# Opportunity

Technology Versus Pandemic

Digital solutions are central to Nestlé’s Covid-19 comeback. CIO Filippo Catalano on the consumer goods giant’s response to crisis, the importance of preparedness, and where big companies go from here.

As Nestlé's Chief Information Officer, Filippo Catalano pulls the digital strings at the company. Good preparation has paid off during the coronavirus crisis.François Wavre/lund13

The first whis­pers of the com­ing cri­sis reached Fil­ip­po Cata­lano in early Jan­u­ary 2020. As Nestlé staff on the ground in China scram­bled to respond to reports of a con­ta­gious ill­ness spread­ing in the city of Wuhan, Nestlé’s chief infor­ma­tion offi­cer took notice. But even Cata­lano was sur­prised by the disease’s rapid spread to Europe and beyond. “We had an early start, because we could see what our team in China was doing,” Cata­lano says. “But in the begin­ning, nobody knew it was going to be mak­ing a glob­al foot­print.” Two months later, Cata­lano was on a ski vaca­tion in north­ern Italy when reports of ris­ing Covid-19 case num­bers in the region began appear­ing on the news. By the time he returned home to Switzer­land, trav­el­ers return­ing from the region were being placed in quar­an­tine. Cata­lano was no excep­tion. “All the response to the coro­n­avirus out­break has been done on a remote basis,” Cata­lano says. By mid-sum­mer, he had been work­ing remote­ly for more than three months.

From his home near Nestlé’s head­quar­ters in Lau­sanne, Switzer­land, Cata­lano has steered the nine­ty-bil­lion-Swiss franc company’s dig­i­tal oper­a­tions in the midst of a cri­sis. The chal­lenges have been tremen­dous. They’ve retooled their approach to data to respond to shift­ing con­sumer pref­er­ences in real time, set up tools to pre­dict sup­ply chain shifts, and re-thought their fac­to­ries to cope with trav­el restric­tions. But before any of that could hap­pen, Cata­lano and his team had to shift a glob­al com­pa­ny with near­ly 300,000 employ­ees, 2,000 brands, over 400 fac­to­ries, and oper­a­tions in 170 coun­tries to remote work almost overnight. “When it became clear the out­break was going to be mov­ing out of China,” he says, “our big pri­or­i­ty was to con­tin­ue to oper­ate the com­pa­ny.”

Preparedness paid off

It helped that Catalano’s team had planned ahead, draw­ing up cri­sis man­age­ment plans and build­ing redun­dan­cy into their sys­tems to ensure smooth oper­a­tions no mat­ter what. In a cor­po­rate world increas­ing­ly dom­i­nat­ed by “just-in-time” man­u­fac­tur­ing and an empha­sis on lean oper­a­tions, pre­pared­ness drills and con­tin­gency plan­ning weren’t always pop­u­lar. In hind­sight, it was all worth it. “It’s not the most attrac­tive activ­i­ty in the world, but pre­pared­ness paid back big time,” Cata­lano says. For Cata­lano, an Ital­ian who joined Nestlé in 2015 after more than fif­teen years at the U.S. con­sumer goods giant Proc­ter & Gam­ble, that meant dust­ing off emer­gency plans and com­ing up with respons­es to new crises on the fly. “We had to mas­sive­ly aug­ment our abil­i­ty to run online meet­ings on a scale never seen before,” Cata­lano says. 

Top Trends in Technology — #1

Remote Collaboration

After months of Zoom conferences and Microsoft Teams meetings, this one’s no surprise. But Catalano says the next hot companies will be the ones to solve the problem of getting creative collaboration—brainstorming, “post it on the wall” sessions—online. “The next frontier is how do you bring dispersed teams together,” Catalano says. Virtual reality could be an answer. 

Over the course of a three-day week­end, for exam­ple, Nestlé’s tech teams brought 180,000 employ­ees around the globe onto the dig­i­tal col­lab­o­ra­tion plat­form Microsoft Teams. To make sure employ­ees were up to speed, Nestlé’s com­mu­ni­ca­tions staff pitched in to cre­ate and post instruc­tions on the company’s intranet and social plat­form. In a dozen lan­guages, they walked employ­ees through tasks most had never dealt with before: how to opti­mize home Wi-Fi net­works for the addi­tion­al demands of video con­fer­enc­ing, set up a VPN, and start secure video­con­fer­ences from home. “We need­ed to rein­force best prac­tices on how to con­nect from some­place besides the office,” Cata­lano says. “We had to make sure hun­dreds of thou­sands of employ­ees could come along for this jour­ney.”

All of a sudden, none of our models were valid.

Filippo Catalano
CIO Nestlé

After suc­cess­ful­ly shift­ing the company’s oper­a­tions online, Cata­lano turned to the big­ger pic­ture. In Nestlé’s case, “big­ger” is an under­state­ment. With thou­sands of dif­fer­ent brands and over 400 fac­to­ries man­u­fac­tur­ing a wide range of con­sumer food and bev­er­age prod­ucts, the com­pa­ny has tremen­dous­ly com­plex sup­ply chains. Take Nespres­so cof­fee, one of the company’s most rec­og­niz­able prod­ucts. Beans for the sig­na­ture brand are sourced from at least eleven coun­tries on four con­ti­nents; the pack­ag­ing and brew­ing pods require specif­i­cal­ly for­mu­lat­ed plas­tic and metal. At the same time, bor­der clo­sures and quar­an­tine rules com­pli­cat­ed efforts to get prod­ucts to super­mar­ket shelves. Nestlé’s thou­sands of brands range from San Pel­le­gri­no bot­tled water, Maggi instant soups and Puri­na dog foods, all glob­al­ly dom­i­nant in their respec­tive cat­e­gories. Would its Nescafé, pro­duced in France, be stopped at the Ger­man bor­der? “We want­ed to pre­vent out-of-stock sit­u­a­tions at retail­ers,” Cata­lano says. “But all of a sud­den, none of our mod­els were valid.”

Corona crisis showed reality of AI

A ded­i­cat­ed inter­nal team built a dash­board that brought togeth­er pub­lic infor­ma­tion sources track­ing Covid-19 cases and lock­down sit­u­a­tions around the world. Capa­bil­i­ty was quick­ly added to enable coun­try-by-coun­try mon­i­tor­ing, and with­in weeks the dash­board was able to mon­i­tor local sit­u­a­tions down to indi­vid­ual ZIP codes. Cata­lano made sure the infor­ma­tion was com­pat­i­ble with the company’s exist­ing data prac­tices. Since he start­ed at Nestlé, Cata­lano has been an evan­ge­list for arti­fi­cial intel­li­gence: algo­rithms and pro­grams that sift and ana­lyze data on a mas­sive scale to help com­pa­nies make deci­sions about every­thing from pur­chas­ing to con­sumer pref­er­ences.

But to suc­ceed in spot­ting new trends, those algo­rithms must be trained on exist­ing data sets. And Catalano’s data wiz­ards quick­ly real­ized that data points gath­ered in pre-coro­n­avirus times were use­less in the face of a pan­dem­ic that changed every­thing from con­sumer behav­ior to logis­tics. “A lot of peo­ple have mis­con­cep­tions about AI being magic that mys­te­ri­ous­ly and swift­ly solves issues,” Cata­lano says. “The Covid-19 cri­sis showed the real­i­ty of AI: it became clear that in some cases there’s not enough his­to­ry in the data set to build con­fi­dence.” That’s quick­ly chang­ing, as Nestlé’s data sci­en­tists col­lect infor­ma­tion from around the world and add it to their mod­els. AI will con­tin­ue to play an impor­tant role at Nestlé—and else­where. “It’s about hav­ing a good data strat­e­gy, hav­ing data that’s inter­op­er­a­ble and acces­si­ble and re-usable across the com­pa­ny, and about hav­ing the right peo­ple that can work on the intel­li­gence on top of the data.”

There’s been a visible shift in channel competition.

Filippo Catalano
CIO Nestlé

A focus on data and AI doesn’t mean for­get­ting peo­ple power. In 2019, Cata­lano spear­head­ed an effort to move the com­pa­ny onto the Work­place col­lab­o­ra­tion plat­form, which is based on a social media inter­face. When tens of thou­sands of employ­ees found them­selves video­con­fer­enc­ing from home, the plat­form was a wel­come way for teams to con­nect out­side the office. “The orga­ni­za­tion was already primed for inter­ac­tion and col­lab­o­ra­tion,” Cata­lano says. “It was a great foun­da­tion to have in the Covid-19 cri­sis, which rein­forced the need for some­thing resilient and easy to com­mu­ni­cate across teams.” In a com­pa­ny Nestlé’s size, such con­nec­tions and com­mu­ni­ca­tion proved to be a major com­pet­i­tive advan­tage. Just as their offices in China pro­vid­ed early warn­ing sig­nals, the workarounds and lessons learned at the Glob­al Hub in Italy in the early days of the cri­sis meant offices else­where had a head start when lock­downs hit. “Coun­try A could learn from coun­try B how to react,” Cata­lano says. “It’s not an exact sci­ence, but it gives you two or three dif­fer­ent ways to under­stand how things might evolve mov­ing for­ward.”

Top Trends in Technology — #2

Augmented Reality

Travel restrictions and global lockdowns posed a surprising problem for Nestlé’s many factories: Repair technicians couldn’t travel, so when a complicated machine broke down or needed commissioning, local staff was on its own. Nestlé has now deployed augmented reality, or AR, software that superimposes technical data and drawings on top of live feeds of machines. Point your tablet at the machine and the buttons will be highlighted, helping speed troubleshooting calls with remote tech support. “With travel being halted, maintenance experts couldn’t get to factories,” Catalano says. “In less than two weeks, we deployed these AR solutions. The level of adoption was tremendous.”

Mean­while, the company’s thou­sands of brands were rac­ing to adjust to chang­ing mar­kets. In just a few months, “there’s been a vis­i­ble shift in chan­nel com­pe­ti­tion,” Cata­lano says. “It’s def­i­nite­ly shift­ed the nee­dle in terms of con­sumers try­ing things online for the first time.” Remote commerce—online sales, e‑retailing, and direct-to-con­sumer marketing—have surged, with over 10 per­cent of com­pa­ny sales tak­ing place via e‑commerce. And with con­sumers spend­ing more time at home and online, the ways they eval­u­ate prod­ucts and ask ques­tions have also shift­ed. As peo­ple stay away from stores, Nestlé is see­ing more and more inter­ac­tion with dig­i­tal “chat­bots” trained using AI algo­rithms. On plat­forms like Face­book, What­sApp, and China’s WeChat, bots increas­ing­ly answer ques­tions about prod­uct avail­abil­i­ty, ingre­di­ents, and safe­ty.

Covid-19 has meant some rapid change. But Cata­lano argues that fun­da­men­tals like com­mu­ni­ca­tion, col­lab­o­ra­tion, and in par­tic­u­lar a focus on what data can deliv­er will remain impor­tant to Nestlé as the com­pa­ny seeks a new, post-pan­dem­ic path for­ward. “All of the foun­da­tions we’ve worked on in the past three or four years are help­ing us now as well,” he says. His phi­los­o­phy of giv­ing brands and regions the free­dom to make their own deci­sions on how to assem­ble and re-use the mod­ules and com­po­nents pro­vid­ed glob­al­ly by the Group has proved very effec­tive. “For­get the fluff. Make sure the foun­da­tions are in place, and the rest will take care of itself.”

Top Trends in Technology — #3

Touchless and Voice

Covid-19 may have killed the deal-closing handshake. Other casualties could include the old vending machine down the hallwho wants to share buttons with a building full of people? “Touchless tech is going to get a boost,” says Catalano. At Nestlé they’re already experimenting with touchless coffee makers and vending machines. One big winner could be voice-activated machines: Alexa at the bus stop ticket machine, for example. “Voice technology has good adoption in homes,” Catalano says, “but I think we will see more embedding of voice in and out of the home.”
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