
- E- commerce refers to the transactions that involve purchasing and selling online
- Nestle has taken the ownership of its consumer data in order to enhance the conversion with Commanders Act
- Nestle has taken steps to understand the manner in which marketing automation and digital marketing has impact on the traffic and conversion
- Nestle has formed an innovative dual strategy wherein it has combined direct-to-customer and e-retail approaches, which led to the launch of its online store named as Nestle Shop
- Nestle uses a proper SAP ERP system as a part of its knowledge management for enhancing its business operations
Knowledge management refers to procedure wherein knowledge and information is created, shared, used and managed within an organization. It enables the organizations to achieve its objectives by ensuring the best utilization of knowledge. Several organizations including Nestle nowadays use knowledge management as a part of their information technology, business strategies and human resource management. It enables the organizations to improve their performance, gain competitive advantage over the others, and improve the business operations. Knowledge management has enabled Nestle to gain competitive advantage and improve its performance which has ultimately resulted in profitable business along with customer loyalty.
Slide 5 shows the operating model used by Nestle. This model includes the integrated management system of Nestle, leadership development and goal alignment. It shows the implementation of the systems in the supply chain of the organization that ensures total performance management from procurement of raw materials to providing the products to the ultimate consumers.
Also mentions the critical issues faced by Nestle. The following are the critical issues:
- Nestle employs more than 2,50,000 employees in over 80 countries across the globe
- Nestle uses a decentralized strategy, which involves the use of 80 different information technology units
- Nestle lacks a proper computer center
- Local differences have prevented Nestle from establishing its strong position in e- commerce (Janssen et al., 2015)
- The implementation of new technologies and ERP systems are risky for the organization
- The implementation of new systems increased the rate of employee turnover within the organization
- The implementation of ERP systems created several issues within the organization
Nestle is a huge organization that operates globally and provides employment to more than 2,50,000 individuals across 80 countries. This makes it difficult for the organization to manage its business operations and to control all the activities. The decentralized strategy used by the organization creates a major issue for the organization as the organization lacks proper control on the business processes. The absence of a proper computer system increases the problems faced by the organization. Several issues have prevented the organization to create its strong presence in e- commerce. The changes in the systems and technologies tend to reduce the motivation level among the employees as they do not feel comfortable in working with the new system or technology. This often results in resistance and conflicts among the organizational members and might also lead to an increase in the rate of employee turnover.
Knowledge management and E-commerce in Nestle
Mentions the GLOBE system used by Nestle and its advantages.
- GLOBE stands for Global Business Excellence
- It aims at improving the efficiency of the business operations on a global scale
- It is based upon the principles of good practice, information systems, technologies and standardization of data and management
- It aims at facilitating improved cross functional communication and knowledge management (Bag, Anand & Pandey, 2017)
- It also helps in standardizing the products of the organization
The GLOBE system implemented and followed by Nestle has enabled the organization to increase its overall efficiency on a global scale. The system is based upon the basic principles of good practice, management and standardization of data and the information systems. The system helps Nestle to enhance knowledge management practices and standardize its products. It has enabled Nestle to create its global presence and maintain its brand position.
states the ERP system used in Nestle and explains its advantages.
- ERP or Enterprise Resource Planning is a Management Information System, which integrates and automates several business operations
- ERP integrates all the organizational functions and departments into one computer system
- Nestle has entered into a contract with SAP in order to implement a proper ERP system within the organization
- Nestle also incurs additional costs for consulting, maintaining and upgrading its system
- This helps the organization to keep proper track of the customer orders (Benitez-Amado, Llorens-Montes & Fernandez-Perez, 2015)
- This has enabled the organization to reduce overstocking and has enhanced data sharing within the organization
Nestle has been using SAP as its ERP system since the year 2000 and has been spending huge amounts for maintaining and updating the system. SAP has enabled the organization to properly track the customer orders, which was earlier a difficult task. The system has enabled the organization to maintain proper stock levels without facing the situation of overstocking and under stocking. The use of SAP has helped Nestle in sharing data among its subsidiaries, which has increased the efficiency of the organization.
Mentions the management issues faced by Nestle as a result of implementation of a new ERP system.
- The organizational members considered the knowledge management process as a software project
- The stakeholders of organization failed to realize the feasibility of the ERP system
- The employees were unable to understand the application of the new system (Galstyan et al., 2015)
- The new ERP system failed to integrate several modules
- There were delays in the projects as a result of the employee’s resistance to change
- The organizational leaders were inefficient in handling the resistance to change
The major management issues faced by Nestle involved employee resistance. The organizational employees viewed the implementation of an ERP system as a mere software project instead of a business re- organization process. The stakeholders also failed in realizing the feasibility of the implementation of an ERP system. Improper amount of training provided to the employees in relation with the new system made them feel uncomfortable with the new system, which ultimately resulted in resistance to change among the employees.
Implementation strategy (Recommendation)
Involves the recommendations on how an organization can successfully implement an ERP system within the organization.
- In order to ensure successful implementation of knowledge management practices, it is necessary to involve appropriate individuals since the beginning
- Heavy customization must be avoided
- Proper business goals must be set and the timeline must be created accordingly
- Business process re-engineering must be evaluated in relation with the ERP implementation (Dost & Rehman, 2016)
- Proper training facilities must be provided to the employees so that they can accept the change and understand the ERP system
It is necessary for the organizations to provide proper knowledge and information related to the changes in the systems and technologies in order to prepare the employees for the change and avoid resistance. It is necessary to provide proper training to the employees so that they can work efficiently along with the change.
Management information system in Nestle
The slide 10 mentions the use of management information system within Nestle and its importance.
- Load control centre was introduced in order to standardize the business processes and to reduce the costs
- The company centralized the control in order manage the costs related to transportation, logistics, carrier and freight
- It enabled the organization to improve customer service (Busco, Caglio & Scapens, 2015)
- MIS enabled Nestle to improve its delivery time, manage the carrier activities and minimize the incurrence of costs
- Automation of the business activities enabled the organization to improve its efficiency
Proper management information system has enabled Nestle to minimize costs and maximize its efficiency. Nestle has its Load control center, which enables the organization to manage its business processes along with the costs.
Marketing information system
Mentions the use of marketing information system by Nestle and the subsystems involved.
- The marketing information system of Nestle is divided into the following four subsystems:
- Internal accounting systems
- Analytical systems
- Marketing intelligence systems
- Marketing research systems (Hussain, Siddiqui & Haider, 2018)
Critical issues faced by Nestle
The internal accounting system in Nestle is responsible for order shipping billing and the analytical system performs horizontal accounting. On the other hand, the marketing research system improves the timeliness of the sales reports and the marketing intelligence system is a user oriented system that helps the organization in improving overall efficiency of the organization.
Also mentions the use of e- commerce platform by Nestle and its advantages.
- Nestle uses E- commerce platform for increasing its efficiency
- The organization uses intranet, extranet and world wide web in order to improve its marketing strategies
- It also uses interactive marketing strategies (Turban et al., 2015)
- Nestle has successfully implemented six SAP modules related to purchase, finance, sales and distribution, accounts receivable, accounts payable and optimization and advanced planning
Nestle has utilized e- commerce platforms to increase its brand awareness and reach a larger number of customers. Nestle has successfully implemented SAP in its departmental activities, which has in turn increased its efficiency.
Incorporating internet strategies in Nestle
Mentions the various internet strategies used by Nestle in order to improve its business operations.
- Several business processes and activities of Nestle have witnessed several changes over a period of time
- Nestle has enabled several store owners to purchase its products online from NestleEZOrder.com
- Nestle uses a majority of its annual advertising budget on web
- Nestle has separate sites for coffee lovers and Italian food lovers
- These sites enable the organization to initiate innovative marketing strategies
- Nestle uses internet for collecting and leveraging information related to the customers for initiating innovative marketing strategies
- Nestle has been successful in developing Nestle Internet Resource Framework (NIRF) as a result of the flexibility of the Microsoft platform used by the company
- Standardization has enabled the organization to collect information related to the customers (Turban, Strauss & Lai, 2016)
- The internet strategies have enabled the organization to identify the market trends in order to fulfill the demands of the customers
Advantages of knowledge management and E- commerce
Mentions the advantages of knowledge management and e- commerce on the Nestle.
- Increase in the productivity
- Reduction in the costs incurred
- Enhanced flexibility
- Improved personalization
- Advanced intelligence
Proper knowledge management and the use of e- commerce has enabled Nestle to eliminate repetitive tasks, which has ultimately led to the improvement in the productivity. Nestle has also been able to save costs by implementing proper ERP system within the organization as it eliminates the manual mistakes. This has also improved the flexibility of the business operations and has helped the organization in obtaining timely and valuable information.
- Knowledge management is an important aspect of organizational activities and helps the organizations to deal with critical issues
- Knowledge management ensures that the right individuals are placed in the right places
- It enables the organizations to identify and select the most appropriate technologies, which shall enable the organizations to achieve its objectives
- E- commerce has gained huge importance with the increase in the popularity of internet
- The online presence of the organizations adds to the convenience of the customers as well as the other stakeholders
- However, it is necessary to make the people fit for the changes before implementing any new system within the organization in order to avoid resistance
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www.nestle.com. (2018). Nestle.com. Retrieved 30 January 2018, from https://www.nestle.com