- Shifting Warehouse Model Causes Nestle to Cut 4,000 Jobs
- Embracing a Changing Workforce
- Seeing the Holistic Nature of the Business
- Careers Can Move up with Technology
- Maintaining Business Culture
- Grooming a Well-Rounded Employee
- How has Nestlé responded to the COVID-19 pandemic?
- How are you supporting your employees?
- How are you supporting communities around the world?
- Supporting Meals on Wheels, in Partnership with Freshly
- Tackling Food Security
- Additional Donations
- Are your products still safe to consume?
Shifting Warehouse Model Causes Nestle to Cut 4,000 Jobs
“The direct-to-store model was too expensive even once the company reached the maximum point of efficiency,” said Steve Presley, CEO of Nestle USA.
Nestle SA’s U.S. unit will lay off about 4,000 workers as it stops delivering frozen pizza and ice cream directly to stores and instead transitions to a warehouse model that’s becoming an industry standard for Big Food companies looking to trim costs.
The company said on May 7 that it’s shutting down its direct-to-store delivery network for products DiGiorno and Skinny Cow, beginning in the third quarter. The change, announced at a shareholder event in Arlington, Virginia, means the elimination of an operation that now includes 230 facilities, 1,400 trucks and 2,000 different routes.
The unit was able to reduce costs but ultimately, the direct-to-store model was too expensive even once the company “reached the maximum point of efficiency,” Steve Presley, CEO of Nestle USA, said in an interview. “You can’t have that duplicative cost in the structure.”
The U.S. unit employs about 48,000 people, according to a spokeswoman. So the cuts represent about 8.3% of the workforce.
Shipping directly to grocery stores used to be more common, as it gave suppliers Nestle eyes on the store and helped them quickly get products to shelf. But as companies look to cut costs, it often makes more sense to ship to warehouses. Nestle USA already uses the warehouse model for its frozen meals and snacks.
Presley says he isn’t concerned with losing space to sell Nestle’s products without its own delivery people in stores.
“Every inch of the freezer is controlled very tightly,” he said. “As retailers have become more sophisticated, as the retail industry has consolidated some, that bit of Wild West where you could kind of move and push your competitor to the side, that’s not the case anymore.”
The layoffs bring one-time costs of about $500 million, the company said in slides presented to investors. As part of the transition, Nestle USA will close eight company-owned frozen distribution centers. The change should be complete by the second quarter of 2020.
In 2017, Kellogg Co. announced plans to eliminate 1,200 distribution jobs as it exited direct-store-delivery as part of a bid to cut costs.
That means the company is relying more heavily on retailers to put its products on shelves. Snack giants Mondelez International Inc. and PepsiCo Inc.
’s Frito-Lay both still rely on “DSD,” arguing it helps boost sales to have employees in stores stocking products.
Parent Nestle has been reducing employment elsewhere, too, as CEO Mark Schneider aims to boost profitability at the world’s largest food company. Last year it moved to cut 500 computer-service roles in Switzerland, shifting some of the work to Spain. Nestle has also eliminated hundreds of jobs in France, including at its skincare unit, and more than 300 positions in Pakistan.
The direct-to-store frozen unit had sales last year of about $3.3 billion, in addition to the $2.2 billion of other frozen food — including Hot Pockets and Lean Cuisine meals — already shipped to warehouses.
By Deena Shanker
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The warehouse experience offers employees a path for career advancement in distribution as well as other departments.
One bright sign amidst everything else going on is that warehouse employment has actually surpassed its pre-pandemic highs. I think we can all agree that 2020 was un any year that we’ve experienced in our lives. As we try to anticipate what the rest of 2021 might hold, vaccine distribution is gaining momentum while the U.S. economy is exhibiting tepid signs of overall recovery.
According to the U.S. Bureau of Labor Statistics, as of December 2020, there are now more than 1.33 million people employed in the warehousing and storage sector. The U.S.
Census Bureau recently reported that e-commerce sales increased by more than 32% last year, fueled by stay-at-home orders and more people shopping online than ever before. Hiring is expected to remain fast and furious in the sector this year, with job search site Monster.
com predicting continued strong growth for supply chain, warehouse and logistics roles. Finding and retaining top talent will remain incredibly difficult.
Embracing a Changing Workforce
Amidst all this change and uncertainty, distributors must also find ways to connect with Gen Z and Millennials and remain mindful of training, retraining and engaging these younger workers.
I was curious to hear what distributors are doing in order to train and retain their warehouse talent. I spoke with Roy Bragg, vice president of operations at E.B.
Horsman & Son, to learn about the creative ways they are providing paths for career advancement in the warehouse.
Led by president and CEO Tim Horsman, the fifth generation involved in the company, E.B. Horsman is one of the largest independent electrical suppliers/distributors and wholesalers in Western Canada. The company’s distribution model consists of a centralized home office and distribution center in addition to 20 branch locations. Today, E.B.
Horsman employs more than 220 workers and its warehouse employees gain valuable experience that prepares them for other roles within the company.
Bragg explained to me how distributors can support advancement opportunities for warehouse workers, shared examples of successful career transitions within his company, and provided tips for identifying candidates primed for career growth.
Seeing the Holistic Nature of the Business
According to Bragg, the key to providing advancement opportunities for warehouse workers is to have clearly defined job requirements and a well-defined training path that supports growth opportunities. At E.B.
Horsman, the human resources department has created a job requirement path for its employees.
The company has put practices in place that provide prospective managers with training opportunities and exposure to the administrative side of the warehouse functions, such as inventory control.
The knowledge gained on the warehouse floor—specifically operations and distribution knowledge—helps them navigate sales and customer expectations. In addition, E.B.
Horsman leads brainstorming sessions with all staff on a regular basis to review and discuss all warehouse-based activities.
These sessions expose employees to all departments across the business as they collectively work through the impacts their decisions have in those areas.
Careers Can Move up with Technology
Though it might be surprising to many, sales and purchasing are the two main areas where E.B. Horsman has seen staff advance beyond the warehouse.
Bragg notes that approximately 20 of the company’s office administrative and managerial employees started in the warehouse. For example, E.B.
Horsman’s top salesperson for the last 10 years and the company’s vice president of purchasing and inventory both started in the warehouse.
While perhaps specific to electrical distributors E.B. Horsman, new career opportunities are being created through value-add services whereby electrical technicians are required.
In response to this need, warehouse workers at the company can take a two-year course in order to move into these roles. Bragg expects that warehouse automation will further drive the creation of similar positions in the future.
Distributors would be wise to consider their own value-add opportunities and anticipate future needs for similar advancement tracks within the business.
Maintaining Business Culture
When it comes to identifying potential candidates for advancement opportunities, this is something that E.B. Horsman explores as early as during the initial hiring process.
Bragg says these hiring decisions are primarily culture based, sharing that while they certainly to see technically savvy prospects, his company really focuses on a prospective employee’s fit with their business culture.
At the branch level, for instance, the expectation is that warehouse employees will advance to counter sales. As such, their hiring expectations are rooted in sales advancement.
Once on board, employees have a chance to learn the operations side and then move into sales or branch management positions such as customer service managers, district managers, and so on.
While expectations are, naturally, a bit different in the distribution center, Bragg says these same advancement avenues are still offered to employees.
Grooming a Well-Rounded Employee
With more people working in the warehousing and storage sector than ever before, particularly younger workers looking for career growth opportunities, now is the time for distributors to get serious about training—and retaining—their warehouse talent. The skills, knowledge and experience your employees gain in the warehouse are directly applicable to administrative, operational and managerial functions across the business.
As Bragg states, “The warehouse experience not only gives those employees a path for career advancement but also helps with their entry into sales, purchasing and other areas.” The opportunity is clear.
What do distributors have to lose by exploring ways you can support career advancement and identifying potential candidates while recruiting for warehouse roles? Keeping your best and brightest employees learning and advancing, regardless of their role in the organization, strikes me as a no-brainer.
Eric Allais is president and CEO of PathGuide Technologies Inc., a provider of warehouse management systems for distributors. He drives strategic objectives that provide sustainable long-term growth and ensure profitability of the company.
How has Nestlé responded to the COVID-19 pandemic?
In light of the evolving situation with COVID-19, Nestlé has been examining how we can play our part in relief efforts.
We’re taking action in three key ways — Leaning In to support our long-term partners through our core strengths, Listening to experts on new areas of need, and Lifting Up employees to seize opportunities for impact. Our CEO Steve Presley has outlined these efforts in his most recent article on Medium.
How are you supporting your employees?
The health and wellbeing of our employees has been, and continues to be, our top priority. Our factory, distribution, and retail sales teams work hard each day to ensure food and beverages are available on grocery store shelves. We’re incredibly proud of our teams and the work they are doing to help feed our neighbors, friends, colleagues, and country.
When the pandemic began, we acted quickly to increase our health and safety measures at all of our locations and have continued to step up our approach. We have taken several precautionary measures to help protect our employees including increased cleaning and sanitation at all facilities, daily temperature and health screenings, stringent mask requirements and social distancing practices.
Additionally, we have added employee testing events when and where it makes sense. It’s how we try to account for potential asymptomatic cases. We want to ensure we are doing what we can to protect both our employees and the community.
In the uncertain early days of the crisis we provided extra support for our frontline workers, providing temporary benefits including wage guarantees in the event of facility closures and added pay for 12 weeks, as well as additional time off for those impacted by the coronavirus.
Continuing added benefits include expanded health benefits for telemedicine and prescription delivery, mental health care, childcare and covering select testing.
How are you supporting communities around the world?
Tackling this crisis requires collective action at a global and local level, so we're Listening to experts and providing support where it's most needed.
Globally, Nestlé has joined forces with the International Federation of the Red Cross and Red Crescent Societies (IFRC). The IFRC has unmatched presence and expertise in providing first aid, emergency response and epidemic control.
Initially, we will work together in four ways to provide urgent help for emergency services and caregivers and strengthen healthcare systems:
- We will donate CHF 10 million to for immediate deployment in countries where it is most needed.
- We will donate food, medical nutrition products and bottled water to bring relief to those most affected by the pandemic.
- We will deploy available logistics capacities from our out-of-home business to support the needs of the IFRC in various countries.
- We will match 1:1 any donations to the Red Cross and Red Crescent National Societies or Federation made by our employees.
Supporting Meals on Wheels, in Partnership with Freshly
In the spirit of breaking down the barriers to healthy eating and caring for others through wholesome food, we're partnering with Freshly to donate $500,000 to Meals on Wheels to support their coronavirus response. This donation will provide the safe delivery of 40,000 meals directly to at-risk homebound seniors. Join us to help deliver essential meals for vulnerable seniors.
“As this crisis continues to disrupt the lives of our employees, consumers and communities, we’re mobilizing relief efforts across the US, and around the world to help,” said Steve Presley, Chairman and CEO of Nestlé USA.
Tackling Food Security
Tackling food insecurity includes providing initial surge support to local food banks and No Kid Hungry as we prepare to support long-term efforts in the coming months.
Teams across Nestlé in the United States are stepping up to support our communities by Leaning In to existing partnerships and Listening to community experts on where assistance is needed most.
Below is the assistance that we have already provided to our community:
- We have donated 2,170,000+ meals to Feeding America so far this year
- Now, we're providing $100,000 surge support to ensure that we are getting meals to those with the greatest need including:
- Supporting food-insecure students through No Kid Hungry
- Food bank partners such as the Cleveland Food Bank in Ohio, Capital Area Food Bank in Washington DC, and FoodLifeline in Washington state.
- Our creamer portfolio supported local food banks and helped get resources to first responders working tirelessly during this time
- Stouffer’s donated to Cleveland area schools to help provide safe and healthy meals for families in need during school closures
- We donated six truckloads of ready-to-drink Nesquik from our Anderson, Indiana facilities to food banks in 4 states
- In 2020 our Nestlé Waters team have donated 4.4M bottles of water to crisis relief organizations currently using donations for COVID-19 relief, and will deliver over 52,000 bottles of water over the next four weeks to the City of Flint for homebound residents
- 80,000 gallons of Poland Spring water will be included in Fresh Direct/Five Boroughs donation of weekly family grocery boxes
- Our Global Brands division, which includes our Maggi, NIDO, Abuelita, and La Lechera brands, is supporting Miriam’s Kitchen, a Washington, DC based homeless service organization. Their donation equates to 35,000 meals for those in need during this crisis.
- Nestlé Health Science donated Boost, Boost Kid Essentials and Carnation Breakfast Essentials to Feeding America food banks
- Chameleon Cold Brew delivered coffee to nurses on the front lines in five major cities
- Our Nestlé Waters team are producing specially designed blue water bottles and donating them to businesses that are filling them with hand sanitizer and distributing them to healthcare professionals and communities in Maine, Pennsylvania and Texas.
- San Pellegrino made a donation to James Beard Foundation’s Relief Fund offering support to independent restaurants
- Nespresso is providing support for frontline healthcare workers, including a donation of machines and coffee to hospitals in the regions that have been hardest hit by the COVID crisis.
Nestlé Purina's efforts include:
- A donation to the St. Louis Community Foundation’s COVID-19 Regional Response Fund and further donations to local relief funds, food banks, and other non-profits across 21 markets
- A donation to the Pet Finder Foundation, providing pet welfare organizations with grants
- A donation to Red Rover NPP’s Purple Leash Project Partner – helping victims of domestic violence escape quarantine in violent homes
- Donations to Purina Shelter Champions
- A donation of extra medical supplies to local first responders
Nestlé’s mission hasn’t changed: we’re dedicated to enhancing quality of life and contributing to a healthier future, for individuals and families, for our thriving and resilient communities, and for the planet. In times of need, we continue to prioritize supporting and caring for those who need it most.
Now more than ever, we are committed to providing nutritious, great-tasting food available for you and everyone who needs it.
We recognize that public health management and response is ongoing and we are continuing to find new avenues for support.
For more information, see our COVID-19 Response Fact Sheet
Are your products still safe to consume?
All of our foods and beverages are safe for consumption the virus cannot survive in packaged food, pet food and beverages, including bottled water. We apply the strictest hygiene measures in all of our factories.