Nestlé's Business Transformation to Include Digital Investments, Job Cuts
Nestlé's newly appointed CEO, Philipp Navratil, has outlined details about the company's turnaround strategy, which will focus on scaling innovation and accelerating a digitally enabled business transformation.
As part of this plan, the company will invest in new automations to become more digitalized, enabling faster decision-making and driving speed in go-to-market strategies, according to Navratil.
"We want to really scale shared services and drive world-class services throughout our markets," he said during a recent earnings call. "So when we talk business transformation, we think about how we want to become a faster, more nimble company that is driving growth."
This is designed to support multi-year innovation pipelines for the big consumer platforms, said Navratil. The company also hopes to transform insights into meaningful innovations through more targeted marketing and digital capabilities that analyze consumer trends.
It has already found success with this approach for Nescafé espresso concentrates, and will look to replicate the effort for its other leading coffee brands.
"Our scale and breadth bring advantages, but they also can bring complexity, and this creates inefficiencies," said Navratil. "We can get more agile in how we work with simpler structures and roles,"
The company has also mapped out its processes and broken down silos, Navratil added.
Savings and Productivity Come at a Cost
Navratil alluded to potential SKU trimming as well as labor cutbacks and leadership shifts as part of the cost-savings plan.
If a business does not meet the criteria for growth, Nestlé will consider pathways for fixing, partnering or selling it. Right now, the company is specifically evaluating its waters and mainstream vitamins, minerals and supplements businesses.
Over the next two years, the company plans to eliminate "12,000 white-collar professionals across functions and geographies." Within its supply chain and manufacturing operations, it will remove an additional 4,000 jobs.
Regarding its leadership staffing, Navratil stated that while he believes the right leaders are in place, the company will implement a new set of KPIs to assess "who is performing and who is not performing," increasing accountability standards across the board.
As a result of these optimizations and cutbacks, Nestlé plans to achieve cost savings of $6.3 million by the end of 2027.
"I'll be looking at everything in a rational way. Where we aren't performing, I will act with urgency," he said.
