Technology Versus Pandemic

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.”

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. 

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.”

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.”

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.”

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.”

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.”