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Procurement

Consumer Customer Distribution Manufacturing Packaging Raw Material

Antonia Wanner
Corporate Procurement – Procurement Excellence

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Creating Shared Value - focus on suppliers

Corporate Procurement Corporate Agriculture

162‘500 suppliers 594'223 farmers

CREATING
SHARED VALUE
Effective Supplier development Nutrition, Water,
Rural Development

Reliable and Efficient Supplier SUSTAINABILITY


Assessment Protect the future

COMPLIANCE
Supplier Code Laws, business principles, codes of conduct

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Our scope: Spend per category (2008)

Total: CHF 59 billion

Raw Materials
CHF 22.5 billion

Services & Indirect


Materials (S&IM)
CHF 27.5 billion

Packaging Materials
CHF 9 billion

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Our objective: One way of operating - enabling buyers to
focus on execution

Processes Delight Consumers

Tools Excel in Compliance

Select &
Manage suppliers Training Deliver Competitive Advantage

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Compliance: The Nestlé Supplier Code

Part of all supply contracts


Acknowledgement is condition to supply

Supplier Code
2009 Q1-Q2 2008
communication
Labour Standard Environment
Purchase orders
2.7 mio 3.0 mio
with Supplier Code
Safety & Health Business Integrity
Supplier Code
100.000/100.000 120.000/162.500
sent to suppliers

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Ensure a sustainable supplier base:
Reliable and efficient assessment

All suppliers Industry wide recognized standard for SAQ


and Audit (AIM-Progress)
Risk assessment
2 step assessment is integral part of
supplier selection, approval & management
process
Focus suppliers
Implementation through expert network
SAQ

nr. spend raw & pack


Pilot Audits (2009)
suppliers mio CHF focus areas
Audit Europe 11 87 11%

Asia & Africa 138 580 20%


Strategic suppliers
America 56 206 7%

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Create shared value:
Effective supplier development

Efficient roll out of the Supplier Code


Reliable assessment
through 2 step approach
Efficient assessment
through industry wide recognized standards

Focus our resources on developing suppliers

Create shared value

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Agriculture

Consumer Customer Distribution Manufacturing Packaging Raw Material

Hans Jöhr
Corporate Operations – Agriculture

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Creating Shared Value - Focus on Farmers

Corporate Procurement Corporate Agriculture

162‘500 active suppliers 594'223 farmers

CREATING
SHARED VALUE Develop farmers & suppliers
Nutrition, Water, building capacity for growth
Rural Development

SUSTAINABILITY Secure availability of adequate


Protect the future agricultural raw materials

COMPLIANCE Ensure safety & quality of raw


Laws, business principles, codes of conduct materials

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Our scope

Milk, Total Volume Usage (MT) = 12'200'000


Nestlé Spend [2008]
Coffee, Total Volume Usage (MT) = 763'000
Cocoa, Total Volume Usage (MT) = 372'000
Packaging
Pack
CHF 9 bio
9 billion
SIM
S&IM
27.5
CHF 27.5 bio
billion 9% Direct
Raw
RM Materials
22.522.5 bio
CHF 42% Direct Coffee
Procurement
billion Procurement
Cereals

Dairy Sugar
59 billion CHF
Cocoa Procurement from
cooperatives
Other RM Oil & Fat

Total Raw Materials

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Our presence and geographical locations

Sourcing base:
- 594'223 farmers
- 771 Nestlé sourcing specialists
Markets with Direct Procurement activities
- 7'784 extension workers

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Function and Role of CO-AGR

 Manage image and trust issues linked to ARMs.


Holding
 Analyse impact of new technologies and practices related to
Management
ARMs sourcing and overall business. Delight Consumers

Business
 Perform risk management in sourcing activities.
strategy /
 Set technical  quality standards and disseminate / monitor
Technical
implementation with primary producers.
assistance
Excel in Compliance
Servicing

 Develop people, key HR capacity building, succession


To Markets planning, skill management.
 Cross functional knowledge dissemination on SAIN.
Deliver Competitive Advantage

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Perform risk management in sourcing activities [RATES]

Risk categories investigated Secure Supply chains by


Availability & Supply chain disruption Mitigating identified risks
0 .48 1.1 9 5.70 9.50

Safety & Quality A 0.95

0 .43 1.0 6 5.10 8.50


B 0.85

Regulatory Compliance 0 .33 0.8 1 3.90 6.50


C 0.65

Corporate Social Responsibility D


0 .18 0.4 4 2.10 3.50
0.35

0 .08 0.1 9 0.90 1.50

Competitive Cost

Probability
E 0.15

0 .03 0.0 6 0.30 0.50


F 0.05

IV III II I
Farm
Farm Storage
Storage Transport
Transport Factory
Factory
S everity

Cross functional team


Agricultural Services
Quality Assurance
Procurement & Supply Chain
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Cross functional knowledge dissemination on SAIN *

SAIN projects are creating value in


the areas of:

Farm income generation


Crop and yield improvements
Animal health issues
Logistic support / Transport
Water management & irrigation
Farm management guidance
Technical training
Etc.

 Rural Development and Water

* SAIN = Sustainable Agriculture Initiative Nestlé


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Conclusion

Corporate Procurement Corporate Agriculture

162‘500 active suppliers 594'223 farmers

CREATING
SHARED VALUE Develop farmers & suppliers
Effective Supplier development Nutrition, Water, building capacity for growth
Rural Development

Reliable and Efficient Supplier Secure availability of adequate


SUSTAINABILITY
Assessment agricultural raw materials
Protect the future

Supplier Code COMPLIANCE Ensure safety & quality of raw


Laws, business principles, codes of conduct materials

Highly contributing to the strategic concept of


Creating Shared Value
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