nis 2011 procurement kevin petrie
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Procurement, Kevin Petrie, head of procurement, at the Nestlé Investor Seminar, June 7 2011TRANSCRIPT
ProcurementfMr. Kevin PetrieHead of Procurement
7 June, 2011 Nestlé Investor Seminar
These slides differ to those shown at
the Nestlé Investor Seminar 2011
Disclaimer
1
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.
7 June, 2011 Nestlé Investor Seminar
Agenda
Procurement objectives and Nestlé spend
Changing environment and managing commodity price trends
Value chain and Procurement impact
Accelerating leverage
Responsible Sourcing
Building on our People’s Capabilities
2 7 June, 2011 Nestlé Investor Seminar
Nestlé Spend 2010
CHF 60 Billion
l
3 7 June, 2011 Nestlé Investor Seminar
S&IM others including Marketing, Sales, Contract Manufacturing
The Changing Environment and Price Trends
Global Growth (IMF)– 4.4% 2011
– +/- 4.5% through 2014
Investment funds
Currency
Political Crisis
Weather (El Niño/La Niña)
Biofuel
Increased Volatility
4 7 June, 2011 Nestlé Investor Seminar
Agricultural Feedstock to Biofuel is Significant
13.1
0.5
21.418.4
2.95.7
40.8
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0%
Share of Feedstock Used Globally in 2010 for Biofuel
FeedstockSources: OECD, FAO, EIA
5 7 June, 2011 Nestlé Investor Seminar
Unprecedented Price Increases in Nominal Terms
6 7 June, 2011 Nestlé Investor Seminar
Inflation adjusted: In 5th Commodity Boom Cycle
7 7 June, 2011 Nestlé Investor Seminar
Commodity Market Volatility has Increased
Period% Average Volatility
and RangeCHF Value (Bil)*
2000 - 2005 12.4 (8 - 22) (0.8 - 2.2)
2006 - 2010 16.4 (8 - 35) (0.8 - 3.5)
Nestlé Monthly Commodities Index and Volatility %Nestlé weightedprice index*
Monthly high-lowchange %
High Low Volatility
* Market price, not price
paid by Nestlé
8 7 June, 2011 Nestlé Investor Seminar
Traceability ProgrammeFor high risk spend categories
Audit Programme vs. NSC
Direct engagement with 556,000 farmers
E.g. coffee, cocoa, Milk
2010/2011:1735 3rd party audits of key suppliers
Responsible SourcingN
estlé
Re
spo
nsib
le So
urcin
g
9 7 June, 2011 Nestlé Investor Seminar
Summary - Anticipating the Changing Environment and Creating Competitive Gaps Provide forward looking information by business & commodity
Dynamic Forecast 6 quarters forward and annual 3 year view
– Nestlé began managing 2011 in Summer 2010
Risk management strategies – futures and options
Total Cost Optimization - Procurement with technical, with R&D
specifications, yields, recipes,…
Strategic Sourcing enables the delivery of competitive gaps in
the value chain
Accelerating Leverage
– GLOBE, Procurement Best Practices, and NCE.
Responsible Sourcing
Building on the Capabilities of our People
10 7 June, 2011 Nestlé Investor Seminar
7 June, 2011 Nestlé Investor Seminar
Procurementf
Mr. Kevin PetrieHead of Procurement