Spend-IT: Nestlé ups tech spends in India

Fast-moving consumer goods (FMCG) company, Nestlé India Limited, a subsidiary of the Swiss multinational company, Nestlé S.A., has been experiencing significant growth in the Indian market. Under the leadership of Chairman and Managing Director Suresh Narayanan, the Gurugram-headquartered company has more than doubled its technology spending in recent years.

Despite maintaining a relatively stable tech budget in the range of ₹87-96 crore for nearly a decade, the company has recently increased its investments in IT. Although the company did not respond to an email sent by TechCircle regarding its technology investments, our analysis based on the company's annual reports shows that this shift in strategy has resulted in substantial growth in tech spending, with figures rising from ₹112.26 crore in FY21 to ₹127.24 crore in FY22, and a significant 52% increase to ₹194 crore in FY24. Previously following a January to December fiscal year, the latest cycle of the company runs from January 2023 to March 2024, covering 15 months.

In response to the challenges posed by the pandemic, Nestlé India has acknowledged an increased reliance on IT to support remote working conditions. However, this heightened dependence has also exposed the company to potential cyber threats, necessitating the implementation of robust IT systems and firewalls to mitigate risks.

In response, the company has, over the last 12-18 months, leveraged strong cybersecurity measures to enhance supply chain efficiency and optimise operations within the realm of supply chain management.

The company's India research and development (R&D) centre in Manesar, along with its other global centres, has identified digital opportunities to leverage artificial intelligence (AI), machine learning, data science, and predictive analytics. “By embracing AI and data-driven innovation, Nestlé aims to deliver relevant and highly differentiated solutions with agility and speed. For instance, the use of chatbots has enhanced productivity by delivering personalised content and offering solutions to complex challenges,” the company said.

The company has said that its supply chain strategies follow a holistic approach that includes logistics management, vendor management, enterprise resource planning, total quality management, and customer relationship management. By focusing on these key areas, Nestlé has streamlined its operations and enhanced services to its customers. 

Furthermore, the company is leveraging insights from social media, connected devices, and e-commerce, it can identify emerging food trends and concepts. The utilisation of AI tools that analyse social media data using advanced algorithms allows it to identify innovative food concepts and stay ahead of market trends.

Narayanan, however, emphasised the importance of responsible AI usage. “In a country like India, we have to be very, very cognizant of the fact that employment generation is a key aspect of this society,” he said speaking to CNBC-TV18 during a fireside chat at The Growth Summit in Delhi in March.

Less than a year ago, Nestlé India made significant strides in digital transformation by accelerating its invoicing platform and transitioning to paperless invoicing. Nearly half of the company's invoices are now managed digitally, marking a significant shift towards automation and digitalisation across its supply chain. This transformation has not only enhanced efficiency in processes but has also expedited speed to market, the company said.