Burgess COMMENTARY

Peter Burgess

News Nestlé CEO on the need for International Standards 25 July 2012 Share on facebookShare on twitterShare on linkedinShare on google_plusone_shareISO News feeds (RSS) Nestlé - Paul Bulcke Paul Bulcke has been Chief Executive Officer of Nestlé S.A., since April 2008. ISO Focus+ : Nestlé produces a wide range of products from ready meals to chocolate, and from mineral water to coffee. How does Nestlé manage to maintain a worldwide consumer base when traditions and tastes vary from one country to the next ? What is the key ingredient to its success ? How have International Standards contributed ? Paul Bulcke : How can Nestlé be so active worldwide and connect with consumers in a meaningful way ? Actually, the answer is that we are very decentralized, because we believe consumers and food are always “ local ”. Very much from the beginning, over 145 years ago, we commercialized our products outside of our home market Switzerland. So, right from the start, we were decentralized and present in many markets with local structures. We are a global company, but one that is very connected on a local level to our consumers. Our great variety of products are manufactured in 461 factories in 83 countries around the world. Our factories are located there where consumption is. Local raw materials, local tastes, the dietary needs of the local population demand it. Handing over real decision-making power to the markets demands alignment behind a common vision. We have a very strong, explicit corporate objective and strategic roadmap which is very simple, straightforward, and shared with the 330 000 employees that make up Nestlé. Our strategic ambition is to be the pre-eminent nutrition, health and wellness company. Nestlé Nespresso Nestlé Nespresso production and distribution centre in Avenches, Switzerland, will produce and distribute 4.8 billion Nespresso capsules each year. Then, the long term has always dictated our strategic direction. Yes, we do also focus on delivering short term, but never sacrifice the long term. And finally, a very important aspect is our corporate culture, our people living up to the same values such as thinking long term, openness to diversity, passion for quality in products and relations. This is how we run our business and this is the basis of our success : facilitating decentralization while ensuring everybody is singing from the same song sheet. We maintain our internal alignment behind a global corporate vision. On the subject of International Standards, a global company like ours has a common strategic objective. Just as we have to have common values and a common culture, we need common standards as well. International Standards provide a framework for the world. Tastes may differ, but health requirements and minimum standards are the same the world over. International Standards, therefore, help to shape our company so that we can be a global player with globally recognized terms of reference. But they serve only to frame our work, the “ paintings ” inside those frames are locally made. ISO has a specific role to play as a truly global, multi-stakeholder, expert-driven, consensus-based standardization organization : it enables us to work efficiently. If that were not the case, if the interpretation of certain dimensions were really local and not relevant and not the same, we would be totally inefficient as a society and as a company in that society. ISO Focus+ : What is the strategic value of International Standards to a company like Nestlé, with an international workforce of 330 000 people ? ISO has developed 1  000 food-related standards. How many does Nestlé implement and what are the benefits ? Paul Bulcke : One of our basic strengths is that we have deep-rooted principles which put value on compliance. I could hardly steer a company like ours if I could not trust our people to comply with our own values, culture and strategic direction. Beyond our internal functioning, they also need to meet the demands coming from the outside world. International Standards help me to apply, throughout the company, the same dimension of judgment and the same terms of reference. In turn, this helps me scale up efforts to comply with these standards. If I have a standard that is the same the world over, I can muster the resources to achieve or, whenever relevant, surpass the requirements of those standards. Nestlé factory in Nigeria The Flowergate Factory in Nigeria is entirely dedicated to the production of MAGGI. As for ISO’s 1 000 food-related standards, we are a food and beverage company so those are the minimum with which we comply. But we comply as an operation, as a part of society, with many other standards, too. We also provide services and operate factories where we apply standards on health and safety. We are committed to environmentally sustainable business practices, so we also comply with environmental standards. And these are just some examples. There are many standards beyond those concerned with food that are important for us. Because ISO’s impact goes beyond product criteria to best practices in factories, and even to our environmental performance, these standards are part of an overarching reference framework. ISO Focus+ : Can you describe the use made by Nestlé of ISO’s management systems standards ISO 9001 for quality and ISO 14001 for environmental management and how this has evolved over the years ? Paul Bulcke : We pride ourselves on being part of an industry that works with ISO to shape standards, putting at your disposal our knowledge, our expertise. ISO has supported our industry through the publication of internationally consistent measurement and management tools, processes and practices. The extent of your involvement has led to the achievement of improved environmental performance. In other words, ISO helps us work towards our goal, and we encourage the development and use of relevant International Standards. ISO’s global authority is useful for us. For example, building on the Nestlé Environmental Management System, we have 413 out of our 461 factories which are already certified to ISO 14001. We have distribution centres, R&D centres, all undergoing certification. That is the value ISO gives us : by being a global standard, globally accepted, when we comply with ISO International Standards, people know straight away what they are getting and the level at which we are working. ISO Focus+ : What concrete benefits has ISO 22000 for food safety management brought Nestlé ? Paul Bulcke : Food safety is essential. Since the adoption of ISO 22000:2005, Food safety management systems − Requirements for any organization in the food chain, we were able to measure our own very stringent standards against those stipulated by ISO. We are again using as our terms of reference a globally accepted standard. This is the best way to get recognition for our own systems for assessing the safety of food. Issues of food safety are not purely intramural. They lead us upstream to our suppliers and downstream to retailers. Having a common standard that is globally accepted like ISO’s helps us to neutralize situations where companies all have their own proprietary standards. ISO Focus+ : Nestlé recently opened Nestlé Health Science and the Nestlé Institute of Health Sciences, two separate organizations intended to develop the innovative area of personalized health science and nutrition to prevent and treat health conditions such as diabetes, obesity, cardiovascular disease and Alzheimer’s disease. Could you please expand on this ? Are there subjects for which standards could facilitate your work and, if so, in which areas ? Paul Bulcke : Nestlé Health Science and Nestlé Institute of Health Sciences were launched at the beginning of last year. This brings a new dimension to the nutrition, health and wellness strategy of the Nestlé Group by pioneering the development and application of evolving science to create a new role for personalized nutrition in disease prevention and management. Nestlé Health Science is going to integrate science and knowledge coming from different disciplines, some of which are quite new to us. We are learning a lot here. In many of these areas, there are already some standards. Nutrition is increasingly more sophisticated in how it is defined and how it is perceived. Personalization is based on a deeper understanding of people’s genetic make-up, as well as how genes affect diet and lifestyle factors. This will demand additional standards as we are trying to embrace several disciplines – like diagnostics, nutritional management and therapy – and add them into the mix. ISO Focus+ : What is the business case for investing in socially responsible actions that may not be immediately beneficial to the bottom line in a competitive market ? How could ISO 26000 on social responsibility contribute to the company’s already well-established CSR programme  Paul Bulcke : Like I said, Nestlé’s orientation is long term. We would not do anything for a short-term advantage which might jeopardize our long-term interests. This reflects how we see our role : evolving with society, safeguarding our relationship with the communities in which we work, because we intend to continue to be a part of those communities. This is why we have linked the concept of corporate social responsibility with our basic activities. Our success must be linked, not only to the creation of value for our shareholder, but also to the creation of value for society This is what we call “ creating shared value ”. It is factored into every step in our value chain, interactions with suppliers, customers and consumers, the business impact on the environment of our products. We also work to create value for society at large. This has many expressions : healthy, sustainable economic activity creates jobs. It also creates opportunities for training and professional growth to give people a more meaningful life. Linking with suppliers in a sustainable way helps us to implement minimum standards upstream as well. Nestlé has focused on three priority areas where we add value to society. Nutrition is first, because that is who we are and where our investment in research and development goes. Distribution of food Nestlé Dominicana staff load products onto trucks bound for Haiti. Our second focus is on water. Water is one of the most important issues in the world today, and it is particularly important for Nestlé. We are using agricultural raw materials and agriculture uses up 70 % of the world’s freshwater supply. We use water in our processes, in our factories. Consumers need water to prepare our products. It is a conditioning factor for the future of the planet. We are, therefore, very supportive of the ongoing work towards the definition of the future ISO 14046 standard on Life cycle assessment – Water footprint – Requirements and guidelines. Our third focus is on rural development. Nestlé’s 461 factories are usually located in rural areas because that is where the raw materials of agriculture are found. We are directly linked to 600 000 farmers, and indirectly linked to millions. Connecting with farmers helps them to be more efficient, have better incomes and helps us to ensure the high quality of our ingredients. Getting back to ISO, using internationally recognized standards such as ISO 26000 gives us the added authority of a globally recognized body, provided it can be certified. We have been in contact with ISO on this topic and will be happy to make further contributions. ISO Focus+ : What would you like to see coming out of ISO ? Paul Bulcke : As an international company, we are facing many different evaluation practices, be it of company or of product performance. To eliminate the different yardsticks and the resulting unnecessary administrative burden, a worldwide authority facilitating alignment among rating agencies and evaluation methodologies, would reduce the time lost and volatility involved in juggling different standards. Standardization of standards is not a bad thing ! Alignment between ISO standards, for instance between ISO 9001 and ISO 14001, possibly merging them into an integrated management system – along with occupational health and safety – would be a step forward. Like Pascal Lamy, Director-General of the World Trade Organization (WTO), Nestlé actively defends the free movement of goods and the suppression of trade barriers, particularly when standards and regulations are politically motivated and counterproductive for delivering the best value at the lowest cost to consumers. The technical authority of ISO is important because it is neutral and objective in a society that is subject to so many influences. ISO helps us build bridges. Pascal Lamy is very vocal in his support for ISO and for opening up the world to increased acceptance of global standards. ISO Focus+ : May I ask an additional question ? What’s your favourite Nestlé product ? Paul Bulcke : That is like asking a parent which child is their favourite ! I normally do not answer, but sitting in front of me, on my desk, is my Nescafé so that is definitely one of them. But there are so many other Nestlé products that I love. About Nestlé Nestlé can trace its origins back to 1866, when the first European condensed milk factory was opened in Cham, Switzerland, by the Anglo-Swiss Condensed Milk Company. One year later, Henri Nestlé, a trained pharmacist, launched one of the world’s first prepared infant cereals “ Farine lactée ” in Vevey, Switzerland. The two companies merged in 1905 to become the Nestlé we know today, with headquarters still based in the Swiss town of Vevey. Nestlé employs around 330 000 people and have factories or operations in almost every country in the world. Nestlé’s sales for 2011 were almost 83.7 billion swiss francs. Paul Bulcke Paul Bulcke Paul Bulcke Chief Executive Officer Nestlé S.A. Vevey, Switzerland