#1Vestle Nestlé Business Excellence LO Chris Johnson EVP Nestlé Business Excellence Nestlé Investor Seminar 24-25 May, 2016#2Disclaimer 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. 150 Years Nestle 2#33 One organization leveraging specific skills & capabilities Global Business Nestle Services བལ Business Nestle Excellence Nestle CONTINUOUS DELIGHT CONSUMERS DELIVER COMPETITIVE ADVANTAGE EXCELIN COMPLIANCE EXCELLENCE GLOBE Nestle ONE STEP AHEAD 150 Nestle#44 Business Nestle Excellence FUEL FOR GROWTH • SIMPLIFY STANDARDIZE SHARE Optimize Global End-to-End Provide World Class Support Demand Focused Flows Business Services Organizations Global Business Nestle Services CONTINUOUS Nestle ENABLE THROUGH PEOPLE Alignment, Leadership and Lean ways of working GLOBE Nestle ONE STEP AHEAD ENABLE THROUGH TECHNOLOGY Processes, Data and Systems 150 Years Nestle#55 Business FUEL FOR GROWTH SIMPLIFY STANDARDIZE SHAKE Optimize Global End-to-End Flows Provide World Class Business Services Global Business Nestle Services Support Demand Focused Organizations 2025 CONTINUOUS Nestle EXCELLENCE ENABLE THROUGH PEOPLE Alignment, Leadership and Lean ways of working GLOBE Nestle ONE STEP AHEAD ENABLE THROUGH TECHNOLOGY Processes, Data and Systems 150 Years Nestle#66 SIMPLIFY Business Nestle Excellence FUEL FOR GROWTH • STANDARDIZE SHARE SIMI Optimize Global End-to-End Flows Provide World Class Business Services Global Business Nestle Services Support Demand Focused Organizations 2025 CONTINUOUS Nestle EXCELLENCE ENABLE THROUGH PEOPLE Alignment, Leadership and Lean ways of working GLOBE Nestle ONE STEP AHEAD ENABLE THROUGH TECHNOLOGY Processes, Data and Systems 150 Years Nestle#77 Business Nestle Excellence R GROWTH • ARDIZE SHARE SIMPLIFY Optimize ARDIZE Optimize Global End-to-End Flows Support Demand Focused Organizations OUS ELLENCE ROUGH PEOPLE ship and Lean ways of working GLOBE Nestle ONE STEP AHEAD ENABLE THROUGH TECHNOLOGY Processes, Data and Systems 150 Years Nestle#88 Optimizing End-to-End Flows will bring value to consumers and customers Goods Receipt *** Idea to Launch Plan to Execute Record to Report Hire to Retire Order to Cash Source to Pay Resource Complete & validate Order Organization Allocate - Reallocate Order exception management Credit rolance Pay and manage Employee and Org.data asury anting Control primary costs & perform accruals PFME/TTS accruals, validation & settlemen נא ication Clearing Good receipt/invoice receipt *** PR Cost Center allocation Prepare brief, including business plan Product & Dypt Inputon commercial activities & Customer Facing Supply Chain Maintain Consensus Demand Planvia Monthly Business Planning duct Master Data Management Commercial Brief Development communicate ents through all levels (20) System parameterization (eg Inventory optimization) erotional Situational ycie Analyse short term Exceptions per distribution location For illustrative purposes only Launch & Monitor Post Launch Evaluation For illustrative purposes only Demand Analysis Supply Analysis Strategy Definition Projects Identification CAPEX Vendor Approval Approval Process Supplier Data Management *** Purchase Order Purchase Requisition Contract Management Supplier Agreement Benefit Tracking Negotiation ipt *** Supplier Selection Invoice Receipt Reconciliation SupplierIssue Supplier Supplier Payment & Reporting Resolution Performance Evaluation Innovation For illustrative purposes only Order Change order optimization Perform deduction and collection Demand management *** Manage End of Service For illustrative purposes only Receive and apply diposit For illustrative payment purposes only Tax accounting Fiscal Statutory reporting For illustrative purposes only 150 Years Nestle#99 End-to-End Flows Optimization Program 2015 2016 2017 2018 2019 PLAN SOURCE TO PAY ORDER TO CASH Concept Proof of Concept HIRE TO RETIRE RECORD TO REPORT PLAN TO EXECUTE IDEA TO LAUNCH Deployment Concept Proof of Concept Deployment 150 Years Nestle#1010 10 Business Nestle Excellence FUE WTH SIM Provide NARE GI World Class Business Services Global Business Nestle Services Alignment working GLOBE Nestle ONE STEP AHEAD ENABLE THROUGH TECHNOLOGY Processes, Data and Systems ed 150 Years Nestle#1111 Leveraging skills and scale to drive agility In-Market (Local) Non-Shareable Category / Business / customer focused Center of Competence Shareable Judgmental or competence-driven activities Center of Scale Shareable Transactional activities - limited judgment required 150 Years Nestle#1212 We have an effective but limited network of transactional shared services Nestlé Global Business Services Switzerland NBS Lviv Ukraine NBS Accra Ghana Hewlett Packard Enterprise Poland Hewlett Packard Enterprise India Strong multi-functional service experience Non-standard flows and non-mandated service solutions NBS Cairo Egypt NBS Ribeirao Preto Brazil NBS Manila Philippines Regional Service delivery model 150 Years Nestle#1313 Opportunities to increase penetration of Shared Business Services outside of IS/IT 47% Information Technology Other Business Services 50% 100% Nestlé Today Industry benchmark Source: Deloitte, McKinsey 150 Years Nestle#1414 Business Nestle Excellence FUEL FOR C SIMPLIFY STAN Optimize Global End-to-End Flows B Support Demand Focused Organizations Nestle EX ENABLE THROU Alignment, Leadership and Lea GLOBE Nestle ONE STEP AHEAD ENABLE THROUGH TECHNOLOGY Processes, Data and Systems 150 Years Nestle#15Supporting demand focused organizations Lean Value Stream eCommerce INTENDO ESPRESSO INTENSO Business Analytics Social Media NESCAFE. Бірог Dolce Gusto $9.49 Quantity 100 Points Add to Subscription 100 Points 15 Listenir Engaging Transforming Inspiring 150 Years Nestle#1616 BENEFITS 150 Years Nestle#1717 Time and Effectiveness Less time on administrative activities and in meetings More time for value added activities Better analytics for better decisions 2 HIRE TO RETIRE • • In the future: time to hire -30% time to on-board -20% time to run transactions -30% As-is: • 95% of process time is "waiting" • 30'000 hours spent keying in new hire data twice 150 Nestle#1818 Speed and Agility More focus on innovation More investment behind our brands. More organizational flexibility As-is: Over 55 m orders processed annually 250 order processing centers 90% of orders require rework ORDER TO CASH In the future: . Over 30'000 sales representatives can spend up to 5% more time with customers. 150 Nestle#1919 Quality and Compliance Better relationship with suppliers, customers and consumers More visibility and transparency More focused and efficient audits 00 SOURCE TO PAY As-is: • Over CHF 30 bn in services/indirect materials purchased annually through over 100'000 suppliers. Over 10 m PO's need to be reworked; half on paper. In the future: E-Catalogue will improve efficiency and adherence to group sourcing strategies, reducing overall spend. 150 Years Nestle#20Cost Efficiency Better ability to leverage scale (e.g. Procurement) Less operational costs Less structural costs Benefits will be tracked within the Group's existing initiatives. 150 Years Nestle 20 20#21Employee Engagement More collaboration, empowerment and fulfilment Better work-life balance More fast, intuitive and user friendly tools ASHE 21 24 Enable employees to re-focus time on added value activities. 150 Years Nestle#22NBE for our future 22 242 A Vestle ILO 150 Years Nestle#2323 NBE take-aways 1 2 3 4 PROVIDE FUEL FOR GROWTH by leveraging Nestlé's Size and Capabilities for Competitive Advantage to Win in the Marketplace and position Nestlé to compete in the 4th industrial revolution. ENABLE AGILITY with consumers and customers through leading digital capabilities and within Nestlé through six «best in class>> simplified, standardized and shared End-to-End flows. DELIVER WORLD CLASS BUSINESS SERVICES by establishing a global, integrated and highly automated world-class Service Delivery Model for the Nestlé Group. TRANSFORM NESTLÉ by bringing benefits in time and effectiveness, speed and agility, quality and compliance, employee engagement and cost effectiveness. 150 Years Nestle