The Key to Inventory Optimisation at Nestle

Nestlé USA milk factory in Modesto, California, USA (Credit: Nestle)
How cloud technology is the key to inventory optimisation at Nestle

Food giant Nestle has adopted a data-driven approach to its inventory management to optimise its procurement operation.  By rightsizing its inventory, the company is able to use the strategy to avoid shortages and large surpluses. This approach is key for the success of its supply chain in managing inventory and coping with supply disruption or additional demand for products. 

Nestle collaborated with Coupa on its digital transformation to leverage cloud modelling to optimise its procurement strategy to make smarter decisions with its inventory management .

Quality check on Nestle VertuoLine (Credit: Nestle)

Addressing inventory management at Nestle 

Working alongside solutions provider Coupla, Nestle recognised they had an issue with its inventory, as they were dealing with poor input data quality and a lack of understanding of its models.  With increasing transportation costs, the company needed to address its inventory management to make sure its models could be agile enough to cope with changing demands on its supply chain. 

The approach it took was to collaborate on a data-driven approach to assess replenishment lead time, improve its data and improve the accuracy of its forecasting.

The solution is now allowing the company to model its network with better data, plan for scenarios, and be aware of any problems they need to have effective plans in place for.  The results have been a reduction in replenishment times, an optimisation of safety stock, and financial savings. 

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Moving Nestle procurement data to the cloud 

By moving the data to a cloud-based system, team members from across the global business are able to use the data in real-time and run complicated scenarios plans within its local supply chain contexts.  

An key area of the strategy is the Coupa App Studio, which allows the Nestle team to see important data, ask ‘what-if’ scenario questions, and share information easily with other stakeholders within the business.  

“Coupa helps us change the way we do supply chain planning. With Coupa we have successfully expanded our solution space and our user base,” said Robert Wang, Principal Supply Chain Optimisation, at Nestle USA.

“I think there’s a couple of things we’re going to benefit from.  One is it lowers the barrier of entry for a larger group of people in the organisation.  They don’t have to have a PHD in operations research and they can essentially use the product and come up with a solution for it.  This is particularly the case looking at Nestle worldwide.  The other thing is the ability that the user is being able to involve a user app to solve a problem and rely less on the analytics group and they can also solve the problem in more of a real-time setting. That's quite a significant impact.”

Robert Wang, Principal Supply Chain Optimization at Nestlé USA (Credit: LinkedIn)

Read more about the benefits of sourcing segregation at Nestle, and its 'climate-smart' sourcing strategy.


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