In our latest Dialogue with a thought leader in European manfacturing, Nestlé Chief Technology Officer Werner Bauer reveals the secret sauce for blending innovation and implementation in a far-flung corporate giant.
Back in 1867, German pharmacist Henri Nestlé saved the life of a neighbour’s child with a new invention: the world’s first infant milk formula. Today, Nestlé is a vast, €72 billion, global conglomerate producing food, nutrition, and health products for consumers (and their pets!) on every continent. In Manufac-turing Executive’s latest Dialogue with a European industry leader, Werner Bauer, executive vice president, chief technology officer, and head of innovation, technology, and R&D at Nestlé, talks to Executive Editor Paul Tate about global technology platforms, operational efficiency, and finding the sweet spots of business innovation.
Q: What’s your main role at Nestlé and how does it support the business?
A: I see my role as helping to invent the future. It’s all about creating the products, technologies, systems, and services that can drive profitability and continued growth. It gives me responsibility for all the elements that make up the innovation pathway in Nestlé — from basic research to development, to implementation in the factories, engineering, regulatory affairs, all the patent activities, packaging, and design. All the elements come together to create the final product.
Q: How would you describe Nestlé’s business?
A: The food industry is a little different. People always have to eat. A lot of our business depends upon the weather. From the sales of ice cream or water to a global supply chain heavily based on agriculture and food security. For manufacturing, that means fast adaptation. It’s inherent in the food industry. You need shorter central planning processes and more frequent updates so you can react to the downturns and upswings in supply and demand. It’s about bringing flexibility into manufacturing so you can adapt to any situation.
I guess it’s also about using our geographic presence. People need more affordable nutrition, and that presents opportunities. Think about it. The Asian instant noodle — a really affordable product. You get lunch for just a few bucks. It is now sold in Europe and almost everywhere. Many of the food innovations and low-cost manufacturing concepts we’ve developed for countries like India and in Africa are now trickling back into Europe and other markets.
Q: Nestlé reported strong results for 2008, with profits up 69%. What drives this business growth?
A: In food and beverages, we defined four clear growth areas over a year ago. One large growth area is nutrition, health, and wellness — especially now, with an aging population. In the future, we’ll see this focus increase.
The second area is eating away from home, or on the go, which led us to create the Nestlé Professional division as a business opportunity. This is all about products and systems. It’s about machines and food services — a full products-to-services business, so a very different approach from conventional food R&D.
The third area is affordable nutrition. I guess this is really the biggest challenge. We’re very active in Africa and Asia, and have brands that go to the lower layers of the consumption pyramid. It means giving nutritional value, but at a very, very low cost. There are many places in the world where this is essential. It’s a different way of approaching production — very closed local production, no long distribution pathways, shorter shelf life, and designing a route to market in a different way. The whole model of affordable nutrition is fascinating. In the Northeast of Brazil, for example, we’ve created a finishing-factory approach, where we just do small packs, local production, and supply at very low cost.
