NESTLE’S ERP IMPLEMENTATION

TM 3 ENTERPRISE SYSTEM

CASE 3 : NESTLE ERP IMPLEMENTATION

Kelas: LH11

 Nama Kelompok 2: 

- Kevin Alexander 1801374412

- Imelda Ellisa 1801440225

- Adinda Fitria Utami 1801433743

- Muhammad Syaogi Alaydroes 1801383133 

- Wita Narensa Anggraeni 1801410771

- Ruben Abram 1801377793

- Dony Maulana Iskandar 1801438006

- Berlino Rahmat Chendramata 1801427274

QUESTION!!!

1. Discuss the objective of ERP implementation at Nestle USA. Did they achieve these objectives?

2. Refer to the nestle case in the chapter. What problem were faced by Jeri Dunn,CIO, and what you think would be the right system architecture for Nestle?

3. Discuss the benefits and limitation of ERP Implementation at Nestle USA.

4. Why should ERP architecture include a discussion on organizational structure, business process, and people, instead of just information technology and system?

5. Why is server-centric architecture better than client-centric architecture?

6. Discuus the benefits of service-oriented architecture over the traditional three-tier architecture.

Answer!!!!

1. we think you guys get the main issue from this case. The project's initial 

objective or main aim was to use common business processes or standardize, systems and 

organizational structures across the autonomous divisions within the USA. These 

common systems across Nestle USA would create savings through group buying power 

and facilitate data sharing between the subsidiaries.

     Nestle achieved its goals, after regrouping and starting again from scratch, with SAP in 

place, Nestle USA achieved significant ROl. The common databases and business 

processes lead to more trustworthy demand forecasts for the various Nestle products. 

This also allowed the company to reduce inventory and reduce the redistribution 

expenses.

2. Dunn was faced with having to change the way Nestle USA did business and facing 

employee resistance to the new business process he tried to push through. he assembled a

team of stakeholders that did not have a stake in the new processes. He had a lack of 

communications with employees about future changes and was thinking to much about 

the system architecture and not enough about implementation across the board. For Dunn, 

a Web-based architecture system would likely be most appropriate. His company is big,

to say the least, has thousands of employees and is spread many miles apart. His 

company has many different products, and many different subsidiaries or corporate 

partners. Dunn needs something that is easy to integrate with existing internal systems 

and external trading partners. In other words Dunn needs an Internet platform which can 

provide a wide range of end users with access to ERP applications over many different 

locations through the net. Because his employees initially resisted the change, he should 

also look to make the integration easy to learn and adjust too, and most people are 

comfortable with Web based platforms.

As stated before, Dunn's main problem was trying to integrate "seven separate 

companies" onto one main system. Since the products that Nestle sells are not related, it 

was extremely hard to get everything in sync.

It is said that Dunn knew the technology very well and her main goal was to have data 

sharing to enable group buying in return reducing costs.

"Dunn actually knew Nestlé technology unusually well because of her long history with 

the company. In 1991, as associate director for application systems at Nestlé-owned 

Stouffer's Hotels, she was sent to Switzerland to participate in an effort to establish a 

common worldwide methodology for Nestlé projects. In 1995, she was promoted to 

assistant vice president of technology and standards for Nestlé SA, and while there came 

to understand and agree with the value of establishing common systems throughout 

global Nestlé because such a change would enable group buying which in turn would 

reduce costs. Dunn also realized that common systems would facilitate data sharing 

among subsidiaries. When she was moved to Nestlé USA in 1997 at age 42, she found 

that her earlier recommendations from Vevey were mostly ignored. "My team could 

name the standards," Dunn said, "but the implementation rollout was at the whim of the 

businesses."

3. The benefits at Nestlé and many other organizations are as follows:

•    Integration of customers,supplier dan partners

•    Improvement of customer and business partner satisfaction; 

•    Establishment of a Global Asset Recovery Services brand; 

•    Reduction of administrative costs; 

•    Raised productivity; 

•    Lowered IT operations and systems maintenance costs; and 

•    Enhanced security and business controls. 

System Limitations

•  The data conversion and transformation from the old to new system was an extremely 

tedious and complex process.

•  Consolidation of IT hardware, software and people resources was cumbersome and 

difficult to attain.

•  Retraining of IT staff and personnel to the new ERP system caused resistance and 

reduced productivity over a period of time.

•  Complexity of installing, configuring and maintaining the system increased thereby 

requiring specialized IT staff, hardware, network, and software resources.

Business Limitations

•  The change of business roles and department boundaries created upheaval and resistance 

to the new system.

•  Retraining of all employees with the new system became costly and time consuming.

•  Nestlé incurred high initial costs of purchasing software, consultant costs and disrupting 

the work flow of its employees

4. As discussed on this thread, technology should not be the only focus in ERP 

implementations. It is necessary to focus on business process architecture, business
requirements, budget, project management, commitments from top management, and
continuous communication with employees informing them about future changes. A
systems value is determined by its usage or end-users.

If the ERP software is installed with a focus only on the system architecture, you may
have a successful installation of software but an unsuccessful implementation. ERP
implementation isn't just about the software. It's easy to install a new system. The hard
part is changing the business processes of the people who will use the system. Nobody
likes process change, particularly when they do not know what is coming. This makes it
even more important, and indeed necessary to include a discussion on organization
structure, business process and people, instead of just information technology and system.

5. In server-centric environments clients only need access to the Internet and a standard 

browser like Internet Explorer or Firefox with a few plug-ins like Java Virtual Machine
and others. There are no other user interface applications required on the client. Thus, the
client can use any Internet device that uses standard Internet technologies such as
Hypertext Transport Protocol (HTTP), Hypertext Markup Language (HTML) for
user access or eXtended Markup Language (XML) for back-end communication
between an application and third-party system with the Internet Application Server.

In client-centric environments client devices will need installation of Software
Development Kits (SDKs) and proper configuration and integration with the client
device for the application to work properly. However, client-centric platforms are popular
in other devices like Personal Digital Assistants (PDAs), Blackberry, and Mobile
phones that are increasingly used to access information from the enterprise systems.

6. In general, SOA allows for more flexibility, scalability and reusability than do the 

traditional architectures. It reduces cost, accelerates movement, and provides a data
bridge --- these are some of the short term benefits. A major longer term benefit is that it
provides flexibility that the traditional systems do not have by providing services
anywhere on any system or network.

Benefits:
-Business-level software services across heterogeneous platforms
-Complete location independence of business logic
-Services can exist in any system and network
-Loose coupling across application services
-Granular authentication and authorization support at service unit level
-Dynamic search and connectivity to other services

Short-term benefits:
-Enhanced reliability
-Reduced hardware acquisition costs
-Leveraged development skills
-Accelerated movement to standards-based server and application consolidation
-Provide a data bridge between incompatible technologies

Long-term benefits:
-Provides the ability to build composite applications
-Creates a self-healing infrastructure that reduces costs
-Provides a real-time decision making application
-Enables the compilation of a unified taxonomy of information across an enterprise and its
customers and partners

Business Value benefits:
-Meet customer demands faster
-Cheaper acquisition and maintenance of technology
-Empowers the management of business functionality
-Leverages existing investments
-Reduces reliance on expensive custom development

Limitations:
-Inconsistent performance
-Requires enterprise-level focus for implementation to be successful
-Security system has to be sophisticated
-Costs can be high due to services being junked often