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Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 25 May, 2016

Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

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Page 1: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

Agility andCost Efficiencyin Operations

Magdi BatatoEVP, Operations

Nestlé Investor Seminar24 – 25 May, 2016

Page 2: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

2

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.

Disclaimer

Page 3: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

3

251991

2016

years

Page 4: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

1991 Number of factories

…whilst sales

have doubled and

production volume

has tripled.

4

549547

438 436

2015

104 opened443 bought

298 closed251 sold

Page 5: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

We are coming from a long-term commitment to Operational Excellence

5

Performance Performance improvement

is part of our DNA and

sustains on-going savings

to support business growth

MH’97

Target 2004+

Operation

EXCELLENCE

2007

1997 2001 2005 2008

Page 6: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

6

30’000Current number of trained

problem solvers

Number of improvement

initiatives per year27’800

Page 7: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

7

Zero is our mindset to deliver Excellence

Page 8: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

Driving Excellence in Safety

8

0

1

2

3

4

5

6

7

2008 2009 2010 2011 2012 2013 2014 2015

Re

co

rdab

le In

jury

Ra

te

6.1

2.6

Number of “recordable injuries”

per million hours worked

Page 9: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

Quality throughout the entire value chain

9

0

20

40

60

80

100

120

2008 2009 2010 2011 2012 2013 2014 2015

Qu

ali

ty in

cid

en

ts

- 65%

Production volume: + 27%

Page 10: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

Eliminating waste from our value chain

10

600

800

1000

1200

1400

1600

2008 2009 2010 2011 2012 2013 2014 2015

OP

EX

Co

st

red

uc

tio

n [

CH

F m

illio

n]

Operational Excellence (OPEX)

captures projects generating

cost reduction

Page 11: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

Delivering the right product at the right time

11

95

96

97

98

99

2008 2009 2010 2011 2012 2013 2014 2015

Ca

se

Fil

l R

ate

[%

]

The percentage of cases delivered

to the customers requirements

Page 12: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

Delivering the right product at the right time

12

40

60

80

100

2013 2014 2015

SK

U n

um

be

r

Page 13: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

Strong performance on environmental indicators

13

Energyconsumption/t

Waterwithdrawal/t

GHGemissions/t

Waste fordisposal/t

Ind

ex

20

40

60

80

100

2005 2007 2009 2011 2013 2015

-29%

-43%

-41%

-75%

Page 14: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

Strong performance on environmental indicators

14

Ind

ex Energy

Waterwithdrawal

GHGemissions

Waste fordisposal

Productionvolume

20

40

60

80

100

120

140

160

2005 2007 2009 2011 2013 2015

+42%

+7%

-14%

-12%

-62%

Page 15: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

Our CSV efforts are recognised

15

Nestlé Industry best Industry average

No 1 in climate change

No 2

No 2

No 1 in environmental

dimension

Certified

Leader position in

Water programme

Page 16: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

16

Zero is our mindset to deliver Excellence

Page 17: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

17

Page 18: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

Our NCE and CSVare providing long term stability

18

Page 19: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

19

As

se

tIn

ten

sit

y

Dig

ita

l@O

pe

rati

on

s

Ca

teg

ory

foc

us

NCE and CSV

Pro

cu

rem

en

t

Page 20: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

Procurement

20

Global

Zone

Above

Market

MarketLocal

Leveraging our scale, knowledge and

skills, while being connected to the

business

Benefit over 3 years: CHF 0.5 billion

Ensure competitive and sustainable

sourcing:

Implementing ONE procurement model

across Nestlé –The Nestrade Procurement Company

Page 21: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

Asset Intensity

21

“Sweat” Operations assets:

Reducing conversion and

distribution costs

Reduce our environmental footprint

Optimising our industrial footprint

Increase Safety, Quality and Service

Whilst continuing to:

Benefit over 3 years: CHF 1 billion

Indexed

Asset Intensity

100 = 2015 base

90

100

110

120

130

2015 2016 2017 2018 2019 2020

Page 22: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

Accelerating TPM to achieve benefits earlier

22

TPM lines with higher Asset Intensity TPM implementation in Key Markets and Categories

100

111

90

95

100

105

110

115

Indexed

Asset Intensity

2015

TPM lines

2015

All Nestlé lines

0%

20%

40%

60%

80%

100%

20192018201720162015 2020

% TPM* Lines

* Total Performance Management

Page 23: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

Category focus

23

Increase Category focus:

Better aligning from Strategy to

Execution

Accelerating Manufacturing

performance improvement

Increasing agility and speed – e.g.

faster introduction of new products

Benefit over 3 years: CHF 1 billion (cost avoidance)

Page 24: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

Digital @ Operations

24

A further step change in Operations:

Leveraging disruptive technologies

Starting first pilots

Advanced

Robotics

Advanced

Analytics

Internet of

Things

Augmented

Reality

Wearables 3D

Printing

Page 25: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

Nestlé Operations combines two skills –Farming and Hunting

25

Land preparation and

planting

Removing obstacles and

stones

Managing water and

enriching the soil

Controlling weeds

etc.

Seeking targets

Deciding how to

approach the target

Being fast

Aiming at first realistic

opportunity

etc.

STABILITY AGILITYand

Page 26: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

26

Moving from a gradual approachto a leapfrog approach

Page 27: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

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NCE and CSV

Asse

tIn

ten

sit

y

Dig

ita

l@O

pe

rati

on

s

Ca

teg

ory

focu

s

Pro

cu

rem

en

t

AGILITY

STABILITY

Shapethe future of Operations

Page 28: Agility and Cost Efficiency in Operations...Agility and Cost Efficiency in Operations Magdi Batato EVP, Operations Nestlé Investor Seminar 24 –25 May, 2016

3 Key Takeaways

1 NCE AND CSV DELIVER LONG TERM STABILITY TO NESTLÉ

2FOUR IMPACT ACCELERATORS STRENGTHEN OUR ABILITY TO

MOVE FAST AND TO BE RESPONSIVE

3BOTH STABILITY AND AGILITY ENABLE OUR COMPANY TO

SHAPE THE FUTURE

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