At the beginning of the 21st century, the world’s largest food and beverage company, Nestle, decided to standardize their operations. This project named GLOBE (Global Business Excellence) Program implements a single set of procurement, distribution and sales management systems and processes worldwide. It aims at increasing consistency and efficiency on its business operation so that profit will increase. It sounds very tempting. However, because this program requires involvement and cooperation from every aspect of the company, the implementation of the GLOBE has encountered numerous challenges.
The firm has 500 facilities in 200 countries. Each of them is allowed to conduct business in a way that suitable for the local situation. That means in order to choice a standard for even only one business process, they need to go through different types of methods. Along with different cultural and political differences, it is extremely time consuming for the standardization considering the amount of processes for the largest company in this field. Chris Johnson who was in charge of this program was given a deadline ending within three years. Moreover, there is a cap on how much the project can cost each year.
The CEO needs to be realistic to spend money strategically on this project without affecting cash shortages on other program. This is going to slow down the implementation progress. Also, because after the standardization of business process and systems, every organization has to adopt the same way of doing their jobs, no matter where it is, what culture they have, and what methods they used for daily operation. The adjustment requires time and efforts, and the planning process needs to be very careful and thorough as one mistake might leads to very serious consequences.
The other aspect that Nestle faced challenges during the standardization process is on the management. In order to standardize everything, market heads lost some of their power on controlling the ways they have been using for business conducts. Resistances appeared due to fear of changes, pessimism about the outcome of the program and the lost of decision-making power. Even if they decided to cooperate in developing the standard sets for business processes and systems, they insisted that their own ways were appropriate and should be the standards for the program.
These issues required extra efforts to resolve and they were not easy. Again, under-estimating the funds and people needed for this GLOBE program ended up with additional costs and workers for assistance. The other problem was that Johnson tried to build up a team with top-on-the-line managers with great experiences on their positions in a variety of business sectors, but many of them have too much value and importance on their jobs so they could not be let go for the this new project.
However, the requirement on the people for this team was critical as the members must be good enough on what they do to make sure the business processes adopted for the GLOBE are appropriate. So this created a dilemma on forming the perfect standard setting team. Finally, with Nestle’s various technology units that ran on different types of hardware and software platforms, it created huge challenges on integrating them into a communicating, functioning entity.
They had newer versions of SAP enterprise resource planning software running in Canada, US and Europe, while old version software in other 14 countries. In addition, throughout the 200 countries that Nestle conducts business, there are many differences in accounting and financing policies that need to be considered while designing the unified GLOBE system. Also for marketing purposes, not every location was using same strategies. Therefore, when it came to the system analysis phase, the team had a large amount of work to do.
Also, because the GLOBE project involved almost all of different departments over the world, it was not practical to switch the systems from the old ones immediately to the new ones. It is critical that how they would start and what pace they were going to update their systems. It seems that Johnson got the toughest job that was impossible to achieve. But he and the team came out with some solutions to overcome those challenges along the way. First of all, Johnson hired 400 executives with diverse career backgrounds covering 40 countries, such as manufacturing, finance, marketing and human resources.