Post on 13-Mar-2020
Agility andCost Efficiencyin Operations
Magdi BatatoEVP, Operations
Nestlé Investor Seminar24 – 25 May, 2016
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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
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251991
2016
years
1991 Number of factories
…whilst sales
have doubled and
production volume
has tripled.
4
549547
438 436
2015
104 opened443 bought
298 closed251 sold
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
6
30’000Current number of trained
problem solvers
Number of improvement
initiatives per year27’800
7
Zero is our mindset to deliver Excellence
Driving Excellence in Safety
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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
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%
Eliminating waste from our value chain
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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
Delivering the right product at the right time
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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
Delivering the right product at the right time
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40
60
80
100
2013 2014 2015
SK
U n
um
be
r
Strong performance on environmental indicators
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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%
Strong performance on environmental indicators
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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%
Our CSV efforts are recognised
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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
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Zero is our mindset to deliver Excellence
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Our NCE and CSVare providing long term stability
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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
Procurement
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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
Asset Intensity
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“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
Accelerating TPM to achieve benefits earlier
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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
Category focus
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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)
Digital @ Operations
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A further step change in Operations:
Leveraging disruptive technologies
Starting first pilots
Advanced
Robotics
Advanced
Analytics
Internet of
Things
Augmented
Reality
Wearables 3D
Printing
Nestlé Operations combines two skills –Farming and Hunting
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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
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Moving from a gradual approachto a leapfrog approach
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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
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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