supplier webinar march 26, 2014. 2 welcome why we’re here 2013 in review 2014 people, priorities...
TRANSCRIPT
Supplier WebinarMarch 26, 2014
2
• Welcome
• Why we’re here
• 2013 in Review
• 2014 People, Priorities and Project K
• Supplier Relationship Management
• Supplier Measurement
Enhancements• What’s next
Agenda
Kellogg Confidential
3
• 2013-2014: Period of significant Change
• Global Procurement Transformation
• Project K
• People and Leadership
• Change in Supplier Engagements
• Supplier Day shift to later in year
• Find a more frequent/effective way to
engage with our suppliers
Why We’re Here
Kellogg Confidential
4
2013 in Review
Success!Kellogg Confidential
5
• Great Results• Delivered the budget – forecast accuracy• Met Direct materials savings targets• Significantly exceeded Indirect savings targets• Supplier Diversity spend
• Exceeded goal• 15 consecutive years of growth
• Diversity & Inclusion• Partners and relationships• Capability and leadership
2013 in Review
All in the midst of tremendous changes in our function and across our business
Kellogg Confidential
6
Global Procurement Transformation
• Year 1 of 3 year journey
• Wave Approach – Capability
building
• Org Effectiveness
• Org Design
2013 in Review
Kellogg Confidential
What is Global Procurement Transformation?
Goals:
• Deliver 1.5X (50%) improvement in negotiated cost savings over 3 years1
• Make savings long-term sustainable
Re-imagine operating model to:
1. Best people, best process, best insights
2. Maximize global spend leverage
3. Minimize duplication of effort
4. Operationalize Procurement best practices with Kellogg Work Systems (KWS)
5. Be Relentless in our application of Best Practice & Continuous Improvement
6. Go Bigger, Go Bolder & Highlight Different Strategic Approaches
1 Compared to historical 09-12 average cost savingsKellogg Confidential
8
Key structural changes – sustainable change and results
Change reporting structure of Regional CPOs to report directly to Global CPO
▪ Drive single vision for procurement globally
▪ Deliver 1.5x savings using new procurement tools & standard techniques globally
Establish regional procurement operations group to segregate tactical and strategic activities
▪ Ensure category managers focus on key value added activities
▪ Identify clear roles and responsibilities and escalation paths to manage day to day operational activities
Establish global category managers that drive strategic sourcing of key categories globally
▪ Leverage global spend and volume to improve savings capture
▪ Ensure categories are managed at right value creation level, e.g. global vs. regional vs. local
▪ Enable development of strategic supply base to support Kellogg globally
Develop in-house analytical capability
▪ Establish an entry level position for procurement to attract talent
▪ Develop capability to conduct market analysis, spend analytics and provide analytical horse power to support category managers
Establish Procurement Knowledge Center
▪ Standardize processes globally and implement advanced procurement tools (clean sheet, fact based negotiations etc.)
▪ Invest in capability building
RationaleKey changes
Establish Procurement Management Office
▪ Program management of transformation wave activities globally
▪ Manage key procurement initiatives and special projects
1
2
3
4
5
6
Kellogg Confidential
9
We have designed the future Procurement organization to be much more global in the way strategies are developed and executed
Current strategic sourcing matrix Future strategic sourcing matrix
% of total spend
Local Regional Global
Strategy Development
Str
ateg
y E
xecu
tion
Regional
Global
Local 0
6
2
22
66
4 Str
ateg
y E
xecu
tion Global
Regional
Local
19
43
1
34
1 2
RegionalLocal Global
Strategy Development
% of total spend
Organizational changes to improve focus on strategic sourcing
▪ All operational activities will be transferred to a newly formed procurement operations function to refocus 30-40% of category managers’ time
▪ Global and lead category manager structure enables strategy setting at global level and allows procurement to pull a more holistic set of levers and capture synergies globally
Kellogg Confidential
10
Results are grounded in a fundamentally different approach
Category transformations
Capability building
Organization
• Waves 1-4 procurement savings at or above target
• Additional impact from continuous improvement and reformulation opportunities
• Next-generation sourcing levers (e.g., best-in-class cleansheets / RFPs, component based pricing)
• Leverage of global purchase volume
• Assessment of demand and process levers (e.g., spec optimization, contractor management)
• Energized and motivated procurement organization
• 75+ leads trained in KNA, KEU, KLA
• Responsible sourcing introduced
• Best practices introduced
• Reinforcement of KSS 2.0 through regional boot camps
• Cross functional engagement (e.g., with RQT and Engineering)
• Side-by-side working model to sustain change
• Global category management went “live” with Cocoa and Capital
• Continued design and implementation of the new Procurement organization
Approach Outcome
Kellogg Confidential
Walter Charles III
Global CPO & VP
Shelly Van Treeck
KNA CPO
Fernando Martin del
CampoKLA CPO
Robert O’Connor
KEU CPO
Brian Bancroft
KAP CPO
Adam Beuker
Knowledge Center
Komal Patel
PMO
Cathy Kutch
SRM & Diversity
Jessi Olivarri
Sr. Exec Secretary
Kurt Brouwer
Procurement Finance BP
Nick Leonard
HRBP
Dan O’Connor
Legal BP
Global ProcurementGlobal Leadership Team
Contractor/ 3rd Party
Open Position
Global Category Manager
Debasis Chanda
Procurement IT BP
Brenda Brenner
CoMan BP
11Kellogg Confidential
Shelly Van Treeck
KNA CPO & VP
Paul Steele
VP Global Packaging
OPEN
VP Raw Materials
Tracy Joshua
VP Indirect
Brenda Minter
Direct Operations
Richard Johnsonbaugh
Indirect Operations
Kristen Halverson
Innovation Manager
Christopher Schumacher
Senior Analyst
Jessi Olivarri
Sr. Exec Secretary
Kellogg Confidential
Global ProcurementKNA Leadership Team
Contractor/ 3rd Party
Open Position
Global Category Manager
12
2014 KNA Procurement Priorities
Deliver Results1. Align and/or improve (as appropriate)
the 4 SC Foundations:– People Safety– Food Safety and Quality– Customer Service– Financial Performance and Cost
Savings2. Deploy, Align and/or Execute Project K
initiatives:– Network Optimization– Global Business Services– Functional Transformations - Global
Procurement, Regional CLS Initiatives, Global Engineering
Strengthen the Organization3. Support S&OP, KIMM, and DTV across the
Business Units delivering improved supply management, pipeline of savings and initiatives through partnering and engagement.
4. Align KSS 2.0 capability training, playbooks, and rollout to KWS principles
5. Develop KNA/global Procurement organization talent and bench strength through regular talent review, PDP, PMP, coaching and mentoring programs and cadence.
6. Visibly support diversity and inclusion, and improve on D&I metrics.
Create the Future7. Support and enable Global Growth
Categories, deliver the day to day business, enable Responsible Sourcing and execute the business growth and innovation objectives.
13Kellogg Confidential
Supply Chain Town Hall | Feb. 13, 2014
Project K
14Kellogg Confidential
15
Our VisionTo enrich and delight the world through foods and
brands that matter
Our PurposeNourishing families so they can flourish
and thrive
Vision & Purpose
Supply Chain Town Hall | GBS Update | Feb. 13, 2014Kellogg Confidential
1616Kellogg Confidential
Supply Chain Town Hall | GBS Update |Feb. 13, 2014
Catalyst for Growth
17Kellogg Confidential
Catalyst for Growth
Supply Chain Town Hall | GBS Update |Feb. 13, 201418Kellogg Confidential
Project K Update: Investing in GrowthProject K UpdateGlobal Business Services
Supply Chain Town Hall | GBS Update |Feb. 13, 2014 19
• Global Business Services• Global• Regional• Local
Kellogg Confidential
20Kellogg Confidential
The New and Improved Supplier
Measurement System(SMS)
21Kellogg Confidential
Improving – Team Effort
1. Met with Focus Group of Suppliers• 5 Suppliers - GPI, Chaucer, Kerry, Exopack and Bunge
2. Met with Statistician at WKKI
3. Met with Focus Group of Internal Surveyors• 5 Plants - Battle Creek, Grand Rapids, Lancaster, Omaha
and Zanesville
4. Conducted 2 Pilots• Plant Pilot - 5 Plants above• CoMan Pilot – Entirety of Mid-Year 2013 Ratings
5. Multiple Training Webinars and Training Documentation
22Kellogg Confidential
Comparison
The Old SMS• Surveyor chose suppliers
to rate
• Surveyor had to navigate to SMS site
• We could not track compliance
• Manual Reminders AFTER
• Numbers-based ratings
• Once submitted, survey was not viewable/editable
• No view into historic ratings
The New SMS• We know who should rate
who
• We PUSH the surveys to the surveyor
• We have visibility - ALL surveys
• Automatic reminders round
• Descriptor-based ratings
• Surveyor can view/edit surveys until due
• Surveyor can see historic ratings
23Kellogg Confidential
The New SMS: The Survey
• Brief Descriptors
• Rating Buttons – no numbers
• In Depth Descriptors
• Comments
• Historicals24Kellogg Confidential
The New SMS: The Rating Scale
• New 7-point scale• Focus on Color• No Numbers – only descriptors
• HARD ANCHORS
25Kellogg Confidential
The New SMS: The Descriptors
• Detailed and specific GUIDELINES• Aids all surveyors – old and NEW• Removes subjectivity
26Kellogg Confidential
The New SMS: The Comments
• Unlimited comment length• Ability to attach documents as evidence
of rating• Ability to see last round’s rating for this
supplier
27Kellogg Confidential
28
• Questions? (
• Feedback please!
• Engagement target June 2014.
• Supplier Day/Supplier Diversity Event
in November 2014.
What’s Next?
Thank you!Kellogg Confidential