Operations Excellence

Evian Evian November 2009November 2009

SSafetyafety

QQualityuality

CCostost

DDeliveryelivery

EEnvironmentnvironment

MMotivationotivation

0 Loss Time Accident3rd Wise audit > 40pts

Reduce COGS/t

every year

100 mEUR B

ooster p

a

Capex at 3,5 to

4% C

ANN

Customer Service > 98,5%15 to 20% less DOH inventories pa

Kwh/t re

duced b

y 4%

+ pa

CO2 re

duced b

y 30

% b

y 20

13

Best Place to Work

Improve score at each Danone

survey

10% less

Consumer Com

plaints pa

CO2

Sourcing

Lead Win

2010 / 2012 2010 / 2012 OPERATIONS OPERATIONS

road maproad map

OptimiseOptimiseourour

OperationsOperationsFootprints & Footprints &

Networks Networks

Reduce theReduce theExposure &Exposure &

VolatilityVolatilityof rawof raw

materialsmaterials

Continuously improve Continuously improve our Operationsour Operations

Everyday, Everyday, we passionately we passionately

supply the best valuesupply the best value nutritionnutrition

to babies & toddlers, to babies & toddlers, throughthrough

operations excellenceoperations excellence

What is working !

• Base Powder recipes simplification,

• Transparency on budget cost and KPI’s,

• Consistent quality,

• Customer service,

• Productivity + Booster,

• Stock reduction.

What is not working !

• High Inventories,• Safety as a priority for all,• Lack of regular / frequent cost update in EMELA,• Portfolio Harmonization & management of complexity,• Supply of small markets (batch size / production runs),• Non quality write-offs (returns, marketing changes,

shelf life expiry),• S&OP Local –Regional – Global,• Some of our suppliers are also competitors,• Visibility of category sourcing strategies,

What is missing !

• How to support geographic opportunities ?• Low cost manufacturing footprint (affordable factory), • Small batch manufacturing capability, • 3rd party strategy, • Transversal career path (in / out of Operations),• Management of transversal / business projects,• Flexibility to align with multiple RTM, • Shorten time to Market (NPD),

What is possible !

• Tailor supply to market size / needs,• Supply chain as competitive lever (+/or quality),• Co2 Neutral (offset projects),• Best practices sharing,• 3rd parties to speed up innovation,• Identify (recognize) when complexity adds value

(specialties),• Lowest Base Powder cost in the world.

Enablers

• Articulate manufacturing master plans aligned to commercial plans,

• Robust S&OP process,• Flexible financial system / reporting, • Base Powder rationalization,• Massive dryers in Europe / Asia,• Flexible blending and packing facilities (foods + milks),• Management competencies and capabilities from

Front line managers,

Barriers

• € / $ SSD contracts

• Volatility in commodity prices

• Complexity :– Technology– Sku’s– Quality standards

• Cultural barrier to cross functional development and integration

2012

• € 4 Billion business plan

• “Big for Big” and “Small for Small” footprint.

• In everything we do, we execute right first time, while improving standards.

A uniquely integrated Operations & A uniquely integrated Operations & Commercial business that is a breakthrough Commercial business that is a breakthrough

competitive edgecompetitive edge

2012 (2)

• A seamless S&OP horizontal & vertical (3 dimensions),

• Speed To Market is our competitive weapon,• Operations is a CO + Cash engine : “ more Co,

less Co2”,• Operations is a reservoir of management

talents,• We have the BEST & The BEST MOTIVATED

people,• A real time & transparent cost model.

2012 (3)

• “Massive” dryers in Europe and China,

• Small, competitive and affordable tailor made blending & packing factories in emerging markets (Vietnam-Algeria-Bahrain- Brazil),

• Istra is completed,

• We reduced write-offs by € 10 M (50%)

2012 (4)• We have a centre of excellence for food category

blockbusters + small flexible competitive factories plants with competitive partners,

• X Gm’s have recently been appointed coming from Operations + 2 plant managers in Sales or Marketing.

• All Front Line Managers have been through Danone Leadership College,

• Reduce outsourcing to the minimum,• 1 Week FG Stocks,• A Completely integrated S&OP

2012 (5)

• No accidents since 12 months,

• SC DBN has been recognized by all key customers as best in class,

• A real cost reporting system + direct link commodity prices and retailer prices,

• 12 months shelf life,

• We own vertical integrated raw material supply,

2012 (6)

• TTM < 12 months. (idea launch),• Operations is a real business partner,• Commercial can articulate the OPS Strategy

and vice versa,• QFS is only focusing on Quality in Design

because OPS is fully under control,• €300 M delivered by 31/12/2012 and we budget

€ 350 M in 2013,• DBN Ops scores better than other Food

Operations (Danone survey)