“Developing CoE to accelerate the delivery strategy and optimize delivery performance”

September, 2011

Fast Facts on Kraft Foods

• Approximately $48 billion in revenue

• World’s #2 food company, #1 in North America

• 11 brands with more than $1 billion in revenue

• Approximately 140,000 employees

2

Kraft Foods Culture

• Independent & accountable Business Units – incented based on performance

• Regional operating model

• Operational flexibility: acquisitions & divestitures

• Collaborative environment: both the “what” and the “how” is measured

3

is measured

• Kraft Foods values:

We inspire trust

We act like owners

We keep it simple

We are open and inclusive

We tell it like it is

We lead from the head and the heart

We discuss, we decide, we deliver

Enterprise Outsourcing Philosophy

• Kraft has chosen to focus on core competencies and outsource supporting services whenever possible

• Kraft BUs and Functions are governed independently requiring a decentralized approach to outsourcingrequiring a decentralized approach to outsourcing– Functions and businesses are free to independently explore and develop outsourcing relationships for delivery of services

– Each function or business will govern its own outsourcing relationship with the advice and support of the BPO CoE

• The BPO CoE will own and track the overall success of the enterprise outsourcing strategy

BPO CoE at a glance

• In 2009, KET sponsored the creation of a Global BPO CoE using key criteria:

• Centralized, cost-effective global expertise development and knowledge retention

• Efficiency of implementation and optimization of value gain

• Objectivity of Kraft-specific recommendation

• Service oriented / non-mandate operating principles

• The BPO CoE team consists of 25 Kraft SMEs with direct outsourcing experience

gained both internally and externally)

• Operations in Northfield, IL and Mumbai, India

• BPO Full Engagements: – 2006 – 1 (ITO)

– 2008 – 2 (ITO, Facilities)

– 2009 – 3 (ITO, Facilities, HRAO)

– 2010 – 5 (ITO, Facilities, HRAO, Procurement, F&A Cadbury)

– 2011/ 2012 working on 2 incremental opportunities

• BPO Consulting Engagements consists of multiple assignments on an as-needed basis

CentralizedAll BPO support

in one organization

DecentralizedBPO operations within eachFunction with Best Practice

network

HybridConsultative

CoE delivering someBPO support services

» One organization that manages and delivers BPO services centrally

» Single governance team/organization –

» Centralized Center of Excellence provides guidance and direction to distributed teams

» Matrixed responsibility for key

» Decentralized governance teams with high degree of autonomy

» Centralized governance

Outsourcing Operating Models

team/organization –direct reporting & responsibility for governance efforts

» Distributed governance/service management teams –solid line reporting relationship to central team

» Matrixed responsibility for key functional areas and processes

» CoE has dotted-line reporting relationships to host function

» Key governance processes and relationships split between BPO CoE and Host Function

» Centralized governance expertise, consults on process standardization, and best practices

» Governance process management and execution is decentralized

© EquaTerra 2008. All rights are reserved

Copyright

Our Approach

BPO Engagement Types: Full vs. Partial

2.aNew Initiative

1.b Current

Engagement

2.b Current

Engagement

1.Major BPO 2. Partial BPO Project

Categorization

Stage:

- Size / Scope / Complexity

- BPO vs. out-tasking

- Bus objectives

- Resource requirements

1.a New Initiative

1

2

BPO Full EngagementCoE Involvement in all stages of

BPO life-cycle

BPO Consulting

Engagement

or

BPO CoE

On-Going

Engagement

Stage

- Execution

- On-going Contract Mgt

BPO Consulting

Stage

- Strategy Development

- Recommendation

- Tools

BPO Partial

Engagement:

CoE consulting services on an

as needed basis

Procurement

Host Operations

Host Finance

Etc

Etc

2

3

+

Roles and Responsibilities

Role Responsibilities

Host Function Owns services being outsourced, Client of BPO CoE

Leads assessment and implementation…, accountable for services and costs

BPO CoE CoE brings process expertise and thought

Provides consulting services, leads some processes, meets expertise and thought

leadershipleads some processes, meets Client’s requirements

Other Support Functions

Provide support as needed to host function and BPO CoE

Provide expertise from their discipline (Legal, HR, IS, Finance)

Provider Provide services per contract

Meet Service Level Agreements

8

Service Towers

• Service Scope and Metrics Refinement

• Performance Measurement

• Client Satisfaction Measurement

• Project Initiation and Authorization

• Program Infrastructure Setup

• Program Issue Escalation and Resolution

• Consult on / Lead Sourcing Strategy Development

• Sourcing

• Negotiations

• Contracting

• Financial Business Case Development

• Financial processes / documentation

• Financial Performance Mgt

Program

Management

Financial

Management

Sourcing & Contract

Management

Measurement

Management

•Governance Processes and Tools

•Change Management

•Relationship Mgt

• Risk and Compliance Mgt

• CI

Governance

Management

Measurement • Resource Requirement Planning

• Project Mgt / PMO

• Compliance

• Benchmarking

Performance Mgt

Operation Management

• CI

• BPO Information Sharing/ and Innovation

• Transition Mgt.

• Steady State Operations

• Local vendor Management

BPO Lifecycle Wheel

Assessment

and SourcingTransition

- Solution Design

- Provider selection

- Contracting

- Teams Dev

- Communication

- Implementation

- Change Mgt

- Communication

- Hand-offs

10

Transformation

& Value

Delivery

Strategy

Refresh- CI

- SRM

- Benchmark

- Measurement

- Reassessment

- Mkt. Evaluation

- Sourcing Strategy

BPO CoE Full Engagement

Transition

Transformation & Value Delivery

Strategy Refresh

Lifecycle Phase

1

Sourcing &

Contract Mgt

HIGH

Finance

HIGH

Measure- ment

MED

Program Mgt

LOW

Governance

MED

Operations

LOW

Assessment and

Sourcing

BPO COE Service Towers

2

3

4

MED

LOW

HIGH

HIGH

LOW

HIGH

HIGH

MED

LOW

HIGH

MED

LOW

HIGH

HIGH

LOW

HIGH

HIGH

LOW

Questions…