NESTLE BEVERAGE TRAVELING 'ECR PATH'

LISA A. TIBBITTS

ATLANTA -- At Nestle Beverage Co., the dividing line is clear: The functions of the marketing department fit into the consumer side of the business process. Sales functions are covered by the customer business processes.

Now 15 months into a total business re-engineering process, the company is well on its way toward conversion into a customer-centered organization, said Kevin O'Mahoney, director of customer operations for Nestle Beverage Co., Glendale, Calif.

The company hired Neo, a Shelton, Conn.-based marketing and management consultancy, to help guide it onto what O'Mahoney called "an ECR path." The path is comprised of training/needs assessment, business planning resources, category management, technical resources, integrated logistics and innovation.

"We could have jumped into category management and changed some titles and spent some money and done a training program but until we focused on looking at our core business practices and the way we were structured as an organization, our attempt would have failed," said O'Mahoney.

O'Mahoney made his remarks at a conference here on "Category Management Execution," sponsored by The Marketing Institute, a division of the Institute for International Research, New York.

He said that Nestle Beverage Co., which was assembled in April 1991 from parts of its predecessor, Nestle Food Co., was a "strategically aligned" company because of the similar characteristics of its brands -- all beverage and related products. However, it remained highly inefficient.

"We had little organizational discipline. We had lagging productivity. And we felt really good about maintaining the status quo," said O'Mahoney.

With impetus from senior management -- a crucial ingredient, according to O'Mahoney -- Nestle Beverage created a cross-functional steering committee about a year and a half ago and charged it with identifying new operating principles for the company.

"They forced themselves to pull together as a team. Acting on that vision, they said, 'We must re-engineer and rediscover our core business processes and build a new organization that would create a sustained competitive advantage in the marketplace,' " he said.

The committee was charged with mapping the current business processes, benchmarking external best practices and creating new business processes, he said. It developed a list of its goals, such as building brand equity, increasing shareholder equity and facilitating innovation. It added up to a focus on the company's consumers and its customers.

"It's great to decide we want to have a structure built around the consumer and we want to focus on the customer but to make that work, we felt that we needed three key enablers and so we created three more teams," said O'Mahoney. The new teams were responsible for systems, people development and financial aspects.

Based upon ongoing communication between these teams and the steering committee, the company was divided into two sections, one focused on the consumer, the other on the customer.

The company also worked to eliminate procedural bottlenecks. For example, the invoicing process, a customer-side activity, has been simplified so that a single individual handles processing of an order from the time it is received through invoicing to final payment.

The company is still on the path to ECR. "For us, ECR is just a process," he said. "I don't know if we're going to get there, because by the time we get there, they'll call it something else."