According to Supply Chain Dive, Nestlé is upgrading its ERP system from SAP S/4HANA Finance to enable AI and automation capabilities. The food and beverage giant plans to cut 16,000 jobs globally over the next two years, representing 6% of its total workforce. Three-quarters of these cuts will affect corporate workers, with the rest coming from manufacturing and supply chain roles. CEO Philipp Navratil told investors last month that Nestlé “has not been the most efficient company in the past.” The company migrated its entire SAP ERP to the SAP Private Cloud in 2022 and is now moving off the legacy Enterprise Central Component system that SAP plans to end mainstream support for in 2027.
Sponsored content — provided for informational and promotional purposes.
The Efficiency Reckoning
Here’s the thing – when a CEO openly admits his company hasn’t been efficient, you know something’s seriously wrong. Navratil’s candor is actually refreshing in corporate speak land. But it also signals how much pressure Nestlé is under to streamline operations. The ERP upgrade isn’t just some tech project – it’s the foundation for the massive workforce reduction they’re planning. They’re basically building the system that will allow them to operate with fewer people.
SAP’s Endgame Strategy
This migration highlights SAP’s broader push to move customers off legacy systems. With ECC mainstream support ending in 2027, we’re going to see a wave of these upgrades across major enterprises. SAP’s cloud-first strategy is clearly paying off – Nestlé already moved to their private cloud in 2022, and now they’re doubling down on the S/4HANA platform. It’s a smart play by SAP, locking in their biggest customers before competitors can swoop in.
Supply Chain Impact
The real prize here is what Nestlé calls “more advanced order fulfillment that matches supply and demand in real time.” In today’s volatile market, that’s gold. But can an ERP system really deliver on that promise? We’ve heard similar claims for decades. The difference now is AI – if they can actually use machine learning to predict demand patterns and optimize inventory, that could be transformative for a company that sells everything from coffee to baby food globally.
The Corporate Restructuring Angle
Let’s be real – cutting 12,000 corporate jobs (75% of the total) tells you where the bloat really is. Manufacturing and supply chain only account for 4,000 of the cuts. That suggests Nestlé’s back-office and administrative functions have become seriously overweight. The ERP upgrade gives them cover to streamline these operations while pointing to “digital transformation” as the reason. It’s a classic case of using technology to justify organizational changes that were probably overdue anyway.
