coca cola presentation asug ga march 1
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…and the systems required to do it…
Forward-Looking Statements This presentation may contain statements, estimates or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from The Coca-Cola Company’s historical experience and our present expectations or projections. These risks include, but are not limited to, obesity and other health concerns; scarcity and quality of water; changes in the nonalcoholic beverages business environment, including changes in consumer preferences based on health and nutrition considerations and obesity concerns; shifting consumer tastes and needs, changes in lifestyles and competitive product and pricing pressures; risks related to the assets acquired and liabilities assumed in the acquisition, as well as the integration, of Coca-Cola Enterprises Inc.'s former North American business; continuing uncertainty in the credit and equity market conditions; increased competition; our ability to expand our operations in developing and emerging markets; foreign currency exchange rate fluctuations; increases in interest rates; our ability to maintain good relationships with our bottling partners; the financial condition of our bottling partners; increases in income tax rates or changes in income tax laws; increases in indirect taxes or new indirect taxes; our ability and the ability of our bottling partners to maintain good labor relations, including the ability to renew collective bargaining agreements on satisfactory terms and avoid strikes, work stoppages or labor unrest; increase in the cost, disruption of supply or shortage of energy; increase in the cost, disruption of supply or shortage of ingredients or packaging materials; changes in laws and regulations relating to beverage containers and packaging, including container deposit, recycling, eco-tax and/or product stewardship laws or regulations; adoption of significant additional labeling or warning requirements; unfavorable general economic conditions in the United States or other major markets; unfavorable economic and political conditions in international markets, including civil unrest and product boycotts; litigation uncertainties; adverse weather conditions; our ability to maintain brand image and corporate reputation as well as other product issues such as product recalls; changes in, or our failure to comply with, laws and regulations applicable to our products or our business operations; changes in accounting standards and taxation requirements; our ability to achieve overall long-term goals; our ability to protect our information technology infrastructure; additional impairment charges; our ability to successfully manage Company-owned or controlled bottling operations; the impact of climate change on our business; global or regional catastrophic events; and other risks discussed in our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2011 and our subsequently filed Quarterly Reports on Form 10-Q, which filings are available from the SEC. You should not place undue reliance on forward-looking statements, which speak only as of the dates they are made. The Coca-Cola Company undertakes no obligation to publicly update or revise any forward-looking statements.
Reconciliation to US GAAP Financial Information The following presentation includes certain "non-GAAP financial measures" as defined in Regulation G under the Securities Exchange Act of 1934. A schedule is posted on the Company's website at TheCoca-ColaCompany.com (in the “Investors" section) which reconciles our results as reported under General Accepted Accounting Principles and the non-GAAP financial measures included in the following presentation.
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2020 Vision: Our Roadmap for Winning Together
• Profit: More Than Double System Revenue
• People: Be a Great Place to Work
• Portfolio: More Than Double Our Servings Per Day
• Partners: Be the Most Preferred Beverage Partner
• Productivity: Manage for Greatest Effectiveness
• Planet: Global Industry Leadership in Sustainability
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Coca-Cola Refreshments
19%
Coca-Cola FEMSA
11%
BIG 10%
Coca-Cola Hellenic
8% Arca
Continental 5%
CCE 5%
Swire 4%
Coca-Cola Icecek
3%
COFCO 2%
SABMiller 2%
All Other 31%
Nearly 275 Bottling Partners creates a highly complex technical eco-system
CCR + BIG =
29% of 2011 KO
System Volume
Top 10 = ~70% of Global Volume
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One Shared Destination: 2X System Revenues…not 2x cost basis
• Profit: More than double system revenue, while increasing system margins
• People: Be a great place to work
• Portfolio: More than double our servings per day
• Partners: Be the most preferred beverage partner
• Productivity: Manage for greatest effectiveness
• Planet: Global industry leadership in sustainability
2010 2020
$100
>$200
Our Goals KO System Est. Net Revenue (US$ Billion c/n)
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How Big is $200 Billion?
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The Business that We Will Double: Sales into 200+ Countries, with operational footprint in 107…massive breadth without depth creates a challenge to standardize
29%
22% 18%
16%
15%
26.7 Billion Unit Cases Sold in 2011
1.2 Billion Incremental Unit Cases in 2011 (equivalent to 1 Japan, 2 Indias or 3 Russias)
2011 KO System Volume
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Pacific North America
Europe
Eurasia/ Africa
Latin America
27%
29%
9%
9%
3%
7%
11%
Rest of World
3%
$40 Trillion
China
US
Europe
India
Japan
Latin America
ASEAN
Middle East & N. Africa
Sub-Saharan Africa
2% 1% 21%
25%
14%
10%
6%
6%
4% 2%
1% 10%
$71 Trillion
India
Latin America
US
Europe
ASEAN
Middle East & N. Africa
Rest of World
Japan
ASEAN
China
Sub-Saharan Africa
Personal Consumption will Increase by 80% by 2020 – systems must accommodate “shift” to edge
2011 Global Personal Consumption
2020 Global Personal Consumption
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Note: Figures do not sum to 100% due to rounding.
Roadmap To New Application Architecture Foundation
Finance & Logistics Out of Standard Support Since 2010 High Customized – 25X Complex Infrastructure > 100 Servers Tightly Coupled Non-Standard Interfaces
Financial Roadmap Options to stabilization &
simplification
2012 2013 2014+ 2011 2010
2012
Classified - Internal use 9
Enterprise Performance Management Out of Standard Support Since 2012 Complex Solution – BPC/BOFC/FIM Complex Infrastructure > 175 Servers Tightly Coupled Non-Standard Interfaces
Treasury Roadmap in process for Wall Street and Reval cloud solutions
Simplified Business Increased Capabilities Higher Performance
Speed to Deliver Reduced Lost Work Time Reduced Costs
Why are we today and where do we want to be?
The current SAP solution does not meet business needs, is complex and expensive to maintain: a new Enterprise Platform would …
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Traditional
Concentrate
Business
Financial Accounting
Order Management So
urc
ing
& P
rocu
rem
en
t
Man
ufa
ctu
rin
g &
Fu
lfil
lmen
t
Geography X
Geography 1
Geography 2
Geography 3
Man
ufa
ctu
rin
g &
Fu
lfil
lmen
t
Man
ufa
ctu
rin
g &
Fu
lfil
lmen
t
Ma
nu
factu
rin
g &
Fu
lfil
lme
nt
From a platform that is challenged to meets Business needs…
• Fragmented business processes that are highly localized
• Highly customized and outdated back-office platform designed for a concentrate business
• Unstable platform driving operational disruptions and negative user experience
• Inflexible and inability to rapidly deliver new capabilities and adapt to new business models
Concentrate
Global Juice Coffee
Energy
DPS
Water
Freestyle
Globalized Region Finance Centers
Dairy
Glo
ba
lized
CP
S F
un
cti
on
Glo
ba
l Su
sta
ina
ble
Pro
cu
rem
en
t
Collaborative/Integrated Supply Chain
Global, Common, Standardized SAP for TCCC*
To a platform that enables 2020 Vision and drives a competitive advantage…
Sports Drinks
• Integrated and sustainable global processes, master data and process governance
• Standardized and simplified processes across core operational routines
• Increased system stability that results in lower run costs
• Flexible infrastructure that is better able to support and provide new capabilities
* Excludes CCR & BIG Globalized Shared Services
Supplier Collaboration
Classified - Internal use
Finance & Logistics Complexity Customization is expensive !!!
Benchmark Profile
• Represents implementations occurring within the last 5 years
• Top quartile of “Very High” and “High” benchmark
• $25B+ revenue
• >18,000 users
• Global profile (>50 countries)
• 9+ core SAP modules (i.e., FI, CO, HCM, MM, PP, SD, WM, QM, PM, etc.)
Classified - Internal use
Benchmark “Average”
SAP ACN
Benchmark “High”
SAP ACN
Benchmark “Very high”
SAP ACN
300 725 1,250 1,285 2,550 2,100
1X Customization Cost
2X Customization Cost
3X Customization Cost
Current TCCC
Customization
If Reduce TCCC Customization by
80%
50,907 10,000
25X 7X Customization Cost
Not a Sustainable Design
Decision Point
How aggressive can we be in removing customization?
Both the volume of incidents and unplanned FILO downtime continue to increase.
Classified - Internal use 12
•FILO incidents continue to rise month over month with volumes increasing by approximately 10% since 2011
• Incident distribution : • 2011 - FI: 50%, LO: 50% •2012 - FI: 60%, LO: 40%
• While resolution time has be cut in a half, total
time to resolve incidents accounts for over 250,000 hour per month on average in 2012
Unplanned FILO system downtime has increased by almost 4 times since 2011 to an average of approximately 6.5 hours per month
The Hidden Cost of Complexity SAP PLATFORM
0
100
200
300
400
500
600
700
800
900
Uplanned FILO System Outage (minutes)
0
500
1000
1500
2000
2500
Total Number of FILO Incidents
Finance & Logistics Decisions Customization Impacts
Classified - Internal use 13
Traditional Approach • Customizations will be difficult to rationalize out • Tendency to always need enhancements to gain
capability as upgrading is difficult • On-going costs tending upward with increased
customization
10k
20k
30k
40k
50k
Yr 1 Yr 2 Yr 3 Yr 4
Traditional
Greenfield
Cu
sto
miz
atio
ns
Traditional
Greenfield
Greenfield Approach • Facilitates a return to standard utilizing Industry templates
and process best practices • Managing to a very low amount of re-customization is the
key cost driver • Transition to Life Cycle Management
10M
20M
30M
Yr 1 Yr 2 Yr 3 Yr 4
Traditional
Greenfield An
nu
al O
n-G
oin
g Sp
en
d
Customization or Vendor Delivered Capability? Vendor Delivered Capability is Lowest On-Going Cost
Limited Customizations X86/Cloud Architecture
The Greenfield approach enables 2020 Vision through a sustainable and scalable business model
...
Greenfield Approach
Building Business Capabilities
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2013 2014 2015 2017 2016
Business As Usual
Minor Updates
Increased risk of major failure
Upgrade
Project 1
Project 2
Project …
New Capabilities Limit Reached
X
Y
Z
Upgrade Approach • Does not enable 2020 Vision • Iterative capabilities and solution
simplification (projects) • Higher time / cost and lower benefit • Business risk as each project is a silo • Requires on-going coordination and
interdependency with CCR
Do Nothing – Business As Usual • Does not enable 2020 Vision • Solution is not sustainable • Significantly increased impact on
business continuity • Requires on-going coordination and
interdependency with CCR
Bu
sin
ess
Cap
abili
ty
Greenfield Approach • Enables 2020 Vision • Faster to end state • Sustainable and scalable business model • One-off organizational impact (end to end
process design and test) • Flexible foundation for more efficient
capability improvements
Classified - Internal use
Help to Sell
Sell Coke
Standardized Processes for core financial processes & US GAAP reporting
Business Intelligence to provide Value chain economics to drive Profitable growth
Good Complexity that provides BI to sell product
Design Orientation
Va
lue
Ori
enta
tio
n
High
Low
Corp - GBS A/P,AR, GL,SD – P2P - CPS
Groups BU’s – Bottlers
Tax & Treasury
Business Systems Landscape/Architecture Towards 2020
Classified - Internal use
Private Cloud or Hana Decision
Currently Finance & Logistics and Enterprise Performance Management run on proprietary hardware which will be ready for Life Cycle Upgrades in 2017.
Hana is SAP’s in-memory computing solution to enable increased performance and speed
Recommended Decision
Architect for HANA
Deploy on private cloud. Note – Cannot go to private cloud with FILO upgrade due to highly customized state
Move to Hana as performance requires
Classified - Internal use 16
Governance Key Drivers
Classified - Internal use 17
Key Driver Description
1. Governance and Sponsorship
• Strong “Top Down” governance and sponsorship is critical to delivering a greenfield implementation successfully simplification, standardization and automation
• This includes setting clear program direction and driving alignment & decisions
2. Planning and Preparation
• Executing a formal and rigorous planning phase is also essential • A small core team that develops the up-front detailed deliverables (approach,
scope, costs, team structure etc.. ) will allow for an accelerated timeline
3. Adoption Level of Industry Solution
• Rapid, time-box driven design with “the right SME” – Why Not Approach • Level of commitment to limit customizations • A team that is familiar/experienced in delivering the industry template
4. Change Management
• Strong training and communication program • Standardization and reengineering of supporting business processes
5. Team Delivery Capability
• A team familiar/experienced in delivering in this model combined functional and technical expertise
6. Stop At Anytime • Unless “playing by rules” to achieve success – STOP PROJECT
Six key drivers will have a significant impact on the time required to
deliver a successful implementation
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