BUSINESSWEEK ONLINE : DECEMBER 11, 2000 ISSUE
BUSINESS WEEK E.BIZ -- WEB SMART COMPANIES E-Chocolate Here's how Nestle (NSRGY) is harnessing the Web to more efficiently make and sell chocolate bars, from KitKats to Butterfingers: 1. Taking Orders HOW IT WORKS Since July, U.S. storeowners have had the option of ordering Nestle chocolates and other products via a new Web site, NestleEZOrder. THE BENEFIT Nestle hopes to eliminate most of the 100,000 phoned or faxed orders a year from mom-and-pop shops. That would reduce manual data entry and cut processing costs by 90%, to 21 cents per order. 2. Getting Ingredients HOW IT WORKS Nestle buyers have purchased cocoa beans and other raw ingredients on a country-by-country basis, with little info about how colleagues were buying the same products. Now they share price info via the Net and pick suppliers that offer the best deals. THE BENEFIT Nestle has reduced the number of suppliers by as much as two-thirds and cut procurement costs by up to 20%. 3. Making the Chocolate HOW IT WORKS Nestle has traditionally processed its own cocoa butter and powder and manufactured most of its own chocolate. The Web lets Nestle better communicate with suppliers, making outsourcing a more viable option. THE BENEFIT Last year, outside contractors in Italy and Malaysia won orders to produce raw chocolate. Expect more such deals: Nestle plans to sell or close a third of its 86 chocolate plants in coming years. 4. Cutting Inventories HOW IT WORKS In the past, Nestle guessed at how many KitKat or Crunch bars it might be able to sell in a promotion. Today, electronic links with supermarkets and other retail partners give Nestle accurate and timely information on buying trends. THE BENEFIT That lets Nestle trim inventories by 15% as it adjusts production and deliveries to meet demand. 5. Marketing the Candy Bars HOW IT WORKS Nestle spends $1.2 billion on advertising through traditional print and TV ads. Within two years, more than 20% of that will go online. THE BENEFIT New marketing approaches include a chocolate-lover's Web site with advice, recipes, and paeans to the pleasures of chocolate. Nestle has similar sites for coffee, Italian food, and infant nutrition. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					e.biz Contents for Dec. 11, 2000 issue RELATED ITEMS Nestle: An Elephant Dances (int'l edition) TABLE: Putting Order in Nestle's Technology House TABLE: E-Chocolate ONLINE ORIGINAL: A Food Giant Forges an E-Revolution INTERACT E-Mail to Business Week Online

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