When Chris Wright is asked about the efficiency gains he hopes to extract from artificial intelligence, the chief information officer at food giant Nestl\u00e9 is quick to discourage an extensive focus on bottom-line savings.<\/p>\n
\u201cOne of the big learnings we\u2019ve had is don\u2019t focus too much just on the efficiency\u201d says Wright.\u00a0 \u201cWe\u2019re finding in the way we track our business cases that the biggest value is in buying better, or reducing energy in a factory, not only being more humanly efficient.\u201d<\/p>\n
One pilot project that\u2019s putting this viewpoint into practice is a generative AI assistant that can create fulfillment plans for distributors and retail customers. For years, Nestl\u00e9 has standardized that process as much as possible, and for big customers\u2014think Walmart<\/a> and Target\u2014order fulfillment is highly automated. But using AI in this manner can not just create the fulfillment plans faster than what a human can do, it can also produce better plans.<\/p>\n \u201cThat\u2019s improving our customer order fulfillment, which can help us grow sales,\u201d explains Wright.<\/p>\n It is also helpful for smaller retail customers that don\u2019t have the digital might of a big-box retailer and still tend to place orders manually. AI is now being used to measure the impact of Nestl\u00e9\u2019s sales recommendations that are offered to those smaller clients. Human representatives can spend some of the time they save on generating those fulfillment plans to now explain to those customers why these AI-generated plans best suit their needs. Customers that get that extra intel are proving to be more inclined to place the orders that Nestl\u00e9 recommends.<\/p>\n Wright has worked at Nestl\u00e9 for nearly three decades and has served as global CIO since 2021, steering all IT and digitalization efforts for the world\u2019s largest food and beverage company, which ranks No. 97 on the Fortune Global 500<\/a>. Nestl\u00e9\u2019s business is vast and complex: it operates 337 factories and sells more than 2,000 brands including Nespresso coffee, KitKat snack bars, and Perrier water in 185 countries.<\/p>\n But Wright says 90% of the company\u2019s core processes run on the same global template by SAP<\/a>. He says this makes it easier for Nestl\u00e9 to test various technology solutions in markets like Brazil or the Philippines, and then ramp up elsewhere if a pilot has proven successful. The company\u2019s data foundation has been centralized across the entire business, so when leaders ask themselves difficult questions\u2014how can factories be more energy efficient or in what ways can media spend be more efficient\u2014it can pull insights from the same connected well.<\/p>\n Story Continues <\/p>\n \u201cWhat we\u2019ve increasingly tried to do is piece all of that together in a data foundation that connects across the value chain,\u201d says Wright. \u201cAnd we\u2019re starting to see a lot of the value that\u2019s coming out is our ability to rethink how you operate end-to-end, and rethink how decisions can get made end-to-end as well.\u201d<\/p>\n A connected ecosystem makes it easier for Nestl\u00e9 to turn on generative AI capabilities from vendors like ServiceNow<\/a> and Microsoft<\/a>. The latter\u2019s Copilot is now used by around 100,000 workers on a monthly basis.<\/p>\n Another way it manifests is through pricing analytics. Nestl\u00e9 no longer looks at pricing through silos: how much it wants to offer discounts to distributors to buy goods, what\u2019s the company\u2019s market share at any given point versus competitors and how it should adjust pricing to respond to those dynamics, etc. The company is using AI to look at the fuller end-to-end picture to produce more accurate pricing models, a pilot that\u2019s been tested in India and the U.S. and can now be scaled to more markets globally.<\/p>\n \u201cBecause we\u2019ve got common systems, common data models, and common processes, if I can get this right in one country, there\u2019s a very high likelihood we can get it right in most of our countries,\u201d says Wright. \u201cThat scale is what we are always going after.\u201d<\/p>\n Nestl\u00e9 is also using AI to help the company conduct auctions for transportation and commodity orders, more efficiently handle machinery shutdowns on the factory floor, and a virtual sales assistant. The latter was built after Nestl\u00e9 took a look at the most time-consuming tasks\u2014pulling sales information, details about the latest product launches, and the best practices to speak to a specific customer\u2014and then built an AI tool that can quickly generate all those materials.<\/p>\n \u201cMy belief on this\u2014I couldn\u2019t tell you that we can measure this yet\u2014is that actually it\u2019s going to make them more effective in those meetings,\u201d says Wright. \u201cSo there will be a revenue-generating benefit.\u201d<\/p>\n In October, Wright cleared a big IT milestone by completing Nestl\u00e9\u2019s first major upgrade to SAP S\/4HANA, which covered 112 countries across Africa and Asia. The upgrade covers core processes like manufacturing, supply chain, and finance, but Wright says he\u2019s also bullish on the shift because it will allow the company to explore more potential use cases for SAP\u2019s generative AI copilot, Joule.<\/p>\n The SAP upgrade news was disclosed the same month that Nestl\u00e9 announced<\/a> it would lay off more than 16,000 employees under its new CEO Philipp Navratil, cost-cutting that would be more tilted toward white-collar jobs as the company targets \u201coperational efficiency.\u201d<\/p>\n Wright concedes that \u201cAI is not the only reason for that, but it is one of the factors.\u201d He shares the example of a product manager that works in IT, typically supported by two project managers and a couple of business analysts. Nestl\u00e9 could opt to develop AI agents to support the project manager, or alternatively, design those tools to support the top of the funnel.<\/p>\n \u201cWe\u2019re more heading towards the latter,\u201d says Wright. \u201cNow, you still need expertise in these areas. It doesn\u2019t drop to zero, but it fundamentally reshapes it.\u201d<\/p>\n He stresses that workers remain critical to Nestl\u00e9\u2019s future. More than half of the company\u2019s employees are in the physical factories, and there\u2019s plenty of work in the field conducted by the sales team and agronomists. Because there\u2019s more money to pump into data and analytics to make both factories and humans more effective, Wright does need to carve out efficiency gains.<\/p>\n But, like in the case of the virtual sales assistant, that may not result in job losses. \u201cCan we use that in order to visit more customers or spend more time with the important customers?\u201d asks Wright. \u201cIt\u2019s not necessarily a straight elimination. The question for us, is always, can we reuse that time for something useful?\u201d<\/p>\n John Kell<\/p>\n Send thoughts or suggestions to\u00a0CIO Intelligence here<\/a>.<\/p>\n