Dirk Poelman– Chief Operations Officer

Operations at Barry Callebaut

1
Agenda
ge da
X Operations and Supply Chain Organization
X Vision
X Organization

X Flow and Footprint

X Continuous improvement
X One+

X Quality

X Strategic equipment sourcing

X Investments

X P ocess and technology

Process technolog development
de elopment
X Sales and Operations Planning
X Raw material optimization
X CSR
X Advantages of BC

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OSCO Vision

Respond
R d to the
h bbusiness
i requirements
i in
i
the most effective and efficient way

3
Strategic Pillars

X Flow and footprint optimization to achieve

lowest cost of goods sold

X Continuous improvement

X Process and technology development

X Sales and Operations planning

X Raw material optimization

4
 OSCO organization
COO

Process & Technology OSCO controlling

Development Project Analysis

Continuous Strategic
Improvement Planning

OSCO Western OSCO Eastern Supply Chain Supply Chain

OSCO Americas OSCO Asia
Europe Europe Cocoa Cocoa

Regional OSCO Director HR QA Director

Central planning Logistic s

Region Region

Site manager

Production/ Maintenance Supply Chain

HR Manager QA Manager
Department Managers Manager Manager
Flow and Footprint

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 Truly global manufacturing footprint with 40
production facilities in 26 countries worldwide

Thimister, Belgium
Chekhov Russia
Chekhov,
Lebbeke-Wieze, Belgium
Heule-Kortrijk, Belgium Nuth, The Netherlands
Zundert, The Netherlands
Banbury, UK
St. Albans, VT, US
St Helens, UK + Kagerod,
g Sweden
Chester, UK
Pennsauken, NJ, US
St. Hyacinthe, Canada Lodz, Poland
Eddystone, PA, US
Louviers, France +
Robinson, IL, US + Meulan, France +
Dijon, France
American Canyon, CA, US + + Dübendorf, Switzerland
Norderstedt,, Germanyy Tsukaguchi Japan
Tsukaguchi,
Verbania-Intra, Italy Zuzhou, China
Abidjan Zone, San Sisto, Italy
Monterrey, Mexico Ivory Coast
Vic Gurb, Spain
Toluca, Mexico San Pedro, Alicante, Spain
Ivory Coast

+ Port Klang, Malaysia +

Douala I, Cameroon
Singapore, Singapore +
Tema, Ghana

Ilhéus, Bahia, Brazil

Extrema, Minas Gerais, Brazil

Cocoa processing factory

Chocolate factory
Integrated cocoa & chocolate factory
+ Expansion of new lines in the last 2 years
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 Advantages of our factory footprint
X Focused factories allow us to produce a wide range
of products with limited complexity

Cocoa:
X Origin factories focussed on access to the beans with
limited product range
X Cocoa sites in consuming countries focussed on
blending of different origins and service to the
customers
X Integratedd sites ffocussed
d on the
h cocoa requirements for
f
the chocolate

Chocolate:
X Specialties (like white, nuts products etc.) are
centralized in a limited number of sites per region
X S
Standard
d d products
d are produced
d d close
l to the
h customers
and are used for capacity balancing

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Advantages of our factory footprint

X By operating as a network we can make full use of the economies of

scale
X Not all processes are done in each site
X Lines can be dedicated to specific product types

X In a network it is easier to create back-up in case of problems

X Interchangeable products

X Flow and footprint optimizations

X Footprint studies are done to determine the optimal location for capacity
extensions
X Flow optimizations are implemented between regional & strategic planning

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 Supporting growth while staying cost leader

X Capacity increase (compared to 2008)

+25%

+21%
Liquor
q

Pressing
+22%

Chocolate liquid

2008 2011
X Headcount evolution (factory headcount excl consumer)

+3%
3.538 3.531 3.528
3.185

2007 2008 2009 2010

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 An efficiently utilized manufacturing
footprint in all production steps
Evolution of our capacity utilization

92.2% 91.0%

Cocoa grinding 93.7% 88.6%

91.1% 90.1%
82 2%
82.2%
Cocoa pressing 93.9%

79.4% 82.6%
Liquid chocolate 89.1% 81.2%

2006/07 2007/08 2008/09 2009/10

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Continuous Improvement

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 Continuous improvement
One+

X Main Objectives
X Install a common process and way of working for the group
ƒ To improve the efficiency and the effectiveness
ƒ To improve transparency and interchangeability
ƒ To facility the rotation of people between sites and functions
X Create a pool of people that are ready to take over line functions
ƒ Get to know the (production) processes
ƒ Get to know the plants and the people
ƒ Experts in the continuous improvement methodomogy

X Implementation.
X Supported by an external specialist (on the job training)
X First focus on the plants:
ƒ Finalized 3 pilot sites (US, France and Japan)
ƒ Started with the wave 2 plants (Belgium, Malaysia & US)
X Next steps: Widen the scope to other processes and other functional areas

X Results achieved
X Yearly savings of about 4 mio Euro for the 3 pilot sites

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 Continuous improvement
One+

The methodology is focussing on a set of improvement levers, to

achieve a performance driven organisation
IMPROVEMENT LEVERS
• Improve process knowledge
• Implement a systematic approach and usage
of tools
• Close monitoring of process
performance
• Systematic Root cause analysis • Mental switch towards
• Implement Group Best practices performance focus in a
• Clear ownership per process (steps) structured and systematic way SUSTAINABLE
RESULTS
• Install common KPI system and usage • More transparency and
• Install performance oriented management predictability in results
Financial
meetings
• Facilitate fact based decision making and • Moving from status quo/re- Operational
follow up activeness to pro-activeness Cultural
• Ensure common view on performance, top
down & bottom-up

• Increase cross functional way of working

• Boost management skills and leadership at
different levels and management
y/
visibility/involvement with the shopp floor
• Resolve cultural and historical issues
• Reinforce competences in the organisation

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 Continuous improvement
One+

Summary of progress at American Canyon

One year ago… Today…

X No ‘real’ root cause analysis X RCAs are done several times per week

X We had bad meetings but didn’t know it X We know what a good meeting looks like

X Managed from lagging indicators X KPIs are looked at daily & challenged

X Production results not being challenged X A better understanding of OEE and its
components

X Maximizing production capacity

X Little visibility to hidden production losses
X Better control of the operation and faster
X New team with potential, but little
reaction to problems
structure

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 Continuous improvement
Quality

X Background:
X Quality requirements in the market are changing
X BC wants to be leading from a quality point of view

X Implementation
X BRC certification and site audits
ƒ Strenghtening of the internal audit team
ƒ Sharing of issues and best practices
ƒ Training
X Better separation on existing lines to avoid contamination
X Investments
X Increased awareness

X Results:
X 29 sites are BRC certified

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 Continuous improvement
Strategic equipment sourcing
Through data analysis, interviews and workshops with the sites, the following
main levers that will drive the savings for the technical spend were identified:

Proposed levers Advantages

X Create spend transparency. X Full spend in scope Æ Leverage global

buying power
X Central repository for spend-data & site-
needs
X Spend consolidation and supplier reduction
X Launch centrally led sourcing initiatives (focus and maximize synergies across all
on common categories across sites).
sites)
sites/countries
i / i
X Increase Low Cost Country Sourcing lever for X Realize significant benefits for standard
technical goods.
goods with high volumes across the
X Leverage
g best practices
p & technical knowledge
g p y
company
between sites.
X Standardize throughout the company and
X Incl revisiting & standardization of realize TCO benefits (rather than focus on
technical specs. transactional cost)
X Evolve towards partnerships with key
suppliers.
X Ability to tackle processes behind purchases

Results achieved in 2010/11: Average 11% reduction on equipments in

scope.
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 Continuous improvement
Investments
X Different types of investments in the plants
X Capacity
p y extensions: about 20 – 40% depending
p g on requirements
q
ƒ New factories
ƒ New production lines
ƒ Upgrading
pg g of existing
g lines (new
( technology)
gy)
X Replacements: about 20 – 25%
ƒ Replacement of outdated equipments
ƒ Upgrading of equipments and lines
X Cost reduction: about 20 - 25%
ƒ Automation
ƒ Energy saving projects
ƒ Efficiency improvements
X Quality improvements: about 10%
ƒ Plants and production lines
ƒ Products
ƒ Analysis equipment
X Health and safety improvements: about 5%

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 Investments support the growth of our
business
In CHFm

Additional growth
IT
5% Upgrade / efficiency gains
on existing sites
Maintenance
4% 250
3%
3%
3%
CAPEX as % of sales

170
153
144 145

115

2005/06 2006/07 2007/08 2008/09 2009/10 FY

2010/11

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Process & Technology
Development

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Engineering

X Main focus: Doing more with existing equipment

Some examples:
X High speed refining

X Continuous conching and Salvator conching

X High efficient hydraulic groups for presses

X Making production processes more energy efficient

Some examples:
X New bean breaker Æ 20 – 25% reduction in gas consumption for

roasting
X Heating,
Heating cooling,
cooling heat recuperation etc
etc.
X Output improvements as mentioned above

X Improving
p gpprocess y
yields

X Low investment greenfield plant

X Compact design
X Modular build-up

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Sales & Operations Planning

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 Sales and Operations planning

X Main objectives:
X Achieve the required internal and external service levels (98% OTIF)
X Manage capacity utilization (80-85% for chocolate – 90-95% for cocoa)
X Reduce the stock coverage year-on-year
X E h
Enhancement
t off the
th regional
i l S&OP processes
X Improved communication
X Better forecasting
X Global S&OP
X Align interregional flows
X Report global inventory evolution and capacity utilization
X Improved visibility to prevent unexpected regional demand
X Coordinate the planning aspects on projects for global accounts
X Results
X Stock coverage has improved by 10% over the last 3 years
X Service levels have been stable or improved

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Raw Material Optimization

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 Raw material saving projects

X Main Objectives
X Recipe improvements: Work with R&D to reduce the
costs of the materials
X Better control and improvement of the yields in the
plants
l t
X Reduction of waste and rework
X Reduction of overweight
X T
Transport t optimization
ti i ti

X Implementation
X Cross functional project teams are working under the
lead of the regional OSCO managers

X Results achieved
X Projects in Americas and Europe resulted in an
annual saving of more than 14 Mio CHF

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CSR
Energy Savings & CO2 reduction

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 CSR in Operations
Energy savings and CO2 reduction
X Target:
X Reduce the CO2 emissions from the plants and owned DC’s by 20% per ton over the
next 4 years
X Results at the end of year 2:
X Energy consumption per ton has been reduced by 11,8%
X Main actions taken: Examples
p
X Awareness
ƒ Target setting and translation into bonus targets for key people
ƒ Introduction of KPI’s with monthly reporting
ƒ Introduction of an energy management system
ƒ One of the key topics in the continuous improvement program
X Process optimization
ƒ Output improvement on existing equipments and lines
ƒ O
Optimized d shut-down
h d procedures
d
ƒ Right sizing of equipments
ƒ Free cooling
ƒ Insulation
X Technology
ƒ Installation of new breakers on the roasting lines to reduce gas consumption by 25%
ƒ New hydraulic groups on presses
ƒ Economizers on boilers and roasters
 BC Competitive Advantages

X Footprint and size:

X Economies of scale
X Better capacity balancing
X Backward integration (flow optimization)
X Skill levels

X Process know how:

X Experienced people in all operations areas
X Constantly searching for new ways to make our
products and to improve our efficiency

X State of the art equipment

X Reliability and effectiveness
X In line with the latest quality standards

X Flexibility combined with cost efficiency:

X Focussed factories
X Line dedication