Creating value through digitalization
Digitalization is vital for Nestlé’s continued evolution. It covers all aspects of our business from the way we organize internally to how we engage externally. We are advancing as a digitally enabled and data-powered business. Our digital journey is business-led and focused on becoming faster, more agile and more consumer-centric.
Winning in a connected world
We look for ways to evolve and use technology to accelerate innovation, fuel new growth opportunities and create efficiencies. This includes using analytics, automation, artificial intelligence and machine learning, as well as e-business (digital marketing and e-commerce).
In 2019, our e-commerce sales accounted for 8.5% of sales and grew by 18.5%. This puts Nestlé at the high end of the food and beverage industry. To win in a connected world, we focus our digitalization efforts on:
- Better understanding and engagement with consumers.
- Enabling digital innovation and new business models.
- Digitalizing our operations.
- Raising digital competencies.
At a glance
100 factories equipped with collaborative robots
20% of consumer contacts personalized
41% of media spend in digital
Better understanding and engagement with consumers
In a digital world we connect with consumers where and when they are receptive. To do so successfully, our brands must be relevant, speak directly to their needs and preserve their privacy. We use data, technology and digital media to build personalization at scale. Data analysis provides insights that can lead to more relevant messaging, services and products.
Sustainable consumer relationships require active and respectful listening and engagement. With this in mind, we rolled out a new consumer service ecosystem in more than 70 markets. This combines human and artificial intelligence and allows us to gather feedback from consumers. We analyze data to tailor messages and adapt content to ensure it resonates with consumers. In doing so, we evolve from buying media and marketing to unknown audiences to connecting with consumers in a relevant and personalized way. In 2019, 20% of all our consumer contacts were personalized. Our objective is to reach 40% by 2020.
Digital creates value by making one-to-one relationships possible. We have developed expertise in machine learning and natural language processing. These technologies allow us to boost consumer engagement with conversational experiences. We have built a network of e-content studios covering 24 key markets and a digital assets platform. These studios create impactful and locally relevant content with speed and efficiency. We have also standardized over 800 Nestlé brand websites to ensure quality experiences. These websites are modular to allow content and functionality to be quickly and cost-effectively updated.
We make digital media work smarter. To deliver content with precision we make use of programmatic media buying. Today, 65% of our digital media spend uses automated buying techniques. This means our brands reach their consumers with the right message at the right time in the way they want it. We have put in place systems to detect fraud, understand campaign impact and evaluate cost-effectiveness.
Enabling digital innovation and new business models
Digitalization opens up opportunities to create products and services. We partner with retailers to gather consumer feedback to tailor products to local preferences. We build on our existing strengths in direct-to-consumer and e-commerce to create new business models, particularly around personalization as with Just Right by Purina. We also invest and acquire companies, such as Freshly and Tails.com. Typically, we look for models, technologies or data that can be applied to other businesses.
We improve our go-to-market strategies using analytics, and support them with digital platforms. We deploy new capabilities, such as strategic revenue management, that support decision-making and drive profitable growth. We also collaborate with leading technology companies such as Amazon, Alibaba and Google. This includes virtual testing to measure consumer preference and trial product launches.
Digitalizing our operations
We are transforming our operations by digitalizing our supply chains and manufacturing. Our goal is to create competitive gaps through data, artificial intelligence, automation and predictive analytics. In many facilities, we are scaling up Internet of Things with remote-sensing technologies, and deploying autonomous vehicles and collaborative robots. For example, at the end of 2019:
- 100 of our factories were equipped with collaborative robots.
- 60 of our warehouses were automated.
- 100 of our factories were paperless.
Digitalization helps us generate efficiencies, create agility and provide new platforms for growth. The shift towards agile manufacturing also helps to deliver faster innovation and supports personalization.
Raising digital competencies
Our people need to have the right mindset, skills and tools. We ask them to be entrepreneurial and externally focused. We also facilitate increased collaboration through internal social networks. We have created digital academies and centers of competency to accelerate our pace of digital transformation. Among them:
- The Global Digital Hub in Barcelona allows us to respond to fast-paced technological changes by building expertise in areas such as artificial intelligence and cloud technologies.
- The Global Digital Media Center of Competencies brings together all our advertising agencies to deliver greater efficiency and transparency in our media investments.
- The Silicon Valley Innovation Outpost enables us to source new ideas and drive digital innovation with partners.
Read more in Our stories: Innovation and iteration at our Silicon Valley Outpost