According to Supply Chain Dive, Nestlé is upgrading from its legacy SAP ECC system to a more AI-focused ERP platform to gain flexibility and faster global product rollouts. The company’s CIO Chris Wright said the upgrade will provide better insights and capabilities, while CEO Philipp Navratil admitted Nestlé “has not been the most efficient company in the past.” The ERP overhaul comes alongside plans to cut 16,000 jobs—6% of Nestlé’s global workforce—over the next two years, with three-quarters of those reductions targeting corporate workers. Nestlé migrated its entire SAP ERP to the SAP Private Cloud in 2022 and is now moving from SAP S/4HANA Finance, with SAP planning to end mainstream support for ECC in 2027.
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The timing raises eyebrows
Look, let’s be real here. When a company announces a major technology upgrade alongside massive job cuts, you have to wonder about the connection. Nestlé is cutting 16,000 jobs while spending who-knows-how-much on this ERP overhaul. Three-quarters of those cuts are corporate roles—exactly the kind of positions that might be replaced by the “automation and standardized procedures” they’re touting.
Basically, they’re not even being subtle about it. CEO Navratil straight-up told investors they want to “speed decision-making through more digitization and automation.” That’s corporate speak for “we’re replacing people with software.” And they’re doing it while the company admits it hasn’t been efficient. So is this upgrade actually about innovation, or is it mainly about cost-cutting?
<h2 id="erp-upgrades-are-risky-business“>ERP upgrades are risky business
Here’s the thing about massive ERP migrations—they’re notoriously difficult and expensive. We’re talking about a system that handles everything from finance to supply chain to procurement across a global company. When these projects go wrong, they can cripple operations for months.
Nestlé already moved everything to SAP Private Cloud in 2022, and now they’re doing another major upgrade. That’s a lot of change in a short time. And with SAP ending support for ECC in 2027, they’re working against a deadline. Rushed ERP implementations? Those almost never end well.
The AI promise vs reality
The company is selling this as an “AI-focused” system that will enable real-time supply and demand matching. Sounds great in a press release, but how much of that is actually achievable right now? AI in supply chain is still evolving, and throwing buzzwords around doesn’t make the technology magically work.
And let’s talk about that “consistency across reporting and planning processes” promise. Every company says that before an ERP upgrade. Then they discover that different regions have different business practices that don’t fit neatly into standardized systems. The result? Either you force compliance and disrupt local operations, or you end up with the same old workarounds and shadow systems.
So is this actually going to deliver the efficiency gains they’re promising? Or is it just another expensive IT project that will take years to show any real return? Given their track record of inefficiency, I’m skeptical they’ll suddenly become a lean, AI-powered machine overnight.
