(This September 29 story refiles to read “stocked” in paragraph six)
KONOLFINGEN, Switzerland (Reuters) – Food company Nestle SA NESN.S said the COVID-19 pandemic has forced its senior management to become more immersed in daily operations as executives need to deal with safety and business continuity issues, its chief executive told Reuters in an interview.
With its 291,000 employees and sales in 187 countries, Nestle has so far weathered the pandemic relatively well as consumers stocked up on packaged foods during lockdowns, but the unexpected situation changed the priorities of its top executives.
“From the moment the crisis evolved from a China-only situation to an international crisis, we formed a crisis committee which I chair,” Mark Schneider said on the sidelines of an event at a Nestle dairy research centre near Bern on Monday.
“Management style of everyone in senior management, me included, has become so much more operational as you deal with more operational matters trying to ensure safety and business continuity,” Schneider said, adding the committee was now meeting only once a week, versus twice at the beginning of the crisis.
He said there were some unforeseen disruptions in supply chains in the first weeks that made it necessary to increase inventory levels from raw materials to finished goods to gain flexibility.
“It cost a bit of extra inventory and working capital, but now is not the time to optimize working capital, it’s the time to maximise business continuity. What the consumer wants to see at this time is shelves that continue to be stocked,” Schneider said.
He said he expected industry supply chains to become more local, but that would take a bit of time.
Schneider said consumers had turned to well-known brands during the crisis – a trend that helped the maker of KitKat chocolate bars and Nescafe coffee – and were also buying more value packs and larger pack sizes.
To stay in touch with factories around the world, Nestle is using its remote support centres more actively – not just at its Swiss dairy research facility, but also at other product development sites. From there, staff can connect to factories worldwide to remotely solve problems thanks to tools like smart glasses and augmented reality software.
“Some of that is here to stay because if you can do something remotely with the same quality, there’s no need to travel,” Schneider said, adding travel restrictions were in place until the end of the year, with exceptions only for business-essential trips.
He said he himself had taken only two cross-border trips since the company banned international travel in February.
Reporting by Silke Koltrowitz in Konolfingen, Switzerland; Editing by Matthew Lewis