Chairman and CEO of Nestle, Peter Brabeck-Letmathe, gestures during the annual shareholders meeting of the Swiss based giant food company in Lausanne.
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In some weeks, Ian Jobson makes 20 types of Kit Kat at the big plant he oversees in the northern English city of York, the largest Kit Kat manufacturing operation in the world. Nestle installed $11 million worth of robots on the production line last year, and a new $1.6 million automated packaging machine is due to be installed this year. The number of people needed to staff the round-the-clock operation has been cut to 28 from 60. Jobson patrols the factory floor in his white coat and hairnet, soliciting ways to improve production. Nestle sent a manufacturing SWAT team to help last year. That resulted in a raft of small production-line improvements, including redesigning the levers that dab glue on the wrappers and reprocessing wasted sugar rather than feeding it to York's pigs--tiny changes but ones that add up and are far cheaper than a new robot. "We are obsessed with getting costs down," says Jobson. Back in his office, he pulls up a graph showing York's productivity. In 1998 it took 38 man-hours to produce a ton of chocolate. This year's time is forecast to drop to 23 hours--a 40% improvement.
Jobson recently met over lunch with Brabeck, who is on the road more often than he is in Vevey. Brabeck estimates he meets from 2,000 to 3,000 Nestle staff members every year, about 10% of the work force. He pays particular attention to about 150 up-and-coming managers, trying to get to know them and their spouses.
One issue Brabeck is explaining a lot these days is the big data project he has put in place. Dubbed GLOBE, an acronym for global business excellence, it involves as many as 2,000 people worldwide working to define and standardize everything the company does. Switzerland, Singapore and Peru were the first to switch to the new data system last November, and they found they were able to eliminate a mass of duplications and redundancies in their systems--for example, tens of thousands of customers who were listed several times in databases, alongside vendors who had gone out of business. Among other things, the exercise has shown that Nestle doesn't leverage its size well and often neglects to get volume discounts when different divisions buy paper clips or shipping pallets from the same suppliers. A lot is riding on the GLOBE project: Nestle is promising a further $4 billion in cost cuts by 2006, and more than half of that depends on opportunities identified by GLOBE.
Brabeck wants Nestle's management structure to pay less attention to national boundaries, and he has begun to get his way. Nestle's water business is now run as a global operation out of Paris, and its eye-care business was spun off as a separate company, Alcon, with its own stock-market listing. Nestle's most futuristic business, an attempt to develop nutritional supplements that enhance beauty, is being pursued as a joint venture with L'Oreal. But Nestle's national organizations still manufacture much of what they sell locally, controlling the chocolate, milk and most other products they sell in their countries.