Presentation on theme: "1 PepsiCo Introduction. page 2 PepsiCo Introduction (27-Feb-10) Agenda PepsiCo State of the Business Strategic Supply Management Overview Rules of Engagement."— Presentation transcript:
1 PepsiCo Introduction
page 2 PepsiCo Introduction (27-Feb-10) Agenda PepsiCo State of the Business Strategic Supply Management Overview Rules of Engagement PepsiCo Code of Conduct Confidentiality Agreement Request for Information Our Expectations Next Steps
page 3 PepsiCo Introduction (27-Feb-10) PepsiCo State of the Business
page 4 PepsiCo Introduction (27-Feb-10) Worlds Second Largest Food & Beverage Company Presence in 200 countries with 198,000+ total employees Historical data based on 2008 results PepsiCo Americas Foods (PAF) PepsiCo Americas Beverages (PAB) PepsiCo International (PI) 48% Revenues 56% Division Op. Profit 23% Revenues 25% Division Op. Profit 29% Revenues 19% Division Op. Profit Frito-Lay N.A. Quaker Foods N.A. Latin America Foods UK / Europe MEA / Asia
page 5 PepsiCo Introduction (27-Feb-10) Strong NEW Track Record of Performance (PEP+PBG+PAS) Every Penny a Prisoner Cash is King! Every Penny a Prisoner Cash is King! $62.0 PBG+PASPBG+PAS The Acquisition of PBG, PAS will change the Landscape $61.0 $6.9 $8.0 PBG+PASPBG+PAS $9.5 $8.1 Revenue ($B) Operating Profit ($B ) PBG+PASPBG+PAS $43.2 $43.3
page 8 PepsiCo Introduction (27-Feb-10) Indras Key Priorities (Feb 16, 2009 PepsiCo Forum) 20% reduction in capital in 09. Every penny a prisoner! 8,300 associates let go on 2008, 09. Deliver 2010 Annual Operating Plans, both Share and Profit Radically improve the competitiveness of our North America Beverages business. Relentless Focus on Value, keep our eye on the value equation for all our products. Build the foundations for our Future Growth This must be in a way consistent with Performance with Purpose But also in a fashion that recognizes that tomorrow will not be like yesterday Watch the cash very carefully. Cash is king, and we've got to Make every penny a prisoner as if it were in our own pocketbook. Watch DSO, DPO, and inventory levels carefully; Re-look at all your capex needs; and, Be extra judicious in all of your spending.
page 9 PepsiCo Introduction (27-Feb-10) Our Priorities Price is important; however, Best Value is our goal –Best Value procurement process balances pricing, performance, and lifecycle cost for critical equipment based on our long-term interests and needs –Best Value procurement process is optimized via comprehensive, holistic scrutiny of our joint (Customer and Supplier) supply chains – goal is to take costs out without impacting margins Innovation must provide PepsiCo a sustainable competitive advantage in the market –Suppliers are viewed as Subject Matter Experts and provide us with access to leading edge innovation – its imperative our partners provide us with First Look at innovation –Innovation is optimized via alignment on R&D agendas and priorities – our suppliers need to have insight into our long- term direction and channel their own resources appropriately to foster innovation that provides us with a sustainable competitive advantage Quality is key and a fundamental principle of Best Value –Quality goes beyond equipment and performance – must ultimately ensure consistency and integrity of product in the market –Our suppliers must share in our vehement defense, maintenance, preservation, enhancement, and growth of PepsiCos brands and its image Performance with a Purpose is fundamental to every aspect of our business –We believe our financial success - Performance - must go hand-in-hand with our social and environmental responsibilities - Purpose. We bring that Purpose to every aspect of our business –Our suppliers must embrace our vision as well as have their own vision, strategies, and tactics to ensure optimization of the total supply chain – Tomorrow > Today –Safety is paramount and not a given, demonstrate, improve, process, and provide documentation, our most precious resource, our people Every penny a prisoner! Cash is King.
page 10 PepsiCo Introduction (27-Feb-10) Enable the continued growth of PepsiCos businesses through competitive, predictable costs, assured supply and supplier sourced innovation, all generated in an environmentally sustainable manner. Strategic Supply Management Vision Strategic Supply Management What we Are..? Enable the continued growth of PepsiCo by: Providing world class procurement leadership in collaboration with key business partners Delivering the lowest total cost of ownership Delivering the highest quality outcome at the best value Partnering with our key constituents and suppliers to drive innovation Driving sustainability SSM Indirects Vision SSM Capital MRO Vision, Mission Drive PepsiCo shareholder value by optimizing the total current and future asset base – management, enhancement, preservation, and optimization of the existing and future asset base. Lower the total system cost – focus on total lifecycle, from acquisition to disposal! Leverage Strat Plans to anticipate supply and focus resources to maximize value areas, categories. Partner with key suppliers to forge Strategic Alliances that enable growth, innovation, and competitive advantage. Link Strategies with Sustainability Index – achieve line-over-line improvements in economic, environmental, and social impacts. Recruit the very best and make them better – build strong, diverse, and nimble teams while providing people with rewarding and challenging jobs. Global Access, PepsiCo Visibility, SSM Support, Formalized Process, Opportunity of Scale, Issue Resolution, etc… Spend Managed USD$31B Spend Managed USD$11B Spend Managed USD$3.8B 2010 CapEx US$2.8B 4900 Capital Suppliers
page 11 PepsiCo Introduction (27-Feb-10) Four major programs form the core of PepsiCos Responsible & Sustainable Sourcing activity: I. Supplier Corporate Social Responsibility Partnering with our suppliers to operate in a way that respects PepsiCos values, brands and the communities in which we operate II. Sustainable PackagingOptimizing our use of materials and driving to continuously improve the environmental footprint of our packaging III. Environmental Supplier Outreach Setting clear, measurable goals for energy, GHG, water, agriculture and forestry resource conservation within the extended supply chain IV. Sustainable Agriculture Ensuring PepsiCo has continued access to the key agricultural raw materials necessary to supply growing consumer needs, while respecting the environment and communities involved in producing those raw materials Responsible & Sustainable Procurement Planks These strategic planks are flexible to meet the needs of different markets, but are bound together as a global strategy. As a Supplier, What do you Bring, Have done, Can do?
page 12 PepsiCo Introduction (27-Feb-10) PepsiCo Rules of Engagement
page 13 PepsiCo Introduction (27-Feb-10) Out of Bounds Inconsistent Behavior Negative Energy & Actions Ignorance to Supplier Issues Information Balancing Changing Rules of the Game Out of Bounds Proprietary Information Released Insecurity & Process Breakdown Circumventing the System Corporate Ignorance Negatively Influential Ethical Behavior Confidentiality Commitment to Partnership Innovational & Challenging Willingness to Invest Trust & Respect Sustainability (Economic, Environmental, and Social) Strategic Partners Quality & Service Cost Effective Operations Effective Technology Development MWBE Driven Acceptable ROI Requirement PepsiCo Program Development Systems Criteria for Sustainability Clear & Unrelenting Expectations Unified Voice of PepsiCo Tough but Fair Good Listeners We All Need to Know How to Behave, Play, Work Together Rules of Engagement Overview
page 14 PepsiCo Introduction (27-Feb-10) Rationalization Strategy Stratify Mix Drop Non-Players Identify Players Develop Position Broad Master Agreements Supplier Homework Spend Map Data Annual Report Product Mix Industry Ranking Product Line Partnership Realized Criteria In Place P01 Discussion Issue Mitigation Cost Model Multi-Year Agreements Price List Rules of Engagement
page 15 PepsiCo Introduction (27-Feb-10) PepsiCo Code of Conduct
page 16 PepsiCo Introduction (27-Feb-10) PepsiCo Code of Conduct For more information go to: Worldwide Code of ConductWorldwide Code of Conduct
page 17 PepsiCo Introduction (27-Feb-10) PepsiCo is committed to conducting its business in an ethical, legal, and socially responsible manner. PepsiCo strongly believes that those Suppliers who are approved to do business with the PepsiCo system must follow the same philosophy. For this reason, PepsiCo has established the following policy. Compliance with this policy is required of all Suppliers and their subcontractors if they desire to do business with PepsiCo. Failure to comply with this policy will be sufficient cause for PepsiCo to exercise its right to revoke a Supplier s approved status. 1) Compliance with Laws and Regulations -Suppliers are required to abide by all applicable laws, codes or regulations including, but not limited to, any local, state or federal laws regarding wages and benefits, workmens compensation, working hours, equal opportunity, worker and product safety. PepsiCo also expects that Suppliers will conform their practices to the published standards for their industry. 2) Employment Practices -Working Hours & Conditions: In compliance with applicable laws, regulations, codes and industry standards, Suppliers are expected to ensure that their employees have safe and healthy working conditions and reasonable daily and weekly work schedules. Employees should not be required to work more than the number of hours allowed for regular and overtime work periods under applicable local, state and federal law. -Non-Discrimination: Suppliers should implement a policy to effectuate all applicable local and federal laws prohibiting discrimination in hiring and employment on the grounds of race, color, religion, sex, age, physical disability, national origin, creed or any other basis prohibited by law. -Child Labor: Suppliers should not use workers under the legal age for employment for the type of work being performed in any facility in which the Supplier is doing work for PepsiCo. In no event should Suppliers use employees younger than 14 years of age. -Forced and Indentured Labor: In accordance with applicable law, no Supplier should perform work or produce goods for PepsiCo using labor under any form of indentured servitude, nor should threats of violence, physical punishment, confinement, or other form of physical, sexual, psychological, or verbal harassment or abuse be used as a method of discipline or control. -Notification to Employees: To the extent required by law, Suppliers should establish company-wide policies implementing the standards outlined in this Code and post notices of those policies for their employees. The notices should be in all languages necessary to fully communicate the policy to its employees. 3) Audits and Inspections - Each Supplier should conduct audits and inspections to ensure their compliance with this Code and applicable legal and contractual standards. In addition to any contractual rights of PepsiCo, the Suppliers failure to observe the Code may subject them to disciplinary action, which could include termination of the Supplier relationship. The business relationship with PepsiCo is strengthened upon full and complete compliance with the Code and the Suppliers agreements with PepsiCo. 4) Application - The Code is a general statement of PepsiCos expectations with respect to its Suppliers. The Code should not be read in lieu of but in addition to the Suppliers obligations as set out in any agreements between PepsiCo and the Supplier. In the event of a conflict between the Code and an applicable agreement, the agreement shall control. PepsiCo Supplier Code of Conduct