GTI lab
The Authors
Dr. Daniel Rouach
Olivier Michael Rouach
Managing Technology Transfer and Innovation
THE NESTLE / NESTEC Experience
The authors would like to thank Nestlé/Nestec managers and in particularly Mr. Helmut Traitler, Mr. Gilles Fayard and
Mr. Laguna who accepted to share their experience during conferences given from 1995 – 1997 (Les Echos conference,
Perspective Europe conference, guest lecturers at the EAP MBA program).
We would like also to thank Nestlé/Nestec management who helped us through our visits at Vevey and especially during
an internal conference made with the participation of the author.
All sources used in this chapter were drawn from public documents or conferences. Nestlé cannot be held responsible in
any case for the content and analyses expressed in this text.
1
Introduction
Through more than 130 years of history Nestlé has grown from a two-product company
focusing essentially on infant nutrition to be the largest food company worldwide with 1.5%
of the world market. The sector, food industry, is a highly competitive market dominated by
giants like: Unilever, Danone, Coca Cola, Pepsi Cola, Philip Morris, Grand Metropolitan
etc.
The Nestlé portfolio consists of over 22,000 products sold across the five continents and
manufactured in more than 70 countries. The total sales on Nestlé in 1997 amounted to
more 69,9 billion Swiss francs and the trading profit was more then 6,8 billion Swiss francs
which represent a 17,3% growth from 1996. (For more 1997 financial figures see annex 1).
“The improvement in trading profit is due to a policy of accelerated innovation in the
product and communication areas, as well as to the extension of the Group’s activities in
several countries.” (Nestlé press release 26/03/1998)
Could Nestlé have become a world leader without a strong commitment for innovation ?
In Germany, for example, 25% of Nestlé’s sales are made up with products which did not
exist three years ago. These figures emphasize the essential role played by R & D as a drive
for innovation. Could this have happed without high investment in R&D?
One cannot raise the question of innovation and R & D at Nestlé without introducing
Nestec. Nestec acts within Nestlé as a separate entity in charge of basic research and the
transfer of the know how to all Nestlé companies. Could this transnational operation work
so well without Nestec or without a well organized Technology Transfer system?
Mastertech, a consulting firm, was hired by Nestec to analyze the current situation of the
Nestlé group and to advise on changes to be made. Patrick Lemon, a senior consultant at
Mastertech, was appointed head of the team responsible on checking the knowledge
management aspects. After studying the materials for a few days he decided to focus on the
role of Technology Transfer and to propose best practices to Nestec.
2
I.
Nestlé: A world leader
Founded in 1866 by Henri Nestlé, the Swiss origin company had become the world leader in
the food industry with 1.5% of the global market with total sales of more then 43 billion US
dollars in 1997 and a net profit of more then 2.7 billion US dollars .
Nestlé’s history can be divided into the following milestones (for a detailed history of
Nestlé, see annex 2) :
Company’s foundation.
Milk for the world, merger with the Anglo-Swiss Condensed Milk
Company in 1905.
Merger with Peter-Cailler-Kohler Chocolats Suisses S.A. in 1929.
World War II.
Growth and diversification, mergers with Alimentana ( Maggi) in 1947
and with Ursina-Frank in 1971.
The grounds shifts, agreement with l’Oréal in 1974.
New directions, new CEO Helmut Maucher (until 1997), acquisitions of
Carnation (USA) in 1985, Buitoni-Perugina (Italy) and, Rowntree (GB)
in 1988, Perrier in 1992 and Spillers in 1998.
1886-1905
1905-1918
1918-1938
1938-1944
1944-1975
1975-1981
1981-1998
From its early days Nestlé had an global view, through intensive expenditure policy Nestlé
today is present in 5 continents and in more than 70 countries.
Exhibit 1 – Transnational companies scale in 1995
Volvo
Cable & Wireless
74%
76%
80%
SCA
Roche
85%
Philips
85%
87%
Unilever
ABB
89%
Solvay
90%
Seagram
90%
Thomson
93%
Nestlé
94%
(Index for transnationality: the average of ratios of foreign to total asset, foreign to total
sales and foreign to total employment)
3
The company operates 495 factories worldwide and employs more then 225,800 people.
Although its origin only 2% of total sales comes from Switzerland and more then 36% in
Europe. Today Nestlé focalize on two regions: Asia and Eastern and Central Europe. Inside
the Asian market countries like India and China attracts must of Nestlé’s attention as the
best potential emerging economies (1/3 of the world population).
Exhibit 2 – Sales analysis by geographic area.
Sales 1997
Food
Europe
Americas
Africa, Asia and Oceania
Other
%
25,706
22,262
13,493
8,537
69,998
36,70%
31,80%
19,30%
12,20%
(In millions of Swiss francs)
The global approach by Nestlé led to product diversification. Less then twenty years ago,
coffee accounted for about half of Nestlé’s profits; today, this proportion has shrunk to less
then 30%.
There are more 22,000 different products under Nestlé network worldwide. 8500 Local
brands which are under the responsibility of local markets. 140 Regional strategic brands are
under the responsibility of SBU’s and regional management, for example: Vittel . 45
Worldwide strategic brands, are under the responsibility of general management at SBU
level, for example Kit Kat. 10 Worldwide corporate brands, for example: Nestlé, Perrier,
Maggi, Buitoni.
Exhibit 3 – Sales analysis by product group.
Product Group
Beverages
Milk Products
Prepared Dishes
Chocolate
Pharmaceuticals
Sales 1997
19,142
19,334
17,66
10,663
3,199
%
27,40%
27,60%
25,20%
15,20%
4,60%
(In millions of Swiss francs)
4
1.1 More 130 years of permanent innovation
The food industry is highly innovative : about 5000 new products are launched every year.
Thus innovation is regarded as a major source for competitive advantage.
In the food industry product renovation is as important as new inventions. Thus the two
major drivers for innovation within the industry: technology–push and market–orientation.
Since its creation, Nestlé had built its success on technological innovation. Technological
breakthroughs introduced by Nestlé include such early products as lacteal flour Henri Nestlé
1867. Innovation may also take the shape of new processes (the process to manufacture
soluble coffee powder, introduced in 1937), as well as improved product quality (the
suppression of carbohydrate support for Nescafé, 1950).
Gilles Fayard, head of Technology Transfer Team, at Nestlé research center gave the
following interpretation of the innovation process at Nestlé
Exhibit 4 – the innovation process at Nestlé
OUTCOME
CONSTRAINTS
Ingredients
Formulations
Processes
Additives
Packaging
Marketing
Distribution
Patent
…
Cost
Manufacturer conservatism
Quality
Safety
Consumer expectations
Consumer conservatism
Sociological, Political
Legal
…
MEANS
Recruiting
Training
R&D
Technology watch
Technology transfer
Information
…
Innovation
DRIVING FORCES
SOURCES
Strategy
Quality
Know-how
Profit
Market environment
Fashions, trends
…
Know-how
Knowledge
Creativity
Competition
Academic
Inventors
Suppliers
…
5
6
Furthermore, Gilles Fayard, stated the following strategic consideration made by Nestlé
throughout the Innovation process:
 Long term strategy - anticipating business and future needs (water shortage,…),
geographical developments (emerging market in south east Asia, …).
 Building and strengthening of competencies - science, technology, nutrition, marketing,
manufacturing, …
 Strict respect of local legislation – modify product and process accordingly.
 High commitment to environmental issues – “the Nestlé policy on the environment”
dating from 1991.
 High quality products – the “3A” rule: Appealing, Available, Affordable.
 Strong technical know-how – competitive edge (coffee,…).
 Cross-fertilization – benefit from multidisciplinary expertise, learn from other product
areas.
 Strong scientific support to meet different claims – infant nutrition, LC1, coffee,…
 The “3P” rule – Nestlé new products should be Proprietary, have a Perceivable value and
be Protectable i.e. patentable.
Peter Brabeck-Letmathe, Nestlé’s CEO: “The constant improvement of existing products is
just as important as the invention of new once. Innovation and renovation go hand in hand”.
“One of the best defenses Nestlé has against the might of the retailer is innovation in your
product offering”.
On the other hand, Roland Meyes, President and CEO of Nestlé Brazil says: “We have a
huge network of R&D centers, but what comes out isn’t quite equal to the investment we put
in. … I feel that real breakthrough innovations are still rather scarce, or sometimes too
sophisticated and, as a result, often too costly for placing the products successfully in the
market. …I would like to see more emphasis on the practical side, for example, local
applications of existing technologies from elsewhere, or being more innovative in relation to
today’s local practices and standards. In emerging countries, there is still a lot which can be
done in this way in order to get a competitive advantage, instead of just waiting for pure
advanced R&D results which might require high additional investment, and increased
production cost and final consumer prices”.
II.
Nestec as a Knowledge Management system.
Nestec SA was create in 1969 by Nestlé (100% ) in Vevey Switzerland. Nestec’s primary
mission is: to give technical assistance to all the Nestlé’s companies, to transfer the know
how to all the Nestlé’s companies.
Nestec is essentially an internal consulting company which operates at all levels of Nestlé’s
value chain. It provides services to Nestlé’s subsidiaries in the following fields : R & D,
Technical matters, Information Systems and logistics, Marketing, Finance, Human
Resources and Administration & legal. “Nestec is like a consultant company owning all the
technology, all the patents and all the brands for Nestlé products”, Jan Ekholm, vice
president of Nestec ,explains.
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The R & D Division of Nestec is the corporate R & D resource of the Nestlé group, serving
all group companies. Nestec holds 50% of the Nestlé research center in Lausanne, all of
Nestlé’s research center worldwide and Nestlé’s training center in Vevey.
Nestec is a self-financing business unit which contributes to the profitability of Nestlé. The
management of patents is a substantial source of profit. Royalties of up to 5% are paid out
by the subsidiaries for the use of new technologies or processes.
In addition, although the RECO’s have a positive view on Nestec as a whole, subsidiaries
have a different perspective. There is a belief within the subsidiaries that Nestec takes too
much of a global perspective and is often unaware of true market conditions in various
geographical areas.
Exhibit 5 – Nestec’s inside Nestlé’s value chain
Nesltlé
Purchasing
Logistics
R&D
Production
Marketing
Distribution
NESTEC
Nestlé world trade company
2.1 Technology Transfer as Managerial tool for Nestec.
A key element of Nestlé’s strategy lies in the globalization of its products. Achieving the
objective of having the same products manufactured the same way around the globe requires
a considerable amount of Technology and know-how Transfer (TT) among subsidiaries and
between subsidiaries and Nestlé’s R & D centers. This unable Nestlé to maintain its quality
8
standards throughout all its location worldwide. In addition, Nestlé has practiced the
acquisition of brands in the food industry to reduce the costs of developing and marketing
new brands. The harmonization of production processes and quality standards among
acquired brands, as well as their development, imply some further TT. Recent examples
include Rowntree (1985) and Carnation (1988).
The active role played by TT in all aspects of Nestlé’s business is embodied by Nestec.
Nestec’s TTT (Technology Transfer Team) has defined for main missions to actively play
the turning plate role which includes 4 elements:
1.
Identify, evaluate, learn and transfer new, emerging technologies for potential
applications in all product groups.
2.
Study, adapt and transfer existing, traditional technologies for new applications in
other product areas.
3.
Insure an efficient transfer of technological competences and information within the
R&D system.
4.
Transfer know-how to all CRN and R&D staff by preparing and performing
technological and concept trials.
The services offered by Nestec are ruled by Technical Assistance Agreements which are
concluded between Nestec and the subsidiaries. Transfers are agreed upon based on various
types of contracts, which cover from small to large technology transfers according to the
needs of the subsidiary.
Subsidiaries gain access to :
 Knowledge acquired through basic research / inventions.
 Processes, facilities and products developed through applied research.
 Norms and quality standards prevailing at Nestlé.
 Industrial know-how, including assistance by skilled engineers.
Nestec’s role in TT offers several advantages for Nestlé :
 It allows Nestlé to keep a tight control over technology in phases such as the foundation
of a subsidiary or the transfer of production to a third country.
 It circulates technological innovation and processes throughout the group at a global
scale, and ensures cross-fertilization between the group’s various businesses.
 It provides central R & D with technological feed-back from the various parts of the
company.
 It guarantees an effective allocation of resources and know-how.
The formalization of TT by Nestec thus creates an effective system for innovation
management. However, applying procedures to a creative and entrepreneurial process carries
the risk of curbing creativity, dynamism and motivation of staff in charge of technological
development within the subsidiaries.
2.1.1 Feeding the R&D
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After some years in laboratories some young scientists can move on to tasks in the field of
marketing, and with them transferring their know how . Internal turnover has been turned
into a management philosophy, as well as work in multidisciplinary teams. “We have built
up a core competence network that brings very competent people from other parts of the
organization together with R & D people”, affirmed Jan Ekholm.
Nestlé endeavors to make its researchers close to consumers’ needs : “We do our best so that
our scientists be as much in tune with consumers’ demand as possible”, asserts Werner J.
Bauer, head of Nestlé’s research.. “In this respect marketing department plays an essential
role of driving belt”. Scientists are made aware of market trends. But the river flows both
ways : they are increasingly involved in the market analysis process. “Many scientists feel
under consulted by the rest of the business, especially marketing”, says Jan Ekholm. In order
to integrate a number of different people more effectively, new mechanisms have been
established. “It’s a question of bringing in the scientists, not leaving them out in the cold”,
Jan Ekholm continues. Andrea Pfeifer has been appointed head of the CRN in early 1998
after having successfully launched the “probiotic” yoghourt LC1. “It is the first time that our
scientific teams have been so deeply involved in the market launch of a product”, says
Andrea Pfeifer. R & D costs for LC1 have been amortized by the end of the first year of
sale. This type of experiment might happen more and more often in the next future with the
advance of “functional food” such as LC1.
Exhibit 6 – Nestlé R&D matrix a base for technology transfer
Product areas
Baby food & milk
Instant coffee
Flavors
Chocolate
Ice cream
Dehydrated food
Frozen foods
Pet food
Cereals
Competences available
Food
Enzyme
Powder
Extrusion Freesing
Proteins
microbiology technology technology technology technology
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
(Source: The Nestlé international research center in Lausanne, Vision – Profiles.)
2.2 Learning from the environment: competitive intelligence and technology watch.
Nestec is open to its environment and considers technology as an asset. Therefore, acquiring
additional knowledge constantly appeared as a key factor in ensuring competitive advantage.
The innovation process, for example, depend on information coming from the outside;
information about: markets, fashions, competition, technology, consumer behavior, political,
sociological and legal factors.
10
Jan Ekholm opinion about market intelligence, innovation and the information flow: “For
me the most important things are to try and create a culture of innovation in your company,
and knowing your consumer, so you have to have a focus on cultural development and
senior management involvement, linked to an information system that feeds into the system
information about what is going on outside, technological breakthroughs, etc., so that they
can be worked on in the company”. Nestlé customers and suppliers are also an useful source
for information: “ In France we have put a Nestlé man inside a customer organization to try
to really understand what that customer needs …it gives important feedback to us so that we
can adjust our products and develop things to fit the trade’s needs”.
Nestec’s TTT (Technology Transfer Team) is not only responsible for transferring
information throughout the Nestlé group but, it’s also in charge of technology watch (term
used to describe one aspect of competitive intelligence which focuses only on technology).
Infect they are responsible for all the phases the intelligence process.
11
Exhibit 7 – TTT as an competitive intelligence unit specializes in technology
identify
evaluate
transfer
The TTT collects information from various sources external as well as internal (RECO’s,
SBU’s, CRN), for Nestec is also looking for new adaptations of traditional technologies
available within the Nestlé group. Research institutes are an important source of information
and indeed Nestec co-operates with many laboratories and universities around the world.
The Research Center in Lausanne alone has about 130 bilateral research agreements with
universities and research institutes worldwide, 37 of them in Switzerland. Furthermore
Nestlé’s participate in a European research project on high pressures along with six
universities and three multinational companies, including Unilever and ABB.
Nestec also looks at what can be useful outside its field of activity : innovation in fine
chemistry, pharmaceuticals or aircraft industry may be of major interest for agricultural
scientists. There is no way to outguess which technologies might prove most useful; the
solution lies in experiments of various solutions through exchanges and dialog with
scientists and industrials, such as those at EDF (France national electricitc company) or
L’Oréal. An annual new technologies workshop is being held at the NRC, where Nestlé’s
experts and external speakers (non-competitors) talk about subjects of common concern.
Nestec uses other sources for collecting knowledge, for example: acquisition of companies
equipped with laboratories or core competences (done through Nestlé), external recruitment
of high-profile personnel, Publications, Markets, Patents, Brokers, Consultants and
Suppliers.
Once the information is gathered, then the TTT experts evaluates it and defuse it to the
appropriate companies within the Group.
2.3 Nestec as information protection.
The Nestec system enables Nestlé to avoid leakages and preserve its technological
patrimony.
The most confidential researches are undertaken by Nestec at the NRC before reaching the
stage of development. In order to prevent the dissemination of its know-how, Nestlé avoids
partnerships and joint ventures, except in cases where the corporate strategic interest is
strong or acquisitions are considered too costly. According to Werner Bauer, “leadership
involves the understanding and mastering all the stages of product manufacturing, including
aroma extraction and technology, which belong to secret know-how. [...] It is essential to
identifying and keeping competences that will enable us to be leader on our market”.
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“For me, core competences are ones that you would want to do yourself, not buy in”, affirms
to Jan Ekholm. However, in some fields such as toxicology, “ we work with universities
since this domain is not a core competence to us”, explains Werner Bauer.
Applied research is insulated within Nestec so as to prevent dissemination of critical
technologies, which might deprive Nestlé of its competitive advantage. Werner J. Bauer
admits that “there are strategic areas for which Nestlé will never consider externalizing its
research”.
Patents are an additional element of innovation protection. Nestec, the entity in charge of all
Nestlé’s patents, was in 1995 No. 160 in the list of top 200 organizations receiving U.S.
patents.
2.4. R & D at Nestlé
Helmut Maucher, the former CEO, Wrote: “Numerous innovations are not introduced
through the market but rather directly through technological studies or research &
development. [...] Of course the product is being tested during the following phase to make
sure that it is relevant”.
And in fact under Helmut Maucher’s leadership, R & D has been considered one of the two
major priorities of Nestlé’s strategy. Indeed, budget has tripled over a ten-year period and
are in order of 700 millions Swiss francs annually, more then 1.2 % of the sales. Although
apparently low, this ratio is high with regard to value added and to competitors’
expenditures; common values in this sector are in order of 0.5%.
Figures in Europe(1992) shows the R&D to sales ratios in the food industry are in the order
of 0.5% compared with 12% for drugs, 8% for electronics and 4% for motor vehicles.
“Research and development remains an integral part of our activity and our corporate
culture” confirms Peter Brabeck-Letmathe Nestlé’s CEO.
The ultimate goal of Nestlé’s R & D specifically consists of achieving a better
understanding of the food chain and its nutritional value - from raw materials to processed
products, with a view to providing consumers with products ensuring health, well-being and
pleasure.
Reaching this goal also ensures product differentiation in terms of technological advance
and tastes. It erects barriers to market entry for both products and processes. Sustained R &
D effort is also critical to ensuring continuous supply in certain raw materials, as illustrated
by the example of coffee and cocoa. Indeed, agriculture in the next century will be
dominated by major chemical groups with key technological know-how in plant genetics.
However, these groups will exclusively focus their efforts on the crops that will guarantee a
substantial return on hefty investments. Coffee and cocoa are not part of these crops. No
major research programs are conducted on yield improvement or resistance to illnesses.
Coffee and cocoa rank nevertheless second and third behind milk in Nestlé’s most
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commonly used agricultural raw materials. Consequently Nestlé finances researches on
coffee and coca. The goal is not to integrate internally the production of raw materials, but
rather to lend assistance to local farmers as a way to defend Nestlé’s interests. Indeed, the
security of Nestlé’s raw materials supply, in terms of both quality and quantity, is at stake.
Nestlé has established a complex network of R & D structures and agents, which are all
centrally manages by Nestec. More specifically, the R & D Division of Nestec is the
corporate R & D resource of the Nestlé group, serving all group companies. The network
employs about 2500 persons across the five continents, through the Nestlé Research Center
(NRC), 17 Research Companies, and the Strategic Business Units.
2.4.1 The Nestlé Research Center : the heart of the network.
The Nestlé Research Center (NRC) is one of the world’s major basic research units in the
field of food and nutrition. It is located at Vers-Chez-les-Blancs, Switzerland, and employs a
550 people with a budget of approximately 175 million Swiss francs . The NRC is organized
by disciplines and follows a multidisciplinary approach. It is divided into three parts :
bioscience, food science and technology, quality and safety.
The NRC has been assigned two major tasks : a deeper understanding of basic food physical
components. Second, biosciences, which represent nearly 60% of the CRN budget : they
include various disciplines such as nutrition, microbiology and biotechnologies. “The link
between food and health has become obvious”, says Werner Bauer head of Nestlé’s R&D.
Moreover, NRC identifies new, emerging technologies for potential applications in all
product groups. It also studies and adapts existing technologies for new applications in other
product areas .
The NRC’s activities can be split into three main categories:
 Innovative research, which aims at (a) developing new food processes and concepts, and
(b) exploring raw materials likely to be used industrially.
 Prevention research, which aims at ensuring the safety of the products and compliance
with Nestlé’s quality standards.
 Support research, which aims at allowing the development of scientific competences
through long term R & D, work with universities and research institutes around the world,
as well as the exchange of technical and marketing personnel between geographical
departments and headquarters.
“ Major R & D priorities are decided in Vevey”, explains Peter Brabeck, Nestlé’s managing
director The NRC’s Central R & D funding and management allows Nestlé to:
 Maintain a central research unit with worldwide scientific credibility in fields such as
nutrition, immunology, food microbiology or toxicology. This credibility allows for an
easy endorsement of new products by the scientific community as well as by authorities.
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 Put a lot of effort on long term research without having to look at the short term return on
investment (it takes 7 years from the early project to the inauguration of a coffee plant).
“If top management decides we need to develop one business which is too weak at the
moment to pay for all the R & D necessary to put behind it, we can still do it based on one
decision”, explains Jan Ekholm.
 Develop long and costly projects that can be amortized on several facilities.
 Follow several leads for one specific research goal.
2.4.2 The research centers : worldwide specialization and local sensitivity.
Applied research and technological development create and develop new products, improve
existing processes and products and guarantee that basic research leads to actual product
innovation. Applied research is being conducted by the central R & D Division, which
manages a network of 17 REsearch COmpanies (RECOs), i.e. 20 R & D centers spread
across the four continents.
The mission of the RECOs is twofold : (a) develop new products and production processes ;
(b) improve existing products through the optimal use of all technological knowledge,
nutritional science and socio-economic analyses available at Nestlé.
Each center employs between 30 and 250 people. Nestlé has questioned the optimum size of
R & D units to be effective. “It cannot be too small”, explains Jan Ekholm, “because then
you will not have the cross-fertilization of ideas and the different backgrounds, scientific
and agricultural, that you need ; but if it’s too big there is too much administration and too
little efficiency”. That is a reason why RECOs have been created. “ For our business we feel
the optimum size is 200 to 300 people in an R & D group. So we have created a network
around the world with 17 R & D labs of this size”.
“If we need to develop something in a new area of the world, we can also do it”, says Jan
Ekholm. Indeed, RECOs are located in various geographical areas, in order to be as close as
possible to customers’ needs. According to Brian Sutter, head of R & D, the essential role of
cultural values in food explains why research centers are spread over 11 countries. In Asia,
for example, scientists study the potential replacement of milk and meat imports by local
vegetal raw materials in the composition of its products. In some cases, agronomes revive
discarded local plants such as millet. Their location also offers the possibility to maximize
the utilization of local raw materials and recipes, as well as to conduct experiments in
various environments.
Each RECO is specialized in one or several domains of food technology and acts as a source
of knowledge about raw materials and food habits in the region in which it is located.
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Exhibit 8 - Nestlé’s R&D centers
R&D center
Lisieux
Beauvais
Tours
Amiens
Ludwigsburg
Weiding
Sansepoicro
Badajoz
Bjuv
Lausanne
Orbe
Broc
Konolfingen
Kemptthal
York
New Milford
Marysville
St.Joseph
Quito
Abidjan
Singapore
Country
Europe
France
France
France
France
Germany
Germany
Italy
Spain
Sweden
Switzerland
Switzerland
Switzerland
Switzerland
Switzerland
UK
North America
USA
USA
USA
South America
Ecuador
Africa
Ivory Coast
Asia
Singapore
Research area
fermented dairy products and desserts
frozen foods, ice cream
plant biotechnology
pet food
coffee blnds, cold sauces
refrigerated desserts, baby food
Italian culinary specialties
plant raw material, agricult. Technology
frozen and refrigerated products
all product areas
coffee, cereals
chocolate, baket goods
dairy and soja products
dehydrated culinary foods, noodles, seasonings
chocolate, confectionery
refrigerated products, industrial ingredients, dietetic products
coffee, tea, chocolate, beverages, ice cream, confectionery
pet food
culinary products, cereals, plant raw material, agricult. Tech.
culinary products, cereals, plant raw material, agricult. Tech.
dehydrated culinary foods, noodles, ermented products
In addition, RECO’s hold national or regional responsibility for development and related
services. RECO’s share responsibilities for some critical domains. Each product branch
keeps its own R & D. Those branches ensure cross-fertilization between the NRC and local
subsidiaries.
RECO’s comprise a pilot plant (a reduced-scale factory with all facilities to ensure
production operations), laboratories, an experimental kitchen, a packaging research unit, and
in some cases an experimental agricultural platform.
Beyond nutrition, science and technology, the R & D centers also improve existing products
in the light of the latest knowledge in socio-economic factors.
Co-ordination of all RECOs is done by a team of experts at Nestec’s Swiss headquarters.
This team provides a link between the RECOs, the NRC, the production facilities and the
marketing units. Some NRC experts may be sent out to local research centers to handle
specific projects.
Nestlé have develop procedures for managing and assessing of R&D project, see annex 3.
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Conclusion
Nestlé’s philosophy according to G. Fayard, head of Technology Transfer Team, Nestlé
research center is :“To build and maintain the skills to transform science, technology and
consumer expectation into new manufacturing processes and marketable products”
In order to achieve this goal Nestlé must be innovative and must optimize the use of its
resources including: R&D, Technology Transfer and Competitive Intelligence. Nestec was
created with this view.
Nestlé’s R & D management ensures an optimal use of both group-wide know-how and
local competences. Indeed, TT management by Nestec allows the company to minimize the
cost of product development while globalizing its products and brands : although the
decentralized RECO’s take advantage of regional expertise, central co-ordination prevents
the duplication of efforts, thus maximizing the use of resources.
Beyond research activities, it appears that Nestec is original in two ways : first, it allows
Nestlé to collect external knowledge and expertise in basic research, and disseminate them
throughout the group. Second, it guarantees the protection of critical know-how that
provides competitive advantage within the company. As an internal consulting company, it
proves to act as a sophisticated tool aiming both at conducting research and managing
information.
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