Nestlé Investor Seminar 2008

Transcription

1 Nestlé Investor Seminar 2008 Creating Performance Gaps versus Competition José Lopez Head of Corporate Operations 1 Nestlé Investor Seminar Vevey June 2008

2 Disclaimer This presentation contains forward looking statements which reflect Management s current views and estimates. The forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statements. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments. 2 Nestlé Investor Seminar Vevey June 2008

3 Agenda Operations in Nestlé: who we are and what we have done Our mission: create Shared Value Our strategy: Nestlé Continuous Excellence Our target: create performance gaps 3 Nestlé Investor Seminar Vevey June 2008

4 Operations in Nestlé Materials Sourcing Agriculture Procurement Production Manufacturing Engineering Supply Chain Distribution Customer Service Sustainability Quality Environment 185'000 people 3'000 managed careers 480 operating factories 43'000 ktons of products >2'000 distribution centres 600'000 farmer relationships CHF 5 bio of capital expenditure 4 Nestlé Investor Seminar Vevey June 2008

5 We come from 10 years of successful cost improvement Operation EXCELLENCE 2007 MH'97 Target CI Reducing Costs: >11bn CHF, 10% COGS reduction Building on each project's success Expanding deeper into the value chain 5 Nestlé Investor Seminar Vevey June 2008

6 during which we have changed ~50% of the industrial setup to better support business growth -Number of factories - Sales + CHF 9 bio Sales 1997 CHF 67 bio F&B only Sales 2007 CHF 100 bio F&B only 227 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 Divestures Acquisitions/ openings Nestlé Investor Seminar Vevey June 2008

7 A good vision is a continuous fight against Operations Myopia A good vision is a continuous fight against Operations Myopia... Technology & Competency Alignment Strategy Alignment = Execution Acceleration Customer & Consumer Alignment % Cumulative cost improvements COGS in in % of of NPS % 41.4%... aligning Operations with the Business to deliver a new level of performance 7 Nestlé Investor Seminar Vevey June 2008

8 Our transformational opportunity... "Premiumisation" Consumption of food manufacturing value-added actual US$, per capita Convenience Sustenance Pleasure and diversity Nutrition Nestlé per capita sales Well-Being PPP US$ 1,500 5,000 13,000 22,000 28,000 Per-capita income 8 Nestlé Investor Seminar Vevey June 2008

9 to create Shared Value CREATE Shared Value SUSTAINABILITY Protect the future COMPLIANCE Laws, Business Principles, codes of conduct The Nestlé Corporate Social Responsibility Pyramid Nutrition & Wellness, Water, Rural development 9 Nestlé Investor Seminar Vevey June 2008

10 at each stage of the value chain Agriculture and rural development Environment, manufacturing & people Products and consumers Value for society Improved yield Reducing consumption Creating jobs Efficient systems Access to nutritional products Generating local investment Value for Nestlé Securing supply Improving product quality Lowering costs Creating Competitive Advantage Entering new and emerging markets Competitive shareholder returns 10 Nestlé Investor Seminar Vevey June 2008

11 Nestlé environmental progress Variation Water Consumption m3-34% Energy Consumption gigajoules -24% Greenhouse Gases kg CO 2-31% (per ton of product) 11 Nestlé Investor Seminar Vevey June 2008

12 Nestlé Continuous Excellence is the Group wide initiative to go beyond Operation Excellence Delight Consumers Minimize Consumer Complaints FreshNes as "measure" and "mindset" Deliver Competitive Advantage Improve Customer Service & Inter-Market-Supply Enable delivery of year on year savings Excel in Compliance Improvements in Quality & Safety Implement Nestlé Management Systems From project driven initiatives to a sustainable, attitude inspired approach Nestlé Investor Seminar Vevey June 2008

13 based on "LEAN Thinking" The 7 wastes in the Value Chain: MOTION WAITING INVENTORY WASTE OVER PRODUCTION CONVEYANCE PROCESSING CORRECTION 13 Nestlé Investor Seminar Vevey June 2008

14 Nestlé Continuous Excellence will: Promote passion & obsession for consumers and quality Seed and foster the ONE way of working in Nestlé: Zero Waste 100% engagement Nestlé Continuous Excellence will engage everybody s heart & mind in a consumer-driven War on Waste Disseminate LEAN Thinking mindset Improve Freshness and Customer Service through increased manufacturing Flexibility Push cohesion and alignment across the functions and with the business Develop talents to ensure future leaders Facilitate flawless execution Nestlé Investor Seminar Vevey June 2008

15 NCE is based on the implementation of One Nestlé Model Nestlé Integrated Management System (NIMS) Quality, Safety, Environment, Standards, Business Excellence... Leadership Development Nestlé Management & Leadership Principles, Business Principles, Nestlé on the Move... Goal Alignment e.g. Mission Directed Work Teams, Mini Business Units, DMAIC problem solving Measure, Monitor, Organize LEAN Supply Chain TPM Audits, Self Assessment Tools... Consumer Customer Distribution Manufacturing Packaging Raw Material Total Performance Management 15 Nestlé Investor Seminar Vevey June 2008

16 The purpose of NIMS Nestlé Integrated Management System (NIMS) Quality, Safety, Environment, Standards, Business Excellence... Leadership Development Nestlé Management & Leadership Principles, Business Principles, Nestlé on the Move... Goal Alignment e.g. Mission Directed Work Teams, Mini Business Units, DMAIC problem solving... Excel in compliance with Nestlé and external standards to guarantee: Quality of our products Health & safety of our employees Protection of environment LEAN Supply Chain TPM Excellence in Leadership Development Commercial and Operations Alignment Consumer Customer Distribution Manufacturing Packaging Raw Material T otal P erformance M anagement 16 Nestlé Investor Seminar Vevey June 2008

17 The purpose of TPM Nestl é Integrated Management System (NIMS) Quality, Safety, Environment, Standards, Business Excellence Leadership Development Nestl é Management & Leadership Principles, Nestl é on the Move Goal Alignment e.g. Mission Directed Work Teams, Mini Business Units, DMAIC pro blem solving LEAN Supply Chain Consumer TPM Customer Distribution Manufacturing Packaging Raw Material T otal P erformance Total M anagement Performance Management Improve the Company by improving its people and its equipment Bring consumer prospective inside the factories Simplify Shop floor flows Empower & align our workers 17 Nestlé Investor Seminar Vevey June 2008

18 The purpose of Lean Nestl é Integrated Management System (NIMS) Quality, Safety, Environment, Standards, Business Excellence Leadership Development Nestl é Management & Leadership Principles, Nestl é on the Move Goal Alignment e.g. Mission Directed Work Teams, Mini Business Units, DMAIC pro blem solving TPM LEAN LEAN Supply Supply Chain Chain Consumer Customer Distribution Manufacturing Packaging Raw Raw Material anagement Redesign management processes and material flows around consumer/customer needs Eliminate duplication and non-added value activities Promote and foster value creation mindset/attitude across the entire organisation 18 Nestlé Investor Seminar Vevey June 2008

19 We have set an ambitious objective to accelerate implementation... More than 300 Factories will begin implementation of TPM by end TPM Launch Reference Factories 24 Full TPM Goal Alignment Preparation Modules LEAN & FI Pillars covering more than 90% of total cost of production 19 Nestlé Investor Seminar Vevey June 2008

20 NCE will enable Operations to create competitive gaps Consumer 2nd Quartile 1st Quartile Competitiveness 3rd Quartile 3rd Quartile 1st Quartile 1st Quartile 4th Quartile 1st Quartile Compliance 3rd Quartile 1st Quartile 20 Nestlé Investor Seminar Vevey June 2008

21 Pilot tests are showing very promising results TPM in Brazil after 12 months Delight Consumers Consumer Complaints reduced >30% Master Schedule Attainment improved >14% Competitive Advantage Conversion Cost reduction > 9% Efficiency > 90% Excel in Compliance Zero Accidents TPM in US Dreyer s Ice Cream Delight Consumers Consumer Complaints reduced >70% Quality defects reduced > 70% Inventory reduced >50% Competitive Advantage Conversion Cost reduction > 30% Efficiency > 90% Case fill rate 99.5% Excel in Compliance Zero Accidents 21 Nestlé Investor Seminar Vevey June 2008

22 NCE will build on our successful past Performance Operation EXCELLENCE 2007 Consumer and Customer focus Target Business and Operations Goal Alignment Excellence in leadership and competence MH'97 development CI ONE Model for improving Performance Using world class tools and best practices Engaging everybody s heart & mind... enabled by GLOBE Time... to sustain profitable business growth 22 Nestlé Investor Seminar Vevey June 2008

23 amplifying our Core Values Quality & Compliance are the foundation of everything we do Evolutionary approach improving on the performance achieved Nestlé Management & Leadership Principles "Every employee of Nestlé has both an individual & complementary role to play in building the Company of the future" "Leadership... is defined as a high involvement of each employee and a common mindset geared to results" "Nestlé is committed to the concept of Continuous Improvement"... engaging people to accelerate performance to create competitive gaps 23 Nestlé Investor Seminar Vevey June 2008

24 to support and enhance The Nestlé Model 1. Long-Term Organic Growth Target 5-6% 2. Continued year after year improvement of EBIT margin 3. Improving Capital efficiency / Business ROIC / Cash returns to shareholders Sales EBIT Resulting in an industry outperforming, long-term total shareholder return 24 Nestlé Investor Seminar Vevey June 2008

25 Nestlé Investor Seminar Nestlé Investor Seminar Vevey June 2008