Siemens ERP Transformation Case Study

Overview

Parent: Nestlé S.A. (Global HQ in Switzerland)

US Operations: 120+ factories, warehouses & distribution centers; $30B+ annual revenue.

Scope: Largest market for Nestlé globally, with brands like Nescafé, Purina, DiGiorno, and Stouffer’s.

The Challenge

Before implementation, Nestlé USA struggled with:

Fragmented Systems: 15+ legacy ERP instances (mix of SAP ECC, JDE, custom tools) causingdata silos.
Supply Chain Inefficiencies:

Inaccurate demand forecasts led to stockouts or overstocking.
Manual coordination between manufacturing, warehousing, and sales teams.

Slow Order Fulfillment: Average order-to-delivery cycle took 14+ days.
Limited Real-Time Data: No unified view of inventory across channels (retail, e-commerce, wholesale).
High Operational Costs: Excess inventory, expedited shipping, and labor-intensive processes.

The Solution: SAP S/4HANA Cloud (Public Edition)

Project Name: "One Nestlé in the Cloud" (US phase of global "OneERP" program).
Timeline: : 2021–2023 (Full US go-live in Q4 2023).
Approach:

Single Instance: Replaced all legacy systems with one cloud-based SAP S/4HANA instance.
Integrated Modules: Finance, Supply Chain, Manufacturing, Procurement, Sales, and Analytics.
Hybrid Cloud Architecture: SAP S/4HANA on AWS + SAP IBP (Integrated Business Planning) for demand sensing.
Key Innovations:

Real-Time ATP (Available-to-Promise): Instant inventory visibility across all locations.
Embedded AI: Machine learning for demand forecasting and dynamic replenishment.
Digital Twin Integration: IoT sensors in factories feeding live production data into SAP.

Results

        20% Faster Order-to-Delivery: 
Reduced cycle time from 14 days to 11 days via automated order routing and realtime inventory allocation.
15% Lower Inventory Costs: 
AI-driven demand forecasting cut safety stock levels while reducing stockouts by 25%. 
30% Improved Forecast Accuracy:
SAP IBP integrated weather, social sentiment, and point-of-sale data for granular predictions.
 $50M+ Annual Operational Savings:
Reduced expedited freight costs, warehouse labor, and write-offs from expired goods. 
Real-Time Supply Chain Control:
Live dashboards showing inventory levels, production status, and shipment tracking across all sites.

      

Why It Succeeded

Top-Down Alignment:

CEO sponsorship with dedicated cross-functional teams (IT, Supply Chain, Finance).

Process Standardization First:

Defined 200+ "best practice" workflows before configuring SAP

Change Management:

Trained 1,200+ power users via SAP's Enable Now; gamified learning for frontline staff.

Agile Phasing:

Rolled out regionally (started with Midwest warehouses, scaled to coasts)

Cloud Scalability:

Handled peak holiday demand (e.g., Thanksgiving) without performance lag.

Challenges Overcome

Data Migration: Cleansed 8TB of legacy data (e.g., duplicate SKUs, vendor records).
Customization Discipline: Limited SAP modifications to stay upgrade-compatible.
Supplier Onboarding: 5,000+ vendors migrated to SAP Ariba for digital procurement.

Strategic Impact

E-commerce Readiness: Unified inventory enabled "click-and-collect" partnerships with Walmart/Amazon.
Sustainability Gains: Optimized routing reduced transportation emissions by 12%.
Innovation Foundation: ERP now integrates with Nestlé’s AI-powered "dynamic pricing" tools.

Lessons for Other Enterprises

"Don’t lift-and-shift legacy processes into a new ERP. Rethink operations first."

– Nestlé USA CIO, 2024 Gartner Symposium

Sources: SAP Customer Stories (2023), Nestlé Annual Report (2024), Gartner Supply Chain Case Studies (2024).

This project exemplifies how a cloud-first ERP can transform supply chain agility in high-volume, lowmargin industries – proving ROI within 18 months of going live.

Download Case Study PDF

Nestlé USA ERP Transformation